Mailing Systems Technology January February 2020 by MadMen3

LOOKING FOR PRINT/MAIL SOFTWARE, SERVICES & BEYOND? PAGE 18

JANUARY - FEBRUARY 2020 MailingSystemsTechnology.com

ARE SIGNIFICANT PRICE INCREASES — AND OTHER CHANGES — ON THE HORIZON? PAGE 24

RETURNED MAIL: SYMPTOM OR OPPORTUNITY? PAGE 16

IMPROVING THE RESPONSE RATE OF YOUR MAIL PIECE WITH QR CODES AND AR PAGE 14

WHAT WILL INTERNATIONAL MAIL LOOK LIKE NOW THAT THE US HAS REMAINED IN THE UPU? PAGE 22

TABLE OF CONTENTS

JANUARY - FEBRUARY 2020 | VOLUME 33 ISSUE 1

DEPARTMENTS 05 Editor's Note

Kicking Off a New Decade By Amanda Armendariz

06 Real-Life Management Power!

By Wes Friesen

08 Software Byte

USPS Promotion/Incentive Programs for 2020 By Jeff Peoples

10 The Trenches

Remaining Relevant in Digital Times

By Mike Porter

By Rob Hanks

16 Returned Mail: Symptom or Opportunity? Utilize the information contained in your returned mail pieces to better cleanse your address lists — you might be surprised at the results you’re able to obtain.

By Mark M. Fallon

22 The US Remains in the UPU, but Changes Are Ahead in 2020 By Merry Law

JANUARY-FEBRUARY 2020 | MailingSystemsTechnology.com

Your Crystal Ball for 2020: Print and Mail By Nichole Jones

FEATURES 14 Could Using QR Codes or Augmented Reality Increase Your Mail Response Rates?

12 Inkjet Info

30 To Sum Up 24 Are Significant Price Increases and Other Changes on the Horizon? A breakdown of what the industry can expect in the wake of the PRC’s 10-year review of the PAEA.

By Kathleen Siviter

28 Ensuring Your Mail Piece’s Success

Just because a piece of mail arrives at its intended address doesn’t mean the message is getting through. Here’s how to make sure your mail stands out.

By John Leininger

SPONSORED CONTENT 18 7 Postal Software and Service Options You Must Know About 31 The Power of Matching

EDITOR’S NOTE

VOLUME 33, ISSUE 1 MAGAZINE STAFF President Chad Griepentrog Publisher Ken Waddell Editor Amanda Armendariz amanda.c@rbpub.com Contributing Writers Mark M. Fallon, Wes Friesen, Rob Hanks, Nichole Jones, Merry Law, John Leininger, Jeff Peoples, Mike Porter, Kathleen J. Siviter Audience Development Manager Rachel Chapman rachel@rbpub.com Advertising Ken Waddell 608.235.2212 ken.w@rbpub.com Design Kelli Cooke RB Publishing PO Box 259098 Madison WI 53725-9098 Tel: 608.241.8777 Fax: 608.241.8666 Email: rbpub@rbpub.com

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 rachel@rbpub.com Online at MailingSystemsTechnology.com. REPRINT SALES ReprintPro 949.702.5390 www.ReprintPros.com All material in this magazine is copyrighted ©2020 by RB Publishing 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, RB Publishing or its staff becomes property of RB Publishing. The articles in this magazine represent the views of the authors and not those of RB Publishing or Mailing Systems Technology. RB Publishing 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 33 Issue 1] is published seven times per year (January/February, Annual Industry Buyer’s Guide, March/April, May/June, July/August, September/October, November/December) by RB Publishing,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

KICKING OFF A NEW DECADE BY AMANDA ARMENDARIZ

he 20s are here again, and while they might not be characterized by flapper dresses, speakeasies, and prohibition like the 20s of the previous century, there is still a booming stock market and a sense of excitement as the new year begins. There’s also a sense of uncertainty, especially with regards to our industry and the United States Postal Service. For starters, Postmaster General Megan J. Brennan agreed to delay her scheduled retirement due to the fact that the USPS was having trouble filling her role. It will be interesting to see how long the search for her replacement takes to be successful and who is ultimately selected to fill the position. We can only hope that whoever is ultimately chosen as the next Postmaster General brings the same passion and dedication that PMG Brennan brought to her years with the Postal Service. That passion and vision will be needed in order to keep the USPS moving forward and keep mail relevant even with the multitude of digital avenues that are now available. Secondly, there were a lot of questions raised in the wake of the Postal Regulatory Commission’s 10-year review of the Postal Accountability and

Enhancement Act, as Kathleen Siviter covers in her article on page 24. One of the key takeaways from the review is that they are proposing that the USPS have significantly more authority to raise prices year after year. While of course the Postal Service’s financial situation needs to be rectified (especially with regards to the pre-funding requirements) raising postage prices too much would simply mean that mailers would mail less, which is obviously the opposite of the desired outcome! On the bright side, mail continues to be one of the most trusted, effective communication methods that mailers have with their customers. And with the USPS once again offering promotions that provide postage discounts to mailers who meet various requirements with respect to their mail pieces, it’s once again a great time to see just how well this method could work for your business. Cheers to a new decade, and once again, thanks for reading Mailing Systems Technology.

MailingSystemsTechnology.com | JANUARY-FEBRUARY 2020

REAL-LIFE MANAGEMENT

#3: Moral Power. Moral power is attributed to a person who has a strong moral compass, who consistently lives out inspiring values, and is quick to apologize and own up to occasional failings. Martin Luther King Jr. gives us perspective when he said, “I am not interested in power for power’s sake, but I’m interested in power that is moral, that is right and that is good.” Moral power is certainly something we all seek to earn. #4: Charismatic Power. Some people are blessed with magnetic personalities and the extraordinary ability to inspire others. For those with this giftedness, this can be a useful source of power when combined with other healthy sources of power (e.g. moral), and used for positive purposes.

POWER! BY WES FRIESEN

o you desire to be more effective in all of your roles in life, including your leadership roles? I do, and I assume you do, too. All of the foremost experts on leadership define the essence of leadership as being influence. The world’s top selling author on leadership — John Maxwell — cuts to the chase by saying, “Leadership is influence; nothing more and nothing less.” To increase our influence, we need to understand and apply the concept of power. Power is the capacity or potential to influence — to affect others’ beliefs, attitudes, and courses of action. Of course, people can use power for selfish or evil purposes, but let’s assume we want to use power to serve others and make the world a better place. To better use power, it’s helpful to know the bases of power upon which we can draw. It’s important to understand and have a multi-dimensional mindset. To maximize our influence, we can intentionally use and develop multiple bases of power, and not rely on only one or two. Based on what a variety of experts have discovered (and validated by my own experiences and discussions with others), it seems there are primarily 10 potential bases of power. Bases of Power Experts on power sometimes group the bases of power into two categories: per-

JANUARY-FEBRUARY 2020 | MailingSystemsTechnology.com

sonal power and position power. Let’s start by examining some specific bases of personal power, which is defined as the influence capacity a leader derives based upon her personal relationships and characteristics. Examples of personal power bases include: #1: Referent Power. Referent power comes from being trusted, respected, and well-liked. We gain referent power when others trust what we do and respect us for how we handle situations. This is a desirable source of power that can be developed as we intentionally work on building positive relationships and proving ourselves trustworthy. I agree with Maya Angelou’s insight, “I’ve learned that people will forget what you said, people will forget what you did, but people will never forget how you made them feel.” #2: Expert Power. Expert power comes from a person’s expertise — her skill, accomplishment, and knowledge. Francis Bacon observed, “Knowledge is power,” and it’s true. Expertise and knowledge can include a spectrum ranging from understanding job specific tasks to soft skills like knowing how to deal with difficult people. Developing our expertise — and sharing with others — is a healthy source of power.

