Offset the Rising Cost of Mail Through Postal Optimization

Co-palletization. Destination entry. Commingling. Welcome to the complex world of direct mail, where there is a lot more to getting letters out the door.If you are like most busy marketers racing from one project to the next, juggling demanding deadlines and coping with tight budgets, you haven't had time to learn the ins and outs of the different postal options for mail campaigns.But by having just enough knowledge and by asking the right questions, significant savings can result from choosing the best postal option for a campaign. The key to smart business mailing is taking full advantage of the discounts the United States Postal Service (USPS) offers for mail that is properly addressed, labeled and sorted.Postal savings have become even more important given the financial shape of the USPS. In early July, the USPS, projecting a $7 billion shortfall for next year, announced it was seeking an overall price increase for mail of about 5.6 percent. The jump, which will take effect in January 2011 if approved, would be the seventh increase in a decade, according to a report in the Wall Street Journal.For time and budgetary reasons, and because postal issues can be complex and confusing, it's frequently tempting to simply insist on a flat guaranteed postal rate. But most of the time that only guarantees you will not get the lowest possible rate. Becoming familiar with the different postal options can optimize direct mail campaigns, help manage budgets proactively for profitability and increase the campaign's effectiveness.The first consideration to examine is the possibility of the destination entry postal option. The USPS offers postage discounts for Standard Class to those who deliver their mail to its large automated sorting facilities, which serve as processing and distribution centers for post offices in a designated geographic area.The highest discounts, applicable to high volume mailings or those with dense geographic coverage, are available for deliveries directly to a Sectional Center Facility (SCF). The next-best level of discounts can be achieved by shipping to a Bulk Mail Center (BMC). But for destination entry to make sense, the discount needs to exceed the freight cost by a large enough amount so that the administrative costs are worth the difference.For some mailings, a combination of SCF and BMC drops might be best, possibly in conjunction with the next major postal option: Co-palletization. A service provider authorized by the USPS to offer co-palletization services can combine trays from multiple mailings together on the same skid, qualifying for SCF postal discounts.Each mailing is presorted and produced independently, but may be merged onto one pallet, maximizing collective postal discounts. For mid-size mailings, or if freight costs are outweighing the savings of SCF/BMC deliveries, co-palletization should be considered. Co-palletization frequently is complementary to BMC drops.What if your direct mail campaign has multiple lettershop versions or is being delivered to a wide, dispersed geography in small quantities of about 20,000 to 30,000 pieces? In this situation, a postal option called commingling can maximize postal rates for First and Standard Class mail. By combining components of your campaign with other mailings, a lower fixed postage rate can be gained than what would be achieved by mailing components separately.The fixed rate is attractive from a budgeting perspective. But for bigger mailings and some small mailings, commingling may not be the best option. Also, with commingling it's more difficult to control in-home dates. Watch out, too, for service providers who may push commingling as an option mainly because that provider has invested in expensive commingling equipment and wants to use it.Understanding these different postal options can significantly reduce postage costs while still guaranteeing accurate and fast delivery of mail. Given the complexities and different combinations of the postal options available, when planning a campaign a marketer should consider sending a prospective service provider a test file that is scrubbed of confidential information, leaving only the address.In this way, a service provider who is an expert at postal optimization can consider all the campaign's variables and determine the best postal fit for the job and provide an accurate bid. A confidentiality agreement can be signed too, if desired, which allows you to securely compare providers.Lastly, tracking and reporting is always critical in a direct mail campaign. So while considering the different postal options, find out also if a service provider offers a system for real-time tracking and reporting, and the PostalOne!® information management system for more time-efficient and cost-effective campaigns. Also, mailers approved for Full Service Intelligent Mail barcode will achieve additional discounts ($.001/pc for Standard, and $.003/pc for First Class).With an understanding of the different postal options available, or by utilizing a service provider that is a postal expert interested in providing the right solution for you rather than whatever option best fits its equipment, you can obtain the lowest possible postal rate for your campaign while still achieving the fastest delivery and strongest response rates.David Henkel is president of Johnson and Quin, located in Niles, Illinois. Johnson & Quin is a national leader in targeted full-service direct mail printing and production, offering the latest data and personalization technologies and multi-channel marketing capabilities. He can be reached at dhenkel@J-QUIN.com.

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Offset the Rising Cost of Mail Through Postal Optimization

David Henkel

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