Direct Marketing

Simplified Addressing Changes Effective 01-02-11

The USPS has eased the rules on simplified addressing effective Jan. 2, 2011. These changes are expected to help small businesses who have not used direct mail because of the cost. Simplified addressing enables business mailers to use mail delivery route information, instead of exact names and addresses, to reach target customer groups in specific geographic areas.

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PRC helps businesses stay competitive

Rejection of Postage Increase Will Help Businesses Stay Competitive and Save Jobs
Tony Conway, Executive Director, Alliance for Nonprofit Mailers
Affordable Mail Alliance Commends Postal Regulatory Commisson on Rejection of Postal Rate Hikes

Washington, DC – The Affordable Mail Alliance – an unprecedented coalition of more than 1,200 nonprofits, Fortune 500 companies, small businesses, major trade associations, consumer groups, and citizens representing the vast majority of the mail sent in the United States – said today that the decision of the Postal Regulatory Commission (PRC) to reject the rate hikes proposed by the Postal Service is good for businesses, and will actually benefit the USPS in the long run.

The proposed rate hikes, which were to have taken effect next January, would have added $3 billion annually to the nation’s postal bill even though the rate of inflation is close to zero. The PRC decision reaffirms that the Postal Service must limit rate increases to the rate of inflation, as the law requires.

“The PRC today has helped countless businesses stay competitive and saved tens of thousands of jobs,” said Tony Conway, Affordable Mail Alliance spokesperson and Executive Director of the Alliance of Nonprofit Mailers. “The Commissioners recognized that imposing an additional tax on Postal Service customers is not the way to address its financial troubles. Our members look forward to working with the Postal Service on the long-term restructuring needed to restore the Postal Service to competitiveness.”

While today’s decision will help the Postal Service retain volume and revenue, there is still more work to do. Blue ribbon commissions and government auditors have reported for decades that the Postal Service needs to streamline its inefficiently large network of undersized and obsolete mail processing plants. And although contracts with several major employee groups are up for renegotiation, the unions have signaled that they will strongly resist any major concessions. Additionally, Congress should also take a hard look at the Postal Service’s current obligations for prefunding its retiree health benefits program, a major cost burden. This prepayment schedule is another major contributor to the Postal Service’s financial problems.

“The Affordable Mail Alliance is truly an unprecedented effort with members across the country all of whom deserve thanks for uniting to address this important issue,” Conway said. “We are also grateful for our support from Congress and particularly for the leadership of Sen. Susan Collins, the key author of the 2006 Postal legislation at issue here and a tireless advocate for the future of the Postal Service. We stand ready to move forward in addressing the other issues that are so important to the future of the Postal Service.”

More on the Affordable Mail Alliance

The Affordable Mail Alliance is an unprecedented coalition of postal customers. The coalition includes charities, consumer groups, small business, national retailers, utilities, banks, insurance companies, Fortune 500 companies, and the customers who use the Post Office every day. The members represent many of the Postal Service’s biggest customers—and many of its smallest—and use every major class of mail. For further information, please visit www.affordablemailalliance.org o contact Jessica McCreight at jmccreight@skdknick.com or (202) 464‐6900

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Email or Direct Mail?

“… consumers are spending 28% less online time using e-mail, according to the measurement company [Nielsen].” Alex Palmer DMNews

“… Ben & Jerry’s is abandoning its e-mail marketing initiatives”

In a recent blog by Howard Fenton, senior consultant at NAPL, the ice cream company is going “to focus exclusively on social media advertising.” Ben & Jerry’s has apparently decided that there are better alternatives than email for building customer relationships. If true, the only use left for email marketing is as an acquisition tool.

But direct mail is more responsive, less expensive than email for acquisitions!

All the hype from email providers hides the fact that email is more or less a non-responsive medium. Their claims of being more responsive are based on comparing email’s click response with direct mail’s purchase response. On the cost side, they promote the idiocy of comparing the cost of distributing emails to the cost of distributing an equal number of direct mail pieces.

