Reevaluating your mail processing and procedures has never been more important than now, in the face of the latest postal increase that just became a tough reality and amid industry speculation that without necessary postal reform, annual rate increases could become the norm. So there's no time like the present to be thinking about ways to save money for your customers and for yourself.
The ever-growing volumes of direct mail prove this method of targeted messaging still appeals to marketers nationwide. And why not? Despite the growth of e-mail marketing (beaten back somewhat by a panoply of tough regulations), a full two-thirds of all cost-effective printed pieces are eventually mailed, making print-to-mail an attractive, high-value paradigm. To maintain that value, however, mailers and their clients must grab every available postal discount.
With that in mind, consider this suggestion: if you can't beat them "them" meaning the Postal Service join them. Learning to fully embrace postal rules and regulations opens the door to postal economies even the savviest mailers may have overlooked.
The Changing Landscape
Ever since the workshare days of nearly 20 years ago, the USPS has sought more efficient and cost-effective ways to process and transport the mail. It began with the Multi Line Optical Character Readers run by traditional presort bureaus that allowed business mailers to post mail at one rate and capture the difference in postage often anywhere from a penny to three cents per piece.
The USPS eventually caught on, of course. The massive classification reform of 1996 revamped the postal model; suddenly, mail producers could control their own output, using computers to create address-block barcodes and net greater discounts. This put presort bureaus on the defensive because of the greater savings opportunities available for large mailers to use software and submit their own mailings.
It was a new age of barcoded automation mail, but still there was, and is, money left on the table. You see, despite efficiency-increasing efforts, the Postal Service can only improve so much in the face of an inescapable business reality. In this field, material has to move from one point to another. The inherent value of the USPS paradigm door-to-door service, six days a week comes with significant overhead costs. According to recent information, every single-penny increase at the gas pump results in an $8 million increase each year for the Postal Service. Transporting mail over long distances is still the Postal Service's single unbeatable asset, and its biggest Achilles heel.
But what if mailers could be convinced to take on some of the transportation chores themselves? Maybe another discount could do the trick
The Value of Drop Shipping
Most professional mailers prepare their jobs to the best of their abilities, but still drop them at the closest possible postal facility bypassing potential additional savings from the Postal Service, which provides substantial discounts to those willing and able to share in that work. Fortunately, the USPS has continued to offer for Standard mail the same deep discounts for downstream penetration of mail into the postal system, often referred to as drop shipping.
Companies taking full advantage of drop shipping bypass their local post offices and instead transport their jobs to destination entry points: a bulk mail center (BMC), for example, or a sectional center facility (SCF). If your job qualifies, USPS is more than happy to make that trip worth your while.
Unfortunately, mailers don't take advantage of these discounts for both good and bad reasons. One that comes up over and over is clearly the hassle factor. For instance, "apples-and-oranges" quotes, secured piecemeal from multiple carriers, foster uncertainty about wading through the fine print to find the best prices. Also, misconceptions abound drop shipping:
1. You must be a plant load verified mailing facility.
2. You need to achieve a specific weight.
3. It is difficult to verify shipment details, control in-house delivery dates, manage the paperwork for customers and verify shipping details and 8125 Forms.
These popular untruths have led to a valuable savings method being overwhelmingly ignored by many mailers. Worst of all, working with logistics or transportation companies in this area (not to mention the USPS itself) has been unnecessarily complicated in the past. This has changed in recent years with the launching of integrated, user-friendly logistics companies that take the guesswork out of drop shipping.
Drop Ship Benefits Abound
Consider drop shipping's win-win advantages. By eliminating steps in the handling of mail and dropping your mail closer to the destination, you reduce not only the Postal Service transportation costs but also the labor and overhead needed to support that mail transit. (The savings depend on the class and destination entry unit for which the mail is inserted into the postal system $21 per thousand pieces for BMC drops; $26 per thousand for SCFs.)
In addition to the obvious financial benefits, there are more subtle advantages. Less USPS handling means mail gets to its destination faster and usually in better condition. The mail processor also has greater control, resulting in more predictable delivery standards. On average, every USPS facility bypassed reduces postal processing by as much as 50% and shaves anywhere from three to 72 hours off ultimate delivery times.
Mailings promoting special offers tied to in-home delivery dates can be segmented geographically, for better timed delivery control and more effective communications. (Follow-up efforts can be better orchestrated, too.) Used in conjunction with USPS PLANET barcode tracking, destination-entry drop shipping can significantly fine-tune a mailing, improving profitability, efficiency, tracking and results all easier than you might imagine.
Destination entry drop shipping typically generates the greatest potential savings on shipments that have low individual-piece weights. But any mailing especially those with critical in-home dates can still benefit greatly. In fact, in the past, many typical LTL-type mailings were often frowned upon by carriers as problematic, or priced accordingly. But today, solutions exist for online "one-stop" LTL logistics, which allow more mailers to take advantage of savings traditionally reserved for the plant load sites and larger mailers.
Sticking Together
With every rate case bringing inevitable postal increases, mailers and their service vendors have had to find new and innovative ways to survive and flourish. Fortunately, the Postal Service continues to work on efficiency-based discounts, such as those found in automation solutions, presort software and work sharing programs that encourage the reduction of USPS mail handling.
For our part as mailers, we must constantly reevaluate the full spectrum of services available and recognize that the standard benchmarks for postal automation are no longer enough to offset our costs and those of the Postal Service. Many mailers today achieve savings through drop shipping and other "new" techniques, but this is a trend that must grow to include everyone. We must take a hard look at the money on the table and consider every avenue available for savings; otherwise, mail will lose its cost-effective edge and even bulk mail volumes could fall. That, of course, would be bad news for the entire industry.
Fortunately, we have a huge "ally" in the USPS. All we have to do is work with the Postal Service, not against it.
Ted D. Seward is Vice President of
BCC Software Inc. For more information, please e-mail ted@bccsoftware.com.
