Impact Your Bottom Line
How to Assess Postal Costs and Mailing Logistics.
Mailers have been implementing a variety of methods to reduce their customer-acquisition costs—but still there is one major component with potential to improve cost savings: postage.
While mailers actively work to reduce their design, data and manufacturing costs, they typically are not concentrating on reducing their total postal costs. Postage, which is one of the largest cost components of a direct mail program, can have a significant impact on the bottom line. By realizing the contribution that a fully developed mail and logistics plan can bring to a campaign, mailers can better evaluate significant cost-saving proposals from their vendors and manufacturers, as well as gain quicker, more reliable in-home dates for their time-sensitive promotions.
Companies that manufacture direct mail often are in the best position to review their clients' mailing requirements and devise alternative plans and scenarios that can provide mailers with postal cost savings. Through experience, these companies have learned the intricate framework of U.S. Postal Service (USPS) requirements and rate classifications, and may have a staff dedicated to postal issues and regulations. This expertise often is included as a component of the services a manufacturer provides to its client; and these services should be recognized for their potential to provide a significant beneficial impact on the total budget for a direct mail project.
Postal costs are an increasingly significant element of total costs. According to The Direct Marketing Association (DMA), approximately 33 percent of the total in-home cost is physical production. An additional 38 percent of the complete cost typically is attributed to list acquisition costs, creative and artwork, while postage accounts for a whopping 28 percent or more of the total cost of a typical direct mailing.
There's an ongoing, concerted effort by mailers to reduce manufacturing and other front-end costs, so it's clear that any significant future reductions in the total cost of a delivered piece can be achieved only through a reduction in postal costs. Some key areas to focus on for cost reduction opportunities include the following.