Email responsiveness, as with nearly all on-line advertising, is measured in clicks. A click on-line is when a consumer clicks on a link, opening a new web page containing more information. According to www.listpriceindex.com’s Top Email Offer Calculator, this happens 0.52% to 1.87% of the time for a Business to Business list. In comparison the traditional direct mail response rate is 1% to 3%. But the traditional direct mail response is a purchase response, or some other significant activity.

A click isn’t a purchase; clicks simply display new web pages with more information. There is an identical consumer action in direct mail… it’s called opening an envelope! Opening an envelope, or other direct mail piece, also displays a new page with more information. In fact opening a direct mail piece and clicking on a link are identical in fulfilling a consumer’s request for more information. Both deliver the requested information, email delivers it on a new screen page; direct mail delivers the information on a printed page.

Since on-line advertisers call the action of a consumer requesting more information a “click”, it’s also accurate to call opening a direct mail piece and instantly receiving more information a “click”. By establishing a common consumer action associated with both mediums, it’s possible to accurately compare common response rates and the costs associated with generating those responses.

The USPS has been conducting a survey called the Household Diary Study for over twenty years. A five year average (2004-2008) of the data shows that 82% of recipients of direct mail advertising read or scan this advertising. Reading or scanning the contents of a direct mail piece certainly qualifies as a click. Because of the Household Diary Study we know that direct mail’s click rate is 82%.

Comparison of response rates: direct mail 82%, email 0.52% to 1.87%.

Of all the costs associated with an email campaign, the only number used to calculate the cost of generating a click is the list cost, which includes distribution. To make a comparable click cost calculation, only the costs associated with direct mail’s in-mail cost should be used. In-mail costs are printing, manufacturing, list costs, list prep, fulfillment, mail prep, shipping and postage.

Email has a perceived functional advantage in its ability to deliver direct connections to the web. But by adding digital media such as an optical disc, thumb drive, web key, or simple QR code, direct mail is also able to provide direct links to the Internet. For a fair cost comparison with email, digitally linked direct mail must be used. The in-mail cost of a direct mail piece containing an optical disc can be as low as $1.00 per piece and will be used in the following cost comparisons.
To calculate the click cost of a mailing, the in-mail cost per piece is divided by the click rate. For disc based mail divide $1.00 by 82%, yielding a click cost of $1.22. For email divide the list rental cost by the click rate.

Listpriceindex.com has a chart tracking the cost of email lists. The current average cost for BtoB lists is $279/m; the average for consumer lists is $112. So to do the math divide the cost per email address by its click rate or $279/1,000/0.52% = $53.65 per click. An alternative option would be to let listpriceindex.com’s handy dandy click cost calculator do the math for you.

Cost-per-click comparison: direct mail $1.22, email from $14.92 to $53.65.

A case study provided by a reputable list broker (summer 2010), had a BtoC company purchasing 30,219 email addresses. Of these 985 were “opened”. The definition of an email “open” is that the graphics were downloaded by the consumer, making the email readable. The reason it’s unreasonable to compare the cost of distributing an equal number of email messages with an equal number of direct mail pieces is that the direct mail industry does not (typically) send blank or unreadable pieces to consumers!

With email, a marketer’s message is only delivered to those consumers that download the graphics. In this case study 29,234 marketing messages were left “blank” or unreadable by consumers. Using listpriceindex.com’s average list cost of $112/m for a BtoC list, the current cost for renting 30,219 email addresses would be $3,385.

With direct mail’s functional advantage of delivering 100% readable messages, this marketer only needed to mail 985 printed pieces to equal the same number of readable messages delivered through email. An accurate one-to-one cost of distribution comparison for delivering 985 readable messages results in a disc based direct mail cost of $985 compared to an email cost of $3,385.

Cost to distribute 985 readable messages: direct mail $985, email $3,385!

This case study generated 74 clicks or a click through rate of 0.25%. An email list cost of $3,385 divided by 74 clicks yields a cost per click of $45.74 per click. A direct mail piece containing optical media would generate the same number of clicks by entering 91 pieces (82% click rate) in to the mail stream. The total cost of generating 74 clicks using direct mail would be $91.00!

