Mar 5, 2007
Postage Rising – Part 1
What can companies do right now to prepare for the upcoming postage rate increase? OutputLinks speaks with its distinguished panel of experts to discover practical solutions for high volume transaction output (HVTO) professionals.
Guy Broadhurst, director of product marketing for Océ North America's Commercial Printing Division, says the impending changes in postal rates and regulations, expected to take effect by summer 2007, will have an impact on all types of businesses, print-to-mail operations in particular. However, he says, the proposed rate hike from 39 cents to 42 cents for a first-class stamp is just the tip of the iceberg.
”The postal service overhaul is expected to include all sorts of changes including changes to several different postal rates, new shape-based pricing, and new rules for address quality,” says Broadhurst.
And while the United States Postal Service is moving to a new rate and fee structure, the change is not necessarily a completely negative one, according to Broadhurst. “It's all in how you look at it,” he says. “Like all change, it can be approached as an opportunity for high volume mailers to update their processes and improve efficiency to minimize the impact of the rate increase. Mailers can take several measures to reduce mailing costs while assuring efficient, predictable delivery.”
So, what can companies do right now to prepare for the next postage rate increase? The OutputLinks distinguished panel of experts shares its wisdom.
Guy Broadhurst of Océ offers the following suggestions:
Plan and Design
”Finessing the rate hike from a roadblock into a positive begins with better planning and smarter design of the mail piece itself to make customer communications more effective, more targeted and tuned to engage recipients in a more personal dialog,” says Broadhurst. “The key is not to stop or to reduce mailings, but to strategically execute more campaigns that are more precisely targeted instead of fewer that are broader in scope.”
Increase Efficiencies
In addition to improving the effectiveness of the mail piece itself, says Océ’s Broadhurst, mailers can increase efficiencies to capitalize on postal discounts. “Many of these discounts apply when you do the work that the Postal Service would otherwise do---for example, preparing, sorting, and entering the mailing to lower postage costs,” he explains. “If you are a high volume mailer and you’re not currently using postal management software, now is the time. PAVE [Presort Accuracy Validation and Evaluation] bulk mail sorting software was developed in cooperation with the mailing industry to evaluate presort software and determine its accuracy in sorting address files according to DMM standards.”
Utilize Software
Last, Broadhurst says software that has been CASS-certified takes your computerized list and runs it through special software that standardizes the addresses, corrects ZIP Codes and spelling mistakes, and adds ZIP+4 codes. “The National Change of Address Link ensures that mail goes to the intended recipient, which reduces errors and double-handling. The USPS is a tremendously useful resource for mailers, who after all, are their biggest customers,” explains Broadhurst. The USPS website is very helpful: http://pe.usps.com/text/dmm200/discount.htm
BÖWE BELL + HOWELL sees the new rate case as a catalyst that will provide opportunities for mailers to take advantage of technology and processes that can reward them with postage savings. “As with any strategy to manage costs, the options mailers select will largely depend on the applications they are running,” says Mark Van Gorp, vice president, business development, BÖWE BELL + HOWELL. Van Gorp offers these suggestions:
Convert from Flats to Folded Mailings
Van Gorp says that one application change that companies can make to produce the biggest cost savings is converting from flats to folded mailings. “One of our customers in the insurance industry converted 56 percent of their flats mailings to folded and realized significant postage savings and an almost immediate return on investment,” he says.
Assess the Impact of In-House Sorting
BÖWE BELL + HOWELL's Van Gorp says that another strategy is for mailers to assess the impact of in-house sorting for letters and flats, which can help mailers capitalize on increased worksharing discounts. “Commingling of flats on a sorter will allow large mailers and presorters to dramatically increase postage savings for flat mail as a result of the new rate case,” he explains.
Try Worksharing Documents
And while postage rates have continued to increase, worksharing discounts have also continued to increase, points out Van Gorp. “For example, while the full-rate postage for a one-ounce first-class letter is going up by 3 cents, postage for a one-ounce first-class letter presorted to five digits is only going up 1.9 cents. More importantly, postage discount on a five-digit presorted one-ounce letter is 9.7 cents today but will go up to 10.8 cents with the new rates. Any large mailer that isn’t currently commingling their mail on a sorter should investigate presorting as a way to greatly reduce postage costs.”
Van Gorp believes that with the effective decrease in three-digit worksharing discounts, and the increase in five-digit worksharing discounts, customers that are commingling mail today may find the need to increase the number of bins on their sorters in order to maximize five-digit qualification.
