Postal optimisation: A growing business imperative (U.S)

As U.S. postal rates continue to rise each year—including a projected increase of around 4 pct this May—direct marketers are continually challenged to offset these costs, which can represent up to 65 pct of total direct mail project budgets. Yet many marketers fail to focus their cost-reduction efforts on postage, trying instead to reduce expenses involving printing, materials and other campaign elements. Only by focusing more on reducing postage costs and optimizing campaigns will marketers be able to proactively manage budgets for profitability while still maintaining the integrity of their direct mail programs.
It will be up to marketers and their industry partners to find ways to lessen the hardships created by escalating postal costs. No longer can postage be considered a “pass-through” cost over which marketers have little or no control. This would lead to dwindling budgets for program execution and less effectiveness overall for direct mail. It also could potentially move customers to look more closely at other marketing platforms that could be viewed as economically advantageous due to the rising costs of print mail.

In addition to examining creative ways to reduce the cost of postage itself, the overall optimization of a campaign has become paramount. Diminished consumer response rates, postal waste due to the large amount of undeliverable-as-addressed mail and inefficiencies in the National Change of Address system pose their own unique challenges, as does the movement toward environmentally friendly business practices to reduce paper usage.

Smart marketers already have begun meeting these challenges by aggressively integrating postal optimization, logistics strategies and campaign optimization techniques that not only promise to curb postal costs but also to improve address accuracy and enhance response rates, contributing significantly to the ultimate success of a campaign. As U.S. postal rates continue to rise each year—including a projected increase of around 4 pct this May—direct marketers are continually challenged to offset these costs, which can represent up to 65 pct of total direct mail project budgets. Yet many marketers fail to focus their cost-reduction efforts on postage, trying instead to reduce expenses involving printing, materials and other campaign elements. Only by focusing more on reducing postage costs and optimizing campaigns will marketers be able to proactively manage budgets for profitability while still maintaining the integrity of their direct mail programs.
It will be up to marketers and their industry partners to find ways to lessen the hardships created by escalating postal costs. No longer can postage be considered a “pass-through” cost over which marketers have little or no control. This would lead to dwindling budgets for program execution and less effectiveness overall for direct mail. It also could potentially move customers to look more closely at other marketing platforms that could be viewed as economically advantageous due to the rising costs of print mail.

In addition to examining creative ways to reduce the cost of postage itself, the overall optimization of a campaign has become paramount. Diminished consumer response rates, postal waste due to the large amount of undeliverable-as-addressed mail and inefficiencies in the National Change of Address system pose their own unique challenges, as does the movement toward environmentally friendly business practices to reduce paper usage.

Smart marketers already have begun meeting these challenges by aggressively integrating postal optimization, logistics strategies and campaign optimization techniques that not only promise to curb postal costs but also to improve address accuracy and enhance response rates, contributing significantly to the ultimate success of a campaign.

It is possible to significantly reduce postage costs while still guaranteeing highly accurate and fast delivery of mail. The key is to take advantage of new, cost-saving production and mailing techniques available today, including:

Aggressive presorting programs that maximize postal discounts
Co-mingling opportunities;
Data hygiene, or campaign optimization, programs that help reduce waste caused by undeliverable mail or incomplete addresses; and
Other logistics strategies such optimal packaging, targeted in-home delivery dates, load planning, reporting, co-palletization and standardized interfaces that determine the most efficient trucking and transport options.
Despite the tools and technology available, many marketers have yet to fully integrate a comprehensive postal optimization plan. Marketers need to ask themselves, “Is my service provider truly moving my mail as effectively and cost-efficiently as possible, given the realities of the economy today?”
It is important for any provider to demonstrate its qualifications and experience as a total solutions provider, delivering streamlined, optimized mailing strategies, as well as trigger mailing tools and the latest in digital printing techniques. In addition, providers must have the resources and industry experience to provide clients with the benefits of the latest data hygiene and intelligent mail technologies, including automated and/or Web-based processing and interface systems that help the USPS process mail more efficiently, resulting in cost savings.

Furthermore, marketers should be assured that their provider of choice can offer significant mailing facility volume, co-palletization certification and their own logistics capabilities. Providers that contract with third-party facilities for co-mingling may not be able to deliver maximum efficiencies.

Comprehensive postal and campaign optimization plans not only offer the best defense against escalating postage costs but also provide ways to increase speed to market, improve response rates and enhance the overall effectiveness and return on investment for mailing campaigns. Those marketers that insist on such proactive approaches will be most likely to succeed in today’s competitive marketplace.

Pat O’Brien is senior VP-sales and marketing at Direct Group (www.directgroup.net), a fully integrated direct marketing solutions provider.