6 PRINT-TO-MAIL SOFTWARE AND SERVICE OPTIONS AVAILABLE RIGHT NOW PAGE 26 JANUARY - FEBRUARY 2021
MAIL: THE LARGEST UNMANAGED SPEND CATEGORY IN YOUR ORGANIZATION? PAGE 22
HOW DID THE USPS PERFORM IN THE CONTENTIOUS 2020 ELECTION? PAGE 16
COVID-19 AND THE IMPACT ON MAIL VOLUMES. PAGE 14
AND THE IMPACT ON THE USPS RATE SYSTEM. PAGE 28
TABLE OF CONTENTS
JANUARY-FEBRUARY 2021 | VOLUME 34 ISSUE 1
DEPARTMENTS 05 Editor's Note
What Lies Ahead in 2021? By Amanda Armendariz
06 Real-Life Management Time: Our Most Valuable Personal Resource! By Wes Friesen
08 Inkjet Info
The Case for Inkjet in 2021
By Jim Hamilton
10 The Trenches
Poor Data Quality Effects (It's Not Just Undeliverable Mail)
By Mike Porter
12 Software Byte
Drop Shipping for Challenging Mail By Jeff Peoples
FEATURES 14 The Impact of the COVID-19 Pandemic on Mail Volumes By Chris Lien
16 Ballot Bedlam: A Look at the USPS’s Role in the Contentious 2020 Election By Leo Raymond
18 Seven Best Practices to Create a Top-Notch RFP By Mark Rheaume
20 The Multichannel Formula for Success… and Why You Need It! By Andrea Molinares
JANUARY-FEBRUARY 2021 | MailingSystemsTechnology.com
13 Strategy and Culture Connection 22 Mail: The Largest Unmanaged Spend Category in Most Organizations By Adam Lewenberg
28 A Look at the PRC 10-Year Review and the Impacts on the USPS Rate System (and More) By Kathleen Siviter
Out of the Fire and into Your Best Future! By Bruce Gresham
SPONSORED CONTENT 25 The Power of Matching 26 Help with Your Print-to-Mail Software & Services Is Just a Few Pages Away. Looking for an answer to improve your address & data quality, automation, data & print management, presort, tracking, workflow, etc.? Find 6 ideas in this special section.
EDITOR’S NOTE VOLUME 34, ISSUE 1 MAGAZINE STAFF President Chad Griepentrog Publisher Ken Waddell Editor Amanda Armendariz email@example.com Contributing Writers Wes Friesen, Bruce Gresham, Jim Hamilton, Adam Lewenberg, Chris Lien, Andrea Molinares, Jeff Peoples, Mike Porter, Leo Raymond, Mark Rheaume, Kathleen Siviter Audience Development Manager Rachel Chapman firstname.lastname@example.org Advertising Ken Waddell 608.235.2212 email@example.com Design Kelli Cooke
WHAT LIES AHEAD IN 2021? BY AMANDA ARMENDARIZ
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SUBSCIRBE Subscribe online at MailingSystemsTechnology.com. Subscriptions are free to qualified recipients: $20 per year to all others in the United States. Subscription rate for Canada or Mexico is $40 per year, and for elsewhere outside of the United States is $45. Back issue rate is $5. SEND SUBSCRIPTIONS TO: Mailing Systems Technology, PO Box 259098, Madison WI 53725-9098 Call 608.241.8777 Fax 608.241.8666 E-mail email@example.com Online at MailingSystemsTechnology.com. REPRINT SALES ReprintPro 949.702.5390 www.ReprintPros.com All material in this magazine is copyrighted ©2021 by MadMen3 All rights reserved. Nothing may be reproduced in whole or in part without written permission from the publisher. Any correspondence sent to Mailing Systems Technology, MadMen3 or its staff becomes property of MadMen3. The articles in this magazine represent the views of the authors and not those of MadMen3 or Mailing Systems Technology. MadMen3 and/or Mailing Systems Technology expressly disclaim any liability for the products or services sold or otherwise endorsed by advertisers or authors included in this magazine. MAILING SYSTEMS TECHNOLOGY (ISSN 1088-2677) [Volume 34 Issue 1] is published six times per year (January/February, March/April, May/June, July/August, September/October, November/December) by MadMen3, PO Box 259098 Madison WI 53725-9098, 608-241-8777. Periodical postage paid at Madison WI and additional offices. POSTMASTER Send address changes to: Mailing Systems Technology PO Box 259098 Madison WI 53725-9098
nother new year is once again upon us, although 2021 perhaps feels more monumental given the year that we just lived through. In both the professional and personal spheres, 2020 was a difficult year, bringing about job losses, financial uncertainty, and (in our industry), declining mail volumes. We’ve been hearing of declining mail volumes for years now, but the pandemic certainly did our industry no favors! Many of us are wondering what the new year holds for mail volumes, given that the pandemic is by no means over (although there is, obviously, a light at the end of the tunnel in terms of the vaccine rollout and a hopeful return to normal life). To mailers, this year feels especially uncertain given the Postal Regulatory Commission’s recent release of its final set of rules regarding the USPS and its authority to raise rates. On page 26, Kathleen Siviter does an excellent job of outlining in detail what the PRC’s longawaited final rules mean for the mailing industry, but the main takeaway is that to be on the safe side, mailers should prepare for a mid-year increase of around six percent (potentially more). For an industry reeling from the effects of a pandemic, this news is hardly a welcome announce-
ment. But, welcome or not, there is a good chance this increase could happen, so it’s imperative that mailers prepare for the possibility now. On the bright side, there were some changes to the way workshare discounts are calculated, so mailers could see some more savings in this area. Regardless of what this year holds for our industry, mailers know that, overall, mail works and is still one of the most trusted, valuable communication methods available — even in an industry facing volume declines and price increases. We will continue to monitor the effects of the recent changes announced by the PRC, and if the new rules cause too much of a hardship for mailers, we trust that the PRC will do as mentioned in its report: “monitor the effects of the final rules on the Postal Service and on mailers in light of economic developments, and it will intervene as necessary if economic conditions prevent the final rules from operating as intended…” As always, thanks for reading Mailing Systems Technology.
MailingSystemsTechnology.com | JANUARY-FEBRUARY 2021
TIME: OUR MOST VALUABLE PERSONAL RESOURCE! BY WES FRIESEN
elf-development expert Brian Tracy suggests, “Your greatest resource is your time.” This same concept was articulated by another respected expert, Jim Rohn, who wrote, “Time is more valuable than money. You can get more money, but you cannot get more time.” Reality is, we all get exactly 168 hours per week — nobody gets more than that (although sometimes we wish we did!). Time management can be defined as “the ability to use time to get things done when they should be done.” Managing our time well has many benefits, including: We complete our important tasks on time We provide better quality work We are more productive and efficient We experience less stress and anxiety Frees up time for leisure and recreation, relationship building, and personal development Bottom line: when we manage our time well, we benefit, as do the people we serve and impact — including our team members who get our best effort. Principles to Manage Our Time Well What can we do to manage our time well? Here are principles to consider: 1. Plan and be intentional. Henry David Thoreau said (and I agree), “It is not enough to be busy... The question is: what are we busy about?” We make the most of our time when we intentionally plan on how we use it. Tracy counsels, “Every 6
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High Importance, High Urgency (Quadrant 1) — Examples of quadrant 1 items are important deadlines and crisis events. Prioritize and do these tasks first. High Importance, Low Urgency (Quadrant 2) — Examples include planning, relationship building, exercise (physical, mental, spiritual). Build time in our schedules to get these done. Low Importance, High Urgency (Quadrant 3) — Examples include some texts, emails, phone calls, and postal mail. Find quick, efficient ways to address with minimal personal time and involvement. If possible, delegate them. Low Importance, Low Urgency (Quadrant 4) — Examples may include some social media, TV, emails, texts, and phone calls. We can eliminate some of these, delegate others, and use our non-prime time to deal with the rest.
