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.
Cost-reduction activities can be as simple as resizing the mail piece, so it mails at the letter rate rather than the flat rate. This change alone can provide between 3-percent and 37-percent savings in postal costs (depending on sortation levels). And though a square piece may attract additional interest by the recipient, any additional lift in response must be weighed against the postal increase for mailing a non-standard letter.
If you mail at the standard rate, your direct mail piece can weigh as much as 3 ounces before excess weight penalties are assessed. At a First-Class rate, excess weight penalties are applied when mail pieces exceed an ounce.
Quantity/Volume and Commingling
If you're mailing multiple graphic versions, or multiple formats as tests, it may be more cost-effective to commingle your mail. Not only will all the cells be inserted into the mail stream at the same time, but commingling these separate versions or cells can only result in a more economical mailing plan than if they were mailed separately.
Of course, commingling your cells allows for a more effective planning process, since you're not dependent on other mailers' programs being ready to match your schedule. Naturally, a mailer with a larger volume of mail entering the USPS system typically will qualify for greater discounts, simply because the chances are greater that the sortation levels will be finer.
Additional savings are possible through the commingling of mail from multiple clients into a single mail stream. The postal savings from the potential for greater discounts (as a result of higher sortation levels) typically earn participating mailers a significant reduction in their postal expenses. Through a review of the mailer's delivery requirements, a mailing services provider can determine if a different sort routine is required to facilitate the delivery process.
For example, the mailing data could be sorted so the pieces destined for farther delivery points are produced first in the process, thereby accommodating the required transit time. The mailing data also can be analyzed to determine if it would be more economical for the mail to be delivered further within the USPS system and closer to its final destination. Through relationships with freight consolidators, the manufacturer or mailing services provider can make this option even more attractive with lower transportation costs.
A traditional lettershop may not have the capability to offer such a commingling service. If it does, the lettershop is faced with the potential dilemma of a late receipt of materials with an immovable deadline. Such a situation provides less than ideal conditions for commingling mail from multiple mailers, because the data processing that's required in advance is based on a common mailing date for all of the participating mailers.
No mailer would intentionally discard a portion of his or her campaign, but this is the ultimate result if the lists are not current. By passing the lists through the USPS National Change of Address (NCOA) file, mailers can ensure that the addresses on their lists are relatively current. By further processing their lists against the Delivery Sequence File (DSF), mailers can be reasonably certain their mailings will reach the correct addresses.
Many people have received multiple mailings from the same sender—sometimes with different rates or offers. By effectively cleaning out duplicates you'll save production costs, reduce delivery time and save face with your customers.
Other benefits can be gained by improving planning and control. Today's integrated direct marketing campaigns rely on the synchronization of many individual factors and components to present a uniform and timely appeal to targeted consumers. Marketers rely on the coordinated timing of a mass media/television/radio campaign with a targeted telemarketing campaign and a direct mail approach.
The timing of these events is critical to gain and maintain any significant marketplace awareness. In-home dates are becoming a key milepost in direct mail campaigns. To allow for the coordination of other elements in their promotional campaigns, mailers must evaluate their suppliers to ensure in-home dates can be met while keeping postal costs to an absolute minimum.
While the actual printing costs are, and will remain, a factor in the selection of vendors, more mailers are moving toward the realization that a critical factor for evaluation is the complete cost of the delivered piece.
By selecting a partner who can help assess these costs at the forefront, direct marketers can achieve a great deal of savings in their a campaigns.
Ted Gaillard is senior vice president of sales, Vertis Direct Marketing Services. Vertis is a Baltimore-based global integrated marketing and advertising solutions company that combines advertising, direct marketing, media imaging and progressive technology. Gaillard can be reached at (704) 892-7316 or email@example.com. To learn more about Vertis, visit www.vertisinc.com.
How Big Can it Be?
The U.S. Postal Service maintains standards for the size and shape of mailings, and charges postal fees based on how much handling the mail requires for processing. This chart outlines the boundaries for the three most popular types of direct mail: cards, letters and flats.
To qualify for First-Class mail rates, your postcard must be:
• At least 31/2˝ high x 5˝ long x .007˝ thick.
• No more than 41⁄4˝ high x 6˝ long x .016˝ thick.
• Cards larger than 61⁄8˝ high x 111⁄2˝ long x 1⁄4˝ thick are charged at the flat (non-letter) postage rate.
Letter-size mail makes up the largest percentage of direct mail. Regardless of whether you send your letter-size mailing First Class or Standard, it must fit the following dimension requirements:
• At least 31⁄2˝ high x 5˝ long x .007˝ thick.
• No more than 6 1⁄8˝ high x 111⁄2˝ long x 1⁄4˝ thick.
Flats (Non-letter mail)
This category of mail is the Postal Service's catch-all for just about any non-letter and non-card mailings—excluding parcels. The following characteristics define a flat mailing:
• Has one dimension that is greater than 61⁄8˝ high OR 111⁄2 ˝ long OR 1⁄4˝ thick.
• Is no more than 12˝ high x 15˝ long x 3⁄4˝ thick.
• Caution: The more you stuff into a flat-size mailing, the more it weighs. For flats exceeding the limit of 3.3 ounces, mailers pay the single piece rate plus a pound rate.