Managing Your Company’s Postal Budget - Midwest Direct

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February 5, 2016

Managing Your Company’s Postal Budget

8 ways to save money on postage costs

Anyone making decisions about an organization’s mailings and postal budget will benefit from understanding the postage savings methods we’re presenting here.

From envelope selection and mail piece folds, to production and presorting, to understanding commingle, co-pal and the costs of freight, this article has you covered.

Let’s start simple > Mail less often

The first, most obvious way to spend less on your mailings is to do fewer mailings. Maybe some of your customer touch points can go digital, such as using emails to drive website traffic for online invoicing. Mass emails can unfortunately mean full spam folders and unopened mail, however; so, a direct marketing expert’s help in setting you up is a good idea.

After you’ve looked over all of your options to go paperless, take a look at your mailing schedule, mail data and geographical targets. It’s doubtful you are indiscriminately sending out costly mailers, while using a poor list in the process!

But mailers can always further scrub their lists, and hone their targets, for greater success in connecting with customers.

Most businesses want to save money on postage, but they also realize mail is a powerful, proven way to communicate with current customers and prospects. So, instead of mailing with less frequency, they are seeking to mail smarter using these following methods.

Watch your size … and weight!

The general rule for mailing is: The lighter and smaller your mail piece, the less postage you pay. Going down a size – from a flat to a letter – can slash your mailing’s postage costs. We routinely see over-sized artwork, supplied by our customers, that threatens to push mail pieces up in size and cost.

 

usps 2016 rate increase

 A letter is 6 ⅛ by 11 ½, by the way, and it needs to go into a standard sized envelope to get the best USPS pricing. Helpful guidelines:

  • Letters can be up to 3.5 oz in weight
  • Letters should not to exceed 1/4” thick, or 6 ⅛  x 11 ½
    • Larger mail is considered a flat, and is priced accordingly
  • For flats weighing 3.5 ounces or less, you can fold pieces into booklet envelopes

Remember, one simple fold of your mail insert can save you money.

While we’re on the topic of mail piece design, remember that intelligent mail barcodes (IMbs) are the secret to unlocking USPS automation rates, piece tracking and more. Mail is run through high-speed sorters at the post office, and the flexible, smart IMb is what allows mail to be read, sorted and delivered with such incredible efficiency.

Mailers can print their own bars on envelopes; or, use a Presort and commingling mailing service to apply bars for them

 

intelligent mail barcode

An IMb contains the barcode ID, service type and mailing class, the mailer ID, serial number and routing code.

 

e-postage saves time and money

For a monthly fee, there are electronic postage services that offer small business software for printing pre-approved postage at discounted rates. These companies claim to save customers a small percentage on postage, depending on the size and class of mail. They also save you trips to the post office.

 

One multi-line vendor

cleveland ohio mail vendor

   (image courtesy of NYT)

Bringing your costs in line by consolidating services with one vendor is often a helpful tactic for saving on postage. One large provider can supply you with services ranging from creative and design, to Lettershop production, to presort and commingling, to drop-shipping your mail deep into the mail stream.

Dealing with one point of contact for all your mailing service needs typically saves a lot of time – and vendor-related expenses – through price breaks and efficient customer service.

 

In House Vs. Outsourcing?

 outsource mail service provider

To do it in house or to outsource – that is the question for mailers. And it usually boils down to volume.  

The USPS offers significant discounts for mailers who sort their outgoing mail by zip, and drop it off at sectional mailing facilities (SCFs).  If you are sending at least 200 pieces of mail, you can qualify for USPS standard class rates. It’s 500 pieces for First Class presorted discounts.

You need a mail permit to send your mail in bulk; or, you can use the permit of your presort and commingling mailing service, should you decide to outsource any portion of your Lettershop, sorting and shipping shipping functions.

Commingle

This brings us to commingling mail. This is where the real postage savings occurs, from a larger-scale operational perspective. Whether you create your own letters, or use a Lettershop service, the finished mail pieces are ultimately sorted by zip and commingled with other mailings.  

Definition of commingled mail: A commingled mailing is a blended mailing: Your mail is mixed with mail from other organizations in order to achieve USPS discounts.  Diverse clients, postage payment types, rates and mail piece weights are all strategically tossed together, like a very orderly salad.  Commingled mail qualifies for steep postage discounts, because it’s sorted to final levels. Destination entry discounts are also achieved because mail is delivered closer to its final destination.

This sorting and commingling can either be done by a presort mailing service, who shares the savings with you, or by the USPS – who will sort the mail this way eventually.  

The USPS prefers that third parties share in the work; and, the post office gladly passes along postage discounts when they are presented with mailstream-ready trays of 5 digit mail. 