minute you spend in planning saves 10 minutes in execution; this gives you a 1,000 percent Return on Energy.” Setting goals and specific targets can help guide us and maximize our accomplishments and success. One approach that I (and others) have used is to start each year with annual goals for us and our teams. We can then follow up throughout the year with updated monthly goals. Then we can set weekly goals (task lists), ideally the Friday night before the week ahead. Final step is to have daily task lists, which we can develop at the end of the prior day. 2. Treat our time like money. Benjamin Franklin cut to the chase when he said, “Time is money.” A tool to manage our money is to have a budget, and we can budget our time, too, starting with our most important tasks first, and then filling in with other tasks that we desire to complete. Also, just like we don’t want to waste our money, we should avoid wasting time. Bruce Lee once said, “If you love life, don’t waste time, for time is what life is made of.” 3. Prioritize the important over the urgent. As we get busier and our task lists grow, we can agonize or organize by prioritizing (I suggest the latter!). Stephen Covey popularized his four-quadrant time management and prioritization model. His model reflects items that come our way that are urgent (calling our attention to do now) versus important (valuable in the big picture and long-term). To be most effective, we need to prioritize as follows:
4. Accept our limitations — we can’t have it all. Leadership expert John Maxwell recently offered this advice in Success magazine, “If you want to be successful as a person and a leader, you must make choices. You must narrow your list. You cannot have it all. No one can.” Having a thoughtful personal value system can help us determine between two good choices when we only have time to do one (e.g., choose to excel as a spouse over excelling with our golf game). 5. Be proactive, not reactive. The best planners and time managers are proactive, not reactive. Being proactive involves intentionally planning and using our time to accomplish our top goals and priorities. The alternative is to be in a reactive mode where circumstances and others drive what we do, and how we spend our time. 6. Fight procrastination. Procrastination is perhaps the major culprit for why people do not complete their work on time (I think we all battle this at times!). Benjamin Franklin advised, “Never leave until tomorrow that which you can do today.” One technique to combat procrastination is to tackle the unpleasant parts of our daily task list first — then reward ourselves in some manner (e.g., take a break and walk around; do something enjoyable like having a quick snack or peeking at our favorite social media site). 7. Working smarter has a higher return than working harder. We all know peo-
ple that really should be working harder to get more done and add more value. My guess is that you are not one of those — you already work hard! Finding ways to work smarter is what you and I need. Ideas include reducing our time doing Quadrant 3 and 4 activities, delegating when we can, getting better organized, and following the advice of marketing expert Dan Kennedy. He counsels, “Disciplined use of the time everybody else wastes can give you the edge.” For example, I just spent 90 minutes waiting to get some work done on my car — instead of wasting time watching TV in the waiting area, I spent the time reading and preparing for future columns and university class lessons. A big part of working smarter is to be well organized. Tips include keeping a neat work area, use daily planners and calendars, have a system to organize and handle paper and emails, develop a workable filing system (and only file papers and emails that we need for future reference), and whatever else works for us. 8. Reduce time wasters and distractions. Whether working in an office or
working at home, the potential distractions and time wasters are many — including phones, emails, social media, personal mail, and chatty co-workers. Part of the solution is to practice self-discipline, and take to heart the wisdom shared by Alan Lakein, who said, “Time = Life; therefore waste your time and waste your life, or master your time and master your life.” It is also helpful to have designated times to attend to phone messages, emails, personal mail, and the like. 9. Don’t multi-task. Some people encourage multitasking, but reality is that it is counterproductive. The Latin writer Publius Syrus wrote, “To do two things at once is to do neither.” Instead of getting many things done, we often end up getting nothing done. The best way to use our time is to tackle and complete one thing at a time, then jump to the next thing. Mozart reinforces this principle when he said, “The shorter way to do many things is to only do one thing at a time.” 10. Find our peak performance time. The most skilled time managers tackle their most difficult projects at the time of
day when they are at their best. Some of us are at our peak performance early in the morning, others mid-morning, some later in the day. Another tip is to have short bursts (e.g. 20-40 minutes) of intense, focused effort to get a jump start on important tasks. Motivational speaker Michael Altshuler said, “The bad news is time flies. The good news is you’re the pilot!” By applying proven time management principles, we can help ensure that our time doesn’t just fly away, but is used to intentionally accomplish what we need to be successful! Wes Friesen (MBA, EMCM, CMDSM, MCOM, MDC, OSPC, CCE, CBF, CBA, ICP, CMA, CFM, CM, APP, PHR, CTP) is a proven leader and developer of high performing teams and has extensive experience in both the corporate and non-proﬁt worlds. He is also an award winning university instructor and speaker, and is the President of Solomon Training and Development. Wes can be contacted at firstname.lastname@example.org or at 971.806.0812. His book, Your Team Can Soar!, can be ordered from Xulonpress.com/bookstore, wesfriesen.com, or an online retailer like Amazon or Barnes & Noble.
THE CASE FOR INKJET IN 2021 BY JIM HAMILTON
e’ve just wrapped up a year during which overall printing industry revenues have dropped significantly (at least 10%; likely much more). Concurrently, printing industry employment has dropped around 14% according to recent US figures. In addition, many printers have been forced to slow or entirely shutter operations. That is the bad news, but with the vaccination process beginning, there is hope that markets will rebound in 2021. Although our industry is still reeling from the effects of the pandemic, there certainly is some hope to be found. First, in spite of the pandemic, mail-driven print has outperformed other markets. Transactional documents may even have been given a boost due to pandemicrelated paperwork. Direct mail has not had a fantastic year, but it has done fairly well in comparison to other segments. Second, there is reason to believe that some impacts of the pandemic will work to the advantage of forward-thinking print service providers. This concept can be summed up in three words: value, simplicity, and opportunity. The Value of Print As we socially distanced and sheltered in place during the pandemic, one thing became clear — there are some imperfections in marketers’ abilities to reach new customers solely through electronic methods. How can you be sure that you’ve reached every household in a community when your lists of email addresses, phone numbers, and social media accounts are not tied to physical locations? We know that print has often served as a gateway to electronic media, 8
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but the pandemic has underscored this fact. Even so, marketers long for the ability to track return on marketing investment (ROMI) with print as they can with electronic media. As a result, simply reaching each household is not enough. Tracking the impact of print becomes that much more important, which is why personalized messaging that drives consumers to e-commerce sites must be part of the bargain. The pandemic has convinced consumers to use e-commerce methods that they might not have considered in the past (for grocery deliveries, for example). In this sense, the pandemic has accelerated e-processes that had previously stalled. Using Zoom as another example, people who had never even heard of a videoconferencing application before this year are now enthusiastic users. Marketers will likewise begin to embrace job submission and tracking systems that provide them with tighter control over timing and results. Where does inkjet fit in this equation? Its ability to produce one-step personalized color documents without the use of preprinted shells has important implications for turnaround time and flexibility. Highspeed color inkjet document printing systems take this value beyond shorter runs and extend it to larger campaigns that can be targeted and segmented in innovative ways, linking to other tools that marketers have to reach existing and new customers. Simplicity of Operation Even as the pandemic has accelerated the move toward e-commerce, it has also been having an impact on other transitions, and one of those is the transition from offset lithography to high-
speed production digital printing. Offset printing volumes have been dropping over the past two decades for a variety of reasons, but two have predominated. First, there was the impact of digital print. Economical quick-turnaround tonerbased digital printing techniques took away short-run offset work and then highvolume production inkjet systems (black & white and color) began to compete for longer run work while also providing digital print benefits like just-in-time printing and personalized messaging. Second, competition from electronic media moved marketers away from longrun, static “spray & pray” print campaigns (whether direct mail, catalogs, or other promotional print). These two factors have eaten into offset volume, leading to ongoing declines. And despite the fact that plenty of work is still best suited to long-run offset techniques, that market is shrinking, with competition coming from both digital print and electronic media. There is also the workforce to consider. Printers whose hardware assets include offset presses are faced with an aging skilled workforce that will be difficult to replace. A post-pandemic world will be focused on productivity and ease of use. Doing more with less will be key. The simplicity of production inkjet digital printing systems in comparison to their offset brethren makes inkjet a more appealing technology to staff. Simplicity of operation, along with high levels of productivity and application flexibility, will mean that production print facilities of the future will likely be built upon inkjet systems. It will not just be inkjet, though. Automation improvements in prepress, bindery, and mailroom have the opportunity to bring other workflow benefits in collaboration with production inkjet printing systems. Competitive Growth Opportunities Looking at inkjet opportunities in 2021, one of the biggest is to move offset print volume to high-speed inkjet. This follows through on the reasoning described above concerning value and simplicity. From a value perspective, the high levels of inkjet productivity, combined with digital print advantages such as just-intime manufacturing and personalized print, pave the way for more effective and targeted documents in print. You could say that value will be the theme for successful direct mailers in 2021,
and inkjet has the ability to play a huge role in providing customer value. From a simplicity perspective, inkjet provides key operational advantages. One, of course, is that a production inkjet system is arguably easier to operate than an offset press, and can also typically be run by a single operator. In fact, that operator may even be able to operate more than one system simultaneously. 2020 has shown us that lean operations can be effective during a pandemic. Granted, some of the leanness in 2020 can be attributed to what some have called “inadvertent lean operations” that stemmed from operator layoffs or sickness, but today’s print service providers must nevertheless be able to roll with the punches, which sometimes means social distancing or furloughs that impact staffing levels. Automation can help you get through that, and inkjet is a key part of facilitating that automation. Another aspect of inkjet simplicity is in its service requirements. Compared to tonerbased processes, inkjet systems have shown higher uptime and greater levels of productivity. I fully expect that in addition to capturing offset volume, inkjet systems
(particularly high-speed cut-sheet ones) will take away toner-based print volume. The largest drawback with production color inkjet is the expense of its inks and printheads. So much of the technology is built into these components that care must be taken to fully assess these costs. High-coverage applications can be expensive due to the amount of ink consumed. For that reason, it is important to be involved early on in the design process so that attractive, yet affordable, layouts are the end result. Recommendations for Mailers As we navigate through 2021, investigate how you can put the principles of value, simplicity, and opportunity into action. The market will not return to our old normal. Changes in business norms must be fully addressed, and the impact of a pandemic economy will linger. Examining how the inkjet systems you own can be fully leveraged and integrated into your overall work is your task this year. Investments in new inkjet infrastructure should be considered when they offer opportunities to expand, diversify, and compete.
The concept of “print on demand” (POD) first came into our lexicon in the 1990s with the introduction of a wide range of toner-based color systems. These allowed the first implementations of the POD concept, that is, delivering what is needed, when it is needed, and in the exact quantity required. That was a good first step, but the productivity of toner-based systems limited the ability to fully implement the POD concept. With more than a decade of high-speed inkjet document systems behind us, today’s print service providers have the opportunity to take POD much further. For the direct mail market, that is a strong reason to look forward to 2021 and its opportunities. Jim Hamilton of Green Harbor Publications (www.greenharbor.com) is an industry analyst, market researcher, writer, and public speaker. For many years he was Group Director in charge of InfoTrends’ Production Digital Printing & Publishing consulting services. He has a BA in German from Amherst College and a Master’s in Printing Technology from the Rochester Institute of Technology.
