Savings Exist at All Steps of Mailings

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The key to maximizing shipping efficiency and minimizing cost is to examine each step in the mailing process. Too often, we become so involved in our own area of responsibility that we miss chances to consult with other areas of the company about cost savings.

Say your agency or marketing department plans to use a square mail piece for a First-Class mailing, which could cost 5 to 11 cents more to mail because it is a nonstandard size. Explaining that the aspect ratio (the width divided by the height) for a standard First-Class mail piece must be between 1.3 and 2.5 could help avoid the surcharge.

Delivery requirements. In the early planning of a shipping, establish the delivery requirements. Determine your tracking and tracing needs. Will you need a signed proof of delivery? Do you need to monitor movements of the shipments? It is critical that everyone involved in the shipping process knows the delivery expectations, limitations and options.

How many times have you heard someone say, "Send it FedEx," and it's generally sent FedEx overnight for $13.50. However, maybe we could have sent it FedEx 2nd day for $8.50, about a 40 percent savings. There also are opportunities to work with consolidators to capitalize on FedEx, United Parcel Service and Airborne volume discounts.

As a general rule, the larger your delivery window, the lower your distribution cost. For example, the cost to mail a 3-ounce letter with:

o 2-day air is $8.50 per piece.

o 3-5 day First-Class mail is 80 cents per piece.

o 5-10 day Standard Mail is 5 cents per piece if you have 300 pieces and perform a ZIP code sort.

If you determine that your delivery requirements are flexible, you have more service and vendor options, including everything from 2nd-day air to Standard Mail.

Design. When considering mailing costs, the largest variable cost (and greatest chance for savings) is in distribution, which includes postage. The second-largest cost variable is paper. A few design considerations established early in the development process can translate into paper and distribution cost savings and even lead to increased revenue opportunities.

Balancing "breakthrough" design and cost-effective design can be difficult. Start by working with designers familiar with postal regulations and understand how to design creatively yet still obtain the automation rate.

If mail is your primary distribution channel, the design of the piece can affect your postage cost. Many advertising and marketing departments design mail pieces to generate the highest possible response rates. But the piece that generates the maximum response rate may not be the most cost-effective when it comes to postage. This is where the company must try to project the break-even point between decreased postage cost and increased revenue potential.

To evaluate the cost impact, designers need to know postal requirements for standard-size mail pieces and requirements for automation rates. This information is on the USPS site, Click on "Mail/Ship," then scroll down to BusinessMail 101. You will find information on rates, mail characteristics and addressing as well as how to sort the mail.

Address hygiene. Undeliverable as Addressed Mail costs the USPS $1.5 billion a year. Look for tougher address-hygiene regulations in the next 18-24 months.

How often do you receive duplicate mail pieces? What do you do with the second piece? Most likely it is tossed in the trash. Every mail piece counts, and every piece costs money. Eliminating duplicates with merge/purge applications can reduce print cost, duplicate postage cost and distribution cost while improving overall deliverability and maximizing automation discounts.

Address hygiene is a process that your list processor will execute to remove duplicate addresses, remove non-deliverable addresses and clean up forwarded or moved addresses. Good list hygiene will eliminate duplicate postage costs, optimize your print run and help you avoid losing your presort/automation rate discount. Most importantly, it will improve your overall delivery, resulting in optimized response rates.

Other savings. When it comes to getting ready to release your mailing, there are two main cost-saving opportunities: presorting and drop shipping.

List processors are the key to presort savings. Your objective in selecting a list processor is to achieve the maximum sortation discounts available. Look for a list processor that uses a variety of software packages to presort your mail and append barcodes. The better ones will perform multiple passes on a list to achieve the maximum percentage of carrier route sortation, which in turn yields the lowest presort postage.

For a Standard Mail flat piece weighing 3 ounces, the basic carrier route postage is 18 cents. Postage for the next presort level, 3/5 digit bar-coded, is 24 cents. This is a 6-cent-per-piece (or $60 per thousand) difference. Therefore, you want your list processor to achieve the best carrier route sort possible.

The second opportunity comes through effective drop shipping. Generally, presort results will drive the drop shipping opportunities. For example, to obtain a destination delivery unit discount, carrier route sortation is required. Today, few mailers drop ship to the DDU, primarily because the discounts are not large enough to offset the associated distribution cost. Most mailers see the greatest advantage by drop shipping to a combination of SCFs and BMCs.


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