#5: Connection Power. Connection power comes when a person has developed strong connections (relationships) with key influencers, experts, and other resources. We can build more connection power when we network and build relationships with a wide range of people; people that can help us and others we are trying to serve. One way to build connection is to selflessly support others and assist them when they are in need of help. We can also practice my 3 Rs of showing respect, recognizing people for who they are and the value they bring, and rewarding in tangible and intangible ways. Connection power is also a healthy source of power. #6: Political Power. Political power arises from a person’s ability to work with people and social systems to gain their allegiance and support. Political power is developed by learning how to get things done within an organization; understanding the “ropes” and how to effectively achieve objectives within the corporate culture. Political power can be abused and used for self-serving purposes, but when used with altruistic motives, it is a source of power that is valuable to us. Position power is the derived power a person has from holding a particular office or rank in a formal organization system. Bases of position power include the last four items on this list: #7: Legitimate Power. Legitimate power comes from the position a person holds. This is related to a person’s title and job responsibilities. By itself, this source of power may result in a certain level of

compliance, but not necessarily a strong sense of commitment and cooperation. If legitimate power is used for the benefits of others instead of yourself (i.e. following the servant leadership philosophy), it can be a key component of the multi-dimensional power we seek. #8: Reward Power. Reward power comes from a person’s ability to bestow rewards. Rewards may come in the form of pay and benefits, bonuses, gift cards, job assignments, preferred schedules, time off with pay, and other valued benefits. Rewards can also be of an intangible nature, as modeled by Sam Walton when he explained, “Nothing else can quite substitute for a few well-chosen, well-timed, sincere words of praise. They are absolutely free and worth a fortune.” Rewards that are used fairly and sincerely can be a useful source of power to recognize and reinforce desired behaviors and performance. #9: Informational Power. Informational power is when an individual possesses

the ability to limit or grant access of others to relevant information. The positive and preferred use of informational power is to share information as broadly as we can and help people feel like “insiders” versus “outsiders.” I like the principle of erring on the side of over-communicating versus under-communicating and feel this leads to increasing our power with others.

Plato observed, “The measure of a man is what he does with power.” And Abraham Lincoln counseled, “Nearly all men can stand adversity, but if you want to test a man’s character, give him power.” Let’s go out and expand and use our power to serve others, and do what we can to make the world — and our workplaces — a better place! 

#10: Coercive Power. Coercive power rests in the ability of a person to force another to comply with an order through the threat of punishment. Coercive power can result in short-term compliance, but in the long-run produces dysfunctional behavior. This type of power is not recommended except perhaps in rare, emergency situations.

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, which provides leadership, management, and team-building training. His book, Your Team Can Soar!, has 42 valuable lessons that will inspire you, and give you practical pointers to help you — and your team — soar to new heights of performance. Wes can be contacted at wesmfriesen@gmail.com or at 971.806.0812.

Here are a couple of closing thoughts about power. First, true power is something we earn and can’t demand of others. Second, power can be used for good or evil purposes, and has the potential to corrupt us if we are not careful.

MailingSystemsTechnology.com | JANUARY-FEBRUARY 2020

SOFTWARE BYTE

 Eligible: First-Class Mail (excludes all FCM single-piece-price mail)

USPS PROMOTION/ INCENTIVE PROGRAMS FOR 2020 BY JEFF PEOPLES

he United States Postal Service (USPS) has announced the incentive/promotion programs for 2020. These promotion programs began in 2011 with the first QR barcode incentive and have continued with added programs each year up until 2018. Due to the lack of an active USPS Board of Governors, no incentive programs were introduced for 2018, but they were again put into place in 2019.

 Eligible: USPS Marketing Mail letters and flats

The Promotions There are a total of six promotions offered in 2020, all of which are repeat promotions from previous years. A summary of the 2020 promotions is as follows:

Earned Value Reply Mail Promotion  Registration Period: February 15, 2020 – March 31, 2020  Promotion Period: April 1, 2020 – June 30, 2020  Eligible: BRM, CRM, and Share Mail

Tactile, Sensory and Interactive Mailpiece Engagement Promotion  Registration Period: December 15, 2019 – July 31, 2020  Promotion Period: February 1, 2020 – July 31, 2020 8

JANUARY-FEBRUARY 2020 | MailingSystemsTechnology.com

Emerging and Advanced Technology Promotion  Registration Period: January 15, 2020 – August 31, 2020  Promotion Period: March 1, 2020 – August 31, 2020  Eligible: First-Class Mail & USPS Marketing Mail

Personalized Color Transpromo Promotion  Registration Period: May 15, 2020 – December 31, 2020  Promotion Period: July 1, 2020 – December 31, 2020

Mobile Shopping Promotion  Registration Period: June 15, 2020 – December 31, 2020  Promotion Period: August 1, 2020 – December 31, 2020  Eligible: USPS Marketing Mail letters and flats Informed Delivery Promotion  Registration Period: July 15, 2020 – November 30, 2020  Promotion Period: September 1, 2020 – November 30, 2020  Eligible: First-Class Mail & USPS Marketing Mail letters and flats Impacts to Mailers We strongly encourage mailers to take advantage of these promotions and include the incentives in their planning for mailings in 2020. Mailers should also work with their software providers to make sure that any mailing software is being updated to support submission of Mail.dat files to claim these incentives. The USPS is also asking mailers for their ideas and suggestions for promotion programs for 2021. To submit your ideas for future incentive programs, log on to https://postalpro.usps.com/promotions/2021_suggestions. Resources The new 2020 promotion program information, including the calendar shown on the next page, is available on the PostalPro website, along with links to the requirements for each promotion, industry webinar information, and more.  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 industry events, GraphExpo, MAILCOM, the National Postal Forum, Postal Customer Council meetings, Harvard Business Expert Forum, and other industry and direct marketing events.