MailingSystemsTechnology.com | JANUARY-FEBRUARY 2021
POOR DATA QUALITY EFFECTS (IT’S NOT JUST UNDELIVERABLE MAIL) BY MIKE PORTER
hen mailing people think about data quality, we automatically connect it to mail delivery. Is the address complete? Has the addressee moved? Are the ZIP Codes or street names correct? Deliverability is important, for sure. But the mail we’re sending today is likely to be highly targeted and personalized. Marketing pieces may contain offers based on a customer’s buying history or credit score, or they may direct customers to the nearest bank branch or retail store. Transactional documents may contain data-driven informational or promotional messaging. Even if they aren’t printed on the pages, details like age, sex, income, or dwelling type often control the content. The availability of data points keeps expanding, which makes the quality of that data vitally important. Inaccurately matching the name and address file to outside demographic data will cause errant personalization and segmentation, which tarnishes the sender’s reputation and impacts the customer experience. Bad address data can have
JANUARY-FEBRUARY 2021 | MailingSystemsTechnology.com
far-reaching effects. This information is often used to control business processes totally unrelated to mail. Non-Mail Uses for Address Data On an individual customer basis, an address influences tariffs on cell phone service, sales tax collection, communications from school districts, shipping charge calculations, or jury summons, for instance. Utility companies rely on
many calculations and transactions on where they believe a customer lives. If a postal address is wrong due to incorrect address elements or because the individual has moved, then business decisions based on those addresses could result in expensive mistakes. At the very least, errors triggered by bad address data can create customer relationship problems and damage a brand’s image. In the aggregate, postal addresses represent the distribution of people over a geographic area. Why is this important? Companies might draw boundaries for sales territories, or decide where to locate service centers, retail outlets, or parts depots based on the location of their customers. Customer service or technical support departments rely on accurate address information to ensure they have sufficient coverage to handle incoming calls from different time zones. Accurate Address Data Yields Benefits Besides the waste of sending mail to addresses where no one lives, inaccurate address data can contribute to fraudulent activities. One scam perpetrated by criminals using stolen credit card numbers is having their purchases shipped to vacant properties. They track the shipments and are ready to retrieve stolen goods once they are delivered. If you haven’t done a thorough job at vetting the addresses before shipping merchandise, these phony transactions cost lots of money. Even if your mail is eventually delivered, incorrect or outdated address data can cause your organization to suffer from the financial impact of delayed payments, re-shipping costs, or customer
Even if your mail is eventually delivered, incorrect or outdated address data can cause your organization to suffer from the financial impact of delayed payments, re-shipping costs, or customer relationship problems. accurate address information to inform customers about outages, maintenance, or fee changes. Companies may base
relationship problems. Organizations often overlook these costs when they consider the value of address hygiene.
Mailing Lists – Beyond the Mail Center I’m assuming your print/mail organization performs address correction and move updates on outbound mail data files. But do you communicate updated address information to the rest of the organization? Most times, mailers just fix the data and produce the mail. They do not transmit address information updates back to their internal or external clients. Your clients may benefit from learning about the impact of poor address quality on parts of the business unconnected to the latest mailing. They will welcome information about how the mail center can add value by helping them lower their expenses or raise customer satisfaction ratings. Basic address quality processes will allow you to identify invalid addresses and update the data of people and businesses who have moved recently and filed a change of address form with the USPS. That degree of data quality is useful, but you may want to go further, depending on the business you’re in. Converting rural addresses to street addresses, for
instance, will be helpful for any company that makes decisions based on the physical locations of its customers. If you need to determine the distance between your customer’s house and the nearest cell tower, the rural route address isn’t useful. Sometimes, the postal addresses may be perfectly fine, but some people on the list are not appropriate for the mailing. Companies don’t want to waste money marketing to vacant or seasonal residences, so use available databases to drop those addresses from the mailing file. Scrubbing deceased or incarcerated individuals will lower mailing expenses also, while improving campaign ROI. Striking business addresses from mailing lists for campaigns aimed at residential customers is another easy way to improve the quality of the data. When precise location information is necessary, use geocoding to assign exact longitude and latitude coordinates to a postal address. Mail centers can perform all these actions that increase the quality of the data and add value to the projects.
Adding Value Is Critical As organizations confront the impact of digital fatigue, they are returning to mail as an important communication channel. But mail is expensive compared to digital communications. Based on some of the most recent proposals from the USPS, postage is likely to increase over the next few years — perhaps substantially so. Mail service providers should be on their toes and ready to help justify the cost of maintaining correct address data and sending mail. That may mean looking beyond mail deliverability to highlight the value of postal addresses to their clients.
Mike Porter at Print/Mail Consultants helps his clients meet the challenges they encounter in document operations and creates informational content for vendors and service providers in the document industry. Follow @PMCmike on Twitter, send a connection request on LinkedIn, or contact Mike directly at email@example.com.
MailingSystemsTechnology.com | JANUARY-FEBRUARY 2021
the step-saving process of drop shipping using PMOD.
DROP SHIPPING FOR CHALLENGING MAIL BY JEFF PEOPLES
very mail service provider (MSP) has run into situations with mailings (or portions thereof) that can only be described as challenging. And those challenging mailings need thoughtful solutions to make them successful. For example, what if you don’t have enough drop ship volume to fill a truck or even enough to send to a consolidator? What about those last few residual sacks or trays from a larger mailing that you are drop shipping using your normal methods? Ever experience pesky mail delivery complaints in certain areas of the country? How about wanting to improve the delivery time for your USPS Marketing Mail but not being able to afford bumping it up to First-Class Mail? If you have ever run into these challenging situations, Priority Mail Open and Distribute (PMOD) can be an extremely valuable drop shipping option for many situations. Another alternative for these challenges is using Less-Than-Truckload (LTL) for these same situations. What Is PMOD? Priority Mail Open and Distribute is a USPS service offering that provides an alternate method of transporting drop shipped mail. Rather than using traditional transport methods (truck, rail, airfreight, etc.) for drop shipping, this service allows mailers to use the expedited delivery service offered by Priority Express or Priority Mail to transport the smaller volume mail to additional postal entry points. To take advantage of this 12
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service, mailers place their prepared mail sacks or trays into special PMOD sacks or tray boxes, and tag these handling units with special PMOD tags. These tags indicate to the USPS that the mail inside the sacks or tray boxes is drop ship mail, and that it needs to be opened and then distributed as it would normally be processed, hence the name “open and distribute.” It is important to note that palletized mail cannot be sent via PMOD unless it is provided for in the MSP’s Negotiated Service Agreement (NSA) with the USPS. The red arrows in the image below demonstrate typical mail processing flow when mail is entered at an origin post office. The green arrows demonstrate
Why Use LTL? While PMOD is a very valuable service, it is not without its drawbacks. In some cases, the PMOD sacks or tray boxes can get lost in the shuffle at USPS processing facilities and end up getting delayed as a result. In other cases, the USPS sometimes breaks open these sacks and tray boxes before they reach the proper processing facility, which can again cause mail to get lost, delayed, or mis-routed. PMOD can also be expensive, particularly for heavier weight mailings. Using LTL can be a more reliable method of drop shipping this mail, and when using expedited freight services, offers the same level of delivery service. Mailers are often surprised when doing price comparisons that LTL drop shipping can meet or often beat PMOD prices, so it can be a very cost-effective option. LTL is also a great option for palletized mail that needs expedited handling, as PMOD is not usually an option for palletized mail.
Jeff Peoples is founder, president, and CEO at Window Book. With over 30 years of innovative postal solutions that make using the Postal Service easier and more proﬁtable for mailers and shippers, he has done presentations at many industry events, including GraphExpo, the National Postal Forum, Postal Customer Council meetings, and more.
Resources: The USPS provides many resources for more detailed PMOD information, including both Priority Mail Express and Priority Mail options. Mailers should work with their software and logistics providers to take advantage of analysis tools to compare PMOD vs. LTL for pricing and delivery time.
STRATEGY & CULTURE CONNECTION
OUT OF THE FIRE AND INTO YOUR BEST FUTURE! BY BRUCE GRESHAM
t’s easy in our industry to run from year to year, month to month, and (what seems like) fire to fire. As a leader, have you and your team set and shared a long-term strategy with your employees? If not, what is stopping you from focusing, right now, on what is most important — the long-term health and success of your business? Without focusing on that, you may be making brilliant tactical decisions, but losing the ability to compete and achieve over the next three to five years. Here is a blueprint for building a clear vision and strategy. Envision a Better Future Take a moment, just yourself, and begin to envision what your business looks like five years from now. Ask yourself these questions: How many clients do we have? In what vertical markets do they reside? What products are clients buying from us, and how much revenue and profit are they generating? How many employees do we need? What skills, tools, and equipment do employees need to be successful?
What new capabilities do we need to create individually and as an organization? After you outline that five-year vision, determine the flight path to get there. The flight path is a series of markers where your business needs to be in year 4 to get to year 5, year 3 to get to year 4, etc. to reach your desired destination. Take some time over a month for you and your leadership team to clearly define your future. Key SMAART Goals of that Future Have you ever planned a vacation with your significant other or family? Oftentimes, the dreaming, brainstorming, and thoughts put into planning are an exciting first step in the journey. Building and planning this long-term strategy with your team should be no different. Ask your top leadership team the following questions: What is exciting about the vision? What parts of the vision should be added to, enhanced, or changed? What are the three to five SMAART Goals that, if you achieve them, the vision will become a reality?
SMAART Goals are: Specific, Measurable, Attainable, Agreed upon, Relevant and Time-based. Each of these SMAART Goal elements are as important as the others. For example, your goals must be specific to reach your destination and they must be attainable; otherwise, you risk losing buy-in from the larger team. Unfortunately, the most-often forgotten element of SMAART Goals is timebased. It is critical that every goal and step along the way has a due date. What Is Written Is Permanent: Molding the Strategy A business leader once told me a quote he lives by: “What is said can be forgotten, but what is written is permanent.” As you charge through this process with your team, make sure to capture each of the steps you have completed in a living strategy document. Step 1: What are the obstacles to achieving the goals? Step 2: What are the critical success factors (what we must control) to overcome the obstacles? Step 3: What are the two best strategies to control the critical success factors based on the probability you can implement the strategy, the impact of the strategy on the SMAART Goal, and the ROI or cost/ benefit of the strategies? Once you have the strategies for each SMAART Goal identified, assign leaders for each strategy and determine a cadence for how often you will report progress. Update the living strategy document monthly based upon whether or not you are achieving the key metrics/flight path for each strategy. Additionally, you should identify new findings, ideas, and market realities.
