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Taking advantage of direct mail postage savings

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With the U.S. Postal Service facing an estimated cumulative shortfall of $238 billion by 2020, it is seeking approval for an overall price increase of about 5.6% starting in January 2011. Add to that tight corporate budgets and it's easy to understand why marketers are intensely focused on looking for flexible solutions that meet their direct-mail delivery time frames yet stay within the budget.

Too frequently, however, the focus on saving money is on how the piece is produced while savings that can result from the right postal solutions are overlooked. Production oversight is important for saving a few pennies per thousand pieces, but there are many mailing options that offer the opportunity for more significant savings. It takes understanding the options and when to use them. Let's take a look:

• Destination entry. The USPS offers postage discounts for standard-class mail to those that deliver their mail to its large automated sorting facilities. But for this option to make sense in most cases, the discount needs to exceed the freight cost by a large enough amount so that the administrative costs are worth the difference. This method is best for a large mailing or one with a very dense geographic coverage.

The highest discounts are available for those that can ship their mail to a Sectional Center Facility (SCF), which is a processing and distribution center for post offices in a designated geographical area. If it doesn't make economic sense to use an SCF, then shipping to a USPS Bulk Mail Center (BMC) or utilizing co-palletization might be the best option. For some mailings, a combination of these options works best.

• Co-palletization. A service provider authorized by the USPS to offer co-palletization services can combine trays from multiple mailings together on the same skid, qualifying for SCF postal discounts. Each mailing is presorted and produced independently but may be merged onto one pallet, maximizing collective postal discounts. For midsize mailings, co-palletization often is the best option and is frequently complementary to BMC drops. If freight costs are outweighing the savings of BMC/SCF, co-palletization should be considered.

• Commingling. For mailings that have multiple letter shop versions, or small quantities of about 20,000 to 30,000 pieces that are delivered to a widely dispersed geography, commingling can maximize postal rate savings for first- and standard-class mail. A lower fixed postage rate can be gained by combining components with other mailings than what would be achieved by mailing components separately.

However, for some small mailings, commingling may not be the best option. For example, with commingling it is more difficult to control actual arrival dates. Keep in mind, too, that commingling is often offered because a service provider has invested in expensive equipment and wants to use it.

There are many complex variables when considering all the postal options available today. When planning a campaign, consider sending your service provider an exact data file that is scrubbed of confidential information, leaving only the address information—a so-called “dead file.” In this way, any service provider expert at postal optimization can consider all the campaign's variables, determine the best postal fit for the job and provide an accurate bid. A confidentiality agreement can be signed too, if desired, which allows you to securely compare providers.

It is also important to know if a mailer has a system for real-time tracking and reporting, as well as access to the Postal Service's PostalOne information management system for more time-efficient and cost-effective campaigns.

Finding the right postal solution to best fit the requirements of a direct-mail campaign, at the best rate, lowest freight cost and fastest delivery might take a little homework, but the savings gained for marketers looking to save their companies money is well worth the time.

David Henkel is president of direct-mail printing and production company Johnson and Quin (www.j-quin.com). He can be reached at dhenkel@j-quin.com.

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