As we head into May, business mailers will be impacted by yet another increase in postal costs. In a time when business mailers are trying to lower operating costs while still meeting consumer demand, there are continual challenges with annual print mail rate increases. Even though there has been some relief with the Postal Reform, which mandates the USPS replace the previous and somewhat erratic system of setting rates for business mailers with something more predictable, high volume business mailers are still facing higher and unexpected postage costs.
Based on the new law enacted in December 2006, the CPI Rate Cap is 2.9 percent. For all classes of mail the average rate increase is not supposed to exceed this percentage. On May 12 of this year, the single piece stamp rate went from to 41 to 42 cents, setting prices up 2.44 percent, which is .46 percent under the CPI Cap. However, for business mailers who provide the largest volume of automated barcoded three and five digit mail, the rates will increase by 3.59 and 3.85 percentwhich is .69 percent and .95 percent morethan the CPI. This turns a "minor" rate increase to a major one for business mailers.
Refresher tips for driving down postage costs
The fact is that for companies mailing high volumes of bills the financial impact will be significant, making it critical to explore and use every avenue possible to offset these costs. Here are some immediate actions a business can take, if you haven't already done so:
· Follow USPS pre-sort rules: Properly preparing and pre-sorting mail will earn significant USPS discounts. Leverage these discounts aggressively by making sure mail is segmented to reach the critical volumes per zip code needed to qualify for the highest discount rates. To qualify for these rates you must print a delivery point barcode on each mail piece and commingle the mail for concentrated volume to geographical areas.
· Verify addresses: Nearly one-fourth of all mail that goes through the USPS contains some simple error such as misspelled street names and improper abbreviations, which can result in significant postage cost increases. If a mail piece cannot be delivered (e.g., "undeliverable-as-addressed" or UAA), the cost to correct the piece can be up to 70 cents. A number of tools in the marketplace are designed to identify undeliverable addresses and link old addresses to new move addresses, including Coding Accuracy Support System (CASS) software to validate, correct, and standardize addresses. If CASS does not recognize a mail piece, it will not qualify for presort discounts and will instead be mailed at full rate (42 cents instead of the approximate automated discount rate of 33 cents).
- Then verify those addresses again: According to the USPS, there are 145 million confirmed mail delivery points in the United States today. "Cycle L", which began on August 1, 2007, requires mailing lists to be run through DPV (Delivery Point Verification) processing. DPV takes the CASS system one step further by comparing your mailing list to the USPS's own list of known addresses and verifying whether or not a CASS-certified Zip+4 address is one of these confirmed delivery points. For example, a Zip+4 Code might cover an area with addresses from 100 Main Street to 300 Main Street. Typically, addresses would run 100 Main Street, 102 Main Street, 104 Main Street, and so on. However, if 104 Main Street is an empty lot, this is not a valid delivery point and DPV would mark it "N" for "invalid"and a First-Class rate applies. DPV confirms all primary number addresses, so addresses missing a secondary numberlike a suite or apartment numberremain acceptable, along with addresses that have a secondary number that hasn't yet been confirmed by the USPS. While DPV can't correct an invalid address, by identifying these addresses you can eliminate them.
· Keep your mailings letter-size: Automation is key for achieving postal savings. While First Class Mail letters containing odd-shaped items are mailable, they will be charged the "non-machinable surcharge"$0.055 for pieces mailed at presorted and automation ratesin addition to postage if they weigh one ounce or less. What's more, the non-machinable surcharge will also apply to flat and parcel mail weighing one ounce or less. Converting flat mail to folded will help you to save money.
· Continue to explore electronic options: Electronic bill presentment is another way to sidestep the postal rate increases. Though reports by the USPS show that more than 70 percent of people still prefer to receive their statements through the mail, converting just 10 to 20 percent of existing customers to electronic bill receipt corresponds to a significant cost savings and is worth the effort.
An opportunity to improve
Over the last few years, the cost of postage has been rising gradually and this trend shows no sign of slowing. While no one likes to see a rate increase at any time, the silver lining may be an increased focus on print/mail production within your company and better efficiencies within the USPS. By keeping current with changing regulations and available technology that supports them, business mailers can take advantage of savings that go straight to the bottom line.
Harry Stephens is President/CEO, and founder of DATAMATX, one of the nation's largest privately held, full-service providers of printed and electronic billing solutions. As an advocate for business mailers across the country, Stephens is actively involved in several postal trade associations. He serves on the Executive Board of the Greater Atlanta Postal Customer Council, Major Mailers Association (MMA), PCC Advisory Committee (PCCAC), and National Postal Policy Council (NPPC). He is also President of The Imaging Network Group (INg), an association for electronic service bureaus. As an expert on high-volume print and mail, Stephens has frequently been asked to speak to various USPS groups, including the Board of Governors, about postal reform and other issues affecting business mailers. For more information about DATAMATX, visit www.datamatx.com.
