The Xerox 1:1 Lab shows how highly personalized marketing messages are leaving imprints on consumers.

Sure, plenty of direct marketers and print ad specialists will talk a good game about how personalization and other newer techniques can lift your bottom line. But at Xerox, the experts have developed a mail-marketing program — known as the “1:1 Lab” — that’s designed to help them back up the boasts.

“We’ve told the story a lot about how response rates and return on investment improve with the use of full-color printing and relevant data,” says Shelley Sweeney, vice president and general manager of the service bureau and direct marketing sector for Xerox’s graphics communications business. “But we really needed to prove it to people in a way that gives a true A/B comparison.”

Most high-level corporate marketers understand that personalization works. However, many brands fail to take advantage of the power of mail personalization because they don’t or can’t gather the consumer information critical to such precise targeting, Sweeney says. “Customer data is by far the most important thing to a successful direct mail campaign, which is what we are trying to prove in the lab,” she adds. “Most marketers have the data, but it might be in three or four different places.”

Without a certain depth of information about customers, such as when they last made purchases, marketers will find it impossible to create truly relevant messages. In fact, Sweeney says, Xerox regularly turns away candidates for the 1:1 Lab because the marketing department can’t compile customer data from the disparate departments.

Despite its name, the 1:1 Lab isn’t a physical place, although it was indeed born in a high-tech Xerox printing facility in Canada some years ago. Since expanding beyond the Canadian marketplace, the effort has become a “virtual” program in which Xerox and its partners around the globe blend their expertise with the company’s latest technology to underscore how personalization increases a message’s relevance to mail recipients.

Under the program, Xerox fits select clients’ existing mail campaigns with a variety of variable data printing (VDP) solutions. The marketing offer and creative are largely the same as the original mailer, with the biggest difference being the increased personalization of the 1:1 version. The Xerox Graphic Communications customer and direct marketing provider then print and mail out the revamped pieces, at no cost to the client, to measure how well the new mailers do as compared to the less-personalized versions. The hope at Xerox, of course, is that successful tests of its mailers will encourage client marketers to use a customized direct mail approach (and Xerox’s expertise) in full-blown direct mail campaigns.

Xerox completes about 10 tests a year in the 1:1 Lab, including several with well-known national brands. Typically, Xerox picks test candidates with robust customer data that are willing to publish any results. Once it chooses a candidate, Xerox teams up with that marketer’s production partner and any other strategic partners involved with the campaign.

Getting results

So far, many of Xerox’s clients are citing increased response to the personalized mailers. For instance, one recent test involved a 529 college savings fund. Dissatisfied with contribution levels, the fund administrators worked with the 1:1 Lab to revise a critical direct mail piece. The new version included graphics that projected how much money the targeted fund participant could save up by the time his or her child was ready for college. Additional graphs showed how greater contributions could boost the growth of the target’s account. Recipients of the personalized mailer upped their contributions levels at a higher rate than those receiving the traditional letter with no graphs, according to Sweeney.

“It really is a way, with no effort on the part of the end client, to be able to prove how successful direct marketing can be when it is not just spray and pray,” Sweeney says.

Content is king

Of course, there are many other marketers who do collect a wealth of vital data, and theirs are the brands that benefit most from the Lab. Consider, for instance, Ford Motor Co. The carmaker was using basic personalization — such as customers’ first names and the vehicles that they owned — in a recent direct mail campaign to promote extended service contracts. However, when response rates topped out at about 2.5 percent, the company looked for other ways to maximize ROI on the mailers. “We were doing a mediocre job of giving customers a reason to respond,” admits Mark Bardusch, Ford’s national sales and marketing manager of extended service business.

Ford’s production provider for the campaign, Budco, recommended the 1:1 Lab. As a first step to reworking the mailer, Bardusch and Budco marketers pulled together an abundance of customer data from various departments, including vehicle type, length of ownership, address, age, income and gender.

“By combining the different sets of data and looking really hard at how we could connect the data with the messaging, we were able to build messages that speak to the reasons why having an extended service contract is important to different customers,” says Jeff Sierra, vice president of marketing and product development for Budco. “For example, a woman with a family might receive a mailer with an image of a family and the car that she owns.”

For the 1:1 Lab test, Ford mailed more than 20,000 pieces to owners of Ford F-150 trucks whose factory warranties were near expiration. The mailer was done in two formats: a black-and-white letter with the Ford logo in color, and a full-color self-mailer. Each format then had two versions: one with basic personalization such as the recipient’s first name (such as Ford had been sending all along) and the other with more personalized messaging and greater VDP content.

The test ran from November 2008 to February 2009, as the U.S. car industry teetered on the brink of collapse and as automakers testified before Congress in an attempt to garner government aid. Despite these events, the personalized self-mailer with a wide variety of VDP content still achieved a 5.7-percent increase in response rates and a 35.7-percent increase in sales penetration as compared to the original mailer with much less personalization. “With mail, they can comfortably investigate the service contract that best fits their needs,” Bardusch says.

Based on the success of the test, Ford began this past September rolling out the VDP strategy across its entire direct mail program for extended service contracts. This will eventually result in more than 2 million pieces of relevant mail annually, Bardusch says. And the company will continue to test various formats for VDP content, including letters and self-mailers. “We always felt that if we learned more about customers and the customers could have a better understanding of us, we would do more business together,” Bardusch says. He adds that by personalizing each offer, Ford also was better able to communicate its product selection.

Xerox’s Sweeney says that the successes of campaigns such as Ford’s only do more to back up the contention by those at the 1:1 Lab that rich VDP efforts can translate into deeper customer relationships. “When a company starts looking at customer data from an overall point of view, it is able to start creating more relevant messaging and drive results from its direct mail,” she says.