Investigate Print-on-Demand Formats
Finally, says BÖWE BELL + HOWELL's Van Gorp, with next-generation formats, mailers can investigate deploying print-on-demand document formats, such as saddle stitch, that can be a better alternative to flats. “This works by optimizing the information and mailing up to 25 pages in a letter-sized envelope,” he says.
Rochester Software Associates knows that postage rate increases are inevitable, and the next one won’t be the last. “The sooner firms plan for such increases, the better,” says AnnMarie Link, product marketing manager, Rochester Software Associates.
”Weigh” Documents for Value
According to Link, every document needs to be “weighed” for its value versus its cost. “Personalized content with variable data will make such mailings more effective, reaching closer to the target audience and having a higher value to the end customer,” says Link. “Indeed, as postage rates increase, the cost of customization is more easily justified and becomes less of the total expense.”
Redesign Customer Communications
Jeffrey Hayzlett, chief marketing officer for Kodak's Graphic Communications Group, shares that Kodak has been informing its customers for the past couple of years to take the time to redesign their customer communications. He says this will help increase customer response to TransPromo communication and maximize savings due to changes in postal rates.
“The key takeaway of the new postal rate changes is the shift from weight-based rates and towards shape based rates,” says Hayzlett. “Under the old rates a two ounce letter, a two ounce flat, and a two ounce parcel all traveled through the mailstream at the same rate of 62 cents. Under the new system, the rate for the two ounce flat increases to 82 cents and a two ounce parcel increases to $1.20. Companies that take the time to audit their current mail pieces and redesign their flats to letter format can avoid the increase imposed on flats while also taking advantage of information design techniques and color to improve their overall customer communication.”
Hayzlett adds that it’s important to remember that much of today's customer communication evolved around the billing systems and printing systems in use, not based on the best information design practices readily available with newer technology. “Often today's customer communications, including benefit statements, bills and statements, include reference information that the customer cannot even use. A careful review of the information being provided against what the customer needs to know may turn up many fields that can be eliminated from the print, opening up significant real estate for marketing messages and targeted onserts that replace static inserts.”
The Postage Cost Triple Threat
Dave Squires, vice president of marketing for Kern, considers the “Postage Cost Triple Threat.” He says, “The ‘triple-threat’ for rising postage budgets can be summed up in three simple statements: weight matters, density matters and size matters.” Squires discusses each “threat” to reveal strategies for big savings.
Threat #1 - Weight Matters
Though easier said than done, the clearest path to postage savings is to put your mail pieces on a diet. Squires says, “It currently costs an average of 80 percent more to mail a two ounce mail piece than when you can keep it under an ounce. How can you get your mail to lose weight? Every major mailer needs to be employing technology to drive selective inserting decisions to the production floor. That means understanding weights and measures of each mail piece component and intelligently holding back on optional inserts to prevent mail pieces from creeping up into the next heavier category. Some major mailers have gone to lighter paper weights. Others have redesigned documents to better use the precious real estate on the page to get more done in less space. Choose a partner that can apply quality analytics to identify opportunities to kick it down a notch.”
Threat #2 - Density Matters
USPS saves money when they can apply less labor to sorting the mail and they reward major mailers accordingly. “The greater the number of mail pieces that go to a particular zip code category the lower the cost per mail piece,” explains Squires. “A tray of mail, sorted to the five-digit zip code level will cost 8 percent less to mail than one tray sorted to the three-digit level. And, sending it out to a presort house costs even more. Major mailers need to employ technology to enable commingling eligible jobs and use the new class of server-based CASS / PAVE sorting and manifesting software tools to fill-up the 5-five-digit trays and get rid of the meter problem. Choose a partner that understands how to implement complete solutions that help your mail tray density kick it up a notch.”
Threat #3 - Size Matters
The USPS has decided that it's easier to handle a flat than a box, and easier to handle a letter than a flat. As of May 2007, they're putting their money where their mouth is. “Any mail piece---currently processed as a flat---that can be converted to a 6 x 9 envelope saves at least 20 percent,” says Squires. “Major mailers need to employ technology to enable out-sorting their envelope eligible, flats destined print streams and put them back into a half-fold envelope. Choose a partner that can think end-to-end from data to door. Print stream sorting plus folding flexibility and capacity will help you manage your size to kick it down a notch.”
And while the “Postage Costs Triple Threat” is valuable advice, Personix also offers some wisdom that addresses this fact: The postage rate increases do not affect all classes of mail equally. “The shape of the piece is now as important as the weight,” says Jeff Richards, senior vice president, Personix. “Mailers with a significant quantity of two-ounce first-class mail should pay particular attention to their use of flats and parcels. Flats will be penalized in the new rates with a two-ounce flat costing 32 percent more than a comparable two-ounce letter. Where possible, mailers should look hard at converting low-page count flats into 6 x 9 or #10 envelopes.”