The screenshots below show the calendar for the upcoming promotions, separated by class of mail. Source: https://postalpro.usps.com/promotions/2020promotions/2020Calendar

MailingSystemsTechnology.com | JANUARY-FEBRUARY 2020

THE TRENCHES

unless something caught their attention almost immediately. 3. Judging by the handfuls of mail going into my recycle bin, few of the materials directed to younger generations are making the grade today.

REMAINING RELEVANT IN DIGITAL TIMES BY MIKE PORTER

ail has a reputation issue, and part of it is generational. Although mail is effective and accepted among all groups, the relationship between people and their mail varies among the generations. Print/mail service providers should be attuned to those differences so they can make adjustments that ensure their products remain relevant in the digital age. In my house, I get to see how Millennials and Generation Z individuals react to their mail. My daughter-in-law and her children have some of their mail delivered to my address. Mail sits on the coffee table until they drop by every few days, sit on my couch, and go through it. Most striking to me is the speed of mail evaluation. A glance is all it takes before these young mail recipients determine the fate of a mail piece. Sometimes they don’t even open the envelopes. I’ve heard the comment, “I know what this is” several 10

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times — a determination made by scanning only the outside of the mail piece. Though popular stereotypes suggest otherwise, this group puts their phones down (temporarily) and seems interested in discovering what has come for them in the mail. Unfortunately, most of it is unimpressive, and my relatives send it quickly to the recycle bin. This behavior tells me three things: 1. Mail still holds an interest for these generational groups. Going through the mail is one of the first things they do when they come over. I can sense their anticipation and, occasionally, even a bit of excitement. 2. Mailers have a short opportunity to communicate value and relevance. Marketers can’t bury the benefits of an offer at the end of a long sales letter. The young people inspecting their mail at my house will never get that far

Good News: Young People Pay Attention to Mail The situation isn’t entirely gloomy. Last night, I noticed my 14-year-old granddaughter looking through a catalog. She was engaged with the content, looking at every page and making comments about featured products. On the other hand, the 18-year-old complained his bank had sent him two separate notices about changes in his account. It turns out the letters weren’t identical; the communications referred to two different accounts. But his point is well-made. The bank should have sent one letter listing both accounts. This Gen Z’er noticed the inefficiency, which reinforced his perceptions about the usefulness of mail. Focus on Results, Not Volume Technology allows print and mail service providers to make the improvements necessary to attract the attention of mail recipients and encourage them to act. So why do we generate so much mail that is unlikely to convert? I think the answer partly lies in the way print and mail service providers (and other parties) make money. Most companies in this industry earn revenue based on volume, not on results. I worked in the print/mail service provider business for two decades. I understand why, under the current conditions, a print/mail company or department would resist changes that purposely decrease the number of mail pieces they produce. When you get paid for generating each piece, regardless of its chances of triggering a satisfactory result, there’s no incentive to be selective. Practices like sending two letters to the same customer on the same day will

continue until service providers recognize a financial benefit to combining them or clients insist on householding. Mail already has advantages over digital communication channels. Mail comes out on top in areas like less competition in the mailbox, higher trust levels, and better conversion rates. The cost to communicate via the mail is the biggest disadvantage. Mail skeptics often cite the cost of materials, production, and postage as reasons to avoid mail and concentrate on email, social, search, and online ads. If the overall cost of communicating by mail was reduced and performance improved, would clients of print/mail service providers put more of an emphasis on mailed communications? I think they would, as long as someone could explain how to accomplish those two things. If mail service providers could increase the ROI of mail by sending less of it, while simultaneously earning the same net profit by providing additional services, would they take the chance? I hope so. Otherwise they are choosing to take part in what could be a viscous cycle of lower volumes and higher costs. Data Is the Key Marketers can mail to fewer prospects but retain the same level of response by using data wisely. If the target is a Millennial or younger, the content can be edgier. Marketers can include hashtags and contemporary language, or encourage interaction via social media. For baby boomers, mailers should alter the images and text so recipients won’t dismiss the messages as irrelevant. If a prospect’s demographics, browsing history, or buying patterns don’t match the buyer profile, then mail to them less frequently or remove them from the list. Use techniques like variable messaging or images on envelopes to attract attention and increase open rates. As marketers begin to deploy artificial intelligence more often, the unresponsive prospects dropped from mailing lists may be replaced with previously unidentified individuals that share characteristics exhibited by the best customers. Over the last couple of years, direct mail advertising response rates have been rising. This will continue to improve as targeting gets more precise and mailers bravely drop unlikely prospects from their lists. Mail is still relevant. With some adjustments in how businesses use it, the medium will continue to connect companies with customers and prospects regardless of the generational group to which each prospect belongs. Finding ways to make mail better, rather than seeking strategies for propping up the volume, seems to be the best path to long term viability.  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 mporter@printmailconsultants.com.

MailingSystemsTechnology.com | JANUARY-FEBRUARY 2020

INKJET INFO

YOUR CRYSTAL BALL FOR 2020: PRINT AND MAIL BY NICHOLE JONES

These questions are necessary rystal balls are amazing — they help us peer into the because of the workflow shortcomings future to give us a view into that are frequently present in printing what may come. In reality, and mailing facilities of all sizes. A quick though, most of today’s perceived walk-through of a shop floor will often crystal ball operators are not magicians expose equipment that is running below or mind readers; they are simply very optimal standards, disabled features, skilled at reading the environment they and capabilities and functions that aren’t live in and understanding the trends aligned with the perceptions of the that surround them. With just a bit of production staff. Once you know where you stand, take help from quick assessments, leading indicators, market research, and some time to examine the trends. These guidance from their best customers, might include file-based processing, anyone can astound their teams by adding barcodes, adding value to data reading the crystal ball for printing and with geolocation options, and customer preference management as a service. mailing operations. Here’s how! Start with the basics by conducting a Keypoint Intelligence — InfoTrends’ quick assessment of the current state of your printing and mailing operations. Ask yourself — how has the nature of jobs that you perform changed since the start Dealing with a high of 2019? Are the runs shorter or number of small jobs longer? Are customers asking for Customizing the different services? How are your workflow to our needs customers’ requests for ad hoc Increasing throughput/ jobs changing? shortening production times Beyond the jobs and contracts Working with legacy/old that you hold, take a look at the software systems state of your printing, finishing, inserting, and mailing lines. Managing multiple workflows Evaluate the age of the lines as Supporting variable data/ well as the features. Are you using cross-media work all of the available automation Connecting islands options? Are inserter bins being of automation used efficiently? Do you have cameras? If so, are they actually in use? How is what they capture used by the production team? 12

JANUARY-FEBRUARY 2020 | MailingSystemsTechnology.com

research has consistently shown that today’s customers want to be given a choice in how their providers communicate with them. Furthermore, direct mail remains a key channel across all age groups, even in this digital world. Since mail is wellunderstood by a variety of demographics, it is good business sense for all firms to focus on making the mail that they send to customers even more valuable. Focus on best practices to drive higher margins, reduce production problems, and create more options to grow the business. One best practice is to stay on top of workflow bottlenecks. If the nature of your work has changed from long runs to short runs over time, that may indicate a need to rework core workflow processes. Another best practice is to stay on top of postal discounts offered by the USPS and offer services. From adding color to envelopes to enabling Augmented Reality, there are a range of options that can enable mailers to become valued partners to their clients. This is also a good time to evaluate your current state of automation. Most mailers invest in automation, but for many, ongoing improvements don’t continue after the investment is made. Today’s technologies are constantly improving on the hardware and software sides of the fence. By walking your current workflow and evaluating how automation is working, you can help ensure that 2020 is as profitable as possible. Walking the workflow and watching how the automation is working today is an important part of making sure that 2020 is as profitable as possible.

