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Mail in the Digital Age, with Postal Service CIO Jim Cochrane.

AL URBANSKI: Hello, everyone, and welcome to DC Direct, where we talk to movers and shakers in Washington about issues affecting direct marketers. I’m Al Urbanski, senior editor of Direct Marketing News.

Today we are pleased to welcome Jim Cochrane, a 40-year veteran of the U.S. Postal Service who’s put in time in sales, shipping, operations, and is now the Postal Service’s Chief Information Officer. Jim, welcome. Very pleased to have you with us today.

JIM COCHRANE: Thank you, Al. I appreciate the opportunity.

URBANSKI: Absolutely. Hey, Jim, I know that one of your key missions is to up the technological profile of the Postal Service in our increasingly digital age. So I want to get some of the specifics of what’s available to marketers and direct mailers, and what they should be taking advantage of. Let’s start with the intelligent mail barcode. That’s been around for some time. Has it gained full traction yet? What percentage of standard mail is sent using it, and is there still some air in the system that should be used by direct mailers?

COCHRANE: Well, it’s a higher adoption on the catalog side. Most of the big printers obviously see the value of IMb. A little lower on the standard letter side, a lot of smaller mailers using it, maybe nonprofits and things of that nature.

But marketers are in big-time, and we’re over, I think it’s like 83% on Standard. Once again, flats runs a little heavier than the letters, and obviously catalogs see the value of that information. And I think we would have been at the finish line, if you remember the regulators said that requiring full service IMb to be eligibility for presort rates was a de fact price change, and that’s in the courts, and it hasn’t been ruled on yet. We remain optimistic that the courts will rule in our favor, and that’ll get us to the finish line. But I think the good news is that it’s really small, small customers that aren’t using it. Most of the big customers are all using the information.

URBANSKI: Could small customers make better use of it?

COCHRANE: Yeah, they could, and I think that it’s the big customers, customers that do a lot of printing, that are big users of the [IMb] and see the value. I think the ones that aren’t in are really small. Maybe they ship once a month or once a quarter. There’s a lot of customers, not a lot of volume that’s not it.

URBANSKI: Yeah. Is there a reason why the small guys won’t be in? Is it a matter of software?

COCHRANE: I mean, usually it’s the software. I think it really isn’t that difficult. It’s come a long way. The whole onboarding process is much better than it was. For them, I think it’s just they’re not using the right software.

URBANSKI: Got it, got it. Now, I know that there are some new rules in pricing surrounding the use of the flat sequencing system that have just come out. Can you summarize what that means to catalogers and bulk mailers and also the smaller mailers?

COCHRANE: Well, what we try to do is to get all, in particular the flat mail from catalogers, to prepare mail so that it’s ready to go right onto the FSS. The FSS is our best opportunity to take flat costs down and to really move it into a delivery sequence just like letters. So we had to tweak a couple of the rules with feedback.

Now this is the second year of FSS rules, and we’re being sensitive to some of the issues raised by the industry, and once again, still trying to get to the finish line on that because it’s–as you know–running costs, driving costs out on catalogs is an important issue to the catalog industry.

URBANSKI: Yes, they like lower costs. I was at Pat Donahoe’s farewell speech a few weeks ago, and he speculated it might be possible to use some digital-style performance measures like pay per clicks–clicks that are used with digital ads–for direct mail. Is that something that’s a possibility? Is that something that the IMb can be correlated with action taken by consumers after they receive a direct mail to work a pricing system that would be pay-per-conversion after the mail is received?

COCHRANE: It’s an interesting approach. What we’re trying to do with mail is create a digital reflection for every hard copy piece. And right now we use our machine hits on — you know, we’re trying to do it passably. So we’re not scanning mail into the mailbox today, but we’re going to be scanning — with informed visibility–we’ll be scanning or recognizing delivery for a block face at a ZIP-four level using geo-fencing that we’ve done in the GPS coordinates on our scanner. So we do want to take mail all the way to the mailbox.

And I think the key issue that IMb brings to mail is measurability and metrics. You know, some of the more sophisticated users really understand when it’s showing up at the house, and they’r then bundling it with other media so that they can surround the customer with their messaging that they’re trying to get through.

