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Direct Marketing News From Hong Kong
How About the HKDMA Expanding to Include International
Members Interested in Accessing the China DM Market from
Offshore?
On January 25, Gene Raitt, who agreed to chair the Hong Kong
Direct Marketing Association temporarily until a new chair
has been found, introduced Ruth Stevens as the HKDMA
luncheon speaker that day. Ruth is currently Chair of the
Direct Marketing Club of New York, a professor of marketing
at Columbia University’s graduate School of Business and is
teaching at Singapore Management University for the Spring
Semester.
Before she spoke, Gene in his initial remarks, described the
apparent interest expressed in the USA, Hong Kong and
elsewhere in forming a Greater China DMA to include the
DMA’s in Hong Kong, China and possibly Taiwan. This topic
was discussed at a recent HKDMA Exco meeting at which just
four of the Committee were present (I was one of those
unable to make it).
If I had been present I would have expressed reservations
about this “Greater China” concept. I voiced these concerns
with Gene over lunch earlier last month.
I don’t want to go through here all the nitty-gritty detail
we discussed, but my own view (for what it’s worth) is that
putting China, Hong Kong and Taiwan together into one single
“DMA” pot is like mixing together chalk, cheese and papaya.
Each of these markets have some fundamental
incompatibilities and quite different sets of priorities
which would make any joint DMA an uncomfortable mix – to say
the least.
Most of the international direct marketing companies I know
(with just a few exceptions) who have been through the
bureaucratic nightmare of establishing a legal presence in
China, of appointing local staff and starting from scratch
have almost universally had an expensive experience (which
was not a profitable one).
The alternative has been to mail into China from offshore (eg.
Hong Kong). You can mail with a national perspective through
Hong Kong Post and all your mail gets delivered – instead of
mailing nationally from one point within China paying the
post office in one city and expecting the post office in
another province to do all the work delivering the mail but
not sharing in the income. What happens? Not all your mail
gets delivered.
In China you’re not dealing with a single business partner
throughout the nation. You’re dealing with many different
provinces in which the local business branch is autonomous
and you have to renegotiate deals province by province.
In China (perhaps more than in other countries) if something
can go wrong – it will. But the numbers are large and
therefore the potential cost (i.e. potential loss) is also
large if things go wrong – and they usually do.
Of course, the option of potential interest to all of us is
how to grow the China market step-by-step from offshore and
get your money out without investing in a local presence.
There are reliable ways in which branded third parties can
receive your response locally in China, process payments and
pay you offshore in a convertible currency less their
commission.
This is being widely practiced, and I believe a very
important role for the HKDMA in the future could be to set
up networks in China in order to facilitate safe access to
the China market for mailers who want to build a customer
base there but prefer to remain offshore for the time being.
Gene Raitt sits on the US DMA Board and you may like to
contact him if you’re based in the USA and feel strongly
about ways to access the China market. (His email address
is:
Eugene.Raitt@aig.com)
I should add that whoever agrees to chair the HKDMA in the
future, especially if a larger role for the Association is
adopted as described above, that person should be a
full-time Chinese speaking CEO – supported by sponsorship
from inside and outside Hong Kong. There’s no way such a
wider role can be led and managed by a fully employed
executive on a part-time basis.
* * *
The Perennial Challenge of Cleaning
and Refreshing List Data
Meanwhile back to Ruth Steven’s presentation at last month’s
HKDMA luncheon.
Her stimulating talk was focused on B-to-B direct marketing
and her perspective was from what’s happening now in the
U.S. market.
Apparently US$868 billion is being spent on DM-driven sales
in the USA – but B-to-B has been growing at 6.2% compared
with growth in consumer DM of 4.4%.
One of the biggest problems affecting the growth of B-to-B
direct mail, however, is unclean data. (Have you heard that
before?). The Data Warehouse Institute in the USA has
calculated that bad customer data costs U.S. business over
US$600 billion a year in postage, print and staff overheads.
Of course, response rates are also damaged. Since business
address data is changing at 4%-6% monthly, this will
continue to be a challenge in the USA – and the USA will be
no different in this respect from other major markets.
Ruth claims that in the U.S. email no longer works for
B-to-B prospecting (spam has ruined it) and postal mail is
securing lower cost, better enquiries.
Finally, the offer. Some things never change. In B-to-B,
information-based offers work best. The free newsletter,
research report, case study, article reprint, book, demo CD
or, of course, the 10 Tips Document on “Making Your Business
More Profitable”. Such offers can be geared to the primary
interests of your target audience and the incremental cost
is low – or even zero.
* * *
More About List Data
A further word about list data. I had a chat the other
morning with one of the major suppliers of international
“cross-border” data to the international list brokering
industry (such as it is). He will remain nameless because I
think he would prefer it that way.
What was fascinating was to hear that the demand for postal
address data was declining and there was now at least 50%
greater demand for telephone numbers.