Bruce Gresham and the team at Applied Vision Works (www.appliedvisionworks.com) use practical methods to help business owners, leaders, and teams reach their goals faster. Connect via 704.726.6728, bgresham@ appliedvisionworks.com or via LinkedIn by scanning the QR code at left with your smartphone camera. MailingSystemsTechnology.com | JANUARY-FEBRUARY 2021
By Chris Lien
THE IMPACT OF THE COVID-19 PANDEMIC ON MAIL VOLUMES
espite being deemed an “essential business,” USPS mail volume was hit hard in 2020 due to the COVID-19 pandemic. In early February of last year, the United States began to hear about a new virus that was rapidly spreading worldwide. Despite everyone’s best efforts, COVID-19 entered the United States and caused massive shutdowns of bars, restaurants, gyms, and retail establishments. Only businesses deemed “essential” by state governments were permitted to remain open for their essential workers to continue working. For a few weeks in March and April, mailing service providers were uncertain whether they could remain open. Thankfully, the USPS issued an industry alert that clarified that the USPS and the mailing industry were indeed essential businesses to fulfill the universal service obligations as outlined in Title 39. Unfortunately, the impact on mail volumes from these shutdowns had already begun, leading to double-digit declines in Marketing Mail volume in May, June, July, and August. 14
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As the nation entered the election season, all hopes were on a record increase in both political and election mail, which seemed to occur. According to the USPS, total mail volume surpassed 4.5 billion mail pieces for both Political Mail and Election Mail tracked, representing an increase of 114% compared to the 2016 election cycle. While this helped somewhat with the year-to-date volume impact from COVID-19, the USPS expects mail volume for 2021 to continue to decline. According to the USPS FY2021 Integrated Financial Plan, overall mail volume in 2021 is expected to decline by 10.2%, resulting in a total volume of 116 billion pieces. The hardest hit class will be Marketing Mail, with an estimated decline of about 9.5 billion pieces, another double-digit hit to this mail class. With such dramatic declines in mail volumes, many direct marketers and mailing service providers wonder what, if anything, can be done to either curtail these projections or somehow add value to those mail pieces that remain. Fortunately, a trifecta of technology is now available for astute mailers.
Adding Value to Your Mail Address quality is always the perfect place to start to improve the value of mail. With mail volumes declining and businesses trying to connect to customers, keeping addresses complete, correct, and current is more important than ever. CASS Certified software is simply a foundation for a complete address. To ensure that the address is actually deliverable and entirely correct, however, mailers need to carefully review the return codes from the software as part of the address quality process to leverage additional address quality services. Having a ZIP+4 for a high-rise apartment’s default address may earn you a postage discount, but it doesn’t result in a completely deliverable piece of mail. An apartment append and advanced address resolution service is the best way to obtain the essential secondary address information. Fortunately, many software providers offer such a service through their CASS Certified solutions. Despite a pandemic with quarantine requirements, the move rate for families and individuals is expected to increase
in 2021. With low mortgage rates and businesses that have shifted to workfrom-home options for employees, many families and individuals are on the move. Keeping up with these customers will be a key challenge for mailers in 2021, and fortunately, there are new solutions to leverage. NCOALink is the perfect way to comply with USPS Move Update requirements and can be easily accessed from CASS-Certified software provided solutions. However, this only provides permanent changes of address that are filed with the USPS, and that is estimated to represent, at most, 60% of the actual moves. In order to find all the changes of address, a proprietary change of address (PCOA) solution is needed. This leverages new address information from additional sources, such as warranty registrations, to compile a change-of-address database. Some software providers have combined these two technologies in order to create a service that goes beyond simply complying with the USPS Move Update rule and can significantly improve delivery rates for prospect mailings. The other technology that continues to evolve is mail tracking, which was particularly useful during the 2020 election cycle.
The USPS Informed Visibility service has come a long way in the past years. It is rapidly emerging as a primary conduit of postal communication that can be leveraged to strategically time omnichannel direct marketing campaigns. Software companies are providing mail tracking services, including Informed Visibility. Additionally, Informed Delivery scans are sent to mail service providers, who, in turn, can present dashboards to the mail owners, showing them when the pieces were inducted into the USPS, where they are now, and when they will arrive. These three value propositions of accountability, visibility, and predictability represent growth opportunities for service providers and assurances to direct marketers that their direct communications are being delivered. “Snail mail” is a term that has been used ever since the advent of email. While mail service performance took a regrettable hit this year, in part due to changes to the supply chain by the new Postmaster General, mailers could at least be assured that the pieces would ultimately arrive at their intended destination. That, of course, assumes a correct address and leveraged mail tracking. Though it may be slow compared to email, direct
marketers are starting to find that they’d rather have “snail mail” than “fail mail,” which results from email messages that were never even opened or read. Direct mail by itself continues to outperform any other single channel of direct marketing. And with Informed Delivery, mailers now have an opportunity to easily bridge physical to digital as part of an omnichannel campaign. Over 30 million Informed Delivery subscribers can now begin engaging with a mail piece even before it arrives in the mailbox later that day. This provides substantial attribution potential to direct mail and further increases its value to astute direct marketers. COVID-19 has hit the mailing industry hard and in unpredicted ways. Volume declines, especially for Marketing Mail, will be felt as we continue through this pandemic into 2021 and may have a lasting impact on the industry. Fortunately, technology continues to evolve, and by leveraging advanced software and services, we can increase the value of mail to ensure its continued use in the years ahead. Chris Lien is President, BCC Software, a BlueCrest Company.
MailingSystemsTechnology.com | JANUARY-FEBRUARY 2021
A LOOK AT THE USPS’S ROLE IN THE CONTENTIOUS 2020 ELECTION By Leo Raymond
n the opinion of many people, businesses, and organizations, 2020 was a terrible year — and for good reason. For the Postal Service, it was one that will not be remembered fondly. The pandemic impacted USPS employees, severely suppressed the mailing activity of many businesses, and drove an unforeseen explosion of online shopping (and shipping). 2020 was also an election year during which voting by mail became key to the election process and the focus of politically inspired charges that the USPS was somehow subverting it. After election day, most of the dust settled, life usually returned to pre-election (but not pre-pandemic) normalcy, and circumstances enabled a look back at how well the USPS did in handling election-related volume. Statistically, it seems to have done reasonably well. Here are some factoids: 16
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The Postal Service delivered approximately 4.6 billion pieces of election and political mail during the national elections, including the primaries — 114% above the mail volume of the 2016 election cycle. This included: • 4 billion pieces of political mail • 610 million pieces of election mail • More than 135 million identifiable ballots to and from voters On average, the USPS delivered ballots: • From election officials to voters in 2.1 days • From voters to election officials in 1.6 days 97.9% of ballots were delivered from voters to election officials within three days 99.7% of ballots were delivered from voters to election officials within five days Ideally, the movement of election mail would have been faster, with 99%+ reaching the voter (or election officials) within only a day or two. Also ideally, any surge of interest in vote-by-mail would have occurred earlier than a few months before
were properly identified, or meeting USPS address accuracy and barcoding standards, or setting reasonable expectations for processing and delivery cycles. Many jurisdictions had their own formats for designing and addressing the envelopes of outbound and return pieces, and schedules for when ballots were mailed and due back to election offices. Some allowed voters to ask for a ballot to be mailed to them as late as the eve of election day. In other years, transitioning from in-person voting to voting by mail would have been a better planned, smoothly implemented process, not something done in the midst of a pandemic. It also would have been done without the exceptional political tensions of the 2020 election cycle or the accusations that they generated.