Cost to generate 74 clicks: direct mail $91, email $3,385!

In comparing email to direct mail, the important numbers to compare are the number of responses (clicks) generated and the cost of each response. When using these metrics, email underperforms…badly. Maybe that’s why Ben & Jerry’s is dumping email for the next hot thing. The fact is that when comparable responses and their costs are used, direct mail (with digital content) delivers greater functionality at a lower cost than on-line advertising.

Todd Butler of Butler Mailing Services can be contacted at 513-870-5060,toddb@butlermail.com or visit www.ekeymailer.com.
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Informal Ruling: Increase in Postal Rates Likely

Postage rates are likely to increase about 1.7% in January as a result of a letter that the Postal Regulatory Commission’s chief lawyer issued today.

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10 Reasons to PreSort with BMS

10 Top Reasons to choose BMS Direct as your Presort Mail Provider

It is a proven cost-effective business tool. Discount mail is your best option if you mail in volume. Whether your direct mail campaign is mailed First Class, Standard Bulk Mail or Periodicals BMS will provide you the most proficient and cost effective service available.

Presorting actually speeds up the delivery because it is zipcode ready! Using the same high-speed sorting machines and recognition systems, our presorters can automatically read addresses, spray barcodes (if necessary), and sort mail to the finest destination zip.

  1. Professional and courteous drivers
  2. Predictable service levels
  3. We maintain the “Best” equipment available
  4. Friendly customer service staff at your fingertips
  5. Management that cares about clients
  6. Better read rates means lower reject rates
  7. Competitive pricing
  8. Multiple facilities
  9. 35 years of experience
  10. Why settle for less, we are the “Best”

Call for details 1-866-816-2378 ext 7724

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6 Ways Direct Mail Thrive

“Don’t Call It a Comeback “

Six ways direct mail will thrive in the new year.

By Rod DeVar, Manager Direct Mail, USPS

happy to get mailMarketers are cost-conscious by nature. But last year’s economic meltdown forced them to look even harder for efficiencies, and it’s a mindset they’ll keep as the market recovers. But through it all, direct mail has been — and will continue to be — a viable, effective marketing tool.

Here’s why:

  1. It’s a strong acquisition tool. Marketers like paying lower prices to search for new customers online, but they’re often disappointed when these folks don’t stick around. That’s because targeting new acquisitions online is much less precise than sending a mail piece to prospects you know will likely be repeat purchasers.
  2. Technology continues to improve. Variable data printing is letting marketers acknowledge customers as individuals. Not only will more marketers take advantage of it, those already using it will get smarter about their applications by using customer data to better track relationships and tailor content as wants and needs change. That’s important because increased personalization makes direct mail more relevant to the end user.
  3. Newspapers are suffering. As newspaper circulation dwindles, it will spur a significant migration to the mail by those marketers (particularly retailers) that need to reach a high number of people in a very targeted geographic location.
  4. Content marketing is on the rise. Transpromotion and custom publishing are delivering marketing messages in more personal and relevant ways, with information woven right in the content — a plus for both marketers and recipients. Custom publishing continues strong growth because consumers like the quality, and with transpromotion the senders of statements and bills can include marketing messages that connect with how the customer is using their services.
  5. Clean lists are eco-friendly. As marketers continue to address list hygiene, they’ll be mailing more efficiently. Not only will that deliver a better return, it also is good for the planet because the number of wasteful pieces will decline.
  6. Mail will be even easier to track. More marketers will begin using the Intelligent Mail® barcode, a new Postal Service™ barcode used to sort and track letters and flats. With it, they’ll be receiving more detailed information than ever on how and when their direct mail is being delivered, as well as how customers are responding.

Before you kick off your 2010 efforts, know this:

The recession has created new norms for the marketing realm. Many tried-and-true formulas for evaluating media effectiveness and accountability won’t measure up to your heightened need to accomplish stronger results for less investment. But direct mail will continue to perform.

Rod DeVar is manager of direct mail at the United States Postal Service.®

USPS Deliver: a magazine for marketers. Click here for direct link.

