Year-end financial planning has everyone sharpening their pencils again. While some mail managers are simply looking to soften the financial blow of expected cost increases, others are taking a more proactive stance. Many, in fact, have identified new ways to help contribute to the bottom-line profitability of their organizations.

    The idea that a mail center could be a profit center has been on the table for years. What's new today is that the combination of a tough economy and new technologies is making it easier for mail center managers to overcome outdated processes and mindsets.

    There are no silver bullets, but the right blend of cost-cutting and revenue-producing changes can help increase overall profitability. Five areas in particular are worth re-examining:

    #1 Postal Optimization As postage can represent up to 70% of the cost of any mailing, there are almost always options to generate new savings. Simple-to-use tools can help you calculate the ROI on a host of alternatives, including:

    · Move Update and Intelligent Mail barcode Compliance. Organizations that do not comply with current postal standards and preparation guidelines could face higher postal costs - including lost discounts and assessments. However, it's easy to comply with these regulations, maximize discounts and improve deliverability of your business-critical mail when you know the rules, and implement the right solutions and strategies.
    · Commercial Base Pricing. Some organizations allow individual departments to process their own overnights. With a mail center's Information Based Indicia (IBI) digital postage meter, however, you can save five to 10% over retail prices on qualifying Express Mail and Priority Mail services.
    · Postage Cash Flow. Time is money, especially when it comes to improving a company's cash flow. When you can wait and pay for postage after you receive a bill, that eliminates the administrative costs associated with rush checks and allows your money to work harder for you.
    · Flats to Letters. A simple fold can convert a 9" x 12" flat mailpiece into a 6" x 9" letter-rate kit, which can reduce postage rates from 40 to 47 percent.

    Set a goal to reduce postage expenses by two percent over the next three months and determine which of the above strategies will deliver the greatest ROI based on your mail characteristics.

    2. Improved Address Quality
    According to the Postal Service, 23% of all address records contain one or more errors, including typos, missing suite numbers, incorrect street names, incomplete ZIP Codes and missing directionals.

    Of the 9.7 billion mailpieces that are undeliverable as addressed each year, more than 75% of the problems are move related. On top of the waste and redundant efforts, organizations incur additional expenses to re-print, re-mail and repost communications - with estimates ranging from $3 to $7 to piece.

    More importantly, each undelivered piece of mail represents a lost sale. More rigorous address cleansing and real-time address validation can not only lower costs - it can help increase sales on direct mail campaigns by up to two percent or more. To maximize address accuracy, you should process all mail files using CASS Certified software that links to the USPS NCOALink database.

    #3 Compelling Personalization Mail center managers can now also do more to impact the effectiveness of a mailpiece. For instance, a recent study by Leflein Associates indicates that 69% of consumers would be more likely to open a mailpiece with color text and graphics versus a plain white envelope without messaging.

    While large mail houses have been making a difference by imprinting variable color images and text for years, this capability was out of reach for most mid-range mail operations until now. The newest line of mailing systems can print high-resolution graphics and messages in color or black on envelopes while applying postage or permits - all in one pass. This flexibility applies to all mailing jobs, including transactional and promotional mail, because these systems can print on the front and back of envelopes. With these capabilities, mail center managers can help other departments take advantage of valuable real estate on each mailpiece to promote offers, strengthen brands and improve response rates.

    Once you are inside the mailpiece, systems that selectively insert can help ensure that you send the right message to the right person every time. When you calculate the ROI of alternative mailing systems, be sure to estimate the financial impact of improved open rates and higher response.

    #4 Improved ProductivityNo one can doubt mail's ability to connect with customers, boost response rates and generate new sales. However reducing and managing costs should always be high on everyone's priority list, and there are still plenty of new ways you can do more with less.

    · Connectivity. Leading mailing systems will connect operators directly to the USPS, making it easy to incorporate special services. While faster and easier, these connections also provide for discounts on Delivery Confirmation service, Signature Confirmation service and Return Receipt used with Certified Mail. The most advanced systems come web-enabled and provide for automatic software updates, address validation, delivery tracking and on-screen tutorials.
    · Functionality. Technology that can process mixed mail in a single pass, or automatically rate mailpieces based on size and shape, can also help eliminate costly manual processes. In addition, some mailing systems can print color graphics and return addresses, while also helping to save money on pre-printed envelope costs for many mid-volume mailers.
    · Workcell Automation. Another lesson learned from large lettershops: when you can combine multiple functions into a single operation, you can increase the productivity of your entire team. Automatic feeders and combination folders/inserters are just a few of the advancements that have made their way downstream.

    Think about this: if management came in and told you that you needed to reduce costs by 20%, what changes would you have to make to maintain service levels?

    #5 Profit-Center Accounting If you want to turn your mail center from a cost-center to a profit-center, you need to act like a profit center - which means being able to allocate and manage expenses on a job-by-job, department-by-department level.

    This is actually easier than it sounds, as software services are available that are designed specifically for the complexities of mail center operations. From one centralized dashboard, you can gain visibility into mailing expenses across your entire organization and generate customizable reports that account for every penny.

    Such detail makes it easy to invoice and charge-back costs to specific clients or departments. Some organizations even add surcharges to cover services and labor expenses. The insights generated by these new-found reports can also help you identify new opportunities to decrease costs and improve operations - increasing the value you bring to your entire organization. If you can acquire and implement an expense management system before this year ends, you could leverage these advantages for all of 2011.

    If nothing else, year-end budget planning highlights that without further action, costs will only rise. However, by taking the proper steps now, mail center managers can use this event as an impetus to revisit end-to-end operations and discover new ways to help cut costs, generate revenue and better connect with customers.

    Karen D'Andrea is Director of Product Marketing, U.S. Mailing, Pitney Bowes Inc.
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