How productive is your mailing operation compared to your peers? Do you track your monthly piece volume? Are printing firms who now offer mailing services having an impact on the
mailing industry?
Answers to the above questions, as well as many others, can be found in the recently released 2008-2009 Mailing Services Pricing Study. This 70-page report provides pricing data for more than 35 popular operations offerings in the mailing and "letter-shop" industry. (You can read more about this study as well as purchase it by visiting Mailing Systems Technology at www.MailingSystemsTechnology.com.)
In addition to providing general data and trends related to the mailing industry (See Table 1), the study, as it has done since 2002 when it was first published, provides basic setup charges, minimum charges and prices per thousand for basic mailing services such as CASS and NCOALINK processing, de-duping, letter-merging, mail matching, application of both pressure sensitive and
In most cases, pricing information is broken down into four common quantity ranges in order to reflect the typical discounting practices of mailers when dealing with larger and larger quantities. The quantity brackets used in the survey include breakouts for the following: 1-9M, 10-24M, 25-50M and 50M and greater. Information is also provided as to the percentage of mailers who apply either minimum charges or setup fees for each of the services they provide.
The 2008-2009 Mailing Services Pricing Study also features a popular section titled "Market Baskets," which includes a variety of comparisons of both pricing and financial ratios broken down based upon geographic regions, sales per employee, population density and sales volume. As a result, a smaller company with sales in the $750,000 to $1.5 million range (excluding postage) can compare their overall productivity and pricing practices against similar firms.
One of the more interesting "market basket" comparisons compares the performance and pricing practices of companies that provide both printing and mailing services against those firms who provide mailing services only. While the latter (larger, mailing only firms) are typically located in larger facilities, their overall sales are lower as is their sales per employee.
Study Compares Sales Per Employee
Sales per employee (SPE) is a key indicator and tool for measuring productivity in many industries, and the differences between the two market baskets noted above is quite revealing. While the average SPE for all participants in our survey was a respectable $115,928, firms offering both printing and mailing services reported an average SPE of $119,584 and a median SPE of $124,000.
In contrast, firms who offer mailing services only report an average SPE of only $87,544 and a median SPE of $89,272. It is important to note that SPE has nothing to do with wages or profitability. It is, however, a reliable indicator of productivity since it is calculated by dividing total sales (excluding postage) by the total number of equivalent, full-time employees, including the owner.
Calculating your own company's SPE can be quite revealing and disturbing depending upon what SPE you arrive at. Rationalizations aside, when an owner realizes that he requires almost 11.5 full-time employees to produce $1 million in sales, and yet a similar firm across town can produce that same $1 million in sales with three less employees (8.36), it ought be cause for alarm as well as a call for action. Unfortunately, too many owners are oblivious to their low SPEs and consequently settle for lower productivity and ultimately lower profits as well.
Competition Increasing Significantly
It has been clear to us during the six years in which we have conducted this study that there has been a dramatic increase in the number of printing firms who see mailing services as a new profit center for their operations. While these "new guys on the block" may not pose much of a threat for mailing firms processing a million or more pieces per month, it does not bode well for smaller mailing companies who process 200,000 to 600,000 pieces per month. This is especially true for those mailing firms specializing in mailings in the 4,000-6,000 range.
Two interesting statistics tend to support these conclusions. When we examined the estimated monthly piece volume and compared that to the estimated average size of a typical mailing, it is quite clear that there are a significant number of new companies, mostly printers, who are "dipping their feet in the water" by slowly and methodically starting to offer mailing services.
Although we failed to ask this question in 2002, subsequent surveys asked participants to estimate the average number of pieces processed and mailed in a typical mailing. Interestingly enough, the results in both 2004 and 2008 were amazingly close:
Average Mailing Size 2004 - 9,925 2008 - 9,595
Median Mailing Size 2004 - 5,000 2008 - 5,000
More Printers Offering Mailing Services
As you can see from Table 1, while the "average" monthly piece count has remained fairly steady in the last six years growing from 771,235 pieces in 2001 to 826,328 in 2007, the "median" (the middle number in an array of numbers) monthly piece count has dropped from 300,000 in 2001 to 150,000 in 2007. What this appears to indicate is that there are a growing number of new companies (mostly printing firms) who are entering the mailing industry, and with each new entry, they are nibbling away at the monthly mailing volume previously produced by the more traditional mailing or letter-shop firms.
Like it or not, in many cases at least, printers have a distinct advantage of being "upstream" in terms of a mailing project because they are typically involved early on in the design and then printing of a brochure, postcard or envelope that is clearly intended to become a part of a large mailing in the coming days or weeks. On the other hand, mailers are often approached at the last moment by a customer who suddenly unloads four cartons of material with an urgent plea that the mailing be processed immediately if not sooner!
Is the opposite occurring as well? Are today's mailing firms beginning to enter the printing arena and offer more traditional offset printing services such as graphic design as well as on-site or brokered offset printing services? We think the answer is "yes," but we also think mailers are more reluctant to enter the offset arena than printers are in trying their hand at mailing services.
John Stewart is President of Q.P. Consulting, Inc. Melbourne,
