Postal : User's Guide to Commingling

What you don't know about this mail optimization tool could cost you time and money

March 2009 By Debora Haskel

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More than 10 years ago, commingling was introduced to marketers as a way to reduce postage costs and get mail in-home faster. The monetary benefits of commingling are numerous—highest possible automation discounts, deepest penetration into the postal system, lowest postage expense—yet concerns about how it works cause some to turn away from savings opportunities.

Commingling works because the U.S. Postal Service offers tier qualification and work-sharing discounts. Simply put, the less the USPS has to handle your mail, the bigger the discounts you earn. The benefits of commingling are not just monetary, however. Commingling also reduces cycle time and handling by the Postal Service, so mail moves faster through the system and arrives in-home both quicker and in better shape.

Your testing program benefits from commingling in two ways. First, even small test cells earn the highest level of postage discounts. Second, analysis of test panels is more accurate because these cells are processed and delivered with your control mail, eliminating delivery variables that might impact response rate.

Commingling sometimes is confused with combining and copalletizing. It’s critically important for marketers to understand the differences. Combining or copalletizing mail allows for destination entry discounts for drop shipments to Bulk Mail Centers and Sectional Center Facilities. Combining is the manual consolidation of mail trays onto single destination postal skids. Combining impacts destination entry discounts only.

Commingling Defined
Commingling goes a step further than combining—merging programs from multiple marketers into one mailstream, increasing SCF penetration and enhancing the accuracy of test panels, because they become part of the control package mailstream. In other words, commingling is the automated sorting of multiple mailstreams into a common mail tray. Commingling upgrades your tier qualification and provides destination entry discounts.

Commingling is effective because of USPS requirements to achieve five-digit discount rates. To qualify, mailers need a minimum of 150 pieces per ZIP code. Commingling improves the chance for ZIP codes to attain the 150-piece threshold. Here’s what happens in a typical mailing:

• Three-cell mailing with 150 pieces total for ZIP code 03458.
• 50 pieces in each cell for ZIP code 03458: All mail in 03458 will be charged at the three-digit sort rate.
• Commingling the three cells into the same tray: All 150 pieces qualify for the lower five-digit rate.

Commingling Savings
Understanding how commingling works and how it differs from combining is critical to understanding the potential value and savings. Here is an example of the commingling process at work on a hypothetical program:

• Marketer’s files (by package) are individually presorted to determine postal qualification with-out commingling;
• Marketer’s files (by package) are prepared in BMC and SCF sequence;
• Projects (by package) are individually imaged and processed in the lettershop. Mail is processed using high-speed delivery point barcode scanners (DBCS), the same equipment used by the USPS to process mail. DBCS equipment scans the POSTNET or Intelligent Mail Barcode on each piece and directs each piece to one of 294 pockets; and
• The result is multiple mailings—including small runs, small versions and test panels—become a single mailstream for highest postal qualification. In a typical stand-alone presort of 50,000 to 100,000 names, 37 percent qualify for the basic rate, and 60 percent qualify for three-digit discount rates. None of this mail qualifies for five-digit discounts. As part of a commingle presort of 3 million pieces, however, 77 percent of these same names qualify for five-digit discounts, and 19 percent qualify for three-digit discounts, delivering enormous savings over the stand-alone presort.

It’s important to fully understand the mechanics of commingling and work closely with your vendor to determine when commingling is the right solution for your program. It’s also vital to understand the nuances of commingling to ensure that you’re asking the right questions to find the best vendor for your program.

For example, you may be told that mailings with a high percentage of five-digit postal sort-qualified mail do not benefit and actually cost more to mail when commingling charges are applied—even if commingling raises the percentage to 100 percent. Because of such possibilities, it’s important to understand the business rules your vendor applies to ensure that you benefit from commingling. Your mail should not be commingled unless there is a benefit from commingling, such as dramatically improving SCF penetration that results in cost savings or preserving the integrity of your testing program if you have complex versioning with very small cells across a wide geography.

Commingling Myths and Facts
Timing may be referred to as one of the pitfalls of commingling. There is a perception that commingling delays mailings because it requires additional coordination time, and three- to five-day delays to combine participants’ mailings for a commingling run are common. There also is concern that if one large marketer’s mail is detained for any reason, this common delay could be extended, or any savings forgone if the participating marketers mail without the other planned marketer’s mail volume in the commingle.

To avoid an unpleasant surprise regarding the timing of your mail, be sure your vendor’s commingle process is real-time and that there is no additional coordination time required for commingling. Look for a vendor who does commingle runs at least three times a week so a missed commingle means a delay of less than 48 hours. It’s also important to understand what happens if one customer in the commingle makes a change that impacts the planned commingle. Your vendor should be able to rerun the presort in a matter of hours, not days, so there is no impact on your mail date.

And then there’s the myth that participating in commingling means a lack of flexibility. The perception is that once a commingling run begins, it cannot be stopped because all jobs are interdependent and preplanned to run together in a certain sequence to gain any postal discounts. Other marketers’ changes or delays will impact your mail.

In fact, a commingle run can indeed be stopped once it begins. Your vendor should be able to rerun the presort in as little as two hours so mail is not delayed. Commingling actually provides an additional advantage when a client identifies a problem after the presort. In one instance, IWCO Direct was able to save a financial services client more than $70,000 by using commingling equipment to identify and isolate product that needed to be pulled out of the mailstream. Commingling equipment allowed IWCO Direct to automate a process that would have taken days by hand and been highly inaccurate and expensive.

Commingling and Intelligent Mail
The USPS’ Intelligent Mail vision to capitalize on the value of information about mail continues to move closer to reality. Intelligent Mail products and services rely on the Intelligent Mail Barcode (IMB) to uniquely identify each mail piece. The Postal Service is introducing new Intelligent Mail options this May.

The “Full Service” option requires marketers to use the IMB on all mail pieces. The content of the IMB must remain unique for a 45-day period. The containers used to transport the mail (trays and pallets) must bear tray labels and pallet placards with the designated style of IMB for that container. Each container also is uniquely identified, and that uniqueness must be maintained for 45 days as well.

In addition to the unique barcodes, all mailing documentation and postage statements for Full Service Intelligent Mail must be presented to the Postal Service electronically. In exchange for the additional barcoding and documentation, the Postal Service will provide marketers with information on when the mailing was received at the postal facility where it entered its network. The USPS also will provide marketers with feedback on address quality, particularly move update information.

What does this mean for commingling? If you are planning to use the Full Service option, be certain your commingling vendor is prepared for “eDocumentation” and has been certified by the Postal Service to use this service.

Last, but not least, be sure your vendor can provide the reporting you need for accurate analysis of commingling activity, including cost-savings recaps for each program mailed and a postal tracking report that provides a more long-term strategic analysis.

The truth about commingling is it drives postage optimization, in-home targeting and predictability of delivery, as well as enables marketers to maintain a robust testing program while mitigating rising costs for producing and mailing control packages.

Debora Haskel is vice president of marketing for IWCO Direct, a provider of integrated direct mail production services and marketing solutions that’s located in Chanhassan, Minn. She can be reached at (952) 470-3295 or debora.haskel@iwco.com.

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