Recently, I was consulting with a couple of different clients who both found via our assessment they were spending too much money on postage. It was another one of those cases where a condition that was obvious to an outside party was completely invisible to the people working in the operations every day. The postage-rate disparities were immediately obvious to me when we did workflow and operational assessments.
In each of these cases, the businesses had outsourced their printing and mailing operations. That wasn't the reason for the excess expense. The service providers were not taking advantage. Rather, it was a case of companies falling into the habit of relinquishing responsibilities to their vendor partners. They had stopped paying close attention to the details. These companies had unknowingly contributed to higher costs when audit and oversight activities eventually ceased.
Full Rate Postage
One of these companies was paying single-piece rates to mail their monthly transactional documents. There were no machineable, automation, or presort postage discounts applied to their mailings at all. Their volume was relatively small so they might not have been able to achieve the mail density necessary to qualify for commercial discounts on their own. However one of the selling points outsource print/mail providers often pitch is the benefit of co-mingling mail from several of their customers to achieve higher mail density and deeper discounts for all. I would have expected to see some postage reductions, even if they were small.
It was clear that company managers hadn't challenged their outsource vendor about postage rates in quite some time. In fact, they could recollect only a vague memory of making an inquiry years ago and fuzzy details about the answer. Employee turnover had resulted in the transfer of responsibility for managing the outsource vendor relationship to individuals with little experience in document management or mail. They simply don't know the questions to ask. I have seen this happen before.
Once the issue was raised, the outsource service provider was able to suggest changes in mail piece design and bill cycle modifications that allowed the mail to qualify for discounted postage.
In an environment of frequently-changing postal rates, regulations, and services it is more important than ever to stay on top of your organization's postage spend. Whether this is accomplished with in-house resources or outside experts, the pennies saved on every piece of outgoing mail can add up to significant amounts of money over time.
Didn't know what they were paying
The second company also used an outsource service provider to handle printing and mailing tasks. An examination of invoices from the outsource vendor revealed an assessed postage rate that was not aligned with any of the prices published by the postal service. It seemed to be some sort of blended rate. There were discounts being applied, but no details on the invoice that indicated the calculations used by the vendor to come up with the price eventually paid by the company.
There's nothing wrong with an outsource provider charging their customers a blended postage rate - as long as the calculation used to arrive at that rate is clear. Customers should be able to apply a known formula to the counts and come up with the same postage amount shown on their vendor's invoices.
Given the nature of their business this company would have been expected to benefit from a fairly deep postage discount. Companies in their particular industry typically create high-density mailings and align their bill cycles geographically. In this case, presort qualification levels seemed to be lower than they should have been. Furthermore, since all the mail was processed as Full Service Intelligent Mail, they should have qualified for the Full Service discount. There was no indication the discount was being applied.
At our urging, the company asked their vendor for an explanation of how their postage rates were computed. Once again, no one currently employed at the company could tell us why they were paying the postage rates that had been appearing on their outsource vendor invoices for years.
Working with outsource vendors is a partnership
Print/mail service providers must of course benefit financially from the work they do to help their customers achieve postage discounts. These companies have made investments that allow them to create high-quality mail for their customers. The service providers frequently sort and co-mingle mail from multiple customers to achieve higher density and greater discounts. Customers of outsource print/mail vendors should not expect to always receive full value from the additional discounts made possible by the service provider. Sharing the discount is common.
The important lesson here is that transferring work from an in-house print and mail operation to an outsource provider does not absolve a company from responsibility. Even though someone else is doing the work, it is still necessary to perform regular audits and assessments of the services provided. Had these two companies been more engaged with their vendors they might have saved tens of thousands of dollars spent on excess postage over several years' time.
Mike Porter is an expert in Print and Mail operations and President of Print/Mail Consultants, an independent consulting firm that helps companies nationwide lower costs and integrate new technologies in their document production workflows. For more of his thoughts and ideas visit www.printmailconsultants.com and sign up for Practical Stuff - the free newsletter for document operations. Your questions on this topic are welcome. Send them to mporter@printmailconsultants.com. Follow @PMCmike on Twitter.
