The Power of Three

Three, as the Schoolhouse Rock song goes, is a magic number. But there’s no such thing as magic when it comes to cutting postage costs. You can save money in only one of three ways: cut your catalog’s weight; qualify for automation and presort discounts; and get your mailing as close to its final destination as possible.

Slimming Down

You can reduce the weight of your catalog by attacking two dimensions: paper and size, says Dave Riebe, vice president of distribution at Quad/Graphics, a printing company in Pewaukee, WI.

For the most dramatic impact, streamline the trim size of your catalog. Depending on your circulation size, the difference of only 1⁄8˝ or 1⁄4˝ can provide a substantial savings on both postage and paper without an adverse effect on response, says Riebe.

Before you start hacking your catalog’s dimensions, you’ll want to take into consideration the types of presses your printing company uses. It’s the law of the land in printing to always match the job to the press for maximum performance and cost efficiency.

You should also pre-determine your range of impositions, says Riebe, to ensure your cost-cutting move doesn’t waste paper instead of saving it. Another way to drop heft is by changing the basis weight of the paper you print on, including the order form.

Riebe explains that the increased emphasis on taking orders via the Web has convinced some business-to-business catalogers to drop their stand-alone order forms. Instead, they print more abbreviated instructions on how to place orders online on the inside back cover or other internal page.

Obviously, you would save on both paper and postage if you scrapped your order form. But this drastic move requires you to have a market that is comfortable and interested in buying online, as well as an internal shift in emphasis from the phone and mail to the Web.

If you’re considering a switch to a lighter paper, it’s best to talk with your print vendor first about the performance scale of different papers to ensure any changes don’t negatively affect production or print quality, says Riebe.

A final caveat on weight: Always compare the savings on postage and paper against the cost of mail preparation and a potential drop in response.

Clean and Complete

The U.S. Postal Service (USPS) gives price discounts based on a simple premise: The less work it has to do, the less you pay.

To sort your catalog mailings as precisely and finely as possible, you need the addresses to be clean and deliverable.

According to Riebe, the majority of catalog companies are already using CASS-certified and PAVE-certified software to clean and verify the accuracy of both their house files and list rentals.

For those that don’t know about the benefits of using such USPS-approved software programs, here is what they are and what they do: CASS stands for Coding Accuracy Software System, and software that has been certified under its parameters standardizes addresses and assigns ZIP+4 and Carrier Route codes for more complete and clean addresses. PAVE stands for Presort Accuracy Validation and Evaluation; software that has been certified under its guidelines verifies the accuracy of your presorting, which saves you a lot of postal paperwork and helps you qualify for discounts.

As for other list hygiene practices, their necessity is driven by the quality of the input and maintenance of the house file, says Jim Berge, manager, AIMS, List Processing Services, Estimating and IIS, at Banta Catalog Group.

“If you have a house file that you are confident about (meaning you know when people move and your customers keep you updated), I would recommend an on-piece endorsement such as the USPS Address Correction Service (ACS) program. This will be relatively inexpensive and you will get corrections on address moves that have slipped through the cracks,” Berge says.

According to Carol Swanson, marketing manager for Banta Catalog Group in Maple Grove, MN, you can save about 60 percent using ACS instead of Address Correction Requested (ACR).

“There are times when you need or want to have address corrections for your catalogs. The USPS offers ACS, which provides an ‘electronic return’ of an undeliverable catalog for about 20 cents instead of sending hard copy address returns, which cost about 50 cents,” says Swanson.

On the other hand, says Berge, “if your customer base has a tendency to move often, sending your house file through National Change of Address (NCOA) processing prior to mailing is a great way to cut postage up front. It will catch the moves prior to mailing and reduce undeliverable addresses. The NCOA process will almost always pay for itself; depending on the frequency of mailings, some mailers will NCOA each mailing.”

Whenever you rent outside lists, you want to be zealous about getting details from the list manager/owner on how recent and clean those names are and about cleaning and standardizing the records yourself.

It’s also crucial to run a merge/purge program to eliminate duplicate customer records. Depending on the specific customer base, says Berge, the merge/purge is set up to send catalogs to businesses, households or individuals.

Don’t lose those discounts you’ve worked hard to get by forgetting to barcode your order form reply envelope, says Swanson.

“The USPS requires reply cards and envelopes be prepared as barcoded and FIM-marked mail, if they are placed in another piece of mail that is receiving postal barcoding discounts,” she explains.

Numbers Count

For all factors, says Riebe, volume drives down the per-piece cost. The more driven you are to maintain a single mail stream for your catalogs by mailing different segments and campaigns at one time, the better your postal costs—which translates into better performance by the USPS.

Why do you need volume to achieve the best postal discounts? Because you’re more likely to meet the piece minimums set by the USPS for injecting campaigns into the mail stream as close to the final destination as possible.

