Postal: Help USPS Help You
Every mailer wants to save on postage, and there are a few ways to do that. Adjusting mail piece design and optimizing mail volume through list analysis are effective ways to reduce costs, but each has to be done with care and copious testing lest it impact campaign performance and stunt growth. However, there are other ways.
The United States Postal Service offers several opportunities for mail owners to earn postage discounts for doing some of the work the USPS would perform, including discounts for assisting with your mail's "presort," automation and drop-ship entry.
Presorting is the oldest form of postal worksharing discount. The USPS offers postage discounts for presorting a mailing to the postal service's requirements. This involves sorting mail pieces by postal route and the containerization of the mailing.
The highest level of presort discount is Enhanced Carrier Route (ECR) sortation, followed by 5-digit and 3-digit ZIP code levels.
To earn ECR-Basic, a mailer needs 10 or more pieces sorted in the mail carrier's line of travel within a single route. High Density requires 125 pieces or more in carrier walk sequence, while Saturation requires 95 percent of the residences in a single carrier route in carrier walk sequence. Most customer mailings of flat mail are carrier route basic sorted with what does not qualify as high density at the 5-digit and 3-digit levels. All these levels of sortation remove the handling otherwise required of USPS in its processing of the mail.
While most mailing lists do not provide enough density to qualify for ECR-Basic presortation, there is a way to increase your mailing's qualification for ECR-Basic and prospect at the same time: The mailer must fill in the missing list density.
Let's say that a flat mailer's more refined targeting efforts put just seven or eight pieces on a route instead of the required 10. That mailer can cheaply add one, two or three targeted addresses by using a Resident/Occupant file to add households that demographically and/or psychographically match existing best customers.
These fill-ins usually fall within the spoilage allowance of the print quantity, so the mailer will not need to print any more pieces than necessary. The additional postage cost is usually less than the difference in postage savings, meaning a net reduction in postage even though the mailer is mailing—and prospecting—more.
A marketer can apply the same technique with a name list; however, the costs of such lists run significantly higher than Resident/Occupant files.
Another thing to consider about list density: The denser the mailing list, the better the postal delivery performance both in speed and consistency. But here shape matters greatly. With letter-size mailings, it is not quite as simple to earn 5-digit automation as it is with ECR qualification. The same approach may be taken. But instead of the 10 pieces that flats require for ECR qualification, letters may need as many as 150 pieces to qualify.
Fill-in prospecting can still be achieved with letters, but may require using a presort service bureau or commingling services to earn the discount collectively with other mailers (more on service bureaus below).
Compared to presort, USPS automation discount requirements are far more numerous and strict. Mail pieces must be able to be run at high speeds on postal automation equipment and need to be pre-barcoded.
In this environment, the carrier does not rule. The machine scheme employed by the postal service to sort, or "case," the mail is most important. There also are Move Update requirements to assure the piece is going to the correct person at the appropriate household so the USPS does not have to further process the mail. Letter mail is incentivized to be automated, rather than carrier route presorted, because the USPS desires to machine case all letters.
It is more difficult to add addresses to a letter mailing to achieve 5-digit automation due to the quantities involved. However, this is where a presort service bureau or commingling comes into play. These allow several mailings to be combined to earn deeper automation discounts, and they aid in building deeper pallets for Sectional Center Facilities where letters are processed.
A presort service bureau provider usually takes many preaddressed mailings from different mailers and performs one of the automation processes for the USPS by sorting the pieces together. They typically run weekly, gathering mailings so the critical mass is achieved. If a mailer has a time-sensitive delivery window, the delivery delay may not be acceptable. However, sometimes the timing at the presort bureau is just right.
The other typical way to combine automated letters is with a commingling service. Commingling differs from presort in that the entire combined mailing is controlled and produced by one service provider. Several mailings are presorted using mailstream software, then they are merged in the software and "virtual" trays of mail are created.
When the separate mailings are staged for commingling, the different mail is organized by virtual tray and, once the virtual tray is full, the result is tracked for production in real trays at the best automation sort levels. Again, this works best if a client can wait a day or so. But the delay is shorter because usually only a handful of mailings are involved.
3. Drop Ship Entry
Once all your presort and automation opportunities have been exhausted, the next opportunity for postage reduction is to truck the mail to destination postal processing facilities.
There are two aspects of all postal processing facilities: originating mail and destinating mail—in other words, picking mail up to bring it to the postal facility, and delivering it from the postal facility to recipients.
If a mailer gives the USPS its mail where it was produced, the mail "originates" there and goes up the chain to National Distribution Centers and then to destinating Sectional Center Facilities and then Destination Delivery Units. Drop-ship discounts are earned by bypassing the enitre originating side of postal processing via private transport. With most mailings, and all letter mail, the best drop-ship entry level is to the SCF. These facilities are where the sheer bulk of mail processing occurs.
Some mailings are large enough and dense enough to be drop-shipped to SCFs, but most are not. What a marketer wants to look for is where these less dense mailings can ride along to get the better discounts and better delivery performance.
Once again, several mailers working in unison can do the trick through the aforementioned presort service bureaus, commingling or other merging technology such as co-palletization. The primary goal is to create SCF pallets and SCF drop-ship. Again, mailers must be careful if a mailing is time-critical that these "merging" solutions are aligned to still meet necessary in-home delivery windows.
Improve Your Mailings, Improve Your Costs
For mailers, the key to cutting postage costs is to work with the USPS and service providers to help achieve the best results with postage and cost issues. Prevent surprises from the USPS by planning in advance. Make absolutely sure your mail pieces meet all postal regulations before any production occurs.
Letter-size pieces need to meet all automation requirements, flats must not be too droopy or too stiff, and all must meet paper requirements and allow proper addressing and barcoding to occur. There is always room to improve.