Priority Mail: Is 2013 the Right Year to Begin Offering Mailing Services?

As printers seek to expand their service offerings to customers and prospects, some may wonder whether 2013 should be the year to get into the mailing business. If someone had asked my advice 15 years ago, I would have answered a very quick, “Just do it.” Today I answer more cautiously: “It depends.”

As a mailing service provider, you become a partner of the USPS. If your opinion of the USPS is decidedly negative, and if you’ve voiced your opinion to your staff and customers—especially if you’ve done it loudly and often—then you probably should not go into the mailing business. Granted, it can take a lot of lot of patience and understanding to be a partner of the USPS, especially when your customers are holding you accountable for performance by the USPS that you can’t explain and over which you have no control. But since the USPS has the exclusive right to deliver mail, you can’t be in the mailing business without being its partner.

 

Get Informed, Stay Informed

Your best defense against your customers’ perception of poor performance by the USPS is to know how to set their expectations. And you can’t do that effectively without understanding how the mail moves through the mail stream, what happens at each step of mail processing, and why the USPS is making changes in how mail is processed. This information is readily available from the USPS if you seek it out, ask questions, and stay informed. Subscribing to the DMM Advisory is an easy way to receive a steady flow of information about changes the USPS is making in the Domestic Mail Manual. Joining a local Postal Customer Council and regularly attending meetings is another way to access useful information.

As part of its strategic plan, the USPS is moving steadily toward increased automation of mail processing—in other words, eliminating manual tasks such as sortation and casing the mail in favor of providing letter carriers with mail all ready for delivery, in the exact order of their delivery route.

This push toward full automation means several things to a mailing services provider:

1. It is no longer enough to understand USPS rules and regulations for preparing and presenting mail to obtain postage discounts. Now you must also master use of mail list technology and electronic interface with the USPS.

2. It may not be possible to equip with used equipment. For example, the requirement to print the Intelligent Mail barcode (IMb) instead of the now-retired POSTNET barcode means that an inkjet head has to image an area greater than one-inch in a single pass. If you buy older inkjet equipment, you may have to purchase new heads, at a cost of several thousand dollars per head. This may apply to both tabletop and floor model equipment.

3. Fifteen years ago you could cross-train bindery workers to run mailing equipment and use the mail list management software with relative ease. Today, mailing list file preparation is much more complicated, and made even harder by customers who lack discipline in maintaining their mailing lists. Think prepress customers who constructed document files in Word or PowerPoint before we had the ability to turn everything into a PDF. While most customers can provide a mail list in Excel or Access, there are some who use Word to maintain a mail list because it allows them to print peel-and-stick labels. And a Word file can’t be easily imported into mail list management software.

4. Finally, there is a greater fixed recurring cost to being in the mailing business now than there was 15 years ago. An annual subscription to mail list management software is north of $1,000 a year. Mailing permits are approaching $200 each annually. National Change of Address (NCOA) subscriptions are about $1,000 annually. That adds up to an annual fixed cost of $2,200, or almost $200 per month. If you are averaging 10-cents per piece mailed, then you need to mail at least 2,000 pieces a month just to cover your fixed overhead costs—and that’s without including labor or direct materials.

 

A Major Commitment

The secret to success in mailing services, as with any service offered by print providers, is whether you can sell it—either to existing customers who currently are mailing, existing customers who might be persuaded to mail, or to prospects. Some customers and prospects have regular, recurring mailing requirements, such as those who use direct mail for marketing. But increasingly, customers are exploring Web-based communications for marketing, and it has become a harder sell even for experienced mailers.

The way to make money in mailing services is to have it be a substantial portion of your business mix—say at least 10 percent. This is the point where you’ll be an efficient producer and knowledgeable enough about postal regulations to be a reliable source of information for your customers. So calculate 10 percent of your current monthly sales volume, then divide that by 10-cents (or eight-cents or 12-cents) as an average selling price per piece mailed. That will give you an estimate of how many pieces of mail you need to regularly produce each month.

Now look at your existing mailing customers and likely mailing prospects. Calculate the regular, recurring monthly volume of mail they are currently giving you—or promising to give you. This number needs to be at least 50,000 pieces, or about 12,500 per week, for you to even consider making any investment in software, equipment, or even training. If you aren’t there yet, then concentrate on selling mailing rather than producing mailing until you get to 50,000.

If you find yourself saying, “I don’t know enough about mailing to sell it,” then recognize that won’t change just because you invest resources. Focus instead on learning how using the mail can benefit customers and on learning the basics of postal regulations so you can sell mailing credibly.

This isn’t meant to be a warning against adding mailing services. Many printers have made a lot of money in mailing services. But you can’t do it casually and expect success. If you have the fire in your belly to learn a new skill, the time to stay informed, and a good enough current ratio to invest resources, then go for it! You may be the next big success story.

 

Nancy DeDiemar is a former chairman of NAQP and Printer of the Year. She is the co-publisher of Printips (www.MyPRINTResource.com/10206473), a newsletter subscription service for printers. Contact her at Nancy91762@gmail.com.

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