In each of these cases, the businesses had outsourced their printing and mailing operations. That wasn't the reason for the excess expense. The service providers were not taking advantage. Rather, it was a case of companies falling into the habit of relinquishing responsibilities to their vendor partners. They had stopped paying close attention to the details. These companies had unknowingly contributed to higher costs when audit and oversight activities eventually ceased.
Full Rate Postage
One of these companies was paying single-piece rates to mail their monthly transactional documents. There were no machineable, automation, or presort postage discounts applied to their mailings at all. Their volume was relatively small so they might not have been able to achieve the mail density necessary to qualify for commercial discounts on their own. However one of the selling points outsource print/mail providers often pitch is the benefit of co-mingling mail from several of their customers to achieve higher mail density and deeper discounts for all. I would have expected to see some postage reductions, even if they were small.
It was clear that company managers hadn't challenged their outsource vendor about postage rates in quite some time. In fact, they could recollect only a vague memory of making an inquiry years ago and fuzzy details about the answer. Employee turnover had resulted in the transfer of responsibility for managing the outsource vendor relationship to individuals with little experience in document management or mail. They simply don't know the questions to ask. I have seen this happen before.
Once the issue was raised, the outsource service provider was able to suggest changes in mail piece design and bill cycle modifications that allowed the mail to qualify for discounted postage.
In an environment of frequently-changing postal rates, regulations, and services it is more important than ever to stay on top of your organization's postage spend. Whether this is accomplished with in-house resources or outside experts, the pennies saved on every piece of outgoing mail can add up to significant amounts of money over time.
Didn't know what they were paying
The second company also used an outsource service provider to handle printing and mailing tasks. An examination of invoices from the outsource vendor revealed an assessed postage rate that was not aligned with any of the prices published by the postal service. It seemed to be some sort of blended rate. There were discounts being applied, but no details on the invoice that indicated the calculations used by the vendor to come up with the price eventually paid by the company.
There's nothing wrong with an outsource provider charging their customers a blended postage rate - as long as the calculation used to arrive at that rate is clear. Customers should be able to apply a known formula to the counts and come up with the same postage amount shown on their vendor's invoices.
Given the nature of their business this company would have been expected to benefit from a fairly deep postage discount. Companies in their particular industry typically create high-density mailings and align their bill cycles geographically. In this case, presort qualification levels seemed to be lower than they should have been. Furthermore, since all the mail was processed as Full Service Intelligent Mail, they should have qualified for the Full Service discount. There was no indication the discount was being applied.
At our urging, the company asked their vendor for an explanation of how their postage rates were computed. Once again, no one currently employed at the company could tell us why they were paying the postage rates that had been appearing on their outsource vendor invoices for years.
Working with outsource vendors is a partnership
Print/mail service providers must of course benefit financially from the work they do to help their customers achieve postage discounts. These companies have made investments that allow them to create high-quality mail for their customers. The service providers frequently sort and co-mingle mail from multiple customers to achieve higher density and greater discounts. Customers of outsource print/mail vendors should not expect to always receive full value from the additional discounts made possible by the service provider. Sharing the discount is common.
The important lesson here is that transferring work from an in-house print and mail operation to an outsource provider does not absolve a company from responsibility. Even though someone else is doing the work, it is still necessary to perform regular audits and assessments of the services provided. Had these two companies been more engaged with their vendors they might have saved tens of thousands of dollars spent on excess postage over several years' time.
Mike Porter is an expert in Print and Mail operations and President of Print/Mail Consultants, an independent consulting firm that helps companies nationwide lower costs and integrate new technologies in their document production workflows. For more of his thoughts and ideas visit www.printmailconsultants.com and sign up for Practical Stuff - the free newsletter for document operations. Your questions on this topic are welcome. Send them to mporter@printmailconsultants.com. Follow @PMCmike on Twitter.
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