Actionable Suggestions for Combating the Postal Increase

Monday, April 16th, 2007

ACTIONABLE SUGGESTIONS FOR COMBATING THE POSTAL INCREASE

To: Valued Clients and Associates
From: Susan Pizzano, Executive Vice President
Date: April 16, 2007
Re: Combating the Postage Increase

I recently participated in an industry forum which addressed the issue of expected postage increases at the NEMOA spring show. With expected changes slated to go into effect May 14, 2007, we have put together some suggestions to consider as possible methods of mitigating the effect of the hikes on your bottom line. We are not advocating any specific strategies. But we encourage you to review all the possibilities below and then set up a time to talk with me to determine what seems best for your specific business.

  1. Co-mailing
    • Find noncompetitive co-mailing candidates with your printer.
    • Realize better USPS entry discounts by BMC/SCF entry, saving dollars and resources as well as achieving faster in-home delivery.
    • Be flexible with your mail dates by a few days, if the savings is significant.
    • Note that it may limit some special marketing methods currently deployed, e.g. inside-outside ink jet messaging.
  2. Add-a-name
    • Increase carrier route and 3-5 digit entry levels by adding names to meet discount requirements; need 10 of same area to receive best rates.
    • Use “intelligent” add-a-name process that models performance to make “add names” decisions most profitable. Review the ROI at each level to make sure projected sales will cover additional costs, especially if going down to 7 or 6.
  3. Improve address quality
    • Use advanced address hygiene tools, not just NCOA.
    • Focus on improving deliverability to your intended recipient (customers and prospects).
    • Eliminate mail with low probability of delivery.
  4. Resize catalog
    • Test using lighter stock; consider reducing weight very slightly, e.g. switch from 40# to 38#; but be careful not to use this strategy too frequently or the catalog image will change and potentially hurt sales.
    • Test lower grade (supercalendared) paper.
    • Consider reducing page count after rigorous merchandise analysis; truly understand your merchandise mix and performance so you’re not making poor decisions.
    • Look at a number of variables if you are considering slim jim’s.
      • Your merchandise lends itself to the slim jim page size.
      • Your printing efficiencies stay the same.
      • 56 pages of 8 1/4 x 10 7/8″ = 77 pages of 6 x 10 7/8″.
      • Letter size catalog can gain considerably cheaper letter-size standard mail postal rates.
      • In the past slim jim testing produced lower response rates than other size.
  5. Create most cost effective contact strategy
    • Reevaluate current housefile segmentation strategy.
    • Review business rules to make sure your matchback process is most accurate.
    • Segment by original purchase channel.
    • Use Lifetime Value Analysis by original source and channel to differentiate among buyer segments. Do a one or two year lifetime value analysis to identify performance beyond initial response to determine most productive circulation.
    • Drop-a-name.
      • Supply your anticipated sales-per-book to your service provider and use it to drop out more expensive tiers when it doesn’t appear that you’ll meet your break-even point.
      • Don’t drop down too far in names you bring to your merge/purges, however. Determine which segments can cover the cost of the same mailing contact and creative/size of book and which groups should receive a reduced size book, or fewer books.
    • Discuss creative options with team.
      • Produce big book using selectronic binding to keep page counts where they are on top performing names.
      • Reduce printer forms to produce a book with fewer pages to mail to less profitable names.
    • CAVEAT: Be very careful about cutting circulation. By curtailing prospecting and reactivation you run the risk of limiting the ability of your housefile to grow. Consider eliminating one contact rather than cutting the circulation.
  6. Incorporate modeling
    • Model housefile, prospects and non-buyers to optimize results.
    • Eliminate “least likely responders.”
    • Use external data to drive models on prospects and non-buyers.
    • Test moving more of the rental co-op circulation into “balance” models.
      • Pay only for names which are mailed, which should save on rental costs but not hurt performance.
      • Please note that if you choose to do this you need to add three days to post merge schedule.
  7. Embrace the web
    • Add copy to drive customers to web for more product selection.
    • Review and implement best practices to create ease of ordering for customer.
      • Make sure website navigation is straightforward.
      • Make sure website internal search includes all catalog significant phrases/words.
      • Add “flip book” of current catalog, especially if you are reducing number of contacts or size of book.
    • Consider or increase paid search.
    • Implement email append to reach more customers through email deployment.
    • Review contact strategies on email deployment.
  8. Revise shipping and handling charges
    • Look at competitive charges.
    • Identify order size groupings where increases may be least significant to buyers (e.g. at higher dollar value orders).
    • Test to ensure increase does not hinder response rate and reduce profit overall.
  9. Consider some non mailing ways to economize

    • Find ways to cut merchandise costs.
    • Test eliminating order forms, especially in sale books.
    • Find ways so that customers spend less time in print shopping for your products. e.g.
      • Better organization/pagination/presentation to reduce page count.
      • Increase email contacts if decreasing number of catalogs.
    • Capture address correction requested information on new buyers (ACR on mailing).
    • Perform contact strategy testing to see if you can combine books. If you have two catalogs (one sale), you may want to combine and add sale pages into current book.
    • Consider alternative avenues such as blow-ins or package inserts.

We recognize that the increase in postal rates will have major ramifications for the industry as a whole and for individual mailers. We empathize with you in the face of the difficult issues with which you have to grapple. We stand ready to be a resource to help you make sure you understand every part of your business and how a decision in one arena affects another.

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