Finally, talk to your best customers to assess their needs. What do they print and mail with other companies? What do they print that isn’t mailed? Would they benefit from a workshop to understand all of your capabilities? Once you’ve had a few conversations, make your 2020 predictions — and be bold! In addition to considering your current capabilities and the trends within the segments you serve, explore your company’s go-forward vision. By predicting the future you want, you can become a driver of the future you’ll get! 

It’s a reminder to pay It serves as a backup/archive It’s convenient It’s easy to access and manage It’s a personal preference

Part of looking into the future involves keeping up with the industry numbers. During your crystal ball gazing, though, bear in mind that the big numbers may not be as important as the segment-specific values that directly impact your business. If you serve the healthcare or insurance verticals, changes in regulations and

requirements are ongoing. Printed and mailed communications remain a big part of these segments as the population ages and concerns about digital identity theft increase. The healthcare and insurance industries have already demonstrated interest in the use of Augmented Reality and data-driven communication.

Nichole Jones is a Senior Product Manager for Keypoint Intelligence — InfoTrends’ Business Development Strategies Production Printing & Packaging Consulting Services. Ms. Jones’ responsibilities include managing the promotion and distribution of InfoTrends’ content and assisting clients and channels in building business development programs.

MailingSystemsTechnology.com | JANUARY-FEBRUARY 2020

By Rob Hanks

COULD USING QR CODES OR AUGMENTED REALITY INCREASE YOUR MAIL RESPONSE RATES?

e are all victims of sensory overload. The number of messages a person sees daily can be upwards of 4,000. Getting your mail piece to stand out is a difficult thing to do. Adding a QR code or Augmented Reality 14

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(AR) to your mail piece can differentiate it from the others in the stack of mail people receive daily. But QR codes and AR donâ&#x20AC;&#x2122;t work if you only have them on your mail piece for the sake of having them. Adding technology like QR codes and AR needs to create a fun, engaging experience

to work. You need to use the technology to its fullest to reap the highest returns. First, you must have easy-to-follow instructions that take a person from the mail moment (seeing your mail piece for the first time and feeling excitement at the prospect of what is inside) to scanning your mail piece

and use the data to see how your customers/prospects are engaging with the offer. See what is working and what is not and adjust as needed. This is a great way to receive data in real-time. Using AR or QR codes might mean users will need to download an app such as Blippar or a QR code reader to their smartphones. While newer phones have bar code readers built into their camera functionality, a phone’s app store also has several different QR code scanning apps that can be downloaded for reading or creating codes. Be sure download instructions are included on your mail piece.

and beginning the journey to purchasing your product or service. Your mail piece will need the traditional components of a strong offer and a clear call to action. In this case, the call to action can be the instructions to scan the QR code and to receive the incentive within the digital experience. As Vito Corleone said in the movie The Godfather, “Make him an offer he can’t refuse.” With the number of offers a person sees in a day, you need to use creative ways to make yours stand out. Enhance your AR direct mail with digital content that you may already have or create new experiences such as AR games or a virtual trial of your product. Allow people to place new furniture into their living room or see how updated cabinets, countertops, and appliances will look in the kitchen. For a car buying experience, you could allow the recipient to see what colors and options are available. Be sure to track responses

Taking the First Step To get started with AR, you can use AR creation tools. The advantage of using these tools is that no coding skills are needed, and you can make your direct mail interactive in just a few clicks. There are drag and drop tools that let you create AR quickly and easily. They allow you to add your own digital content, animation, 3D models, and links to videos. The advantages of using a QR code includes the ability to measure how often each code is scanned and obtain clickthrough information. This will provide you with the data needed to see the effectiveness of your campaign. The user only needs a smartphone or tablet with a QR reader app to activate the experience. With 91% of Americans ages 19-49 owning a smartphone (per a survey conducted by the Pew Research center in 2018), it is easy to reach a wide audience using a QR code. AR gives companies the ability to track the total number of scans, the number of unique users, the length of time spent on the app, the click-through rates, and the time of the scan. Once the app scans the advertising image, the user can watch a video, listen to music, make a purchase using mobile commerce, virtually try on clothing, or access an e-book of branded product information. One company found that consumers were 135% more likely to purchase a product viewed through AR than a product they saw in a traditional advertisement. New Technologies + Postage Discounts = Win/Win The United States Postal Service has two promotions scheduled for 2020 that reward

mailers who use AR or QR codes with an upfront two percent postage discount. The Emerging and Advanced Technology promotion is for both First-Class and Marketing Mail. Registration is open from January 15 through August 31, and the promotion runs from March 1 through August 31. The promotion encourages mailers to incorporate emerging technologies like AR, VR/AMR, and Video in Print along with multiple channel mail integration with addressable TV or digital assistants into direct mail. Since it’s never too early to think about the 2020 holiday season, the Mobile Shopping promotion is being offered again in 2020. The registration period is June 15 through December 31, and the promotion is open for five months beginning on August 1 and ending on December 31. This promotion is designed to have mailers integrate direct mail with mobile technologies to provide a convenient online shopping experience for consumers during the holiday season. The many new mobile barcode formats can be leveraged to qualify for the promotion, in addition to the use of a payment QR code to complete the shopping and purchasing experience. Some of the additional formats that can be used are dotless QR codes, voice QR codes, Twitter QR codes, Amazon Smile codes, Pinterest pin codes, and Messenger codes. Participants will receive that same two percent postage discount during this promotion. This promotion is for Marketing Mail letter and flat mail only. QR codes and Augmented Reality on a mail piece will increase response rates and allow mailers to receive analytics to help refine offers and increase sales. Combined with the incentives offered by the USPS, there’s no better time to add these technologies to your campaigns than 2020.  Rob Hanks is an inside sales representative at Suttle-Straus and has more than 25 years of experience in direct mail. Rob is a Certified Direct Mail Professional and a Certified Mailpiece Design Professional through the United States Postal Service and serves as the Industry Co-Chairperson for the Greater Madison Area Postal Customer Council. Rob enjoys the challenges of mailpiece design within postal regulations and helping clients save on postage costs. MailingSystemsTechnology.com | JANUARY-FEBRUARY 2020

