The Changing Mailing Landscape: 2007 Postal Rate Case

Catalogers and multichannel retailers are facing a number of key issues in the marketplace. But the one issue that is currently on the minds of all who mail flats and catalogs is the huge postage increase scheduled to be implemented May 14. Unless the Postal Rate Commission reduces its proposed increase to flats mailers (which, if it occurs will most likely not happen until sometime after May 14), most flats mailers will see postage increases that will exceed 20%.

In addition to these documented increases, mailers will also face other hidden increases that will go into effect on Aug. 1, when new address standardization rules will have to be implemented. An example of this type of increase is that today, records that fall within valid street ranges but are not a valid delivery point are +4 coded. As of Aug. 1, these will no longer be +4 coded. This change will result in more records not receiving a +4 code, thus increasing postage while reducing delivery and correspondingly, response.

What can a mailer do to proactively counter the impact of these changes and increased rates?

Explore co-mailing opportunities so that more records to be mailed will be qualified in tiers with lower postage rates and thus reduce the potential postage increase. For flats mailers, if a piece is 5-digit qualified instead of carrier route qualified, then the incremental postage is 8.6 cents for flats under 3.3 oz. If the piece is 3-digit qualified instead of 5-digit, then the incremental postage is 5.7 cents.

Address hygiene is more important than ever:
+4 code more records using multiple +4/standardization software engines along with proprietary processes from some service providers. For a flats mailer, each additional record +4 coded will save about 12 cents in postage along with improving delivery/response on these records by 30% to 50%.

Correct records with missing or invalid data using proprietary processes from some service providers – secondary, for example – again improving delivery/response by 20% to 40%.

Aggressively sue change-of-address processing, running it either for each mailing event or monthly, whichever makes the most sense. This is one area where mailers can be penny-wise and dollar-foolish in trying to reduce their service provider costs. If a mail piece is delivered to a person’s old address, response generally drops by at least 70%.

Use address correction endorsements on mailings once or twice a year, especially when the cost of doing this significantly drops later in 2007.
Make sure your service provider is not putting duplicates in the mail. Just 1% duplicates can add up to a lot of wasted costs.

Consider intelligently not mailing pieces with potential delivery problems or low propensity of response.

By implementing some or all the above, catalogers and mailers can put themselves in position to mitigate some of the impact of the postage increases positively affecting their bottom-line.