This year’s 5.4 percent postal rate increase in January had a significant financial impact on companies that mail a high volume of presorted and bulk bills and statements. To soften the blow the additional postal expenses brought, every organization that prints and mails high-volume transactional documents is searching for cost-cutting measures that can be quickly implemented.
Smart companies can be successful at combating postage costs using both careful consideration of current billing methods and a clear understanding of the constraints and opportunities that exist in the mailing process.
Here are a few tips to consider when working to control expenses:
Carefully Evaluate Postage Postage can be the biggest expense in mail production. In fact, it can account for up to 70 percent of total production costs. Depending on how many pages are printed and how the bill is stuffed, the average cost to produce one bill can start at 42 cents. Postage can make up 31 cents of that total. This expense forces many telcos to view postage as the major driver of billing costs. The focus then should be on process improvements that offset, or even exceed, postage costs, such as bolstering print/mail efficiency and enhancing the marketing value of their statements and invoices.
Keep Bills Below One Ounce As each document grows with more information, mail pieces may innocently overflow to another page. Taking advantage of state-of-the-art document composition tools ensures your print supplier or you will have to make only a few simple changes, and also helps ensure you keep all mailings below one ounce – a savings of 24 cents per piece in postage. For example, since many telcos continue to rely on legacy systems, customer statements are often printed on only one side of the document. By printing statements on both sides of the page (duplex) companies can trim the weight of each mail piece and reduce postage costs.
Leverage Postal Discounts Properly preparing and presorting mail will earn significant discounts from the United States Postal Service (USPS). It is wise to leverage these discounts aggressively to ensure mail is segmented to reach the critical volumes per zip code needed to qualify for the highest discount rates. And, not only will properly preparing and presorting mail grab a substantial postage discount, it will also speed delivery times.
Address Data Quality Address data quality is often another overlooked expense in organizations. Simple errors in addresses can result in significant increases in postage costs. Coding Accuracy Support System software is available from the USPS to validate, correct and standardize addresses.
Mitigate Returned Mail The cost of returned mail can be significant for any company. If a mail piece cannot be delivered (e.g., “undeliverable-as-addressed”), the additional cost to correct the piece is much higher than the initial postage. There are a number of effective tools in the marketplace designed to reduce returned mail by automating the address updating process. These tools identify undeliverable addresses and link old addresses to new move addresses.
Explore Electronic Delivery Some may point to electronic bill presentment as a way to sidestep postage costs. But recent reports by the USPS show that more than 70 percent of people still prefer to receive their statements in the mail, perhaps to help themselves keep a better tracking/filing system. However, converting just 10 percent to 20 percent of existing customers to electronic bill receipt can correspond to a significant cost savings opportunity. It makes sense then for telcos to provide incentives to customers to change their paperbound habits by finding ways to help them transition to the Internet through a combination paper/electronic statement. For example, creating a paper invoice that doesn’t hold all specific details will make the bill shorter. Customers would then be directed to a secure Web site where they are able to access their call report and other services.
Maximize Marketing Opportunity Another way to find hidden value in paper bills and statements is by looking at them as marketing vehicles. Monthly statements and bills are often the only direct point of contact with customers. Viewing these documents as a source of value and new revenue, rather than simply “the cost of doing business” reaps many benefits. Statements – unlike other forms of mail – are always opened, most often read and commonly kept on file. That makes them worth their weight in marketing advantage in terms of selling additional services to customers.
Enterprises that take the time to leverage document composition tools to realize the full promise of personalization and one-to-one marketing can produce statements and bills that command improved customer response.
Untapped Savings and Value This year’s postage increase will not be the last. Over the last few years, the cost of postage has been rising gradually and this trend shows no signs of slowing. The good news is that by reviewing current processes and identifying cost-saving opportunities companies can offset postage hikes and ultimately grasp the untapped savings and value inherent in their print/mail operations.
Not every telco can be an expert in postal discounts, document composition and/or mail piece tracking. Outsourcing is one way to access these expert skills while eliminating the need to maintain a large investment in staff, technology and process development. But if you don’t outsource – or even if you do – keeping current with resources you can take advantage of (and those that go straight to the bottom line) is of benefit to everyone.
Harry Stephens is president and CEO of DATAMATX. He can be reached at hstephens@datamatx.com.
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