RETURNED MAIL – SYMPTOM OR OPPORTUNITY? By Mark M. Fallon

Utilize the information contained in your returned mail pieces to better cleanse your address lists — you might be surprised at the results you’re able to obtain.

our company updates all their addresses through Coding Accuracy Support System (CASS) and NCOALink software on a monthly basis. The presort operation applies Full-Service Intelligent Mail barcodes to each piece. Still, every day, the US Postal Service (USPS) returns piles of pieces of mail back to your offices. It can be a frustrating routine. Savvy managers know that the most tangible evidence of addressing errors in any mailing is the volume of return mail. Instead of treating return mail as a nuisance, managers should consider it another tool to improve their address list. If a company has done an effective job with cleansing their addresses, then their return mail will be below one percent. However, if that company mails out 50,000 bills a day, that still means 500 will be returned each day — over 10,000 pieces will be returned in a month. That’s a lot of mail. So, what should a company do? We recommend a multi-step approach:

 Keep accurate measurements  Update moves first  Fix obvious errors  Use CASS, NCOALink, and Address Element Correction (AEC) for tougher problems  Turn off mail for repeat offenders  Repeat Metrics Provide Valuable Insight Measurements are important to determine the effectiveness and efficiency of your address quality program. With return mail, you need to know more than just volumes. You also need to know what percentage of your outbound mail the return mail represents. Studies have shown that almost 2.5% of presorted, First-Class Mail is undeliverable as addressed. However, best-in-class operations achieve a one percent or lower percentage of return mail. Accurate, consistent metrics will demonstrate where your operations stands, and how corrective actions are improving the situation.

Metrics will also reveal if something has changed. If the normal count of return mail represents 0.5% of outbound mail, and it suddenly jumps to one percent, that’s an indication of a new problem. Mailers may consider checking their most recent Mailer Scorecard to look for potential issues. The scorecard could show that there were additional errors in the Move Update with a specific service provider. Immediate attention should be given to pieces that have address update information attached. These are the easiest mistakes to fix. If a new address is provided, then the customer’s record should be modified. If the intended recipient has moved and left no address, then the customer should be contacted by alternate means (e.g., phone or email) to obtain the correct information. The next target should be the returns with clearly marked errors — missing house number, no unit or apartment designated, incorrect ZIP Code, etc. The customers’ records should be searched

for the correct information and the address then updated. If the information isn’t evident, then contact your customer. Unfortunately, many of the Nixie codes provided on the yellow return labels aren’t helpful. The most common is “Undeliverable as Addressed” and has no additional information provided. These addresses should be processed through CASS and NCOALink software to identify possible reasons. These addresses may have already been processed through CASS before, but the errors were skipped over. With a smaller batch, more attention can be given to the errors. An approach used by some mailers is to enter the address into an internet search engine. The results may include additional information, like an apartment number. By looking at the map, especially the “street view,” you might be able to have a clearer picture of the complete address or reveal that the address is a large building or empty lot. For the pieces that still can’t be resolved, consider using the USPS AEC program.

AEC is best described as “CASS Plus.” With input from the mailing industry, the USPS developed specialized programs that break down the elements of the address and perform a series of evaluations and comparisons. Through these logarithms, the AEC software is able to add missing elements and correct many errors that commercial software can’t resolve. For the tougher addresses, mailers can request the “AEC II” service. Under this program, the addresses are sent to the local USPS delivery unit for resolution. The USPS is then able to tap into their proprietary Delivery Force Knowledge system. In other words, they ask the letter carriers responsible for that address for their help. That’s right, a human being with actual knowledge of the problem address — not software — corrects the list. If the address can’t be fixed, and mail pieces keep being returned, then your company should consider stopping mailing to those customers. There are very complicated rules that vary by industry about when a company can turn off mail. However, in most cases, sending a notification by Certified Mail, and then retaining the returned mail piece, will meet the official obligations. Work with your legal department to identify the best policy for your company. People will continue to move without notifying you or the USPS. Errors will be made when entering customers’ addresses. Return mail will always exist. That means every day, the process must be repeated. Measure; update known moves; fix errors; use CASS, NCOALink, and AEC; and then stop mailing. By following these steps, successful companies have reduced return mail to below 0.5%. Those positive results only happen through constant attention and prompt action. Physical mail remains a critical link to customers in an increasingly digital world. But mail pieces that are returned to your company add no value to the relationship. Use the returned pieces to improve your data and strengthen the link to your customers.  Mark M. Fallon is President & CEO of The Berkshire Company, a consulting firm specializing in mail and document processing strategies. You can contact him at mmf@berkshire-company.com, or visit his blogs at www.berkshire-company.com/the-berkshire-company-blog or www.markfallon.com/blog MailingSystemsTechnology.com | JANUARY-FEBRUARY 2020

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7 POSTAL SOFTWARE AND SERVICE OPTIONS YOU MUST KNOW ABOUT

JANUARY-FEBRUARY 2020 | MailingSystemsTechnology.com

When it comes to successful customer communication, your two biggest assets as a mailer are your customers’ data and fast delivery. After all, if your mail piece can’t reach, or is slow to reach, the intended recipient, it will not achieve its purpose. Yet, address data quality, hygiene, and delivery options can be hard to manage without the right software and services. The 7 companies listed here offer a variety of solutions to the common problems plaguing mailers’ operations today. When you reach out to them, make sure you tell them you saw them in Mailing Systems Technology.

Offering data-driven solutions that enhance direct communications anywhere along the workflow spectrum, BCC Software has been the industry leader in postal presort software and address quality solutions for over 40 years. BCC Mail Manager™, our USPS®-certified address quality and mailing preparation software, is relied on by thousands of companies, including some of the country’s biggest mailers. As a result, our solutions improve deliverability and reduce postage on a quarter of the US mailstream every year. Plus, you’ll receive unbeatable customer service and support from our team of USPS Certified Mail Piece Design professionals. BCC Software solutions are integration-ready and include API toolkits for customization along with prebuilt connectors to many software packages already in your workflow. Integratec® is the first and only available PAVE™-certified API, using the secure messaging layer, ZeroMQ™, with the CurveZMQ protocol, enabling Integratec to pass the most stringent security requirements.

Completing the direct communications lifecycle with a comprehensive suite of data marketing services, BCC Software is focused on expert address standardization. We offer full-service data management and campaign execution solutions, backed by data licensed from the USPS and a handful of carefully selected strategic partners. BCC Software is dedicated to bringing our customers expanded technology and personal support to make sure they have the right tools to succeed in this ever-evolving industry. That’s why in 2019 we introduced Bulk Mailer SMB®, a powerful data quality tool specifically designed with small and medium-sized businesses in mind and offered at affordable subscription pricing. To learn more, visit bccsoftware.com.

