Mailers Find Savings as Rate Increase Nears
"This rate increase has been low key. We haven't had the usual anxious calls" from catalogers worried about how much the increase will cost them, said Don Landis, vice president of postal affairs at Arandell, which prints and distributes catalogs. "I can count the number of inquiries on one hand."
That's because this next rate increase, an average 5.4 percent across the board, is lower than the double-digit increases the U.S. Postal Service has instituted in the past.
Circulation plans are presumed to be flat for 2006, and the USPS expects less volume next year, too. However, one way catalogers are increasingly finding cost savings is by co-mailing, Landis said. Arandell, Menomonee Falls, WI, saw a 50 percent increase in the service this year and expects a 100 percent rise next year after the rate increase takes effect.
Co-mailing, which works best for individual mailings of 800,000 and under, takes catalogs of the same trim size and presorts them into the same mailstream. The higher combined volume lets Arandell deliver the catalogs further into the mailstream, saving catalogers 6.7 cents for every piece weighing less than 3.3 ounces.
Co-mailing has been around for several years but is just now taking off because the technology has improved for working with multiple mailing lists and because of Mail.dat, which lets multiple mailers contribute to the same postage permit number. There are limitations to commingling catalogs during the assembly process -- until now, the usual method for co-mailing -- including that they must have the same trim size, the same ink-jet locations and the same schedule.
To offer customers more flexible co-mailing options next year, Arandell recently bought a machine that combines completed catalogs into the same mailstream. This method allows for some variation in trim size, ink-jet locations -- though they must be on the outside -- and greater flexibility in scheduling.
"We expect [the machine] to be running 24/7 when it arrives," Landis said.
According to catalog printer/distributor Transcontinental, Montreal, another way clients are reducing costs is by "paying more attention to their house database," mail services manager Jim Wiseman said.
Catalogers also are doing more, either in-house or through Transcontinental, to eliminate duplicates when they merge lists.
Though companies such as Transcontinental, Arandell -- and even the USPS -- have asked mailers to do this kind of upfront analysis for years, Wiseman said he thinks it's happening more now because catalogers are feeling squeezed by next month's rate increase, the first since 2002.
"They are saying to themselves: 'I only have so many dollars to spend on the distribution of my catalogs. How do I best do that?'" he said.
Arandell also is stressing list hygiene to clients.
"When you really get in and take a look at the list, some customers are really shocked by the number of duplicates and bad addresses," Landis said. "[But] when you talk to clients about spending additional money for list hygiene, you need proof that it is going to be beneficial."
Wiseman said he expects to see more use of delivery point validation software, which can verify that a physical house exists at a specific address. Today, most data files go through address correction to validate that an address exists, but that address may be an empty lot, a parking lot or a building with multiple units.
Chantal Todé covers catalog and retail news and BTB marketing for DM News and DM News.com. To keep up with the latest developments in these areas, subscribe to our daily and weekly e-mail newsletters by visiting www.dmnews.com/newsletters