a national election. More time would have been available to educate election officials about the practicalities of vote-by-mail; the USPS would have been better prepared to handle an increased volume of ballots; and all of that would have taken place not during a pandemic and without an overlay of political hysteria and finger-pointing. But, after all, this was 2020. Most election offices in the nation’s over 10,000 jurisdictions aren’t full-time operations or staffed by persons experienced in voting by mail. For years, the Postal Service has had teams working with election offices, advising on everything from mail piece design to preparation and entry of mailings. But neither those teams nor the offices with which they worked were prepared to pivot to large-scale voting by mail as quickly as interest in the method accelerated. Essentially, conducting an election by mail is similar to producing a bulk mailing and managing returns from customers. That may be run-of-the-mill for commercial mailers but not for election officials; they knew how to run an election, but this did not translate into ensuring election materials
A Perfect Storm of Mitigating Factors Much of the focus on the USPS was based on a series of otherwise unexceptional circumstances. For political reasons having nothing to do with the 2020 election, all of the nine appointed positions of the Postal Service’s Board of Governors had become vacant. Like all presidents who nominate thousands of political appointees, the incumbent president named individuals to serve as governors who, after the usual process, were confirmed by the Senate. Meanwhile, back in the fall of 2019, Postmaster General Megan Brennan announced she would retire in early 2020. Only the appointed governors of the USPS can hire (or fire) a PMG, so they began to search for Brennan’s replacement — a process that dragged into midyear and concluded with the selection of Louis DeJoy. Not surprisingly, the governors believed DeJoy had the background to improve USPS efficiency and get its costs under control — all reasonable objectives — but they failed to realize that what would be the headline was DeJoy’s political history, not his executive experience. Aside from whether DeJoy was professionally qualified to be PMG, the optics of his selection fostered the belief that he was the president’s designee to use the Postal Service’s role in vote-by-mail to influence the voting’s outcome. DeJoy didn’t help himself in the opening days of his tenure when, reacting to the findings of reports by the USPS Office of Inspector General, he ordered measures to control overtime and transportation costs. Both initiatives were reasonable and jus-
tified, but their timing was bad, given the impact of pandemic-related absenteeism and surging package volume on service performance. At the same time, under ongoing programs to reduce its infrastructure to better align with shrinking mail volume, the Postal Service had been removing underutilized collection boxes and decommissioning redundant or obsolete letter-sorting equipment. Though there was no news in any of this, persons unfamiliar with USPS activities quickly connected the removal of boxes and equipment, declines in service, DeJoy’s orders about overtime and transportation, and his political background to allege it all was indicative of a not-so-covert political scheme. Soon, one camp was claiming the voteby-mail process couldn’t result in a fair election (and that the USPS couldn’t support the related volume) while the other camp was accusing its opponents of using the Postal Service as a tool to disenfranchise voters by delaying their ballots. Other concurrent situations — the impact of the pandemic on the postal workforce, or the unexpected surge in package volume — were overlooked as everything postal was viewed through a political prism. Politicians in Congress demanded explanations from DeJoy, and lawyers were activated, lawsuits filed, and judges persuaded to order measures to monitor the USPS and thwart its misuse for political objectives. Eventually, after one of the most bitterly contested elections in recent USPS history, the results were counted, and, in the end, none of what was alleged about the USPS proved true. One camp will claim its actions prevented a subversion of the electoral process, while the other camp will reply that there was nothing manipulative being done in the first place. As noted, the agency did very well, but not perfectly, so the headlines were about its failures. Regardless, like before the election, the USPS still moves and delivers mail while dealing with the pandemic and waves of packages; revenue and costs are still moving in opposite directions. And politicians, no longer finding a political value in the Postal Service, have returned to ignoring the need for fundamental reforms to the agency’s outmoded business model. Leo Raymond is Owner and Managing Director at Mailers Hub LLC. He can be reached at lraymond@ mailershub.com. MailingSystemsTechnology.com | JANUARY-FEBRUARY 2021
SEVEN BEST PRACTICES TO CREATE A TOP-NOTCH RFP By Mark Rheaume
f all the ways our industry has evolved, one of the more challenging changes is the prevalence of the request for proposal, or RFP. While providing pricing to clients has been around just about forever, the change to which I am referring is the evolution that this process has undergone. It has become so formal (almost sterile) and, in many cases, difficult. This devalues the personal relationships we all strive for as we build partnerships between organizations. Here are some best practices that help the process remain valuable, unbiased, and equitable without making it more like a matrix that is cumbersome and difficult for respondents to complete. Personalize It It is vitally important that the respondent feels included. The RFP should be presented and written in a way that includes the respondent. It should clearly state the â€œdeliverableâ€? that the respondent is being asked to create. By simply stating what business problem/issue they are being asked to solve and clearly defining the operating environment (IT structures, preferred and mandated security protocols, implementation timelines, etc.), the respondents will be able to provide better
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and more detailed responses regarding the deliverables. The respondents will be able to include graphics and verbiage that directly relate to the organization issuing the RFP, which makes it easier for them to evaluate the responses they receive. Minimize Filler Content RFPs should be direct and based on action. Organizations invited to respond to RFPs do not like ambiguity. It forces them to make assumptions, which is always dangerous for both organizations. Be clear and expect clarity from the respondents. A properly developed RFP invites responses that clearly define the actions that each party will undertake should they engage in moving forward. Without this level of clarity and clearly defined actions, the whole process loses a great deal of value for all involved. Spelling and Grammar The RFP should be well-written and easy to read. Nothing disturbs me more than finding grammatical and spelling errors in one of these documents. It is difficult to prepare an RFP and takes both resources and time, but yet, it is hard for me to believe that organizations fail to do a simple review of the
document to check for spelling and grammar. Would these same people send their resume into an organization without first checking these important elements? Clearly Pose Questions When issuing an RFP, your organization is looking for answers. The RFP needs to be clear about what the organization is looking for. The respondents deserve clarity so that the answers they provide will be clear and on point. As a result, their responses will likely be obvious within first two sentences they provide, which is an added benefit. Visually Appealing In the RFP document, margins, graphics, and text should align and flow seamlessly. The graphics should be used to supplement and break up the written content. Respondents will appreciate the structure and value a consistent look. This makes it easier for them to clearly know where they need to add a response and allows them to format their responses, focusing on continuity in terms of structure. Too often, RFPs are cluttered and formatted in ways that make it challenging (this is putting it mildly) for respondents to provide their information.
This is one form of “response prevention” that I am sure is unintentional but is nonetheless an impediment to the value of the RFP itself. If respondents are expected to provide clear and concise responses, the RFP document must be properly prepared and presented.
grams is not a best practice. At the very least, I always worry whether or not my responses will “translate” properly between versions or if the issuing organization will even be able to open the response if they only have the older version of the program.
Focusing on the respondent is one way to ensure that the effort of preparing the RFP will result in thorough, thoughtful, innovative, and complete responses. User-Friendly Remember that any RFP you prepare must be universally accessible. Without access, the respondents cannot/will not respond. If the responses are limited, the best solutions may never reach the organization issuing the RFP, which is certainly not optimal. Use updated versions of the commonly used platforms many RFPs are issued in. It is difficult to prepare these responses anyway, and trying to do so in outdated versions of the pro-
Invite Comments and Feedback Finally, while you have potential vendors engaged, ask for their feedback on the RFP. Allow them to share their thoughts on the structure and “ease of use.” They will share some insightful thoughts that will allow you to improve future efforts and RFPs you work on. Continuous improvement is something we all strive for, and the RFP process should be no different. Allowing the respondents the chance to provide their feedback will represent you and your organization professionally.
Don’t Let the Process Overwhelm You Preparing RFP documents is challenging and difficult. I appreciate it as an art form and take great pride in providing RFP documents that are easy to respond to clearly and concisely. Focusing on the respondent is one way to ensure that the effort of preparing the RFP will result in thorough, thoughtful, innovative, and complete responses. Leaving the document open to question is an invitation for respondents to feel the need to add all sorts of caveats and assumptions, which is not optimal. Each of the “best practices” above keeps the focus on the respondent. This list should result in responses that are clear and easy to evaluate. I hope it is helpful as you prepare RFPs going forward! Mark Rheaume is a Services Engineer, Enterprise Services Sales Engineering, at Ricoh USA, Inc. He has over 35 years of industry experience developing, designing, and implementing solutions. Mark is and has been an active member in several postal industry associations as a board member, speaker, and writer. These associations include: MTAC, Idealliance, NPOA, PCC, MSMA, Mailcom, NPF, and Printing Industries of Minnesota. He can be contacted at Mark.Rheaume@ricoh-usa.com.
MailingSystemsTechnology.com | JANUARY-FEBRUARY 2021
By Andrea Molinares
THE MULTICHANNEL FORMULA FOR SUCCESS… AND WHY YOU NEED IT!
e all know that customer communications is one of the most important aspects of any successful business, and for generations, that communication used to be a simple, one-way outbound correspondence. That is not the reality today. Your customers’ expectations have dramatically increased in the past decade, largely due to the amazing customer experiences offered by giants like Google, Apple, and Amazon. As a result, these new standards apply to the communications and marketing messages consumers receive, either in print or digitally. Customers expect to interact on the channels they choose, and they demand that companies tailor messages to their needs. This is a challenge for any company that has to manage customer communications across multiple channels and ensure that the production and workflow systems work seamlessly to guarantee the responsive delivery of every piece of communication to the end consumer. The best way to assemble all pieces of the multichannel puzzle is to use an integrator that provides complete control over the production and distribution process and that can effortlessly implement the multichannel formula for success. The complexity of this formula reveals itself when you start looking at your customer preferences, how to collect and analyze the data, what content you use, how to capture it, how to trigger workflows, how to determine the channel, how to create the format for that channel, what to do when one channel is not producing, how to link the channels, and much more. Multichannel is more than creating output from a composition engine in a format for one channel; that’s just a small piece of the puzzle. If you’re getting into the multichannel game, here are a few tips: Focus on Customer Engagement Your customers have busy lives. They want communications that reach them at the right time and in the channel that’s most convenient to them — plus, implementing personalized targeted messages that add value to the customer is the ultimate winwin scenario. You see, customers now expect a certain level of connection to a brand, and through targeted (a.k.a. “thoughtful”) messaging, you are letting your customer know exactly what action you want them to take. This is the fastest way to trans20
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form customers into brand advocates who will, in time, practically become walking advertisements. It all starts with a customer-centric mindset. Content Is King and Activity–Based Content Is the Kingdom Your consumer database has valuable lifestyle and demographic data, along with the purchase histories and channel preferences the consumers gave you. That’s the “king” part. Tracking what consumers do in the world gives you the keys to the kingdom. With all that information, you’ll be able to communicate in relevant ways with consumers at the time they want to have a dialogue. As you advance your multichannel initiatives, lean on your vendors. It is hard to do this alone. Start Small Sounds cliché, but people say it for a reason. Multichannel projects are complicated, multidisciplinary, and you can run out of enthusiasm and funding if you try to boil the ocean. Start with creating the output formats needed for the channels and designing simple workflows to push the content through the channels and tie the channels together. For example, create a PDF from your document composition system that you attach to an email, and then measure what happens to the email. You can trigger actions such as sending a text or physical mail piece if the emails are not opened. That connection between channels can become intricate, but there are some simple things you can do without too much effort and cost. Use Technology If you and I are the only people in the world, then we can easily communicate through just about any channel. If you want to talk to 10,000 people, then you’re either going to hire a big staff, or you’re going to use technology. The hard part is finding the right tools for the job. Start by thinking big picture and avoid being sucked into one area of your workflow, like composing the right output formats for the channels. That’s an obvious place to look, but you might find that you want to have multiple places in your workflow where you create personalized messages, and it’s not always at the document composition system. Architect your solution from the 30,000–foot view and then execute your plan piece by piece
as time and money allow. Pay special attention to integration of your systems and channels. Vendors offer integration platforms that assemble a nice system out of what you already have.