Mailers then use call centres to make offers to these files
in order to generate postal addresses from them which are
both current and “qualified”. The end result in terms of
prospective buyers who convert is (for most mailers)
justifying this more expensive and time consuming means of
gathering fresh data.
* * *
How to Avoid Bulk Mail Penalties
As the Euro, Sterling and Aussie dollar have continued to
strengthen against the U.S. dollar, so international,
cross-border mailers have been encouraged to print,
lettershop and post mail internationally from Asia where
currency values are more closely linked to the dollar.
The upside is a significant saving in production and postal
costs for customer acquisition mailings, but the downside is
you can’t be too cavalier about simply delivering your mail
to an Asian postal administration for entering into the
international mail system and expecting it to arrive in full
at the particular rate negotiated with that postal operator
or postal administration.
Every experienced mailer knows about bulk mail penalties
applicable on Developing Countries (DC) mail sent to
Industrialized Countries (IC’s) for local delivery. Volumes
of direct mail delivered to any one country is limited to
1,500 items a day or 5,000 items in two weeks.
The justification for this? ICs complain that their cost
domestically of delivering lightweight mail is higher than
the compensation they receive for foreign mail received from
D.C’s under the UPU terminal dues system. This may be so but
in all fairness they should add into their total
calculations the full postage paid by responders to bulk
mail, the subsequent response received from the mailer
(including product fulfillment) and the full postal rate
correspondence generated and exchanged over the lifetime of
that customer relationship. Direct mail these days keeps the
postal industry going.
However, right now bulk mail volumes from DCs are being
closely monitored by receiving postal administrations in the
following countries (and there may be more): Japan; Germany;
France; Australia; UK; Korea; Greece; Switzerland; Canada
and Thailand. The USPS doesn’t care how much mail they
receive from where – they’re more interested in identifying
scurrilous, misleading or illegal content.
After talking to some leading international postal operators
(who would like to see their mailer customers receive full
delivery of their volume mailings without direct mail
penalties being imposed) there are clearly some rules which
can be followed:
·
Always get your mail mixed with other mail in many different
mixed mail bags.
·
Spread your mailings over as long a period as possible.
·
Test handwritten addressing. (This can be done cheaply in
the Philippines where envelopes can be printed, addressed
with handwriting and sent over to your printer in Hong Kong
or Shenzhen). One mailer told me recently that response to
handwritten addressing doubled if deliberate mistakes are
made in the addressing! (More authentic?)
·
Use live stamps. (At least one reliable postal
administration is willing to do this). Live stamps can
deliver 20% lift in response.
·
Use different company names if it’s a B-to-B mailing and
drop the ‘Undelivered’ address.
·
Use different envelope designs.
Incidentally IC’s may not want to deliver your bulk mail,
but many small and developing countries will be more than
happy to do so because they earn more from the overseas mail
items they receive and deliver under the terminal dues
system than from domestic mail. Maybe that’s why we get full
postal delivery from smaller countries and much higher
average response rates!
* * *
Spam Filter Over-Efficiency
I’m all for efficient spam filters but recently we’ve found
that more of our private one-to-one emails (especially to
the USA) are ending up in junk mail boxes – and take some
time for your overseas colleague to find even when you
follow up in a timely and efficient way. More of our U.S.
sourced email is also ending up in our own junk mail boxes
here.
If you don’t hear quickly from your contact – it’s worth
following up in a couple of days (don’t just assume
inefficiency on their part) – and do review your
non-provocative subject line. This can be a key element in
one-to-one email (and, of course, bulk email) getting
delivered – or not getting delivered.
* * *
Reason Tells Me Printed Matter Should Be “Printed Matter”
Until It’s Entered Somewhere/Anywhere into
the International Mail System When It Can Then Be Called
“Mail”
Canada Post doesn’t agree with the above statement. However,
at the end of October last year the Minister of Transport in
Canada tabled a key amendment to the Canada Post Corporation
Act which would allow any carrier to take direct mail
packages produced and printed in Canada as “printed matter”
and drop that material into the international mailing system
outside Canada. Until now, this has been the exclusive
privilege of Canada Post. Canada Post is not happy at all
about this amendment but, of course, the mailing industry is
thrilled at the prospect of a change in the law.
The proposed amendment has been introduced by Parliament, it
will have a 2nd
reading shortly followed by approval (hopefully) from the
Standing Committee on Transport and then sent back to
Parliament for enactment.
There’s an important principle at stake here because other
postal administrations we know have been beginning to take
the same position as Canada Post by litigating against
mailers who were printing and lettershopping direct mail
materials locally and taking these materials and dropping
them into the international mail system outside their home
territory (either for cost or efficiency reasons). I hope
the example set by the Canadian Government’s decision to
force Canada Post to amend their position on this will be
followed by other postal administrations elsewhere.
* * *
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