Seven Best Practices
Pitney Bowes offers seven practical ways to apply the proposed postal rates to your advantage:
1. Automate Address Changes
2. Fold Flats to Letters
3. Enhance Presorting
4. Consider Householding
5. Drop Shipments
6. Reduce Returned Mail
7. Focus on Delivery Point Validation
“Each of these seven areas represents a unique way you can leverage the intelligence in your mailstream to save significant money,” says Pitney Bowes. “To more accurately estimate the impact the proposed rates could have on your organization, test how these strategies can help you mitigate the costs. You may also request a computerized analysis from your Pitney Bowes specialist.”
Target Your Audience
Pate Cantrell, vice president of sales and marketing, Barr Systems, says that you can prepare for the next postage rate increase by taking advantage of the US Postal Service’s bulk mail rates and sending your mailings to a targeted audience. “Depending on how many pieces are mailed, targeting your audience and using bulk mail instead of first class can result in significant postage savings,” says Cantrell. “Many companies still pay first-class rates when sending large-scale mailings, though, simply because they don’t have the time for or don’t want to do extra preparation work. But preparing for bulk mailing doesn’t have to be a chore---if you have the right resources.”
Take Action Now
And Fraser Ross of COPI says that companies should immediately review their mailing processes to ensure that they are taking advantage of existing discounts. “They should review any opportunities for bulk mailing, pre-sort discounts and also make sure that first class mail is the best choice for their correspondence,” says Ross. He adds, “Taking advantage of the onecode system offers customers an improved method of collecting, managing, and leveraging information about mail to enhance the current service and performance. This offers companies the opportunity to add new value, even if the increase is unavoidable.”
Watch for Part 2 of “Postage Rising” in an upcoming issue of the OutputLinks eNews. The OutputLinks panel of experts will review products and services for HVTO and mail.
Thank you to our panelists:
Pate Cantrell, vice president of sales and marketing, Barr Systems
Mark Van Gorp, vice president, business development, BÖWE BELL + HOWELL
Fraser Ross, COPI
Dave Squires, vice president of marketing for Kern
Jeffrey Hayzlett, chief marketing officer, Graphic Communications Group, Kodak
Guy Broadhurst, director of product marketing, Commercial Printing Division, Océ Digital Document Systems
Jeff Richards, senior vice president, Personix
Pitney Bowes
AnnMarie Link, product marketing manager, Rochester Software Associates, Inc.
To visit these and other leading HVTO vendors visit the OutputLinks eExhibit Hall >>>>
Postage Rising – Part 2
Part one of this OutputLinks series on rising postage costs looked at what companies can do to prepare for the upcoming postage rate increase. Now, OutputLinks speaks with its distinguished panel of experts to learn about products, services and tips to manage the process and generate bigger results.
For Pitney Bowes, the postage rate case is not about a proposed three-cent increase in the cost of a stamp; It’s about how mail operators could be using those three cents more effectively to connect with customers, grow business and improve profits.
Pitney Bowes is one company that provides the software, the equipment, the processes and the know-how to work the new postal rules to help save millions of dollars. “We also help to build a strategic framework that provides long-lasting benefits throughout the entire enterprise,” says Pitney Bowes.
“In simplest terms, converting flat mail to letter-sized mail is one of the easiest ways to cut costs and mitigate the proposed rate increase,” says Pitney Bowes. “For a quick ROI fix, a heavy-duty folder combined with an intelligent inserting system can provide the high-speed, automatic feeding and folding required to transform documents into a size appropriate for a 6” x 9” letter---all with a single fold. It delivers postage savings, and increased speed and productivity.”
Pitney Bowes says that the key to a successful implementation involves production intelligence, which ensures that every communication is produced as accurately and efficiently as possible. Some of the proven best practices in this field, according to Pitney Bowes, includes:
· Distributed Output Management, which provides the ability to divert printstreams to the most efficient output device – anywhere in the world.
· Audit-controlled Processing, which ensures that document integrity is maintained, for each and every communication.
· Modular Inserting Systems that offer the flexibility to quickly move from one job to the next, minimizing downtime.
· Cross-plant Visibility that allows you to view, analyze and manage print and mail production across an entire enterprise through a single dashboard.
· Real-time Address Validation. Data entry accounts for approximately 40 percent of data quality problems. But keeping bad address data out of your databases can be easily accomplished, whether addresses are keyed in by customer service reps, order entry clerks, sales professionals---or even customers themselves. Today, you can integrate software that captures, corrects and verifies address data in real-time---effectively dealing with this issue before it becomes a problem.