Utilize the Power of Integration Producing and distributing high volumes of personalized and targeted communications across multiple channels is tough business, but the outcome is worth pursuing. By implementing various consumer messaging techniques, businesses can improve their reach, drive engagement, and cultivate amazing relationships with their customers. However, in order to achieve results and grow, they have to invest in systems that enable intelligent automation and energize user and employee involvement. Software platforms that provide one integrated experience fulfill a variety of needs by connecting shared systems into one single source of truth. This is true for those producing the communications and those receiving them. Look for systems that create digital twins of what people do. Another name for this is a digital workflow. One that not only automates, but incorporates three important things: Intelligent Automation (IA) Artificial Intelligence (AI) Robotics Each of these three provide value individually, but companies that figure out how to use them together will outperform those that do not. For those involved in the output of customer communications, production control dashboards linked to workflow systems are prerequisites to the more advanced sport of IA, AI, and robotics. Print and mail operations can achieve multichannel success, improve customer engagement and satisfaction, deliver seamless experiences, as well as automate their entire production and distribution processes by leveraging the multichannel formula for success. In addition to that, using a CCM software integrator to efficiently automate, control, and manage the operation is key. Remember, to successfully execute a multichannel strategy, your company must first cultivate a customer-centric mindset. Then, focus on building smart workflows and using technology and integration capabilities to advance a customer experience that is consistent with consumer demands. Andrea Molinares is the Marketing Coordinator at Racami and is responsible for developing and implementing marketing and advertising campaigns to build brand awareness, increase sales, and launch new products and services. Learn more about Racami at www.racami.com. MailingSystemsTechnology.com | JANUARY-FEBRUARY 2021
MAIL: THE LARGEST UNMANAGED SPEND CATEGORY IN MOST ORGANIZATIONS By Adam Lewenberg
am going to start out with a blanket statement based on years of customer research: 99% of medium to large organizations have limited to no visibility of their mail spends across the enterprise. This leads to overspending, lack of control, and lost funds. You may question this statement, but ask yourself: Do you have complete visibility of all the categories in the chart in Figure 1 for all areas of your organization? Mail is typically the largest spend category where there are not specific controls in place to reduce costs. Can you imagine running a company with as little visibility 22
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of other major areas, such as real estate, labor, or raw materials? People may think that this is a small area, but when you factor all spend segments, it is typically in the multiple millions of dollars with large savings opportunities. Cause of Lack of Visibility The main reasons there is this lack of visibility is that the spend is fragmented around different groups and vendors, making it difficult to centralize the information. These are the main areas of mail spend: Mail Equipment and Postage â€“ These are the metered mail spends at the
medium to larger locations. Offices may make their own decisions on equipment and are responsible for funding their own postage. There may not be a central owner who is managing this category, and even those that do may not have decent reporting or any centralized invoicing. Home and Small Office Mail â€“ Now that more people are either working from home or from small offices, this category is growing. People are buying postage on credit cards, filling out expense reports, using petty cash, or worst of all, sending things through expensive overnight services because it is easier to manage.
USPS Permit Accounts – Larger mailings are funded with direct USPS accounts. These are fragmented because there are different groups controlling their own USPS relationships, which are infrequently linked to a master postage funding model. For example, statements are processed by one account, business reply accounts are at the office level, and marketing mailings are managed by third-party vendors that are generating the mailings. Outsourced Mail Services – This can be one of the worst categories because there could be anywhere from one to 50 different service providers used for different printing and mailing projects. There is no standardization, and their fees will vary considerably.
Expedited Document and Parcel Shipping – There are typically great controls for what ships from the main distribution centers that have traffic management oversight. Where most organizations lose visibility is with regards to the desktop shipping done to send expedited letters and small packages from their field locations and home office workers. Savings Gained Through Visibility There are major savings in every category, but having complete visibility is required. These are the main savings areas we typically find once the data can be viewed in a centralized format: Postage Savings – We are looking for locations that could save on postage at the location level in the following areas: High volume mail that could be converted to automation rates internally or utilize a presort service (a savings of 16-73%). Converting mail done in field offices to central mail services or to out-
source providers to take advantage of the rates below in Figure 2. Converting lightweight 9x12 or 10x13 flat envelopes to folded letters (a savings of 49-72%). Changing Priority Mail, Priority Mail Express, and First-Class Parcel from Retail to Commercial rates (saving 15-27%). Implementing Electronic Return Receipt (eRR) vs. Green Cards for Certified Mail (saving $1.10 each). Utilizing discounted meter rates for high volume stamp users at $.51 vs. $.55 per letter. USPS incentive and workshare programs that can be used if you know what mail volumes qualify. Equipment Savings – Equipment savings can be realized by setting up national contract rates, rightsizing equipment to the proper levels, and removing unneeded assets. These are items that can be done by any organization with the proper visibility.
Figure 2 MailingSystemsTechnology.com | JANUARY-FEBRUARY 2021
Fee and Overcharge Savings – There are specific overcharges and fees on mailing vendor invoices that can be caught once reviewed. Lost Postage Recovery – With office closures, moves, divestures, restructuring, vendor changes, and projects no longer funded, postage gets forgotten and lost. Postage meters, USPS permit accounts, and pre-deposited funds at mail service providers are all assets and should be tracked accordingly. There are millions in lost funds every year that can be eliminated with the proper visibility and controls. Outsourced Mail Service Savings – Through managed bids, vendor consolidations, invoice validation, and service level optimization, the rates paid can be reduced dramatically. Expedited Document and Parcel Shipping Savings – Through rate shopping, service level optimization, staff usage controls, and education, shipping costs can be optimized. Methodology for Enterprise Visibility The process outlined below is the easiest and fastest way to collect the data, with the highest level of accuracy, while involving the fewest people. Identify your current vendors - The main vendors that should be searched are: Mail Equipment – Pitney Bowes, Purchase Power, Reserve Account, Quadient, Hasler, Neopost, Neofunds, Total Funds, Mail Finance, FP, Francotyp-Postalia, Postalia, Stamps.com, Endecia.com, CMRS. USPS – USPS, United States Postal Service, Post Office, Postmaster, US Postal Service. Outsourced Mail Services – You should survey your main mail center, marketing department, and accounts receivable department to see what thirdparty mail services are being used. Expedited Document and Parcel Shipping – UPS, United Parcel Service, FedEx, Federal Express, and DHL are the primary vendors used by most organizations. Work with Accounts Payable – In most organizations, most of the mail spends will be paid by an invoice that flows through a central accounts payable department. Pull a report of the last 12 months of spend
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from the vendors above. We recommend using a wildcard * or % before or after the names of these vendors in case it is listed differently inside your system. This spend should be sorted by vendor and then cost center to find the unique relationships. You will find many that duplicate as you are paying for similar services throughout this period. Find one or two invoices from each vendor and cost center combination and request a PDF copy of the bill. This is needed because you will not have enough information in the excel export to understand the relationship. From the specific invoice, you will be able to pull the following: Location address, account number, service description, and agreement terms.
Every year, the USPS and the private carriers raise rates by two to 10%. The only way to combat this is to have the needed visibility to your spends and to optimize each category to make sure your costs are at the lowest rates. Go to your largest vendors and see what support they can provide. This is the type of support that we typically find: Mail Equipment – They can either provide you a report of their identified spends or you can take the information that you gather and create a profile on the vendor’s website. This will provide visibility to the equipment and postage spends
throughout your locations. You can also request copies of agreements and end of lease dates where required. USPS – You can link the identified spends to a centralized visibility account on the USPS Business Customer Gateway portal. This can provide you with the details of the specific transactions processed, balances, and accounts serviced. Outsourced Mail Services – Request copies of agreements, invoice copies, and access to their client portals. Expedited Document and Parcel Shipping – The carriers should be able to provide you consolidated billing details as needed as well as annual reviews of the total corporate spends. Build a central repository for the information – With the way that postage, equipment, and services link, it is best to have a web-based platform that can view these spends together in one place. If this is not possible, you can build a spreadsheet model that would suffice. Update the data – The information is only valuable when it can be updated easily so you can monitor the changes over time. Every year, the USPS and the private carriers raise rates by two to 10%. The only way to combat this is to have the needed visibility to your spends and to optimize each category to make sure your costs are at the lowest rates. Although there is work in creating these controls up front, they are much easier to maintain and they make managing the spend much easier. There is no reason mail must be the least managed category when there are ways to simplify its oversight to drive savings. Adam Lewenberg, CMDSS, MDC, President/ CEO of Postal Advocate Inc., runs the largest Mail Audit and Recovery firm in the United States and Canada. They manage the biggest mail equipment fleet in North America and their mission is to help organizations with multi-locations reduce mail and parcel related expenses, recover lost postage funds, and simplify visibility and oversight. Since 2011, they have helped their clients save an average of 57% and over $61 million on equipment, presort, avoidable fees, and lost postage. He can be reached at 617.372.6853 or firstname.lastname@example.org
SAFE, SECURE, SMART SMALL BATCH CORRESPONDENCE Generating business correspondence from remote field offices has always been a time-consuming, error-prone, and costly necessity. And in the current COVID (and hopefully soon, post-COVID) work environment, this business necessity has only gotten more challenging. With the increase in work from home staff, organizations are now faced with having to provision their employees to produce mail that is both accurate and compliant while ensuring the safety of their employees has not been compromised. As more and more companies extend work from home policies, it is clear the hassle factor of managing adhoc correspondence is not going away. Organizations need a simple, secure, and safe solution to address the significant hassles of adhoc correspondence. Smart MailHub allows organizations to eliminate the costs, complexities, and compliance risks associated with producing small batch business correspondence in the post-COVID WFH environment. It empowers remote and work from home staff to safely and securely submit documents for printing and mailing in a production environment. The secure, easy-to-use interface
facilitates the preparation and delivery of business communications right from the desktop, eliminating time-consuming and error-prone manual handling processes. Documents are sent to a “virtual” printer leveraging centralized production processes to automate the quality printing, inserting, and delivery of critical correspondence. High integrity, web-based document tracking and audit details ensure accuracy, provide proof of mailing and document archiving to mitigate compliance risks. Documents are submitted using a simple print driver and secure interface directly to the production facility. The intuitive interface allows users to easily choose processing options including document type, paper stock or form, attachments and inserts, envelope type, delivery options, simplex or duplex print, black and white, or color. Documents can be automatically delivered based on customer preferences. Options can be easily configured to ensure all correspondence meets business rules and compliance requirements, gets printed on the correct stock, and is addressed properly. Smart MailHub incorporates intelligent, web-based job tracking, audit
and authorization capabilities to ensure document status is tracked and visible for all stakeholders. File-based processing enables accurate document assembly and processing, capturing information on each mailpiece and its contents. This comprehensive tracking allows users to quickly determine where a mailpiece is in the production cycle, when it was sent and display an image of the mailpiece in support of compliance audits. Smart MailHub also automatically archives all business correspondence generated in WFH environments to meet compliance requirements and allows standard archiving facilities to be used with these documents. With Smart MailHub, business documents are cost-effectively and accurately processed leveraging the capabilities of your production print and mail operations - high quality print and inserting, postal optimization and integrity reprints. Smart MailHub also offers the opportunity for print and mail operations to grow volumes while offering new services to their clients. Smart MailHub is a component of CrawfordTech’s Enterprise Output Management solutions, leveraging our in-depth knowledge and unmatched expertise to ensure successful, cost-effective results. This solution easily integrates with existing print environments including document re-engineering, PRO Conductor production workflow solution and eDeliveryNow™ platform for digital document delivery, as well as our AccessibilityNow® solutions.
