In 1921, a small company made a big splash by introducing a revolutionary technology: the postage meter. Headlines reported it would enable companies to apply postage at the “lightening fast” speed of 250 letters a minute, making corporate mailings more cost efficient than ever—and turning Pitney Bowes into an overnight sensation.
While many successful startups soon crash and burn, Pitney Bowes grew into a $5.6 billion company, with a wide repertoire of software, hardware and services that integrate physical and digital communications channels. Today, the Stamford, Conn.-based company is also just a decade away from centenarian status—an impressive feat at a time when the average corporate life-span is just over 40 years. CEO Murray D. Martin, who joined Pitney Bowes in 1987 and was named CEO 20 years later, credits a culture of innovation for the longevity. “This company has always continued to push out as part of its legacy,” he says.
Initial forays into diversification focused on streamlining snail mail by adding folding and insertion services and checking mailing lists for accuracy. But in 2000, the company saw a need to reach further out. “Volumes of mail around the world were starting to stabilize,” recounts Martin. “We needed another wave of change.” So Pitney Bowes began acquiring companies to expand its software and data management capabilities, as well as developing partnerships with the U.S. Postal Service to process large companies’ mail.
The company also targeted the parcel market by developing technology for e-commerce companies, such as eBay, that let vendors bundle shipping costs into the price of goods and ease the shipping process, even across international borders. “We enable buyers to lock in the currency exchange rate at the [point of purchase] and sellers to auto-compute all the duties, taxes, customs,” explains Martin.
Other advancements seek to target mailings more effectively by identifying high-potential customers based on integrated demographic and geographic information. “We use that information to narrow down what information you would want to receive,” says Martin. “So instead of sending out 100,000 pieces of mail with a 1 percent open rate, a company can send out 50,000 with a 10 percent open rate.”
Despite these strides, Pitney Bowes had a bumpy second quarter in 2010, reporting revenues of $1.3 billion, a decline of 6 percent from the 2009 period. Martin attributes the drop in part to the global economic environment, but also acknowledges that the company’s core business is suffering from a decline in first-class mail use. “U.S. mail volume peaked in 2007 at about 213 billion pieces and dropped last year to 177 billion,” says Martin, who is banking on innovation to bring Pitney back on a growth track.
“Based on current trends, 10 years from now it will be 150 billion pieces,” he notes. “But the parcel side, the personalized side and the digital components will grow. That’s why this transition we’ve been on for the last eight years is so important.”