Postal rates have gone up. Now what?

Over the past several months, the United States Postal Service (USPS) has implemented the most dramatic changes in the past 30 years. More than simply rate hikes, essentially the USPS has begun changing the way it does business.

If your business relies on the mail either to sell, to communicate with customers, or to provide products and services, one thing is certain. When the Postal Service changes the way it does business, your business will change as well.

Rather than simply biting the bullet and accepting increased postage, this situation presents opportunities for your business to mail better and to mail smarter. Cleaning and analyzing your mailing list can significantly improve your direct mail ROI as well as save you thousands of dollars annually. There are mailing techniques which also can yield substantial dollar savings. Finally, with the new postal changes, even the design of your mailing pieces can affect your rates and provide savings.

Clean and Lean

The old adage “your mailing is only as good as your list” has never been more true. The difference today is the number of tools at your disposal to improve the hygiene of your mailing database. This is especially true with the changes that went into effect on August 1.

To qualify for postal discounts as of August, the Postal Service has added a DPV requirement. DPV is delivery point validation. Your addresses now have to be exact. As Postmaster General Jack Potter recently said, “Close enough is not good enough.” He compared mailing addresses to telephone numbers. When dialing the phone, if you’re one digit off, your call won’t go through.

Unlike phone calls, your mail may still go through but you’ll lose postal discounts of 2-6 cents per piece. When you consider that the average list has errors on as many as eight percent of its entries, the additional costs can add up quickly. Now, if your address is one character off, you’ll pay more.

In addition to DPV, running a simple merge-purge to eliminate duplicate names on your list typically yields benefits as does updating your list with NCOA – National Change of Address. The Postal Services claims that nearly 20 percent of the more than 150 million delivery addresses it services change every year.

Going the extra mile

As I said, there are numerous tools at your disposal. Pre-sorting a mailing by ZIP code can save the average mailer thousands of dollars in postage. You could pre-sort your mailing yourself with software, or have a pre-sort house co-mingle your mail so that your mailing is pre-sorted for the Postal Service.

Another technique is drop shipping your mailing at specified post offices. Again, significant savings are possible. Depending on where your drop ship location is, however, there may be travel/shipping considerations that could affect your ROI. Some organizations, especially non-profits, constantly seek out “partners” with whom they can share shipping costs.

The 21st Century

If you’re contemplating abandoning your mailing program in favor of pursuing an all electronic strategy, there are many factors to consider in the equation. While e-mail can be a very efficient and effective way of reaching customers, our clients are finding that e-mail works best when used in conjunction with a hard-copy, mailing program.

We’re able to match e-mail and internet orders to mailings to determine if the mailings drove them to the on-line order. Companies are finding that customers who are coming to them electronically – through e-mail or Web contacts – are often originally influenced by more traditional means such as mailings. Combining those lists, these companies can then engage in “multi-channel marketing,” cross-promoting to customers through direct mail and e-mail based on their past discovery and buying behaviors, etc.

With e-mail lists, the quality of the list remains just as important, but quality lists are difficult to obtain. If you do it yourself and your data entry person mis-keys an address by one letter, the e-mail goes nowhere. If there are errors, the fixes can seriously negate the cost advantages of distribution. Some companies have even had to add additional staff – over and above their existing mailing staff – just to manage their electronic database and related programs.

After the fact

You can even maximize the effectiveness of your list after the fact. List analysis can be tremendously effective when improving the ROI of your mailing program.

List analysis is an integral part of becoming more strategic in your marketing program. Who are your actual buyers? After how many mailings do they typically respond? How large are their orders? Do you need to contact them with every mailing? How long do you continue to mail to a contact before dropping them from your list?

How accurately and how often you answer those questions will have a direct impact on the ROI of your program. Your answers will affect the frequency of your mailings, how you segment your mailing list – or lists, even how you design your mailing pieces.

Be practical with your creative

One overriding message that came from the Postal Service’s most recent changes is that size matters. For the first time in USPS history, the shape of a piece will affect postage as much – or more – than the weight.

Overall, there is a definite shift from “flat to fold.” What this means is: when sending a letter-size piece, you’ll save on postage by folding it and putting it either a #10 business or a 6H9 envelope as opposed to putting it in a larger 9H12 envelope – or flat.

This holds true for other pieces as well. At C.TRAC, we have a client who, by redesigning their catalog to 6H9, will actually be paying more than $21,000 less per mailing than they were paying before the recent rate increase. The difference between what they are paying now and what they would have been paying without the size adjustment is more than $37,000 – or nearly 40 percent!

It all adds up

With the higher rates and the changes in postal regulations, mailing smarter is more important than ever. It is imperative that companies that rely on the mail become more strategic in their thinking. Most successful postal strategies will actually include a variety of approaches – utilizing different tools and techniques.

We have an insurance company client that has demonstrated just that. This company had been printing 20-page documents and mailing them in 9H12 envelopes.

The first thing they did was to start two-sided printing, lowering the number of pages to ten. Obviously, two-sided printing cut their weight in half. The fewer pages also enabled them to fold those documents and fit them into a 6H9 envelope – which qualified them for a lower postal rate over and above the lower weight.

Because they were mailing nearly 1,000 pieces per day, we recommended that they pre-sort their mailings using a pre-sort house – which yielded additional savings!

The pre-sorting alone is saving them nearly $80,000 a year in postage. Added to their savings in lower weights (by changing to a 10-page document) and by qualifying for a lower rate by using the 6H9 envelope rather than a flat, their total savings will be nearly $125,000 year – which does not include their savings in using less paper.

When surveying the new postal landscape, to paraphrase the late Senator Everett Dirksen, a pre-sort here, a smaller piece there and “pretty soon we’re talking real money.”