Over the last few years, the cost of postage has been gradually rising and is expected to continue to go up. This is due mainly to the fact that the volume of First-Class mail has been decreasing steadily since 2000 as a result of the rise of new electronic delivery methods. Postage is, by far, the highest cost in producing a mailpiece. While assessing the efficiency of print and mail operations, IMERGE Consulting found that postage represents about 70% of utilities' total bill production cost. The average cost of producing a bill is about 40. per mailpiece, with postage accounting for about 29.. The other major production cost categories are: paper, labor, insertion and printing. These costs are solely for print and mail production and do not include all the IT costs for the creation and maintenance of the print streams.
Companies often overlook many process improvement and cost-saving opportunities that can possibly offset, or even exceed this postage hike. Here are some of the areas that are likely to bring you great rewards:
Improving the Quality of Your Data
Data quality is often an issue for many companies, and it is not uncommon to have up to five percent of addresses with some type of a problem. Problems can vary from spelling mistakes in street names, improper abbreviations, extraneous characters such as hyphens and even improper sequences of the address lines. While most of these mailpieces are still deliverable to their recipients, many of these incorrect addresses fail to be recognized by the Coding Accuracy Support System (CASS) software that is used to validate, correct and standardize the addresses. As a result, the mailpiece may not qualify for the automated mail discount and will be mailed out at the maximum First-Class postage rate of 39. instead of 30.. If the mailpiece cannot be delivered, the cost is much higher (usually 70.) and may require a manual correction of the
customer data.
Standardizing Forms and Mailing Supplies
Many companies print their invoices and letters in simplex on pre-printed forms. The front page is reserved for the variable data, and the back of the page details the terms and conditions for the invoice, the notice or other type of letter. Using many pre-printed forms comes with a host of issues. It complicates and increases the size of the inventory and makes changes to the pre-printed back of the document a longer and more complicated process that generally results in wastes due to obsolescence. Many forms also complicate the production process since operators need to change the · paper on the printer often, release different print files and switch from rolls of paper boxes that are more convenient for smaller runs. Also, since prices of pre-printed forms are largely determined by the volume ordered, the price for the low-volume forms may be two to three times the price of the larger volume forms, preventing the company from taking advantage of high-volume discounts.
With regulations requiring an increasing amount of information on the invoices, the document becomes packed with information, less pleasant to the eye and increasingly difficult to read and understand. In many situations, the invoice data does not fit on a single page, and the pre-printed back on the second or third page takes up valuable space that could be used for variable data. As a result, more multi-page invoices may exceed the one-ounce weight limit causing the company to pay an additional 23. of postage per mailpiece.
The standardization of forms and supplies is an important step in achieving higher efficiencies. In the most optimal situation, the company uses one single form for all the bills and letters, one type of mailing envelope and one type of return envelope. By doing so, the company minimizes the paper and supply costs, maximizes postage discounts, minimizes inventory costs, eliminates all the paper wastes due to obsolescence and streamlines production. In addition, a simple open form provides unparalleled flexibility for the design. Note: This level of efficiency requires duplex printing. While duplex printing may require additional equipment, the costs are usually rapidly offset by all the other benefits of the solution.
Maximizing the Postage Discounts
The U.S. Postal Service offers significant postage discounts for mass mailers that properly prepare and presort their mail, eliminating the pre-sort steps in their facilities. Mass mailers get a double advantage: they get a significant postage discount and also ensure a faster delivery to their customers. Companies like utilities are especially well positioned to take advantage of this opportunity because of the naturally high concentration of their mailings. Meter readings are typically performed by towns, allowing billing to easily reach the critical volumes per ZIP Code needed to qualify for the highest discount rates.
Figure 2 shows different average postage rates paid by different utilities. Company 3 has standardized its mailing supplies and has streamlined its processes, while company 4 has not. The other companies are at various levels of automation and optimization. The optimization process is paying off for company 3, which has gained more than two cents per mailpiece over company 4, saving the company $500,000 a year in postage alone.
Is It Time to Review Your Communication Strategy?
With changing regulations, new services to promote and more competition, companies have an increasing need to better communicate with their customers. Since paper is still the preferred mode of customer communication, the transactional document has become a valuable communication tool for marketing, safety and regulatory information. Unfortunately, many documents were designed to just accommodate the transactional data and do not offer
enough space for additional information. A document redesign is required.
A clearer and better designed transactional document may speed up collection, reduce customer service calls and increase customer satisfaction. It may also promote new services, encourage customers to sign up for direct debit or incite customers to use the Web for viewing and paying their invoices. If you are up to the task of redesigning documents, it would be a unique opportunity to define new document presentation standards, standardize the supplies and improve the complete document production process. Also, since the Web is becoming an increasingly important communication vehicle, it would be a good time to design all documents for mail and electronic delivery and take advantage of the electronic channels. The results will not only offset the recent postal rate increase but thwart the subsequent ones while improving customer communication.
Pierre Heymann is the Vice President of Sales of Sefas Innovation, a leader in collaborative document composition, print stream enhancement, and Automated Document Factory solutions. For more information, contact Heymann at 781-425-5060 x213, pheymann@sefas.com or visit www.sefas.com.