Crawfordtech.com 866.679.0864 email@example.com
6 PRINT-TO-MAIL SOFTWARE AND SERVICE With over 40 years of experience in postal presort software and address quality solutions, BCC Software is a proven industry leader. We are experts from data to delivery, offering the widest range of solutions to enhance direct communications anywhere along the mailing workflow. Our products include best in class data enhancement services, postal preparation software, and mailpiece tracking to ensure your mailpieces reach the voter in the upcoming election season. For thousands of mailers, our suite of desktop software products improves deliverability and reduces postage. Introduced in 2019, Bulk Mailer SMB® is designed for ease of use with small and medium-sized businesses in mind. Our flagship BCC Mail Manager™ product suite offers additional capability for businesses in need of more robust solutions. Mailers looking to supercharge their operations should explore BCC Software’s enterprise solutions that improve capacity and maximize postage discounts on high volume mailings and throughput through advanced automation. These solutions include Mail Manager Full Service™, BCC Ignite, Integratec®, and BCC Post-Presort. BCC Software also offers comprehensive data marketing services, including COMPLIANCE+™, which combines CASS™ and NCOALink® with powerful industry tools. When it comes to mail tracking, BCC Software’s Track N Trace® uses USPS Informed Visibility® technology to provide unbeatable mailpiece intelligence and reporting. To learn more contact us at marketing @bccsoftware.com or 1.800.337.0442. firstname.lastname@example.org 800.337.0442 https://bccsoftware.com
Crawford Technologies is an awardwinning, global provider of software solutions and services that help enterprises optimize and improve the secure and accessible delivery, storage, and presentment of their customer communications. But beyond that, Crawford Technologies is a company that was built from the ground up to serve their customers in any way needed. Crawford Technologies continues to put the customer first in their approach to serving the CCM industry, and it only takes a quick look into their Net Promoter Score — an industry leading +73 — to see just how much they stand by their customer-centric business. Crawford Tech customers continue to speak incredibly
highly of their solutions and of the commitment of the staff in providing expert advice, whether that be during a strategic assessment, product implementation, migration, training, or support. Contact Crawford Technologies today to set up a personalized discussion regarding your business needs and see how quickly and easily you can begin or continue your digital transformation.
Firstlogic’s DQ10 software combines file preparation, address quality, data enhancement, and matching/consolidation in a single, comprehensive data quality suite. Since 1984, data-driven companies have turned to Firstlogic’s products to care for some of their most valuable assets — the data that fuels their business. Driven by the industry’s most sophisticated parsing engine, this powerful system analyzes and cleanses even the dirtiest data in both real-time and batch modes. With DQ10, marketing departments, data analysts, and fulfillment operations can deliver personalized messages and superior customer service. Business performance and competitive advantages are possible only when working with timely and trusted information. Firstlogic offers data-driven solutions designed to meet today’s business challenges: Data-Driven Marketing: Turbocharge your marketing campaigns with precise customer targeting by leveraging cleansed and enhanced data. Customer Experience: Personalize your customer’s experience across multiple channels to drive customer loyalty and increased sales.
Direct Mail Marketing: Use the latest address quality techniques to pinpoint new customers while avoiding non-targeted groups through suppression lists. Operational Efficiency: Deploy data quality best practices throughout your company’s operations to increase performance and productivity. Regulatory Compliance: Reduce risk by enforcing data quality processes to align with federal and state regulations. Cost Containment: Avoid costly errors that increase your company’s direct and indirect costs by implementing world-class data quality software and best practices. To see how Firstlogic’s software can help your organization, take advantage of our no-fee data quality assessment. We will process your actual datasets to find anomalies and improvement opportunities. Visit https://firstlogic.com/contact-us/ to sign up.
www.Crawfordtech.com 866.679.0864 email@example.com
https://firstlogic.com 678.256.2900 https://firstlogic.com/contact-us
OPTIONS THAT ARE AVAILABLE RIGHT NOW Ensure your business stays connected as the world gets further apart with iAddress™, a suite of market-leading address management solutions from Flagship Software Ltd. With the shift towards remote working likely to become permanently entrenched for many positions going forward, address management becomes critical. Ensuring customer, prospect, supplier, and staff addresses are correct, complete, and current provides a pivotal key around which other data can be appended and communications can be tailored. Benefits of a robust address management system include increasing engagement and cost reduction. iAddress™ is powerful but simple-touse Canadian SERP™/PERL™-recognized and USPS CASS™/PAVE™-certified address management and presortation software. Designed with flexibility and speed, iAddress™ is available on a variety of platforms to provide batch and real-time validation. Whether correcting
a database or adding address checks to websites or e-commerce platforms, iAddress™ makes sure your records are right. iAddress™ presort module for Canadian and US addresses produces barcoded container & bundle labels and Mailing Plan for automatic updating of the Electronic Shipping Tools (CPC) and Postage Statement & Qualification reports (USPS). iAddress™ DC provides real-time correction on websites, e-commerce platforms and our data quality tools are available as multi-platform APIs, plug-ins, and Cloudbased SaaS. Add-on modules include Canadian NCOA (National Change of Address) / US NCOALink® and geocoding.
Since 1985, over 10,000 customers worldwide have relied on Melissa for their address management, data quality, and data enhancement needs. We know accurate address data is critical to your mailing operations and bottom line, so we’ve got you covered with solutions for mailing success — from cloud-based solutions and desktop software to service bureau and flexible APIs. Mailers Online is our cloud-based SaaS solution with no binding contract — just easy, up-front pricing per job. Mailers Online can be used from any web browser, and you don’t have to worry about changing postage rates or data file updates. Mailers+4 is our desktop software that corrects, verifies, and standardizes U.S. and Canadian addresses, removes duplicates, performs NCOA change-of-address processing and presorts your mail for maximum postal discounts.
We also offer SmartMover, our change-of-address API solution, and Address Object, our SERP/CASS™ Certified engine that verifies, corrects, and standardizes U.S., Canadian, and international addresses. Melissa’s MatchUp features proprietary deduping algorithms to identify duplicates for list hygiene and householding purposes. Universal to our solutions is support for the latest USPS® data and technology such as Mail.dat, Palletization, Full Service Intelligent mail, and destination discounts for SCF, NDC and DDU drop shipping. So, when it comes to addresses, which Melissa mailing solution will you choose?
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Melissa.com 800.MELISSA email@example.com Video
In times of uncertainty and change, there is one thing that you can count on — that SmartSoft remains solidly independent and focused on providing you with the very best address data quality tools and postal discount software. Since 1998, we have supported our customers with the very best in technology and customer service, through our SmartAddresser and AccuMail solutions. SmartAddresser, the all-in-one postal software, now features 48-month NCOALink. It is CASS™ and PAVE™ Certified by the USPS® and easy to install and learn. From state-of-the art Address Correction features and all the very latest Postal Presorting options, to advanced features such as Mail Tracking and automated mail processing with Job Scripting, SmartAddresser is the USPS® Certified postal software you can trust. The AccuMail Suite of address correction products provides you with desktop, on-premise APIs or cloudbased address validation either at point-of-entry or across your entire database. Whether you want a standalone application or want to integrate into an existing website or platform using a .NET, SOAP or REST API, AccuMail has got you covered. Visit SmartSoftDQ.com for more information, or email us at contact@ smartsoftusa.com. We also welcome resale partners through our reseller network as well as providing additional discounts if you are in a current subscription elsewhere. www.smartsoftDQ.com firstname.lastname@example.org Video
A LOOK AT THE PRC 10-YEAR REVIEW AND THE IMPACTS ON THE USPS RATE SYSTEM (AND MORE) By Kathleen Siviter
To be safe, mailers should budget for a potential mid-year 2021 postage price increase of six percent (potentially more for underwater products).
