For high-volume production mailers, the impact of many U.S. Postal Service rate changes is often calculated in terms of millions of dollars. While fraught with challenges, however, the proposed 2007 rate case presents you with a unique opportunity to revisit your mail stream practices. And in this process, you can find new ways to improve profitability and build stronger customer relationships.
To be among the smart mailers who benefit from the proposed changes, you need to understand one important fact: the USPS is looking to align postal rates with the true cost of accurate, timely mail delivery. The proposal, therefore, includes shifts in the structure of postal rates and how they are calculated, with a greater emphasis on shape-based pricing. The end result: the rate paid for each mailpiece will more accurately reflect the expenses incurred to process and deliver that piece.
This means that if you produce mailpieces that are less costly for the USPS to process and deliver, you may spend less as well. And by taking an intelligent approach to cost reduction, you can make your mail stream more efficient and valuable in the process.
Paving the Way to Savings
Our team of experts have scrutinized the proposed changes and identified best practices that can potentially help you save hundreds of thousands of dollars in postage costs. At the heart of these best practices is what we call communication intelligence - an approach to mail stream management that leverages greater customer know-how, data-driven production techniques and stronger channel coordination.
Here, we outline seven practical ways you can apply communication intelligence to turn the proposed rate changes to your advantage.
1. ACS Automation: using OneCode to add value and cut costs
In an effort to reduce undeliverable-as-addressed mail, the USPS is making it less expensive for letter mailers to use its Address Change Service. The USPS proposes to reduce the cost of electronic ACS notification from 21. to six cents on First-Class letters.
Companies can automate this even further by switching to a more advanced barcode. The OneCode (four-state) barcode, a 31-digit, four-state barcode that carries a nine-digit unique identifier, is a new technology that can support multiple applications and services, including OneCode ACS. By implementing OneCode ACS, First-Class mailers would get the first two address scans free and pay only five cents per additional pass. To maximize savings, you can also correct many addresses prior to mailing by using an address correction tool that leverages the NCOA database.
2. Folding flats to letters for substantial savings
The proposed U.S. Postal Service rate changes include an increase for flats of close to 20% plenty of incentive for mail centers to reconfigure mailpieces for more cost-effective delivery.
By adding a single fold, mailpieces up to 3.5 ounces (approximately 22 pages) can be formatted to capture letter-mail rates and qualify for other special services and discounts, including OneCode ACS. A heavy-duty folder combined with an intelligent inserting system can transform documents to 6" x 9" letter size and add efficiencies, such as file-based processing, barcode technology as well as digital document management and routing.
What's more, today's print stream-engineering and document-composition tools provide for quick document format adjustments and can easily enable clear, well-organized design, customized presentation and relevant messaging, thereby more than compensating for the shift to letter-sized mail.
3. Presorting for savings and improved delivery
The USPS proposal includes new presort rules designed to reduce trays, bundles and mailhandling expense.
Mailers can expect their current software applications to be updated to accommodate these new rules. However, even if you have coding rates in the 96%+ range today, a new breed of technology tools may enable you to do better and a one percent lift can cut your costs by 0.28%. These new tools run files by multiple coders in a single pass. Exceptions are automatically passed from one coder to the next with results summarized in a single CASS report.
4. Householding: reducing mailings without reducing communication
Under the rate proposal, reduced costs for each additional ounce on First-Class mail would make "Householding" the practice of combining multiple communications into a single envelope a cost-effective way to handle growth in cross-sell and CRM communications.
Data-quality and data-integration tools bring customer definition into focus and provide the necessary print stream engineering to put householding to work. For example, by combining three communications into one two-ounce mailing, postage costs can be cut by more than 50%. Corresponding reductions in printing, paper, processing, collections and customer service can increase these savings even more.
5. Drop-shipment discounts and distributed output management
If approved, drop-shipment discounts will rise from 12% to nearly 15%. By utilizing multiple print facilities, you may be able to produce communications closer to their final destinations and capture more of these discounts. Distributed output solutions can take the place of more costly trucking by allowing you to digitally direct and manage print streams anywhere around the world.
Distributed output management can also drive up geographic density, resulting in better presort rates. And processing single applications at multiple sites helps ensure business continuity.
6. Reducing returned mail and its burdens
Companies today can waste hundreds of thousands of dollars producing mail that is never delivered. Estimates place hard costs alone at more than three dollars per piece. The U.S. Postal Service is also determined to reduce undeliverable-as-addressed (UAA) mail by 50% by 2010. This is likely to mean even stiffer penalties for those who don't cut back on returned mail.
By increasing your communications intelligence, you can reduce your return-mail volume. Real-time address-validation software captures, corrects and verifies addresses, reducing data-entry errors. And a closed-loop address management process that includes regular move updates and NCOA data makes it easier to improve your customer data quality.
7. Rising to new DPV standards
Another way the U.S. Postal Service hopes to reduce costs is to require more accurate addressing from mailers. DPV, or Delivery Point Validation, is part of its new proposal, and it will require a new level of precision.
Mailers who take no action could see coding rate drops of as much as three percent resulting in increased costs.
However, by following the six steps listed previously and adding an automated DPV tool to your mailing processes, you should be able to take these new Postal Service requirements in stride.
Communications Intelligence Will Give You an Edge
The proposed USPS rate changes pose some interesting challenges. However, they focus on aligning rates with costs, giving savvy mailers opportunities to potentially reduce costs and capture better rates.
To get ahead of the rate-case curve and improve your overall Postal Service customer communications strategies, you will want to leverage communications intelligence to make every customer contact more purposeful, every communication more accurate and efficient and every customer experience more effective.
Robert Pipe is Vice President, Tactical Marketing, for Pitney Bowes. For more information on rate change strategies, you can download "Acts of Intelligence," a 12-page white paper that includes more details on how you can save, at www.pbdmt.com. Or to speak with a Pitney Bowes sales representative, call 877-536-2736.