February 2008

Planning to save: keeping your
postage costs to a minimum
Looking to minimize your postage costs?
Here are some key guidelines. By Dave Ward

Today, we sit firmly in the midst of a much-heralded economic crisis. Cash flows are getting tighter and many companies are looking for ways to cut costs. One idea might be to look at your postage costs. I can tell you that there are postage savings everywhere, and all it takes to enjoy them is a little careful, front-end planning.

There are a number of different mail products for delivering your direct communications to your customers and/or prospects. You can use Addressed Admail, Dimensional Addressed Admail, Lettermail, Publications Mail and sometimes even Parcel. Most of these products feature several variations or sub-categories, and all of them have their own definitions, requirements and restrictions. Unfortunately, if a mailing piece does not meet these requirements, it can be subject to reclassification and increased postage costs.

Thus, given the diversity and complexity of the different mailing products, it is not surprising that even experienced direct marketers and purchasing agents occasionally spend more on postage than they need to. So, if you are looking to minimize your postage costs, here are a few key guidelines. Really, we’ll just be touching the tip of the proverbial iceberg – since understanding the full complexity of Canada Post products can be a discipline unto itself – but these basic guidelines should still help keep you from experiencing that nasty, and costly, reclassification.

Know your intent
Before starting on any design, you should always establish the intent of your piece. Is it primarily promotional in nature? Do all the pieces have a uniformity of theme? If so, you are probably already enjoying the attractive pricing of Addressed Admail. But what about the organizational newsletters and business newsletters that many companies are currently using as effective marketing tools?
Since these communications pieces seek to inform readers and further goodwill, they are clearly promotional in nature. Yet, many are now being mailed as Publications Mail, with its base weight allowance of 200 grams. That’s four times greater than the 50 grams allowed by Addressed Admail! By turning to Publications Mail, many mailers are now enjoying significant reductions in postage for some heavier items. The same is true of thicker items too, since Publications Mail can exceed the 2 cm. thickness restriction of Addressed Admail.

The lesson here: know your intent first. Then you can select the Canada Post product that offers the best postage rates for what you are trying to accomplish.

Consider timing
Another thing you need to know is your timing. If you want to promote an event happening in BC three weeks from now but are mailing out of Toronto, you may be shocked to learn that Addressed Admail, Unaddressed Admail and Publications Mail do not enjoy the air travel of their Lettermail cousins. In fact, Canada Post’s delivery standards for out-of-province Addressed Admail are four to 13 business days, although in my experience it usually takes about three weeks for delivery from Ontario to British Columbia. That means that people would be receiving your piece just a few days before your event.

Mailing as Lettermail (which will cause an increase in postage on its own) can solve the timing problem, but there may be yet another issue. Suppose you designed a postcard measuring 216 mm x 140 mm. This would have been fine for Admail, but the maximum size for Lettermail postcards is 235 mm x 120 mm. Suddenly, your piece has to be classified as Non-standard Lettermail and mailed at a rate of $1.18. If we assume that postage would have averaged around $0.40 as presorted Addressed Admail, that’s an increase of $0.78 per item, or $7,800 per every 10,000 pieces.

You can, of course, put the postcards into envelopes and mail them as Short/Long Lettermail, but even this solution costs more in postage than it should. I’ve actually seen this sort of thing happen before, which is unfortunate since a bit more attention to the timeline would have allowed the pieces to go as Admail with no problem.

Geographic concentration
Paying attention to geographic concentration when using a product that requires a Letter Carrier Presort (LCP) plays a large role in determining your postage costs. This was, perhaps, most apparent on a Dimensional Addressed Admail project we did a few years back. This project required the assembly and merging of fourteen different streams. At the outset, the client had suggested doing fourteen separate mailings. However, out of curiosity, we compared running fourteen separate sorts against running a single, combined sort. I anticipated savings, but was shocked when the postage for the single sort was $20,000 less on 70,000 pieces of mail.

This confirmed that there are potentially huge savings to be realized through increased geographic concentrations or segment mailings along geographic lines. In my experience, there are a couple of methods you can use to increase concentration.

First, if you or your clients are involved in sample fulfillment, you may be able to marginally increase overall turnaround times by grouping more records together. This can provide higher geographic concentrations and, thus, lower postage costs. Of course, there is a trade-off on service levels, but you can often find a reasonable balance that helps you enjoy lower postage costs while also maintaining reasonable service levels.

Second, if your organization has multiple offices, you could consider merging some direct communications from different branches into single mailing streams. With today’s variable imaging technologies, the pieces can easily be tailored with branch specific text, graphics and signatures. For example, pictures of individual branch managers can be shown along with a unique branch-specific message. In these cases, the increase in geographic concentration can depend on the proximity of the different branches, but there can certainly be some economies of scale on print and mail preparation. Additionally, there can be significant savings if the individual branches were previously mailing similar items in smaller batches at Lettermail rates.

Dimensions
Watch your key dimensions like a hawk. These include width, height, thickness and weight. I cannot stress this one enough, since crossing the maximum for any of these dimensions will either kick you up into a more expensive class, or into a whole other product. Let’s look at just one possible example.

A piece is designed to have several inserts stuffed into an envelope, and the envelope selected measures 165 mm x 242 mm. However, the largest insert is 140 mm x 216 mm, and a 150 mm x 245 mm envelope would have been just fine. The piece weighs only 28 grams, but given that the envelope is outside of the Short/Long maximum width and length of 156 mm x 245 mm for Addressed Admail, the price just went up about $0.14 per piece. For Lettermail, the price just went up $0.64 per piece. On a 100,000-piece mailing, these are increased costs of $14,000 and $64,000, respectively.

Of course, it might cost less to order new envelopes in the Lettermail example (though re-ordering may not always be possible on time sensitive projects), but what if one of the inserts had been just a millimetre too wide? Then you’d really be stuck. And this is just one expensive scenario. There are plenty more out there, so, like I said, please watch your dimensions.

Quick Notes
In addition to the important guidelines outlined above, here are a few simple things you can do to help minimize your postage costs:

If at all possible (and sometimes it’s not), try to keep all product samples under 2 cm in thickness. Unless you qualify for Dimensional Addressed Admail or Publications Mail, items exceeding 2 cm in thickness must be mailed at Parcel rates. This can increase postage costs upwards of 1,000%, or in excess of $10.00 per item.

Be aware of glossy stocks, which can weigh 16% more than plain paper. This extra weight can add up quickly and could push your piece over a key weight threshold, costing you hundreds or thousands of dollars in extra postage.

Measure all prototypes. You can never assume that a piece actually meets the specifications you provided, and if a prototype goes into production without its measurements being confirmed, it could end up costing you dramatically.

Using self-mailers (pieces that are securely bound and cannot come apart) is a great way to save money on mail prep, but avoid using them for Lettermail. The piece would be classified as Non-standard and you would likely be paying $1.18 per piece rather than $0.54 for standard Short/Long under 30 grams.

Conclusion
As stated above, we’ve only touched the tip of the iceberg here, but hopefully you can see that there are immense postage savings to be realized, and that they are really not that hard to achieve. All it takes is a certain degree of planning. And, if the complexity of Canada Post’s line of products seems daunting, talk to specialists that can help. It will be time well invested.

Dave Ward is president of Highland Marketing, a Waterloo Ontario based firm which provides a complete range of data and lettershop/fulfillment services to both smaller businesses and large multi-national corporations. The company also specializes in the areas of pharmaceutical fulfillment, proxy mailings and database restructuring. He can be reached at dward@hiland.com or by telephone at (519) 886-6777.