· Closed-loop Address Management Practices. Even with stronger data entry, customers move (17 percent annually) and some addresses simply change (including over 650,000 ZIP+4 changes every year.) Prior to mailing, you should be using a move update solution that interfaces directly with the USPS NCOA data. Afterwards, you can capture additional updates on the back-end through OneCode ACS.
· Qualifying for Automation Rates, which may become more challenging with two new requirements scheduled to become effective in August 2007 as part of CASS Cycle L.
· Delivery Point Validation. The existence of a primary address must be validated using the USPS DPV file---validating a range of addresses will no longer be accepted.
· Locatable Address Conversions. LACSLink processing is a proposed new requirement. Among other benefits, this converts rural route and box numbers to city-style addresses.
Océ
Guy Broadhurst, director of product marketing at Océ North America's Commercial Printing Division, says one way to get more “bang for your buck”, especially as rates rise, is to optimize your mailings with variable data to create a more targeted conversation with recipients. “Variable content in transaction documents enables mailers to achieve much better results,” he says. “Océ digital production-class printers and Océ PRISMA™ workflow software provide the tools mailers need to leverage the power of personalization to make communications more effective.”
For example, the Océ VarioStream® 9000 and 7000 families of continuous feed printers offer direct mailers and service bureaus high-powered digital capacity to produce highly personalized documents at production speed. And, for high-volume cut sheet applications, the Océ VarioPrint® 6250 digital duplex cut sheet printer is an ideal solution. “When the Océ VarioPrint 6250 combines with software like Océ Document Designer Advanced, it simplifies personalization and supports comprehensive data input, design, composition and output, enabling mailers to create attractive, highly customized documents that engage readers in a one-to-one dialog,” says Broadhurst.
And by combining powerful digital printers with intelligent software like Océ Document Designer Advanced, print-to-mail operations have the tools they need to produce smaller, but more targeted and effective mailings that leverage variable text and images to generate higher response rates.
“As expected, Océ equipment is designed to correctly image all USPS authorized barcodes including both PostNet and Planet Codes, adds Broadhurst. “The Planet Code is an additional barcode that is part of the USPS's Confirm program. Confirm tracks Planet Codes every time they pass through a barcode sorter. The Planet Code identifies the mailer, and the scanning data is transmitted to account holders.”
BÖWE BELL + HOWELL
BÖWE BELL + HOWELL's One ReCompose print stream manipulation software allows mailers to modify the data in one or more print files without having to re-engineer a legacy billing or statement application. “This includes the ability to cleanse addresses and add delivery point barcodes, sort files based on postal rules, merge files for higher densities, and dynamically reposition data to change from one format, such as flats, to another,” says Mark Van Gorp, vice president, business development, BÖWE BELL + HOWELL.
Mailers can also use the advanced vision capabilities of JETVision to test the quality and postal processing efficiency of a mailpiece. “JETVision uses similar testing criteria and procedures as the current MERLIN program running in the USPS,” says Van Gorp. “A sample list of the postal checks include code readability, code and address block positioning, package dimensioning, and many others.”
Van Gorp says that with the BÖWE BELL + HOWELL FlexiSort high-speed sorter, mailers can process flats and letter-class mail, allowing customers the flexibility to use the machine for additional letter capacity when the machine is not being used to sort flats.
But for customers looking to maximize five-digit qualification for their commingled mail, the modular design of BÖWE BELL + HOWELL’s Criterion and X-Class sort bins makes the addition of additional bins an economical option. “Bins can be added at the end of the machine, or for one- or two-tiered machines, bins can be added above the existing bins---making it possible to increase the number of bins without increasing the length of the machine,” says Van Gorp.
BÖWE BELL + HOWELL’s back-end automation solutions include bin-sorting systems, which can be mounted on the back end of an inserter, allowing mailers with high-density ZIP codes to sort in-house directly off of the inserters. And the BBH DemandWorks Booklet Maker systems enable mailers to move to next-generation formats. “The Booklet Maker system can be configured with high-speed feeders that can accept cut-sheet, continuous (roll or fan-fold), digital and offset-printed input. This versatility enables the systems to produce letter- or flats-sized booklets with ease,” says Van Gorp.
Rochester Software Associates
Rochester Software Associates, Inc. offers variable data personalization through its WebCRD, RSA’s Portal to the Print Center. “Our template-based ordering empowers individuals to order personalized versions of approved corporate templates such as sell sheets, postcards and proposals, making all documents and especially mailings, more valuable to the customer and more effective for the enterprise,” says AnnMarie Link, product marketing manager, Rochester Software Associates, Inc.
