Nine Ways to Reduce Costs

A penny here, a penny there: it adds up fast!

By George Linkletter

When times are good managers tend to focus on getting product out the door quickly.  In the process they may overlook an equivalent need to contain costs.  But when business slows, the focus shifts dramatically.  Searching out and eliminating unnecessary costs becomes the priority -- because it doesn’t matter how fast you produce if the cost of production is too high or worse unprofitable.

Here are nine steps you can take right now to wring excess costs out of your print/mail finishing operation. 

Maximize Presorting.  The ultimate discount you receive will depend on the density of your mailings.  So those with highly concentrated mailings will receive the greatest benefit.  Still, this may be the fastest and easiest way to reduce costs – and with the least amount of effort on your part. 

The savings can be achieved pre-assembly via the use of software, or post-assembly via mechanical sorters.  If your volume or density doesn’t enable you to achieve a discount internally, you can utilize the services of a pre-sort service bureau.

Postage costs are likely to increase in May.  So any action you take now will save money right away and will help minimize the future increase as well.

Reduce UAA Mail.  UAA (Undeliverable As Addressed) mail is a hidden cost for most organizations.  But it can be reduced.  In fact, this is a great time to attack this ongoing cost.  Why?  Because fewer Americans are moving right now due to the credit crunch and recession.  So the scope of your UAA problem is reduced, making it easier to implement the soltution needed to improve address quality and deliverability. 

If you act now, you’ll be able to take advantage of a customer base that is a little more stable.  And with both a postage increase and business recovery on the horizon, your savings will soon be multiplied.

Shift Production to an Outsourcer.  This may sound like heresy to an internal shop.  But it can work for all involved, especially if you are: 1) encountering costly overtime; 2) operating a partial shift that is underutilized; or 3) have applications that are excessively complex, short-run or otherwise time-consuming or difficult to process.

If you carefully select and outsource troublesome applications, you'll be left with core applications that you can focus on and process well.  And that will boost your overall productivity and lower your costs.  The more challenging applications will go to firm that is better suited -- via technology, expertise and training -- to handle them.  All will win.

Track Inbound Mail.  If you send out late payment notices or collection letters, you can send out fewer by tracking your inbound mail to determine if a payment you are expecting might be 'in the mail.'  If an inbound letter (with a possible payment enclosed) is due to arrive, you can suppress the outbound letter pending receipt and verification of the inbound message.  Once the system is up and running, you'll be able to save the entire cost of the outbound letter.

Consolidate Mailings.  This may be the biggest cost-reduction bang for the buck that you can get without relinquishing valuable customer contact.  Doubling up or piggy-backing separate mailings intended for the same recipient into a single envelope can save virtually the entire cost of a mailing, minus the printing cost and a perhaps a slightly slower production/assembly speed.

Reduce Use of Electricity.  Various studies estimate that data centers consume about one percent of electric power in this country.  Residential and workplace lighting is estimated to consume about another 17 percent.  Despite the recent and welcome drop in oil prices, many observers believe the dip in oil prices will be temporary.  Print/mail finishing managers who act to invest in energy efficient hardware and lighting systems save money now and avoid future increases in electrical costs as well.

Sell the Carrying Capacity of the Envelope.  This is not a true cost reduction effort.  Instead, it is a way to generate revenue to offset those costs.  Credit card processors have used this insert technique for years.  However, it is still not widespread in the industry because many firms are wary of enclosing third-party marketing materials in the monthly account statement or other critical customer communication. 

Some observers are now suggesting that the resistance to third-party messages in the account statement will soon diminish, largely due the twin impacts of the recession and the impending increase in postage costs.  I concur and think more companies will seriously consider capitalizing on the carrying capacity of the outbound envelope by enclosing third-party marketing materials.

Migrate Messages to Electronic Delivery.  Electronic messages can save almost the entire cost of an outbound mailing.  And the practice – of migrating paper-based messaging, such as simple account-related alerts or notifications, to electronic or SMS messages -- is already well underway in the financial services and telecommunications industries.  As an added plus, these electronic messages are actually welcomed by the recipient, because they arrive instantly and in a format preferred by the recipient.

Consider QR codes.  Quick Response (QR) codes are still something of an innovation in the U.S., but they are already widely utilized in Japan and increasingly Europe, where cell phone penetration is greater.  

In effect, a small QR code gives users instant access to very specialized and even abundant information.  To access the data, the user 'takes a picture' of the QR code with a cell phone and is automatically linked to a site that contains the additional information.  (There is no need for a computer or inputting complex links.)

Organizations with customers that are cell phone- and tech-savvy (such as educational institutions and telecommunications firms) could make great use of the QR code technology.  All they need do is include the QR code, along with a very small amount of descriptive copy and perhaps a small illustration, on an account statement, insert, or other document in a regular mailing.  

Upon receipt, the cell phone-equipped customer would snap a photo of the QR code and be instantly connected to the additional information, either from within or outside the organization.  In effect, a QR code enables an organization to consolidate mailings, migrate messages to electronic format, and sell the carry capacity of the envelope all at once.

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Comments?  Contact georgelinkletter@charter.net.