American Printer's mission is to be the most reliable and authoritative source of information on integrating tomorrow's technology with today's management.

SAVE TIME AND POSTAGE WITH COMMINGLING

Nov 1, 2000 12:00 AM


         Subscribe in NewsGator Online   Subscribe in Bloglines

For high-volume jobs, it can reduce postal costs, speed, delivery and provides accurate test marketing results.

Commingling is the process of merging multiple strings of mail into a single mail stream. When the right types of large-volume jobs are combined, all clients involved can achieve significant postal discounts. The U.S. Postal Service (U.S.P.S.) requires a minumum of 150 pieces per zip code to achieve desirable five-digit postal discount rates. Commingling mailing runs together improves the chances that more zip codes will attain this 150-piece threshold.

Currently, the difference between three-digit and five-digit rates is $16/M (per thousand pieces) on for-profit mail and a whopping $21/M on non-profit mail. Since postage represents up to 30 percent of total production costs, chipping away at this large number makes a lot of sense. Not all companies with commingling capabilities offer their services to the trade, but some do. If you find one, your customers can achieve net savings of up to $29/M after all commingling and drop shipping charges have been factored in.

Printers with customers that segment large mailings into different groups, or "cells," should invest the time to learn more about commingling technology. Many financial services and non-profit companies already are reducing their production costs and delivery times. During the bygone era of large "shotgun" mailings, postal discounts were easy to achieve. Today's highly targeted "rifle" mailings have increased response rates, but have also reduced the percentage of mail that qualifies for five-digit postal discounts.

Assume you have a for-profit mailing segmented into three cells (lots). If zip code 55555 has 150 pieces in total, but only 50 in each lot, all mail in this zip code will be charged at the higher three-digit rate. If the three lots are commingled into the same tray, however, then all 150 pieces qualify for the lower five-digit rate, saving $2.40 in postage ($3.15 if non-profit). If you have a million-piece for-profit mailing, of which 75 percent benefits from commingling, then the net savings passed on to you and your customer could be more than $7,500. If you split the savings with your client, guess who would deepen the customer relationship while fattening your own bottom line?

EVALUATION AND PRODUCTION The first step of any potential commingling project is to run a presort on the data file to predict likely savings. If you have a million-piece mailing and 95 percent of it already qualifies for the U.S.P.S. five-digit rate, the cost of commingling will outweigh the savings. (At this point, companies like Harte-Hanks Baltimore would advise you to proceed without commingling.) If your presort determines that 20 percent of the job qualifies for the five-digit rate, however, then commingling will make a lot of sense. This 20 percent should be processed first so that commingling costs aren't unnecessarily charged to the portion of the job that won't benefit. Next, the remaining 800,000 pieces should be data processed and staged in the warehouse by lot and zip code order. Then, job A should be loaded onto the commingling machine in zip code sequence, followed by jobs B, C, etc.

Even though Harte-Hanks Baltimore's recent multi-million dollar investment in high-speed commingling machinery accommodates up to 568 zip codes at one time, most commingled jobs still need to be split into multiple runs to accommodate the 36,000 U.S. zip codes. Prior to running a commingling job, statistics of each lot need to be downloaded into the commingling machine's computer. If there's a mismatch between expected and actual mail for any reason (i.e., spoilage in the letter shop), commingling systems will track this information.

MORE CONSIDERATIONS Before printers decide to recommend commingling to their customers, they should consider a few factors. Commingling requires additional coordination time, especially if one company's job is piggybacked onto another's. Even though Harte-Hanks Baltimore processes more than 80 million pieces of mail every month, we still need between three and five extra production days to accommodate most commingling jobs. Although this won't affect delivery dates - you'll gain the time back bypassing U.S.P.S. facilities - think twice before recommending commingling to clients that focus on mail "departure" dates instead of mail "in-home" dates.

Another important point to be aware of is that once the commingling process has begun, it's completely impractical to halt. First, stopping a job from entering the mail stream can only be done by hand. Second, commingling jobs are data processed differently, which means that other postal discounts would be forfeited. And third, the mailing rates for all jobs being commingled together would change, unfairly raising the postal costs for the remaining parties. If there's a realistic chance that your mailing will be halted, then commingling isn't appropriate for you.

Since multiple cells of jobs arrive at destination Section Center Facilities (SCF) in the same trays at the same time, test-marketing results are more accurate. For example, if four different color envelopes and three messages are tested, mail from all 12 cells going to zip code 55555 will be simultaneously processed. A traditional multiple-cell mailing not only costs more; it is more susceptible to skewed testing results because of variable delivery dates.

DROP SHIPPING: THE OTHER PART OF THE EQUATION Commingling combined with drop shipping increases customer savings. If your project is deposited at a local post office, it will be processed through:

n The local post office

n The local SCF

n The destination Bulk Mail Center (BMC)

n Possibly a destination Auxiliary Service Facility (ASF)

n A destination SCF.

Choosing a large-volume mailer that runs trucks of commingled mail to destination SCFs throughout the country means that your mail will avoid the serendipity of U.S.P.S. mail processing. Since mail is delayed anywhere from three to 72 hours at each U.S.P.S. facility, drop shipping to destination SCFs should realize a net time gain of three to five days on average. Even though your mailing may require an extra couple of days at your commingling service provider, it should still arrive faster than ever.

Few people know about commingling. Commercial printers can now offer their high-volume direct-mail customers eye-popping cost savings on the back end of the production process. Put commingling and drop shipping services in your briefcase and sell more print!