When you have critical mail that needs to get in-home fast, use TruckDirectMail.com Truck Direct Mail (TDM) is a website for estimating and tendering less-than-truckload (LTL) freight shipments of palletized time-sensitive mail directly to USPS postal facilities nationwide (NDC/SCF/DDU). With TDM, you can create new destination entry postal drop shipments directly from mail.dat files, by manual entry, or from within BCC Mail Manager and WindowBook Dat-Mail software. Powering the website is a full complement of API services which provide unmatched integration options for software providers and internal development teams wishing to embed TDM’s industry-leading functionality into existing workflows and enterprise systems.

Direct Logistics, Inc. Based in the heart of Dallas / Fort Worth, Direct Logistics (DLI) is a 25-year old 3rd-party logistics company specializing in service and technology solutions for destination entry postal drop shipping within the direct mail industry. DLI also provides discounted shipping options for non-mail, paper-based products including printed material and raw print stock. Transportation services include Less-Than-Truckload (LTL), Consolidated Truckload (TL), Dedicated Truckload, and Expedited (air freight) logistics – all backed a dedicated customer service team with over 100 years combined experience in mail and shipping logistics, and a 99%+ historical average for on-time delivery. Call or email us today for full details.

Register now at v2.truckdirectmail.com The TDM website is free to use for estimating shipping costs and transit times. You only pay for shipments tendered through the website.

www.DirectLogistics.com questions@directlogistics.com 800.201.0026

bccsoftware.com marketing@bccsoftware.com 800.337.0442

For over 15 years, ConfirmDelivery has been helping organizations with their accountable mail. Now a division of Engineering Innovation, Inc, we’ve grown from working with a few Midwestern counties to a vast nationwide customer base from our Indiana office. When your business needs critical information delivered with speed and accountability, ConfirmDelivery simplifies the Certified Mail process with a fast and cost-effective solution. Our program saves substantial time by eliminating the need to fill out green cards associated with Certified Mail as well as reducing the cost of postage. With our web-based program, you can process one mail piece at a time or a batch of thousands. Multiple users can complete mailings on the system at the same time and our reporting features display the activities of each user and department, allowing customers to create an accurate budget for expenditures. ConfirmDelivery sets itself apart in the industry by providing patented tracking technology for each mail piece. Track by recipient, company, location, customer reference number or USPS tracking number. Manage recipient signatures via query or have them automatically emailed for easy print out or electronic storage. We also work closely with the post office in helping our clients find lost mail pieces and obtain the delivery information which is crucial with Certified Mailings. With ConfirmDelivery you have an efficient, accurate system with tracking at your fingertips. www.confirmdelivery.com sales@confirmdelivery.com 888.960.6245

JANUARY-FEBRUARY 2020 | MailingSystemsTechnology.com

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.

GrayHair Software is the trusted partner and provider of mail tracking and address hygiene services to the largest mailers and mail service providers in the country. GrayHair solutions deliver insights and decision-ready business intelligence that enable its clients to define best mailing practices, enhance customer engagement, increase response rates, and decrease cost per acquisition. With GrayHair, mailers gain the guidance and confidence of 200+ years of collective postal experience and an ally with an understanding of the postal industry’s nuances. Mail Tracking: Give yourself the power to track each and every mailpiece to its final destination. Gain valuable insight into your outbound and inbound mail. Manage campaigns to determine the best in-home date. Pallet Monitor: Leverage USPS® Informed Visibility® container scan data

to provide insight into your campaigns. Identify mail delivery issues at the pallet, tray, or piece level. Address Hygiene Solutiuons: Empower yourself to cut the high cost of mailing. Both standard and proprietary solutions will improve the quality of your addresses, stop bad addresses from going to print, and keep you compliant with the USPS. Data Visualization: Access fast and powerful business intelligence reports through our visual dashboards. Answer critical questions that impact your mail and identify trends that are overlooked in traditional reports.

https://firstlogic.com https://firstlogic.com/contact-us 678.256.2900

grayhairsoftware.com info@grayhairsoftware.com 856.727.9372

At Melissa, it all starts with an address. Since 1985, more than 10,000 customers worldwide have relied on Melissa for their address management, data quality, and data enhancement needs. We know that accurate address data is critical to your mailing operations and the bottom line. We got you covered — with unique mailing solutions offering different ways to meet your needs — from cloud-based solutions, desktop software, to service bureau and flexible APIs. We offer everything you need for mailing success. Mailers Online is our cloud-based SaaS solution where we do it all for you on our end. There’s no binding contract — just easy, up-front pricing per job. Best of all, you can use Mailers Online from any web browser. Plus, you don’t have to worry about changing postage rates or data file updates — it’s zero maintenance. MAILERS+4 is our desktop software that corrects, verifies, and standardizes U.S. and Canadian addresses, removes duplicates, performs NCOA change-ofaddress 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. Also, in our lineup is MatchUp, which features proprietary deduping algorithms to identify duplicates for list hygiene and effectuate common householding scenarios. 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, the question isn’t, “Why choose Melissa?” — the only question is, “Which Melissa mailing solution is perfect for you?”

Maximize the ROI of Your Marketing Dollars with SmartSoftDQ Every year, there are, on average, over 140 million change-of-addresses filed with the USPS®, as well as over one million new delivery points being added to the network. Think about all the discarded mail and what dollar amount that equates to. That is a lot of lost revenue and lost connections. Address correction is a vital step in keeping data up-to-date for your marketing efforts. Campaigns are far less effective if they don’t reach the right individuals’ mailboxes. Verifying and updating contact information before mailing reduces returned mail and wasted resources, allowing you to get the most out of your direct mail budget. SmartAddresser, the all-in-one postal software from SmartSoft DQ now features 48-month NCOALink so

you can keep your data up-to-date when people move. It is CASS™ and PAVE™ Certified by the USPS® and easy to install and learn. From stateof-the art Address Correction features and 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. Visit SmartSoftDQ.com for more information. Or ask your postal software reseller to contact us at contact@ smartsoftusa.com

Melissa.com info@melissa.com 800.MELISSA

CONTACT INFO BCC Software bccsoftware.com marketing@bccsoftware.com 800.337.0442

Direct Logistics www.DirectLogistics.com questions@directlogistics.com 800.201.0026

ConfirmDelivery www.confirmdelivery.com sales@confirmdelivery.com 888.960.6245

Firstlogic https://firstlogic.com https://firstlogic.com/contact-us 678.256.2900

SmartSoftDQ.com contact@smartsoftusa.com

GrayHair grayhairsoftware.com info@grayhairsoftware.com 856.727.9372

Melissa Melissa.com info@melissa.com 800.MELISSA

SmartSoft SmartSoftDQ.com contact@smartsoftusa.com

THE US REMAINS IN THE UPU,

BUT CHANGES ARE AHEAD IN 2020 A s most mailers know by now, the United States will stay in the Universal Postal Union (UPU), a decision that likely caused mailers everywhere to breathe a sigh of relief at the avoidance of a major disruption in the USPS’ international mail services during peak season. This is very good news for commercial and institutional mailers, for US residents, for US citizens outside the country, and for the USPS. The concerns regarding voting by US civilian and military citizens overseas and for mail to members