n November 30, 2020, the Postal Regulatory Commission (PRC) issued its long-awaited “final rules” in its statutorily mandated “10-year” review of the Postal Service’s rate system for Market Dominant products. The 484-page PRC order has stunned a mailing industry that is still reeling from the impacts of the pandemic. If the USPS takes advantage of all the new additional rate authority the PRC has granted it as soon as it can, mailers will see a second postage increase in 2021 (not including the one that went into effect on January 24) to the tune of six percent or more, followed by another postage increase in 2022 of potentially eight percent or more. And that doesn’t include another two percent increase for “underwater” mail products (e.g., some Marketing Mail and Periodicals categories)! PAEA Required 10-year Review To refresh everyone’s memory on how we got to where we are now, the Postal Accountability and Enhancement Act
(PAEA) legislation enacted in late 2006 included the requirement that the PRC evaluate the rate system for Market Dominant products (does not apply to Competitive Services) that the Commission put in place after 10 years to see if it was meeting the 10 objectives and 14 factors contained in the law. Accordingly, the PRC began its review process in late 2016 and ultimately decided that the current rate system was not meeting some of the objectives and factors contained in the law; specifically, the Commission concluded that while the USPS was financially stable in the short term, it could not meet its “medium” and “long-term” financial objectives as defined by the Commission. The PRC further concluded that some of the failures of the current system were actually due to the USPS not utilizing the “system” effectively. In late 2017, the PRC proposed revisions to the rate system and received extensive comments from all concerned stakeholders, including the mailing industry, USPS
employee organizations, the USPS, the PRC’s Public Representative (tasked with representing the public’s interests), and more. The PRC then revised its proposals and came back with another version in late 2019. Another active comment period ensued with all stakeholders weighing in on the revised PRC proposals. Then, in late 2020, the PRC issued a set of “final rules,” with an effective date of January 14, 2021. That meant that barring any legal action, the new rules would take effect at that time (as of the time this issue went to print, the rules had gone into effect, although there has been legal appeal, as we will discuss below.) So what changes to the rate system are in the PRC’s final rules? USPS Will Be Allowed/Required to Raise Postage Prices… Significantly The main thrust of the PRC’s final rules is to give the USPS “additional rate authority” above the CPI cap (i.e., allow the USPS to raise postage prices beyond the annual CPI percentage) for Market Domi-
nant products. There are several categories the PRC creates in its final rules that either require or allow the USPS to do so. Retirement Additional Rate Authority. The PRC’s rules create the Retirement Additional Rate Authority category, which is designed to collect money the USPS can only use to pay its unpaid retirement liabilities. The most contentious part of the PAEA was that it included a requirement that the USPS pre-fund its employee retiree health benefits in a manner no other federal agency (nor private corporation) is required to do. Although the USPS has made a few of the annual required payments, it has defaulted on the majority. According to the PRC’s rules, the USPS does not have to use this additional rate authority, but once it uses it in a given year, it must use it every year for a five-year consecutive period or forfeit the ability to collect this additional authority for use in subsequent years. The PRC is using a fiveyear phase-in of the amount USPS must pay in order to avoid “rate shock” for users of the system. In the data just filed by the USPS at the PRC, it calculated the retirement additional rate authority at 1.062% for a 2021 price adjustment. Density Additional Rate Authority. The second category for additional rate authority created in the PRC’s rules is the Density Additional Rate Authority, which is another formula-based mechanism to compensate the USPS for declines in mail volume and increases in delivery points. The PRC judged that the USPS has little to no control over volume declines, yet its delivery points continue to increase each year, resulting in the cost per piece rising. Although the PRC in its earlier proposed rules had provided a chart showing what the Density Rate Authority would have been for USPS Fiscal Years 2013-2019 (it ranged from 0.36% to 1.72%), the USPS in FY2020 has seen a dramatic decline in mail volumes as a result of the pandemic. In the data just filed by the USPS at the PRC, it said the Density Rate Authority is 4.5% because of the FY2020 volume losses. Underwater Products Rate Authority. In addition to the Retirement and Density additional rate authority categories, the PRC’s rules also include additional rate authority for “underwater” products/ classes (meaning the price charged by the USPS does not cover its costs). If all the products in a mail class are determined to be underwater (aka “non-compensatory”), this two percent additional rate authority would be optional for USPS, but for situ-
ations where a product is underwater but not the whole mail class, then the USPS would be required to increase prices an additional two percent above the average price increase for that mail class. According to the USPS's Annual Compliance Report (ACR) filed at the PRC in late December 2020, there were no First-Class Mail underwater products in FY2020. Three Marketing Mail products were underwater in FY2020 — Carrier Route, Parcels, and Flats -— and the mail class was not underwater, so the USPS would be required to raise rates for those three products two percent higher than the average price increase for the class the next time it files for a price increase after the January 2021 price change. For Periodicals and Package Services, the entire mail classes were underwater in FY2020, so it would be optional for the USPS to use the underwater rate authority. More Additional Rate Authority to Come? In the earlier versions of its proposed rules, the PRC had created another category where the USPS could get additional rate authority — the “performance-based” category, where USPS could earn additional rate authority by not changing its service standards from the prior year, and achieving specified productivity gains. The PRC in its final rules decided to take this category out, but said it plans to review it further in a separate proceeding (timing unknown), so stay tuned. USPS Can Bank Some Rate Authority. Another change in the PRC’s final rules was to give the USPS the ability to bank the Density Additional Rate Authority, so it would not have to use the full available amount in a given year but instead could hold it over for a subsequent year. The USPS also can bank the Non-Compensatory Additional Rate Authority (aka “underwater”) when the whole mail class is underwater. Also in the PRC’s rules is that the USPS can use no more than two percentage points of banked rate authority per mail class per year, and banked authority expires after five years. Changes to Workshare Discount Rules Are a Bright Spot One bright spot (and perhaps the only one) in the PRC’s final rules are the changes to how the USPS can set workshare discounts — something the industry has been advocating for over the years and which the PRC has always encouraged the USPS to do to improve efficiency. For years, the PRC has recognized the value of Efficient CompoMailingSystemsTechnology.com | JANUARY-FEBRUARY 2021
nent Pricing (ECP) and has encouraged the USPS to set its workshare discounts as close as possible to 100% “passthrough” of the costs avoided. In other words, if a workshare activity (e.g., presort, barcoding, drop ship) saves the USPS five cents, the discount should be set at five cents, not at three cents (below 100% passthrough, meaning the USPS does not pass all the savings on to the mailer/MSP) or seven cents (above passthrough, meaning the USPS is giving the mailer/MSP more than what the workshare saved the USPS). The PRC’s final rules include restrictions on how the USPS can set workshare discounts. In general, the USPS must leave workshare discounts set equal to 100% of the passthrough alone; the USPS can’t further reduce workshare discounts where the passthrough is already below 100%; and the USPS can’t further increase workshare discounts where the passthrough is already above 100%. Of course, there are some exceptions, as well as a waiver process the USPS can request, although the latter is designed to be difficult to justify. The PRC rules also use 85% as the “floor” for workshare discount passthrough, instead of a higher number, which was advocated by many in the industry. Increased Focus on USPS Costs and Cost Reduction Initiatives The PRC’s final rules also include new and additional reporting requirements for the USPS on its costs and cost-reduction initiatives, capital investments, and productivity and service standards (in preparation for the separate proceeding the PRC envisions on the performance-based additional rate authority). What Happens Next? There are a few things that could happen next (and may already have happened by the time you are reading this!). First, several mailing industry associations at the time this article was written had already filed legal action both at the U.S. Court of Appeals and at the PRC to “stay” the implementation of the PRC’s final rules under the argument that the PRC does not have legal authority to make these kinds of changes to the price-cap rate system (that only Congress has that authority). The USPS also has filed an appeal on the grounds that not all its requested changes were made by the PRC in the final rules. Since the process laid out by the PRC for determining the additional rate authority amounts requires data that is not available until the PRC issues its Annual Compliance Determination (ACD), which is usually in 30
JANUARY-FEBRUARY 2021 | MailingSystemsTechnology.com
February/March, it is likely the earliest the USPS could file a request for a price change using the additional rate authority would be March 2021 — and the new rules require the USPS to file the request 90 days before the implementation date for the new prices (so in this example the prices would not take effect until June/July 2021). This means there is some time for the courts to act. How Much Price Increase Could Mailers See in 2021? Barring any action from the courts, if the USPS decides to utilize all the additional rate authority the PRC’s final rules allow it in 2021, mailers of Market Dominant products could see an across-the-board mid-year 2021 price increase of about six percent, with an additional two percent for some “underwater” mail products. The six percent (or more) increase estimate is derived from assuming the CPI for a half year of about 0.5%, 1.062% for the retirement additional rate authority, and 4.5% for the density additional rate authority. Then add the two percent the USPS is allowed/required for underwater products/classes. And, in 2022, the estimate will likely be higher due to a full year CPI being available as well as potentially higher density additional rate authority if mail volumes continue to decline. But Wait… Raising Postage Rates During a Pandemic? If you are reading and absorbing all this and are wondering how the PRC’s rules do not seem to take into account that the mailing industry has already taken a huge hit in 2020 as a result of the pandemic, which has resulted in significant declines in mail volume and financial hardship on many mailing businesses, there is an answer. The PRC did consider the pandemic (which was raised by many industry associations in additional comments submitted earlier in 2020). It considered it, but decided that it does not change its findings that the current rate system is not meeting its objectives, nor does it change the PRC’s final rules designed to fix the rate system. The PRC said that ultimately the decision whether to utilize some or all of the additional rate authority allowed the USPS in a given year lies with the USPS. It said it is up to the USPS to “exercise its business judgment.” Industry groups also raised the point that if the USPS were to get $10 billion in funding from Congress, that would change the USPS's financial liquidity position and
should be taken into account by the PRC. The PRC responded that such funding was an increase in the USPS's borrowing authority and must be repaid, so it did not improve the USPS's long-term financial position. It should be noted that at the time the PRC’s final rules were published, Congress had not passed the legislation that would change the $10 billion funding to not require repayment by the USPS, which it later did. The terms of the USPS getting the $10 billion have yet to be worked out with the U.S. Treasury, and may be tied to COVID-related expenses, but it still will be money the USPS did not have before. The PRC did say in its final rules that it will “monitor the effects of the final rules on the Postal Service and on mailers in light of economic developments, and it will intervene as necessary if economic conditions prevent the final rules from operating as intended…” So Where Does this Leave Mailers? Ever since the PRC’s final rules were published, many of us in mailing industry associations have been fielding the question — what should mailers do? What should they plan for in their 2021 budgets? For starters, to be safe, mailers should budget for a potential mid-year 2021 postage price increase of six percent (eight percent for the above-noted underwater products/ classes). Better to be prepared than not. The next couple of months will reveal much of what is to come. Mailers should stay close to their associations to keep abreast of how things play out, including potential changes from the appeals court. And one thing the PRC had correct in its decision — ultimately the USPS is the one that will decide what additional rate authority it is going to use and when. Mailers and MSPs that would be harmed or reduce their mail volumes as a result of a mid-year 2021 significant postage increase should communicate that to the Postal Service leadership and Board of Governors, since the ball is now in their court (except for the legal ball, which, of course, is in another court). Kathleen J. Siviter is Asst. Executive Director of the National Association of Presort Mailers (NAPM) as well President of Postal Consulting Services Inc. (PCSi), and she has over 30 years’ experience in the postal industry. She has worked for the U.S. Postal Service, Association for Postal Commerce (PostCom), and others, as well as providing consulting services to a diverse set of clients with interest in the postal industry. She has also worked with PostalVision 2020, an initiative designed to engage stakeholders in discussions about the future of the American postal system.
Mailing Systems Technology Jan/Feb