As you may have heard, the United States Postal Service announced that rates will increase effective January 22, 2017. Rates of "Market dominant products" are going up almost across the board, and Standard Class mail rates are set to increase by approximately 2-2.5%. This type of change is detrimental to businesses who rely on direct mail/direct marketing to communicate with their current customers and potential consumers.
Standard mail is also being rebranded to what the USPS is calling "Marketing Mail." Changes within Marketing Mail include removing the Flats Sequencing System (FSS) pricing. "This change will ensure that mailers pay for flats based on their volume density instead of the equipment flats are processed on. Other changes include increasing the piece pound breakpoint from 3.3 to 4.0 ounces for Marketing Mail Flats and Parcel shaped pieces to encourage mailers to include more content, which will lead to more sales for mailers and support volume growth," (Freeport Press).
why this could be problematic
This rate increase could be a dramatic setback for the USPS and brands that use direct mail as a means of communication. Each time rates go up, brands tend to take a close look at the mail they send—from invoices and billing statements to marketing communications. With more alternatives than ever to choose from, it's easy to see how some look at rate increases as an opportunity to cut costs.
Although turning to email may seem like a great way to offset the postage rate increase, it will likely come at the expense of reach and effectiveness—especially when it comes to marketing communications. Direct mail packs a stronger punch when it comes to response rates. According to Compu-Mail, "The direct mail household response rate is at 3.7%, compared to .2% mobile, .1% email, .1% social media, and .02% internet display."
Some other statistics to consider:
- 36% of people under 30 look forward to checking their mail daily.
- 66% of people are more likely to remember to use a voucher if they have a physical copy to carry around.
- 23% bought or ordered something as a result of receiving direct mail in the last 12 months.
- 92% of shoppers say they prefer direct mail for making purchasing choices.
- 42% of recipients read or scan mailpieces.
(Statistics from Compu-Mail).
It's worth mentioning that lower mail volumes could also spell opportunity for some brands. If major mailers that do not take advantage of available postage discounts reduce their mailing volumes in the face of increases, there is effectively less noise in the marketplace to compete with.
variable data printing with onestream delivers a solution
Have you ever wondered how major mailers continue to mail high volumes of direct mail in spite of rate increases? The fact is, properly planned and executed direct mail campaigns qualify for postage discounts that not only offset rate hikes, but save millions of dollars. There are many factors of a direct mailing that impact postage rates—from volume and concentration to manufacturing methods. We've worked with brands, manufacturers of printing and mailing equipment and the USPS to introduce new ways to qualify for postage discounts while still delivering effective, high-quality direct mail for our clients.
It all boils down to this: in order to qualify for deep postage discounts, you need to consolidate postal streams and manufacture your mailing in the best possible postal presort. Manufacturing all components of your mailing in one continuous process, without breaking sort is no easy feat when simultaneously striving to deliver relevant messages and creatives to a wide range of audiences. This is where variable data printing comes into play.
Variable data printing (VDP) is a form of digital printing that enables you to change images, copy, or style from one piece of mail to the next, without having to slow down or stop the printing press. Therefore, instead of letting the printing process determine how your mailing is broken up, you can print in one continuous run regardless of creatives and messages while maintaining the proper postage sort.
This is a widely known fact across the mailing industry, and is probably a key driver of the proliferation of variable data printing over the past five years. However, maintaining mail streams and concentration is further complicated by the need to send multiple package configurations across your audience. Our proprietary manufacturing process, which we call OneStream, is a solve for this challenge...but that's a whole other blog post.
IT ALL STARTS WITH THE DATA...
While overcoming the manufacturing challenges of producing mail in the proper postal sort is key, the technology is only as useful as the data powering it. Before you can manufacture your mail in the proper postal sort, you have to organize and optimize the mailing list behind it. Some mailers take an alternative approach and sort mail in proper postal sort after it's been manufactured. This typically involves moving a completed mailing to another facility, where specialized equipment is used to physically sort finished pieces of mail in a process known as co-minggling. While this method results in some discounts, the discounts are often offset by the cost of performing the sortation. This also comes at the expense of time—delaying the delivery date of your mailing.
the takeaways
- Effective January 22, 2017 postage rates will rise.
- Higher postage rates could result in lower mail volumes, which could actually be a competitive advantage for your brand.
- Don't fall into the trap of shifting marketing communications to digital channels and expecting the same results.
- Variable Data Printing and OneStream technology can help offset the postage increase.
- Focus on proper data hygiene and list-management methods that have the potential to reduce mailing costs.