JANUARY-FEBRUARY 2020 | MailingSystemsTechnology.com

of the military who are serving outside the US are now resolved. Between the postage increases in January 2020 and ones that will take effect in July 2020, postage rates for international small packages from the US to other countries will increase more than they have in the past due to the agreement reached among the member countries at the UPU Extraordinary Congress in September. And we may see higher postage increases for international packages in the future, since they will be considered competitive products as of July. After the Extraordinary Congress rejected the proposed option preferred by the US

on September 24, with 78 countries voting against, 57 in favor, and nine countries abstaining, an agreement dubbed “Option V” (for Victory) was passed on September 25 regarding remuneration for bulky letters and small packets. It met the US requirements for remaining in the UPU, according to Dr. Peter Navarro, Assistant to the President and the Director of the Office of Trade and Manufacturing Policy (OTMP), who led the US delegation to the Extraordinary Congress. The US formally removed its notice to withdraw at a White House meeting between President Trump and UPU Director-General Bishar Hussein.

BY MERRY LAW because it is more the 0.8” in height. Regular letters and flats are not affected, nor is Parcel Post, which weighs over two kilograms or 4.4 pounds in the UPU definition. The inbound rates paid by countries to each other are not postage rates. The rates countries pay are established under the UPU agreements and are paid in Special Drawing Rights (SDRs) that can be converted into national currencies. Postage rates are what mailers pay. For international mail, a portion of the postage rate covers what the originating country pays to the mail-destination country. Self-declared inbound rates are payments exchanged between countries, rather than postage paid by mailers to a postal operator. The formula for determining the maximum for self-declared rates for each country is complex. It is based on a linear regression line using 11 weight points from 20 grams (0.705 ounces) to 2,000 grams (4.4 pounds) and 70% of that country’s single piece rate for those points. A linear regression line, also known as a best-fit line or least-squares regression line, is a calculation that produces a straight line that is statistically closest to each point on a graph. See Figure 1 for an example.

According to those attending the Congress, negotiations to reach the compromise lasted until 3 a.m. and picked up again early on the 25th. Late in the afternoon in Geneva, Option V was passed by acclamation. This agreement will be in effect through 2025 unless it is amended by a UPU Congress. (There will be Congresses in September 2020 and in 2024.) The agreement allows self-declared rates (rates set by the destination country) for bulky letters and small packages. Since any items containing goods must be mailed as a package under the USPS rules, this agreement affects any mail with goods and those in the defined size. Who and What Is Affected? The UPU defines small packages and bulky letters as class E letter-mail (E stands for encombrant, French for cumbersome.) Class E items are defined as larger in any dimension than 305mm X 381mm X 20mm and weighing between 500 grams and two kilograms, or approximately 12” X 15” X 0.8” and weighing between 1.1 and 4.4 pounds. So, a package that is 6” X 4” X 2” weighing three ounces is covered by this agreement

Weight

Postage There are caps to the inbound rates, expressed in SDRs. The agreement lays out increasing caps for each year from 15% to 17% over the previous year through 2025. A procedure for allowing exceptions for any country where the rate determined within this methodology does not meet its costs are laid out and can allow a self-declared rate of up to 80% of the single piece domestic postage for an equivalent item. The USPS, or any other country that “received total annual inbound letter-post volumes in 2018 in excess of 75,000 tonnes”, will be able to institute self-declared rates for inbound international small packages at the beginning of July of this year, although doing so will invoke payments to the UPU of CHF 40 million ($40.31 million in US currency) over a five-year period. Only the US meets this requirement. About 45 developed countries exchanging packages with the US may respond with their own self-declared

rates for inbound items from the US. As the USPS estimates it loses about $400 million annually on these packages, the agreement makes financial sense. More Changes Coming Next Year In January 2021, the system of self-declared rates is available to all countries. All UPU-designated target system countries with higher volumes, which are generally more developed countries, are required to self-declare rates. Right now, that includes 47 countries. Exemptions to the system of self-declared rates are available to UPU-designated transitional system countries and those with low international mail volumes, but they may choose to enter into self-declaring rates. The UPU-designated transitional system countries number 105 out of their membership of 192 countries. (This number should decrease as countries develop better postal infrastructure and services.) The self-declared inbound rates will be determined by each participating country under whatever legal and regulatory regime applies in that country. Once these rates between postal operators are established, each country can calculate their outbound costs to that other country. This is when postage prices applicable to outbound items can be established, subject to the regulatory and legal framework. It may be a lengthy process, but this all applies only to small packages and bulky letters, not to regular letters, flats, or parcel post. Here in the US, the Postal Regulatory Commission (PRC) is the regulatory authority that will review and approve the rates submitted by the USPS, calculated as agreed among the UPU members. The USPS and other countries must notify the UPU in March of their self-declared rate, with each country having a different inbound rate. The USPS has made it clear that there will be a postage increase for small packages in July. The January postage rates are public, with increases for international packages from about six percent to 10% depending on package weight and destination country (in addition to the aforementioned July increase). These increases for small package postage might be as high or higher than those that went into effect this January, so it is important for mailers and shippers to start preparing as soon as possible.  Merry Law is President of WorldVu LLC and the editor of Guide to Worldwide Postal-Code and Address Formats. She is a member of the UPU’s Addressing Work Group and of the U.S. International Postal and Delivery Services Federal Advisory Committee. MailingSystemsTechnology.com | JANUARY-FEBRUARY 2020

By Kathleen Siviter

ARE SIGNIFICANT PRICE INCREASES AND OTHER CHANGES ON THE HORIZON? A breakdown of what the industry can expect in the wake of the PRC’s 10-year review of the PAEA.

n December 5, 2019, the Postal Regulatory Commission (PRC) issued its long-awaited next step on its statutorily mandated “10-year” review of the Postal Service’s rate system. The Postal Accountability and Enhancement Act (PAEA) legislation, enacted in late 2006, included the requirement that the PRC evaluate the rate system 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 24