And I think it’s the next extension on that, is, how do you use that measurability, that new measurability that IMB gives you, on response rates? So I think it’s intriguing. Could you,based on the response rate, you know, if the response rate was 20%–unheard of, maybe, in direct mail–you would charge a higher fee, and if it was a lower number, you could charge a lower fee.

I mean, I think that’s something that the Postal Service couldn’t do on their own. They’d have to work closely with the industry on that. But I think it’s in our best interest as an industry to kind of raise our game and use all this information in new, powerful ways to help keep mail relevant in, once again, in an increasingly, as you said, an increasingly digital world that we live in.

URBANSKI: Yeah. You know, it’s funny, though. I don’t know if you saw there was a big story in the Wall Street Journal last week or the week before about catalogs making a rebound. And JCPenney is starting to get back into catalogs. So, you know, I think with marketers, they’re knowing that some of the old methods are still very relevant. And what do you think? Do you think there might be some groundswell there that could lead to a move like that?

COCHRANE: There’s a lot of clutter in people’s lives, and I think in particular, direct mail I think has got a real strong — retains a strong ability to get noticed. We call it the mail moment, but I know, I look at myself. I work for the post office, but I’m also a consumer, and I show up, and I get my mail each day, and I go through it in the kitchen, and I look at things, and I hold catalogs to look at later, in the evening, maybe on the weekend.

And I know all that. Mailers know how I respond and how my household responds to mail. And I think that it was a mistake on people’s parts to get away from mail. E-mail marketing is a nice piece of how you want to reach customers. You know, text marketing is a nice piece of how you want to reach customers. TV, radio, all of them, newspaper, magazine.

But we think mail is a relevant piece of this, and in many ways is more effective than these other mediums. So I think we just getting ready to announce our quarterly results, and I think you’re going to be surprised at how well we did.

URBANSKI: Interesting.

COCHRANE: — on standard mail.

URBANSKI: I will be on that call on Friday.

COCHRANE: Yeah, and I’ll be there Friday. But a good quarter on standard mail.

URBANSKI: Yeah. At the Postal Forum last year, we spoke, and you had talked about the data analysis potential that the Postal Service has and all the data that you do have. What are some of the things the Postal Service can provide to mailers in the way of customer intelligence now, and is that going to improve in the future?

COCHRANE: Well, from a customer intelligence [standpoint], we’ve kind of stayed out of that and let each mailer do that themselves. What we’ve been using the data is to improve the whole experience. We have taken the data that we have from full-service IMb’s and we’ve completely leaned our process. We’ve taken performance levels to new highs.

We understand and share that data with mailers. It used to be a mystery what happened once they gave it to us, but mailers can go to our website and see the condition of every plant in the country and how long the cycle time is from when they give it to us on the dock to when it’s getting put into a mailbox. So that kind of information becomes powerful for everyone to manage that whole experience.

The customer experience — and the segmentation of customers, we kind of leave that up to the mailing industry. It’s very sophisticated. Now, we’re doing a lot of work with big data ourselves, and I think that the mailing industry has been a big mover, a first mover on how to use analytics to understand, whether it’s the personalization or the colors they’re using, the screen, cover pages. All that is designed in a very data-driven way.

So I think that together — and I’d really look at the whole ecosystem — together we’re really taking mail to new levels relative to its being so targeted to the individuals, and at the same time being very measurable.

URBANSKI: Got it. Jim, you got a new boss this week. Can we expect anything different from the Postal Service under Megan Brennan? Are there any new initiatives coming this year?

COCHRANE: Well, I mean, we’ve had a pretty consistent leadership team for a few years now, and so I think that Megan is very supportive of our needs. Our number one goal — and I tell it to everybody in the CIO organization, and Megan tells it to everybody in the post office–our number-one goal is to generate revenue.

And the way we have to do that is to provide world-class service, improve the customer experience, and we have to continue to drive costs down. So I think that’s been consistent through Pat [Donahoe’s] tenure, and I know Megan is going to bring a lot of energy to that same issue, is growing the business, growing the business. That’s a constant mantra.

URBANSKI: Absolutely. It’s going to be a big year. Jim, thanks for taking time to talk with us today.

COCHRANE: My pleasure. And it’s good talking to you, Al.

URBANSKI: We are now going to wrap up this installment of DC Direct. We’ve been talking with the U.S. Postal Service’s Chief Information Officer, Jim Cochrane. This is Al Urbanski from Direct Marketing News signing off.

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