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Direct Marketing

USPS Announces No Rate Increases: How that Affects You

By Mike Porter, President, Print/Mail Consultants

lettersThe USPS recently announced there would be no postage rate increases in 2010 for market-dominant mail. This includes First-Class and Standard mail as well as periodicals. I think this was a good move. A postage increase now might have spurred an acceleration of mail moving to non-USPS delivery channels. That’s still happening, but hopefully at a pace that will allow the Postal Service to adjust and adapt.

Did the postage rate freeze announcement cause you to re-think your short-term mailing strategies?

It certainly gives mailers a little more breathing room. But don’t get too comfortable. There are changes coming. A significant price increase probably would have accelerated the decline in mail volumes, but holding the line on postage for the next year isn’t likely to reverse the migration to alternative communication channels that is already underway.

Just as the USPS has had to anticipate a scenario of shrinking volume, mailers should be planning now for a world in which the measure of their success is changing. Going forward, the emphasis will be on the effectiveness of each mailpiece instead of how many units can be produced at the lowest cost.

Cost and productivity will still be important, of course. But making sure every mailpiece contributes to the overall goals of the organization will be more prominent. And your volumes may decrease, making the remaining mail even more valuable.

Did You Plan on Paying More for Postage?
Chances are good you already budgeted for a postal increase, probably somewhere in the neighborhood of three to four percent, maybe more. Even though it is tempting to save that money now that you know rates will be stable, I recommend that you invest some of those budgeted funds in upgrading your operations.

Using more dollars for postage would have had absolutely no effect on the value of the service you provide to your in-house or outside customers. Why not take some of that money and use it more strategically?

One of the best ways to do that is to spend a little on an analysis and improvement project. You should do this first – before you start to make capital investments in hardware and software.

Here’s why.

There is waste in your operation. Even after the gut-wrenching decisions you’ve made over the last year to comply with corporate cost-cutting directives, there is still more to do. Sometimes lots more. I have yet to visit a document operations center where we did not recognize an opportunity to lower costs, raise productivity, or both.

Decreasing waste and streamlining the workflow can result in a reduction or even the elimination of a planned investment in other areas. If you can improve your throughput in the finishing department, for instance, perhaps you can get by with a relatively inexpensive upgrade to your inserting equipment instead of a replacement.

That is why you should do a comprehensive analysis first. Funds are limited. Make sure that you get the maximum benefit from what you spend, not just a quicker way to do the wrong things.

The Savings Are Not so Obvious
Most document centers already reduced staff, eliminated travel, froze wages, and cut training to make their budget numbers.

But a document operation that has been around for any length of time has plenty of other savings opportunities hidden in the work they do every day. The trouble is that those opportunities are hard to recognize from the inside. And even if you do discover them, they are tough to fix on your own. The solutions often require the cooperation and consent of multiple departments. The competitive environment in most companies and the lack of influence that the print and mail center management has over other departments make progress extremely difficult or politically unwise. No one wants to make enemies or risk their jobs in an economy like this!

Put Some of that Money to Work for You!
Document Operations managers often tell us they can’t meet the needs of their organizations without upgrading their hardware or software. Eliminating waste in one part of your workflow frees up money that can be used to beef up other parts that allow you to meet the communications requirements of your customers. The money you need may already be there – you just have to find it!

Maybe you’ll want to do matching. You can invest your discovered savings in cameras for your inserters. Or perhaps you’ve seen the value of intelligent mail and need get some help to develop processes to take advantage of some IMB features. Save some money by optimizing your existing operation and use those funds to acquire expert help to develop your new capabilities.

Think about the direction in which your operation must travel over the next two years in order to be successful without increasing mail volumes and make a plan to get there. Spending some already budgeted money on your own operation instead of on postage may be just the opening you need to take the first step.

Mike Porter is an expert in Print and Mail operations and President of Print/Mail Consultants, an independent project management firm that helps companies nationwide be more productive, adapt to changing requirements, and lower costs in their document operations. For more information on training, coaching, or getting your projects done, visit www.printmailconsultants.com or email Mike directly at mporter@printmailconsultants.com.

From Mailing Systems Technology. Click here for a direct link.

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