The best rate a catalog marketer can get is for presorting mail to the carrier route level, where you must have at least 10 pieces traveling to the destination delivery unit (DDU), or local post office, for a single carrier route, says Riebe.

The next best rate is for presorting mail to the 5-digit ZIP code level, also destined for the DDU. And the third best rate is for mail presorted to the 3-digit ZIP code level for handling by the sectional center facility (SCF).

To qualify for these cheaper rates, Riebe recommends that catalog marketers try to maintain large lists for their campaigns instead of breaking them into smaller promotions.

You can do this without sacrificing your segmentation goals by using selective binding on same-size catalog versions and combining the lists into one mail stream.

For example, says Riebe, you can create both customer and prospect books in the same printing/binding pass and share the postal discounts from the combined larger mailing size.

Riebe adds that catalog marketers should bring their production and creative teams together to brainstorm ways to achieve the lowest postal rates without damaging response rates.

At Banta, the Catalog Group offers its clients “a process called ‘Add-A-Name’ that presorts your mail file and looks for Carrier Route bundles that are short of the 10-piece minimum,” say Berge.

The program then looks in another database of names (“Add File”) that you provide to find Carrier Route pieces that could complete the bundle to achieve the 10-piece minimum.

“This process doesn’t normally reduce postage overall,” Berge explains, “but it allows the customer to mail more names at a reduced rate. The customer can create an ‘Add’ file from expired customers (customers that haven’t ordered in a period of time) or prospects that they would consider mailing if the cost wasn’t prohibitive. The best lift is achieved when the mail file is already at 800M to 1,500M and the add file is 1,000M+ in size.

The Buddy System

As mentioned earlier, the cheapest postal rate for most catalog mailers is the Carrier Route rate. Catalog marketers who generally mail smaller quantities can benefit from having their drops sorted with a larger mailing, called co-mailing.

According to Berge, a smaller mailing (say, 50M pieces), presorted on its own, is likely to have no Carrier Route qualification. A larger mailing (say, 750M to 1,500M) already has enough pieces to qualify for some Carrier Route qualification.

The smaller mailing may have pieces that can qualify for carrier route, if the larger mailing has enough pieces going to that carrier already. For example, if the larger mailing only has nine pieces going to a carrier route and the smaller mailing has one going to the same carrier route, then both mailings will benefit.

If you are a catalog marketer with multiple titles, co-mailing these titles together is a great way to reduce the postage cost of the smaller, additional titles, says Berge.

“The main considerations [when co-mailing] are common catalog size and common catalog inkjet area, so the titles can run on the same bindery line,” says Berge.

What if you’re a one-title catalog company? You can ask your print vendor to suggest other catalog clients that you could call to arrange a co-mail partnership.

Berge says that “some customers continually co-mail with another company’s catalog, and the relationship works great. Again you need to have a common book size and a common inkjet area.

“Another consideration is common mail stream size. If both companies have a mail list of 500M and are mailing to a national audience, then both will benefit from reduced postage costs—and it makes it easier to divvy up the savings. If one customer has a mail stream of 1,000M and the other customer has a mail stream of 150M, the smaller mail stream will see more of the drop in postage.”

According to Riebe, co-mailing can be performed both in-line and off-line. The in-line process, as described above, requires that the catalogs all have the same trim size and address their covers in the same location; in addition, there is a limited number of pockets on the line, which reduces the number of partners who can co-mail.

The off-line process only requires that participants have similar trim sizes and address in a similar location.

As the off-line co-mailing production method eliminates the option of inkjetting personalized messages on inside catalog pages, more business-to-business catalog companies choose to co-mail than their consumer counterparts, says Riebe.

Another caveat of co-mailing programs is the need for the participants to be on the same mailing schedule, says Riebe. Your print vendor can help you find likely partners, but you have to make the alliance work.

Location, Location

The third way to cut the amount of work performed by the USPS, and your postage costs with it, is to get your mail as close to its final destination as possible.

According to Riebe, striving for destination discounts makes sense when:

• you can get mail to the drop point economically;

• you can meet the requirements for trucking it there.

Your printing company should have a computerized mail pool destination entry program, says Swanson, to schedule deliveries to the most localized USPS mail processing facility by the truckload.

“You will save on freight costs—in addition to the postal savings—by having your mail enter the USPS system at the BMC and/or SCF level. And if you’re a small-volume cataloger, you’ll be able to capitalize on the savings without compromising your in-home delivery dates,” explains Swanson.

Ready for some hard numbers? Riebe adds that drop shipping, or pool shipping, among several mailers can save an average of $7/M to $10/M.

“If you’re mailing large quantities per mail drop, you’re crazy not to pool ship,” says Riebe.