New View
Nothing is forever, and politicians are using this sentiment to their advantage. As degrees of economic uncertainty and political turmoil continue to fluctuate, the success of candidates vying for control of the White House hinges on platforms advocating change. Currently, direct mail is a key industry particularly affected by change—with no immediate end in sight.
In accordance with The Postal Accountability and Enhancement Act, the costs of mailing services will be adjusted each May. The price for a one-ounce First-Class stamp will increase from $0.41 to $0.42 on May 12, for instance. Furthermore, within the last year, practices and products such as shape-based pricing and Intelligent Mail barcodes have penetrated the mailing circuits. At first glance, these initiatives may seem cumbersome; however, companies willing to stay knowledgeable are helping both themselves and their clients to obtain a higher ROI.
Birmingham, Alabama-based Mail Enterprises is one company faring well in its quest to assist targeted industries—including nonprofits and publishing companies—with mailer campaigns. “Our clients are still mailing, just doing it smarter,” observed Scott Swedenburg, partner. “The postage increases, environmental concerns and consumer demand have all been drivers for us to help clients become more targeted in their direct marketing efforts.”
Headquartered in Stamford, Conn., Pitney Bowes is finding similar success. Clint Dally, vice president of product line management, document messaging technologies, said, “Postal changes typically drive operational changes, and we provide a consultative service for our customers.” He noted that customers are reevaluating their mailings and, in turn, developing ROI vehicles. If mailing less isn’t an option for marketing strategies, companies will have to change their operational cost structures—consequently opening the door for businesses such as Pitney Bowes, he said.
For example, last year’s introduction of shape-based pricing came with consequences for customers processing flats. In simple terms, the act of processing flats is often “laborious and expensive” for the United States Postal Service (USPS), Dally explained. Therefore, by implementing a system to penalize flats, the USPS aimed to optimize its profitability. In assisting his customers, Dally initially questioned their decision to process flats, only to learn that the reason could be attributed to routine.
“We developed a new heavy-duty folder input, allow[ing] us to take our customers’ flats—within 16 pages—and fold them in half. ... This saved them postage dollars because the rates for a second ounce for a letter decreased with the new shape-based structure,” he recalled. “We were able to conduct an analysis of the customer mailflow, and learn what they were processing from the flat side of the house. Then, we could either upgrade their equipment or sell them a new piece of equipment that changed from a letter—a #10 envelope or a 6x9" envelope—to a flat—a 9x12" envelope or a 10x13" envelope. Some customers paid for their new equipment in under a year due to the incremental discounts they received for the new letter-based mail second-ounce discount.”
Another challenge that can lower ROIs, if left unattended, is UAA (undeliverable as addressed) mail. At Mail Enterprises, much of Swedenburg’s business involves direct mail fundraising. After evaluating the direct fundraising package, the first step in the process involves data hygiene and segmentation. By removing bad addresses, clients receive an average of 9 percent costs savings.
Of course, additional savings can be obtained as Swedenburg relates. “By using data modeling, we were better able to target a client’s best prospects, allowing us to mail 20 percent less than [the client] had mailed with a previous vendor. And, [the mailing resulted] in more new customers than before,” he stated.
UAA has been a major issue from Dally’s perspective, as well. “If [customers] are doing a solicitation or fundraiser for a nonprofit, and 5 [percent] or 10 percent of their mail doesn’t [reach] the target or recipient because of a bad address, the viability of that mailing is lost,” he stressed. In addition to running address-cleansing software, Dally recommended clients use sorting products. This type of equipment works particularly well for larger outbound mailings.
In its attempt to reduce the amount of UAAs, the USPS has mandated the Intelligent Mail barcode (IMB), formerly known as the 4-State Customer barcode. As of January 2009, IMB will replace Postnet and PLANET barcodes, and all mailers must utilize this new technology to receive automation discounts. The primary objective of the IMB is to sort and track letters and flats—a feat accomplished with symbology storing up to 31 digits of information in 65 bars of four varying lengths and positions.
Despite the many positives that can result from the new barcode, the IMB may introduce headaches for many during conversion. “If customer[s] put a Postnet on that mailcode today through their hardware or software, they’re going to need to change that. So, this is a very, very, very big deal for the mailers, and everyone is scrambling trying to figure out exactly how they’re going to do that,” Dally commented. “We have solutions that go far into the front end. Right from document creation, we can take a document that [has] a Postnet, and we can convert that Postnet to an IMB prior to it hitting the print stream. [Additionally,] we can take an outgoing piece of mail that has a Postnet on it and convert that barcode to an IMB through our sorting product line or our inserting product line.”
Dally went on to say that a lot of customers are waiting to see what the final USPS specifications will entail. The post office isn’t expected to provide full details on this until April. Two different services will be offered—basic and full service—and there is discussion about different cost structures for each. “They have not yet come out and said what the cost structure difference is going to be, but at the end of the day, the feeling is they’re going to provide some incremental driver for their customers to move to the full implementation of the barcode,” Dally surmised. “You never know what the USPS is going to do. It can offer a special rate some time later this year, although it did not come out in the rate case filing [it] just presented.”
Message in a Mailer
According to its findings in “The Power of Direct Marketing,” the Direct Marketing Association forecasts big things for the industry. In fact, the growth rate in direct marketing expenditure for 2008 is expected to increase to $183.1 billion (a 5.7 percent increase), in comparison to last year’s projected numbers of $173.2 billion (a 4.4 percent increase).
Dally anticipates color to be a popular trait of future mailers. As the price of color drops, people can look for more color TransPromo documents. Fairly unique shapes and sizes can be processed, as well, and penalties can be avoided if the mailer isn’t a flat. Some companies recently capitalized on the benefits of Valentine’s Day by sending out mailers in the shape of a heart.
Even the IMB is allowing for more creativity. Because it removes the excess clutter of multiple barcodes on a mailer, enticing messages, including “Special Offer Inside” or “Discount,” can be sprayed on the outer component of the envelope after material has already been inserted. These promotional messages can even be related to an individual name in a database. “As these mailers get better and better, and more information becomes available, we will see more personalization not only on the envelope, but inside of the envelope,” Dally said.
No matter how companies decide the best course of action for postal regulation compliance and creating dazzling mailers, Dally and Swedenburg agreed that a competitive edge is maintained by upholding a business model that promotes customer needs. “We don’t develop technology for the sake of technology,” noted Dally. “We’re always trying to drive our customers to increase their revenue, to increase their earnings and to drive down operational costs.” With direct mail, knowledge truly is power.
- Companies:
- Mail Enterprises
- Pitney Bowes