How to Combat the USPS Postage Increase (Industry Trend or Event)
The U.S. Postal Service's (USPS's) next postage rate increase will take
effect this month. The increase of one cent for a First-Class letter–to 34
cents from 33 cents–may not sound like a lot, but to an average business with
a monthly volume of 100,000 First-Class pieces, the increase will have a
financial impact of $1,000 each month, or $12,000 annually. Large-business
mailers will experience a cost increase into tens of thousands of dollars each
month to continue current mailing processes.
Proposed rate increases won't be limited to First-Class mail, but will apply
across the board. Companies sending presorted, Priority, Express, and
special-service mailings will also see delivery expenditures increase between
4.9 and 50 percent. Under the proposed increases, presorted First-Class mail
will increase from 30.5 cents for the first ounce to 32.0 cents and from 22.0
cents to 23.0 cents for each additional ounce. Priority Mail rates are
proposed to increase by $0.65 to $8.90 depending upon the weight and
destination of the mailing. Weight and destination are also factors for
express mail rates, which may increase by $0.25 to $4.55 depending upon the
piece. Certified mail will increase from $1.40 per piece to $2.10 under the
rate proposition. And Business Reply Mail costs may increase by 2 cents per
piece and $75 in annual fees per account.
How do you approach such increases and still continue to operate within your
administrative budget? There are three basic options:
* Reduce the volume of your mail.
* Pass this expense to your customers by increasing prices.
* Reengineer processes to create a smarter system.
Th
e first two options will not enhance current relationships between you and
your customers. Reducing mail volume will theoretically reduce and limit your
company's new market potential. The practice of absorbing new costs by raising
prices will eventually limit your company's ability to compete in the 21st
century. The customer is getting smarter, and comparison of product prices is
becoming more of a standard when purchasing.
This leads us to the third option– the reengineering of standard processes.
The challenge is to create a system that will completely enhance a company's
ability to pursue aggressive growth, while practicing cost-effective and
customer-friendly solutions.
When looking to reengineer an outbound mail system, the most logical place to
start is with the existing practices. No matter how successful an operation
is, there's always something that can be upgraded or improved.
State-of-the-art equipment can be installed, for example. Unfortunately, these
items will also provide an added cost to your company. The goal should be a
careful evaluation of the process, beginning with the actual sender,
The following is a review of proven techniques for reducing postage costs.
Address mailing lists
Contact all key users of outbound mail serv
ice so mailing list audits can be
scheduled. The ongoing practice of verifying customer addresses will reduce
postage expenditures for mailing to bad addresses. The postage savings will
pay for the effort expended. One company in the pharmaceutical industry was
able to save $40,000 just by auditing and adjusting to client mailing
lists.
Outdated database information
One big source for mail being returned can be traced to outdated database
files. Old information or data entered multiple times in different files
within the same database almost always leads to returned mail or duplicate
mailings. The use of one file to manage all lists is preferable and can
eliminate multiple mailings to the same address. As more mail is centralized
and consolidated, the price of mailing will be reduced.
Address hygiene
In order to obtain the maximum postal discount and avoid any noncompliance
surcharges, it's necessary to create addresses that are readable by the postal
service's optical character recognition (OCR) system. Various software
packages are available to guarantee proper address formats in accordance with
postal service requirements.
Shifting contents
To many large mailers, the answer appears to be an approach of "one size fits
all" for window envelopes. The universal-envelope principle for purchasing
will almost always get the best price for your stock. But, the problem lies
with that one mailing with contents that may vary in thickness and alter the
position of an address in the window. When any portion of the address is
concealed because of the vibration of the postal service's sorting equipment
shifting, the item will be kicked into a "reject" bin. The item no longer
qualifies for a discount, and more often than not, you'll be assessed a
surcharge for noncompliance and extra handling. Working with postal employees
and OCR production companies to understand the necessary mailing design and
packaging ensures surcharge avoidance and maximizes postage discounts.
Certain mailings are created with very extravagant addresses, using
techniques such as italics, fancy script, or calligraphy to make the recipient
feel important and, therefore, more likely to open the envelope instead of
tossing it into the trash. Since an OCR sorting device can't decipher how
important a recipient might be, the envelope heads for…you guessed it…the
reject bin–no discount and a probable surcharge.
Italics, punctuation, multiple-font
Business Reply Mail (BRM) vs. Mail Codes
Some companies invest in Business Reply Mail as an effective tool in
motivating recipients to reply as it provides prepaid postage to send it back.
But more and more senders are abandoning this practice for a few good reasons.
My two favorites are:
* The recipient doesn't respond.
* The recipient responds, but does not use the return envelope provided.
Either of these will result in the following unnecessary costs:
* The pri
ce of the envelope
* Prepaid postage
* Added weight (and postage) caused by the return envelope
* The postal fee for processing your BRM
* Interest lost depositing and leaving money in the BRM account
Using a Mail Code instead will help your company achieve the same results
with a minimum expense. A Mail Code is a special internal sort code that can
be added into an address block to identify the final internal point of
delivery. It can be used in the street address, or even applied to the Zip +
four area to allow for automatic OCR (Optical Character Recognition) equipment
to quickly isolate mail for fast sort. While BRM costs the recipient a fee per
piece, using a Mail Code is free.
Leading advertisement and logos
Many companies will print their logos or pictures on the front of envelopes
and they end up skewing the view of the OCR scanners. These envelopes stand a
greater chance of making their way into a reject bin than if the image had
been left off.
Great intentions will sometimes produce the least-desired results. Avoid
using any extra logo or graphic images on the envelope so you qualify for all
discount opportunities.
Size and weight of envelopes
The standard envelope was designed to hold four to five regular sheets of
paper. Sometimes, mailings will exceed this amount and cause an envelope bow,
creating a problem in both OCR read and the ability for the envelope to pass
through narrow sorting feed equipment. In addition, weight can add postage
expense when envelopes exceed the maximum capacity. Advanced software and
in-line printers can produce two-sided sheets for easy processing, handling,
and postage reduction.
"Frosted" window envelopes
Certain supply houses provide an economy line of window envelopes and promise
a low price when compared to other suppliers. The best price is not always the
wise purchase. Specific problems encountered with the use of these windows are
related to the poor quality and grainy "frosted" effect. The problem isn't one
the human eye would recognize. OCR equipment often reads a distortion in this
type of envelope, due to a lack of clarity and shading created by the poor
quality of the transparent window. As a result, these envelopes are classified
as nonreadable and rejected from the regular process. In an initial analysis,
examine the quality of the mailing stock to eliminate this burden from
operations.
In the OCR environment of the USPS, any of these problems can cause items to
be disqualified for pre-sort and bar code discounts. Additional steps taken by
the post office lead to delays in processing and timely delivery. In addition
to your new penny increase, you now need to ensure the envelope will get from
point A to point B before we reach the next new millennium.
It's important for your company to develop strategies to reduce mailing
expenses and avoid surcharges from presort vendors and the post office. The
modern mailer has the challenge of creating new opportunities to offset the
rising costs of postage and for metering equipment. The proper approach is to
look objectively at your firm's operation from a true sense of efficiency and
cost-effectiveness that will allow you to compete.
Joe Freeman works with Archer Management Services Inc.
Page 26;Volume 18;Issue 1
THIS IS THE FULL TEXT: COPYRIGHT 2001 Quality Publishing
COPYRIGHT 20
01 Gale Group
OFFICESOLUTIONS, 01st January 2001
