Editor's note: Starting July 10, 2022, another postage rate increase will go into effect. Read more here.
On August 29th, 2021, the second United States Postal Service postage rate increase of 2021 went into effect. According to the USPS, this rate change reflects economic pressures facing the organization. Since 2006, the Postal Service has been required to limit their price increases to the rate of inflation, as indicated by the Consumer Price Index (CPI). However, the Postal Service says its costs have been rising faster than inflation.
“The Postal Service’s cost profile and demand trends, including a decline of mail volume, a growing number of delivery points, and increased labor and retirement costs, are not like those of the average company. This is why the Postal Regulatory Commission (PRC) recognized that CPI must be adjusted to fit the price cap to the Postal Service.”
As the Postal Service points out, mail costs under the new pricing will remain among the world’s most affordable. will remain among the world’s most affordable. For example, Domestic First-Class Mail will increase from $0.55 to $0.58, compared to an average of $1.32, putting it far ahead of other industrialized countries like Japan, the UK, France and Italy.
But for companies with large mass mail programs, these changes still represent a significant cost increase. Here are a few things you can do to make sure you’re getting the most out of your direct mail budget through the new postage rate increase.
The more mail you send, the more leverage you have. Take advantage of that leverage by working with a partner that sends a high volume of mail. As the industry leading direct mail platform, Lob bundles all our customers mail together, which enables us to keep postal costs down and pass the gains to our customers. Whether you’re sending 100 mailpieces per year or 100,000 per month, we can help you minimize direct mail costs.
Switching to large format postcards can also help you get more from your mail spend. Starting August 29th, the Postal Service is increasing the maximum size for Presorted and Automated First-Class Mail Postcards.
You can now send postcards as large as 9" x 6" as First-Class Mail postcards. That allows you to make a bigger impression, include more info, and easily add features like QR codes to postcards, with the same low delivery cost and fast delivery available for smaller postcards.
Retargeting is one of the best ways to drive ROI, because you’re sending highly targeted mailpieces to consumers who are already very close to making purchases. While email retargeting can be effective for some potential buyers, a lot of emails are ignored or filtered out as spam before they can influence a purchasing decision.
By using direct mail retargeting in conjunction with email and other digital channels, you add a personal point of contact that consumers will actually read. That means every mailpiece you send out can potentially make the difference in a sale.
Data is your most important asset in obtaining strong direct mail ROI. The more you know about customers or leads, the better you can focus your resources and approach on the ones who are the most likely to convert.
By combining internal sales and marketing data with third-party data, you can target your direct mail exclusively to recipients who are likely to convert, decreasing volume and cost, with a greater return per piece.
The more carefully you test your direct mail campaigns, the more strategic you can be about spending. Testing not only measures ROI more accurately, but also gauges how customers are responding to the language, design, offers, marketing cadence, and other factors that go into your campaigns.
Over time, this enables you to optimize each campaign for the intended purpose, whether you’re retargeting to drive customers to complete purchases, promoting retention or driving new customers. It also works for transactional direct mail, enabling you to measure what strategies work to get recipients to perform needed tasks like paying bills or setting up accounts.
A commercial mailpiece usually only needs to do one thing: get recipients engaged enough to complete a process, such as buying a product or paying a bill. That’s all. While big, bold mailings can be really useful for some applications, most mailpieces don’t need to answer every question a customer might have or be loaded with information. If you can entice the recipient to scan a QR code or put in a website, you don’t need to duplicate content they’ll find online.
In fact, in many cases, a smaller, less expensive mailpiece like a postcard or folded self-mailer can be more effective, because it doesn’t bombard the customer with long pitches or unnecessary information.
Keep your mailpieces compact, and you’ll save money without harming ROI.
While the postal price increase is significant, it represents a relatively small proportion of your total direct mail cost. For most companies, lack of automation is a much greater expense — and unlike the new USPS pricing, you can do something about it. Here are some of the major areas to address.
Legacy direct mail workflows typically use paper-based proofing. Mailings are printed, shuffled around, manually reviewed and corrected in a time-consuming and resource-inefficient manner.
There’s no reason that this has to be the case for direct mail; companies only do this because they always have. An automated digital workflow enables you to proof your mailpieces more quickly with fewer steps, cutting cost while accelerating your direct mail cadence.
Another common issue with legacy direct mail processes is decentralized and ad hoc direct mail processes. Sales, product, accounts payable, legal, and other departments all have their own direct mail processes, creating costly and unnecessary redundancy.
This might make sense in a small startup printing a few letters on the office printer every now and then, but once you’re sending more than a few mailpieces at a time, it becomes tremendously wasteful — not to mention stressful!
By partnering with a full-service direct mail provider, you can cut cost and complexity, standardize your process, and free your team from the work of printing, addressing and sending mailpieces entirely. This also provides a far more robust system, eliminating the risks of missed letters and bottlenecks when your printer breaks down or you have a surge in demand that your office equipment can’t handle.
Digital marketers use automation extensively because it gets results. By sending follow-up emails triggered by consumer actions and relevant events, they can get the right message out at the right time. This influences purchases, downloads and other consumer actions far more effectively than untimed mass emails, while also cutting down on email spam.
In direct mail, this approach is even more effective. And the marketing platforms most businesses already have setup to trigger automatic emails can just as easily trigger direct mail messages, providing massive improvements on ROI, using technology you’ve already invested in.
So why don’t more businesses use triggered direct mail?
Because they lack workflow automation. To trigger direct mail, you need a modern, template-based system where mailpieces can be customized on the fly. You need “set and forget” capabilities so that new mail can be automatically printed and sent without a long, manual process.
When you’re using a manual labor intensive, legacy workflow, you don’t have either of those conditions. To learn more about how your manual workflow is holding you back, check out our ebook on Modernizing the Direct Mail Process.
No one likes to see a crucial service provider raise their rates. But postal prices are just one of many factors influencing direct mail cost. By optimizing the way your company designs, produces and uses direct mail, you can cut costs, drive ROI, and get more value from every mailpiece.
To learn more about how to make your direct mail campaigns more effective (and cost-effective!), check out our Direct Mail Tactics Playbook.