Here’s an example of commingling in action: We recently had a customer send us a 250,000 piece mailing. We analyzed the data, and saw that 10,000 pieces qualified by themselves for 5 digit discount prices.

However after we commingled their mail, almost 100% of it qualified for 5 digit prices – once the client’s mail was sorted with other mailers as part of a several million piece mailing. Clearly, commingling was a big win in this situation – as it is with most higher volume mailings.

Sometimes it makes sense to use a hybrid commingle model.

Say a Lettershop or business has a million piece mailing. About 200,000 of it qualifies for 5 digit pricing on its own, and the other 800,000 pieces are good candidates for commingling, with zip codes spread all over the country.

This mailer might consider sorting and submitting the 200,000 pieces, and commingling the rest with the help of a mailing service. At this point, you have to take into consideration freight and other shipping costs. How much will you save on postage, versus how much will you pay a freight company to ship your mail?  We see this above scenario less frequently, as most mailers don’t have enough mail on their own to qualify for either sorting or shipping discounts.

“If a mailer can sort to 5 digit SCF, and use LTL freight for transportation, that might be the best option,” said Sam Mazzola, Midwest Direct Letter Plus Manager. “But now, weighing the cost of shipping becomes critical.”

 

 SCF entry postage savings

Sam described a recent job where we had about 150,000 pieces of flats mail. We broke it down into 90 pallets, and we were able to drop ship these pallets directly to the destination SCFs … skipping over Cleveland, and all mail entry points, along the way.

Our VP of operations Andy Phillips cautions that most mailers probably don’t have the volume to sort to discount levels on their own; or, to build pallets on their own qualifying for drop-shipping discounts.

“That’s the real reason to use a commingler,” said Phillips. “Certain volumes are required for entry discounts and postage discounts.” Phillips said that typically it’s cheaper (and far easier) for a mailer to have a mailing service come get, sort and ship its mail. But Phillips said mailers can share pallet space with other mailers, bringing us to the co-pal process.

Co-Pal

Definition of co-pal: Like commingling, Co-palletized mail also involves combining mail.  Here we are talking about sharing trays of mail on a pallet, versus sharing pieces of mail in a tray.  Co-pal mailers also get a discount: Combining mailings into larger entries allows for dropping mail deeper into the mail stream.

commingling mail… sharing space inside a tray, vs sharing space on a pallet

 

Both commingled mail and co-palletized mail reduce the number of times the USPS touches your mail, resulting in faster shipping and discounts. Keep in mind this co-pal process doesn’t improve the qualification level of a container: If your trays are sorted to the 3 digit level, they will remain at a 3 digit sort. You miss out on the commingling discount when you go straight co-pal, but it’s still highly advantageous for mailers.

As always, ask your mail services specialist which option is right for you.

 

ltl transportation

Quick Recap:

Think Commingle, Co-Pal and Consolidation (LTL freight). 

Sharing space in a tray, on a pallet, and on a truck.

It starts, and ends, with great data

One of the simplest ways to reduce unnecessary postage costs is to keep your mailing list clean. In the business this is referred to as data hygiene, and it’s a critical part of any direct marketing initiative.

Ask about your mailing service’s software suite, which must include NCOA (National Change of Addressing) processing for starters.

NCOA is a nationwide system allowing mailers access to updated addresses that are filed with the USPS. The Post Office requires all Standard Mail (including letters, flats and parcels) and Presort-rate First Class Mail to be updated within 95 days of a mailing.

All quality mailing services are NCOA-compliant, so check with your mailing partner before signing on.  If your mail service provider doesn’t follow the Move Update Standard, you can be penalized by the Post Office.  Benefits of NCOA include:

  • Reduction in undeliverable or delayed mail
  • Increased ROI on your mailings
  • Real-time address updates
  • Postage, prep and printing savings
  • USPS-compliant mailings
  • Keep customer communications relevant and current

Beyond NCOA

NCOA is the starting point for mail hygiene experts. The process also includes:

- CASS (Coding Accuracy Support System) which standardizes addresses

- DPV (Delivery Point Validation) which confirms not only postal stops, but postal stops where someone actually lives, and  

- LACSLink® which matches addresses against rural and highway routes and box numbers that were renumbered due to 911 address conversions.

Going the DIY Route

If you want to explore sending out your own mailings, here is a basic idea of what you’ll need to achieve any sort of significant discount:

  • A permit to mail at Standard Class rates
  • A permit imprint account number you can print instead of using stamps
  • At least 200 pieces of the same mail for Standard and 500 pieces for First Class
  • USPS supplies, which you can pick up from the post office
  • USPS compatible mailing software
  • The ability to satisfy Move Update requirements
  • Standardized list data for your mailing
  • Mail sorting software
  • Ability to add barcodes to your mail pieces

 Check out our resources section for more information on the above topics!

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