Kodak’s Graphic Communications Group
Jeffrey Hayzlett, chief marketing officer, Kodak's Graphic Communications Group, says Kodak has a wide range of printing systems solutions covering every speed requirement and every type of application from high-speed roll-fed full-color inkjet for bills and statements, using the KODAK VERSAMARK Printing Solutions, to cut-sheet full-color electrophotographic printing on a wide variety of paper types using the KODAK NEXPRESS Digital Production Color Presses. “No matter what state your current legacy printing environment is in, Kodak has workflow and printing solutions to prepare you for the most efficient approach to the new postal rates,” says Hayzlett.
Kern
And Kern is a partner that has answers. “With advanced print stream processing in mailFactory PROStream, the postal sorting and reporting in mailFactory Postal Reporter, and the flexibility and performance built into every Kern production inserting system, more and more major mailers are choosing Kern as their end-to-end production partner,” shares Dave Squires, vice president of marketing, Kern
Personix
And according to Jeff Richards, senior vice president at Personix, his company acts in a consultancy role to its existing clients relative to the rate increases by helping them model the impact of the rate increase, using their existing mail piece design and suggesting alternatives to minimizing the overall postage spend.
For more valuable insight on mail, click here for a brochure from Personix. http://www.outputlinks.com/uploads/personix_sellsheet_mail.pdf
Barr Systems
Pate Cantrell, vice president of sales and marketing, Barr Systems, points to two solutions from his company that help make bulk mailing a breeze. “Our variable printing solution is a powerful, yet easy-to-use software tool for the design, dynamic creation, and real-time delivery of electronic documents for any industry,” says Cantrell. “With it, you can create marketing materials, customized direct mailings, barcodes---for streamlining postage sorting---and much more. But more importantly, the integrated Postal Certification module provides a complete range of postal sorting and other processes with certified US Postal Service data.”
The core functions of Barr’s optional Postal Certification module include:
· ZIP + 4 adds the correct nine-digit ZIP Code and automatically fills in city and state data based upon ZIP Code entry, and standardizes address data using USPS preferred spellings and abbreviations.
· CASS (Coding Accuracy Support System) qualifies your fixed-weight mail for the lowest postal rates by correcting entire batches of addresses, printing the correct postal form, standardizing address spellings, and adding nine-digit ZIP Codes. It also checks the validity of individual mailing addresses.
· PAVE (Presort Accuracy, Validation and Evaluation) qualifies your mixed and fixed weight postal items such as first class, standard, and periodical mailings for the lowest possible postal rates. It does so by barcoding addresses, printing barcoded sack and tray tags, and by printing all required USPS documentation.
GMC
According to Hal Morrow, VP of marketing, GMC Software Technology, GMC’s PrintNet T Designer is used by various clients to create trans-promotional materials that allow them to add variable informational, educational, and marketing content to customer financial and investor statements based on specific demographics. “This not only improves the level of service they provide their customers, but enables them to point recipients to company web sites for additional information and/or incorporate marketing and informational messages into a single statement mailing for significant postal savings,” says Morrow.
GMC also offers a web-based interactive solution, PrintNet Interactive, for on-demand, one-to-one communications with customers, either in response to a specific customer request or as a highly targeted, outbound campaign. Morrow GMC’s Morrow says that PrintNet Interactive is currently being used by a major European insurer for on-demand client correspondence creation. “This has allowed them to control their communication content and branding as well as move the majority of externally destined print off their network lasers to high-volume, lower cost-per-page printers in their production print center,” he explains. “They have also deployed a ‘mailbox’ system where non-critical correspondence is collected over a five day period and bundled into a single envelope. This has resulted in substantial postage savings, as well as an increase in customer satisfaction since their customers receive one consolidated mailing a week, rather than mail pieces a day.”
Thank you to our panelists:
Pate Cantrell, vice president of sales and marketing, Barr Systems
Mark Van Gorp, vice president, business development, BÖWE BELL + HOWELL
Hal Morrow, VP of marketing, GMC Software Technology
Dave Squires, vice president of marketing for Kern
Jeffrey Hayzlett, chief marketing officer, Graphic Communications Group, Kodak
Guy Broadhurst, director of product marketing, Commercial Printing Division, Océ Digital Document Systems
Jeff Richards, senior vice president, Personix
Pitney Bowes
AnnMarie Link, product marketing manager, Rochester Software Associates, Inc.
To visit these and other leading HVTO vendors visit the OutputLinks eExhibit Hall >>>>