Postal Changes Take Shape
When the Board of Governors of the U.S. Postal Service (USPS) approved most of the recommendations made by the Postal Regulatory Commission in March, it set into motion an often confusing set of regulations and cost increases that will have a wide-ranging impact on direct mail users of all sizes, budgets and markets. Since the initial rate changes for First Class and Standard mail are scheduled to be implemented on May 14—followed by scheduled changes in July for periodicals and catalogs, and in August for mandatory use of Delivery Point Verification (DPV)—hopefully you’ve already begun preparing for these adjustments and new requirements. If you wait too long, you may face postage increases that can throw off your direct mail budget projections and anticipated profits for the year.
The New Postal Deal
What are the changes? The USPS proposes rate increases for all classes of mail to go into effect on May 14. The following link, www.usps.com/ratecase/fcm_summary.htm, will give you access to the latest information on new rates. But understand that this postal rate case is more than a flat-out price increase, though the USPS certainly is faced with the need to address its own increased costs with higher revenues. The “postal reform” label involves a host of other complex adjustments, including realignment of mail classifications, greater incentive to comply with updated sorting and processing equipment, new recommendations on the use of NCOA (National Change of Address) and LACS (Local Address Correction System) processes, and uniformity in mailing dimensions.
In addition to the postage rate increases and the realignment of many class- and rate-qualification tiers, changes on the vendor side also will impact mailing costs. One that will be in place by August is the way the Coding Address Support System (CASS) software will code addresses. CASS, used to append ZIP+4 codes, translates into postage savings, and essentially is the USPS’ stamp of approval for ultimate deliverability, as those codes help to automate and streamline the processing and delivery of mail. Currently the software codes address ranges, meaning the USPS provides a number range for a street address, e.g., 100–500 Main St. If the address you have falls in that range, then the USPS supplies the ZIP+4 code. Come August, however, the USPS will tighten the match criteria, providing the ZIP+4 code only if the address you have is an exact match. So, if you have 507 Main St. and the USPS has 501 Main St., no ZIP+4 code will be returned. Miss enough matches and you could lose out on postal savings.
A change that will occur later, in 2008, will involve change-of-address requirements. The USPS asks that mailers update their files with NCOA data, since this cleansing tool helps produce less undeliverable-as-addressed mail and keeps down its processing costs. Currently the USPS merely recommends that mailers run their files past the NCOA database every six months. However, in 2008 the USPS will require that NCOA cleansing take place every three months for First Class mailers and recommend this hygiene schedule for all other mail classes.
These proposed changes will set new, forward-facing standards for postage assessment, so mailers and their vendors have no choice but to prepare for the changes and integrate them quickly into marketing plans, processes and budgets. But remember that your list/data providers, database marketing firms, printing companies and mailing services want to work with you to help mitigate the direct impact of the changes.
Ways to Start Cutting Your Postage Bill
So what’s a mailer to do? Here are eight tips:
1. Ensure the quality of your mailing database so you minimize undeliverable-as-addressed mail. Quality control in the data-entry department has never been more crucial, so consider appropriate accuracy incentives for your data-entry department. With addresses transferring among different data environments, the probability of incomplete information—such as missing apartment numbers—is high. Remember, addresses that do not conform to CASS software will not benefit from automation-based savings.
2. Remove duplicates from your mailing files. Merge/purge simply is a best practice.
3. Take a closer look at your creative process. Ask yourself and your colleagues if there are potential cost consequences to the proposed dimensions of an envelope or self-mailer. That perfect square may be eye-catching, that nifty triangle sure could win an award, but will the additional mail-processing costs be worth it? Certain direct mail campaigns will continue to gain value from an unusual dimension or mail-piece thickness. In those cases, go for it! But consider, too, whether it makes more sense to challenge your copywriters to come up with stronger teasers and headlines that lead to action. A powerful teaser may pack a punch, but it’s pretty easy on mail-processing equipment.
4. Target your mailings as never before. Your current subscribers, members and customers already have provided you with a way to mail in a more targeted fashion. Profiling and modeling your customers through demographics create a powerful tool. Measure your responses to glean data on the lists that have worked and the geographic areas that have responded.
With higher per-piece costs on the horizon, you have a strong incentive to take advantage of the numerous demographic criteria and data overlays that are available to you. The more narrowly you concentrate your list selections, the better you can shape a message in your direct mail that speaks directly and effectively to your audience, thus improving your response rates.
5. If you don’t do it already, run NCOA data against your housefile at least once every three months, as it soon will be either required or recommended by the USPS (as noted earlier). Given that one of every seven Americans changes his or her address in a given year—approximately 5 million quarterly, according to the USPS—this recommendation reflects the reality of keeping up with the relocation habits of American consumers. While this service attaches an up-front cost to your mailing budget, it converts over time into savings as your mailings hit their mark more regularly. There also are various proprietary change-of-address products available that can capture additional updated address data for those consumers who haven’t notified the USPS of a move.
6. When you do run the NCOA file, make sure you request a receipt of the address changes so that you can use them to update your files. Not every mailer remembers to do this, even though it is an important practice that ultimately helps you to qualify more mail pieces for lower processing rates.
7. If your customer file’s concentration includes areas outside of metropolitan areas, ask your vendor to run it against the LACS database. This service converts rural routes into street addresses, which inevitably will code against the new CASS changes.
8. If your file includes metropolitan areas, ask your vendor to perform an apartment append to secure better coding and deliverability.
Integrate these steps into every marketing plan, and what today may seem as hard to process as a jagged-edged envelope will result in better quality data, up-to-date lists, stronger advertising messages and precision-targeted selections that bring larger overall returns on your marketing dollar.
Steve Elias is director of client services, data analytics and processing at MKTG Services, a provider of lists, data solutions and analytics services based in Newtown, Pa. He can be reached at email@example.com or (917) 339-7159.
Editor’s Note: To help mailers determine how the new rates for flats/parcels will affect their mail costs, UPS Mail Innovations has developed a new rate calculator. Visit www.upsmi.com.