Dec. 29 2006 10:54 AM

Each year, the US's major mailers unwittingly let millions of dollars slide through their hands. Their only oversight is failing to understand the savings potential made available to mailers by the U.S. Postal Service... and treating mail distribution as a "by-product" of print production. A growing number of mailers are taking precautions to verify whether their suppliers are aware of these postage savings opportunities, and whether they are able to obtain these postal discounts on their behalves.


While most mailers remain loyal to their time-tested print providers, they are increasingly motivated to reduce annual postage. Mailers are often re-examining the efficiency of each step in their mail supply chain and making systematic changes wherever they identify incremental value. There is an emerging trend of mailers partnering with postal logistics specialists, who are able to minimize postal and transportation expenses, while effectively decreasing cycle times.


Postal Logistics Litmus Test

In a challenging economy, there is increased pressure to improve supply chain efficiencies and also to reduce costs. When it comes to managing postal costs, many mailers are reevaluating their current systems and channeling mail distribution through specialized "postal logistics" firms.


Here is a quick test to determine if you are a good candidate for working with a postal logistics provider:

  • Do you have visibility into the mail management and distribution decisions made by your direct marketing agency, printer or lettershop?

  • Is your agency, printer or lettershop partnering with a high-quality postal logistics provider to maximize your postal savings and minimize cycle time on your mailing events?

  • Have you explored your supplier's level of expertise in providing your company with the lowest possible postal rates?

  • Do you know the right questions to ask in order to verify that you are paying the lowest postal rates possible?

  • Are you aware of how your supplier's aggregated mail volume impacts your postal rates? How much volume does your supplier have to work with?

  • Are your distribution costs being broken out for your company's review?

  • Do you know precisely what you are paying for postage?

  • Do you know how much you are paying for transportation to the postal stream?

  • Has your vendor discussed dropshipping discounts with you, in addition to sortation discounts?

  • Have you worked with your vendor to analyze the trade-offs between using First Class and Standard Mail for your different promotions?

  • Have your vendors offered dropshipping to the BMC, SCF and DDU levels of the USPS? What percentage of your mail is entered at each of these entry points?

  • How many USPS dropship entry points do your suppliers actually serve... and how often do they serve them?

  • Are you aware that delivering mail too late (or too early) can seriously impact your mailing's response rate? What are your suppliers doing to provide precision entry dates for your mail?


    If you answered "No" or "I don't know" to more than three of these questions, there may be significant opportunities to improve the efficiency and effectiveness of your company's mailing programs.


    A Logistics State of Mind

    When does a promotion begin to promote? Your message hits its mark when it arrives in consumers' hands and draws them in, compelling them to pick up the phone, to sign up for your service, to visit a Web site or to place an order. Until the "mail moment," all of these documents are · just ink on paper... postal logistics is the key to transforming a printed piece into communication.


    Having the ability to cultivate and maintain a logistics state of mind can mean the difference between being a good direct marketer and a great direct marketer. Any good direct marketer drops things in the mail, but great direct marketers understand that carefully managed timing and postal discounts drive more efficient and effective mailings and maximize response for the lowest possible delivered cost.


    The logistics algorithm involves three variables time, distribution cost and postage. Decreasing any of these three affects one or both of the others. Managing the logistics algorithm means leveraging volume and density to optimize each of these variables.


    Timing Is Everything When It Comes to Effective Mailings

    More often than not, timing plays a pivotal role in the effectiveness of a mail campaign lists age quickly, and with each passing day, more of your potential customers have moved to a new address or bought from another vendor. In a world where a "good" response rates is between one to three percent and prospect lists age at an accelerated rate, compressing cycle times is a critical part of optimizing mail response rates.


    When mailings are timed to coincide with specific events, such as holidays or sales, the linkage between precise in-home delivery and the mailing effectiveness becomes even more obvious. When mail is integrated with other elements of the marketing mix, delayed delivery can impact the effectiveness of the entire campaign.


    Timing also impacts the ability to synchronize inventory levels with demand and to adequately staff call centers to accommodate call volume. Thus, missed delivery windows not only have an adverse effect on revenues, but also on cash flow, capital expenditures and operating expenses. Controlling the on-time delivery of the mail is mission critical, and identifying suppliers that reliably reduce cycle time enhances that control and improves program efficacy.


    Location, Location, Location... and a Whole Lot of Volume

    Beyond the common presortation discounts, a growing number of mailers are beginning to leverage dropship discounts. This rewards mailers for sorting and transporting their Standard and Periodical mail for delivery further into the postal stream, rather than entering it locally at the point of origin.


    Postal logistics providers help mailers capitalize on dropshipping discounts by efficiently optimizing the amount of mail that is entered at each level of the postal stream. Selecting a postal logistics provider with sufficient scope and scale (a national distribution network and the consolidated mail volume of the nation's largest mailers) ensures more effective service from all of your print suppliers, regardless of location, to all the consumer markets you serve.


    The amount of mail volume that a logistics provider handles is critical. Lacking sufficient volume, some distribution firms delay the mail until they build up sufficient volume to fill a truckload to a particular destination. While your costs may still be optimized, this has a detrimental effect on meeting the desired in-home date. Alternatively, a distribution firm may forego deeper postal penetration because they have sufficient mail volume to deliver a full load further upstream in the postal system in time for your specified delivery date; in this case, you meet your desired in-home date but pay more in postage.


    How to Choose the Right Logistics Partner

    The more sophisticated the logistics partner working on your mailing, the better the service you'll receive. Choose a partner that creates a customized distribution plan which clearly identifies what the percentage of mail that will be delivered to each level of the postal network including the Destination Bulk Mail Center (DBMC) and the Destination Sectional Center Facility (DSCF). They should also clearly outline the savings you should expect.


    To accomplish this analysis, the logistics provider must employ sophisticated software, not only to analyze your mailing, but to create synergies between all of their customers. And to create optimized load plans that efficiently reach the deepest destinations in the postal stream each and every day.


    Look for a provider that offers both economies of scope and scale, operates a national distribution network and manages billions of pieces of mail each year. Remember, it's a volume game, and the key to success is efficiently filling loads every day, many times a day. Find out what their postal appointment schedule is, and whether they offer mail tracking capabilities that allow you to monitor the progress of your mail. Be sure to inquire about the breadth of the distribution network does the vendor serve the country through a national network, or is its distribution platform regional? If it can only address a limited region, can you find a comparable solution in the regions it does not serve?


    Taking care to understand the capabilities of the postal logistics provider and then leveraging those strengths to maximize efficiencies across all mailing programs is a powerful and under-utilized weapon in the mailer's ongoing battle to control costs and maximize response rates.


    Linda Carlisle is president of The Marketing Department, LLC, an integrated marketing and communications firm providing outsourced marketing and communications services to small and mid-sized businesses. You can contact her by e-mail at To learn more about the Power of Postal Logistics, contact RR Donnelley Logistics at 800-800-SHIP, and ask for their white paper, "Finding Money in the Mail."

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