JANUARY-FEBRUARY 2020 | MailingSystemsTechnology.com

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 2017, the PRC proposed revisions to the rate system and received extensive comments from all concerned stakeholders. Further complicating the PRC’s work was the fact that in 2019, three of the

five PRC Commissioners were replaced as their term limits were reached. The PRC ultimately issued a 354-page set of revised proposed rules on December 5, 2019, with comments due by February 3, 2020 and reply comments due by March 4, 2020. While I encourage all stakeholders to review the full set of revised proposed rules, here are some key highlights. USPS Would Be Allowed/Required to Raise Prices… Significantly The main thrust of the PRC’s revised proposed changes are 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). First, the PRC proposes a required category of additional rate authority, which it says is designed to address the ongoing USPS liabilities from the pre-funding of its retiree health benefits, a contentious part of the PAEA that is the main reason for the USPS’ current financial difficulties. The PRC proposes requiring the USPS to make payments each year for the next five years, and designates the additional rate authority required for the USPS to make the annual payment (i.e., the USPS would raise postage prices by whatever additional percent is needed to make the annual payment). Though the PRC cautioned that it can’t accurately predict USPS revenue changes year over year, it showed a chart where it applied its proposed formula for this additional rate authority to example revenues for the next five years, and the annual percentage of additional rate authority ranged from 0.827% to 1.11%. This category of additional rate authority would be required, not optional, unless legislation were to be passed to change it (or unless the USPS decided not to pay on its retirement liabil-

ities). So, if the CPI were two percent for the year, and this category required the USPS to raise an additional 1.11% to cover the retirement payment, that would mean a total of 3.11% postage price increase… but there is more. The PRC also included a formula-based mechanism to provide for additional rate authority based on year-to-year changes in mail volumes and USPS delivery points. The PRC’s premise in creating this “density” category of additional rate authority is that the USPS has little to no control over mail volume declines, yet its delivery points continue to increase, meaning that the cost per piece for the USPS continues to rise as volumes decline. The density rate authority is designed to make up for that additional cost. In its revised proposed rules, the PRC included a chart that showed what the result of implementing its proposed density formula would have been for USPS Fiscal Years 2013-2019, and the percentage of additional postage increase each year (in addition to the CPI postage increase) ranged from 0.36% to 1.72%. [I would note that if the PRC had gone back a few more years to FY2009, a year when mail

volumes declined dramatically due to the Great Recession, the proposed density formula would have resulted in a 5.4% additional rate authority (remember this is on top of the CPI price increase…)]. So now, using our example above, if CPI allows the USPS to raise prices two percent, and the retirement category requires it to do another 1.11%, and this density category comes out to another 1.72%,the USPS then would be able to raise postage rates 4.83%. But wait, there is more. The PRC also proposes two additional components of “performance based” rate authority. One is a service-efficiency category, where the USPS would receive one percent of additional rate authority if it meets the proposed service and efficiency goals. To meet the proposed service requirement, the USPS would have to NOT lessen its service standards (its targets for delivery of each mail class within a specified number of days), like it did in years past where it eliminated retail First-Class Mail overnight service or the load leveling changes it implemented for Marketing Mail. The USPS would not be required to actually meet the standards in terms of its MailingSystemsTechnology.com | JANUARY-FEBRUARY 2020

service performance; however, as long as it doesn’t change the standards, there is no requirement around whether it meets the standard. For efficiency, the USPS would have to show year-over-year improvement in its Total Factor Productivity (TFP) scores. If the USPS achieves both in a given year, compared to the prior year, it would receive the additional one percent rate authority. Lastly, for those products the PRC determines are “underwater” each year — meaning the price does not cover its costs — the USPS would be required to increase prices an additional two percent unless all the products in a mail class were determined to be underwater, in which case the additional rate authority would be optional for the USPS to use. The PRC had identified eight non-compensatory (aka underwater) products for FY2018: (1) In-County Periodicals; (2) Outside County Periodicals; (3) USPS Marketing Mail Flats; (4) USPS Marketing Mail Parcels; (5) Stamp Fulfillment Services; (6) Inbound Letter Post; (7) Media Mail/Library Mail, and (8) the Market Dominant negotiated service agreement (NSA) with PHI Acquisitions, Inc. (PHI). What Does All This Additional Rate Authority Mean? It means that, in a given year, the USPS could conceivably increase prices for all its Market Dominant (monopoly) products by the CPI (which was about two percent for 2019), plus two additional categories of rate authority (which could amount to anywhere from an additional 1.5% to two percent, or much higher), plus another one percent if it achieved the service-efficiency improvements, plus another two percent for underwater products… which means some products would be looking at a seven percent or higher annual postage increase. Changes to the Workshare Rules Are a Bright spot, but May Need Clarification There is a definite bright spot in the PRC’s proposed changes, though it may need clarification or fine-tuning, which are the proposed changes in support of workshare. For years, the PRC has recognized the value of Efficient Component 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 (e.g., presort) saves the USPS five cents, the discount should be set at five cents, not at three cents (which would be below 100% passthrough, meaning the USPS does not pass all the savings on to the 26

JANUARY-FEBRUARY 2020 | MailingSystemsTechnology.com

mailer or Mail Service Provider (MSP)) or seven cents (above passthrough, meaning the USPS is giving the mailer/MSP more than what the workshare saved the USPS). In the PRC’s revised proposed rules, it sets three principles around workshare to start with the first pricing change the USPS files after the PRC’s rules are implemented: 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%. All that is just as it should be to help drive the USPS to set workshare discounts as close to 100% as possible… except that the PRC also includes “safe harbor” and a process for the USPS to request a waiver to any of the above rules. This is where things get a bit confusing in the PRC’s proposed rules. There are scenarios where the USPS can file a request for waiver at the PRC to enable it (if approved by the PRC) to reduce a workshare discount where the passthrough is below 100% (as long as it stays above 85%), or to increase a workshare discount where the passthrough is above 100%. These exceptions threaten to undermine the PRC’s stated goal of maximizing incentives to improve efficiency. The PRC should stick to its “do no harm” principle that discounts can only move closer to a 100% passthrough, except in the very limited circumstances where the USPS can show cause that such a discount would impede its operational efficiency (an intentional high bar). Such an approach would help the USPS reduce its costs while increasing the incentive for mailers and MSPs to prepare and enter mail the most efficient way possible. While the proposed rules need some clarification and perhaps fine-tuning around the “waiver” portion, the core principles here are sound business practice. Increased Focus on USPS Costs and Cost Reduction Initiatives Lastly, another core component of the PRC’s revised proposed rules are new USPS reporting requirements on costs and cost-reduction initiatives, including annual reporting on unit product costs and additional data when costs increase more than the average product cost increase from one year to the next, as well as specific reporting on USPS cost reduction initiatives and their impact on performance metrics and unit costs. The PRC also proposes requiring “summary information” on ongoing and

future projects that have approved USPS DARs (Decision Analysis Reports). The Mailing Industry’s Reaction Reaction from the mailing industry to the PRC’s revised proposals has been swift and vehement — raising postage prices above CPI will simply accelerate mail volume declines, not to mention that much of what is being proposed on increasing prices is premature. For starters, the industry vehemently disagrees with the PRC’s premise in creating the “density” additional rate authority category — that the USPS has little to no control over mail volume. If that were true, why is there a USPS sales and marketing force? Or promotions/incentives, or Informed Delivery and its marketing campaigns, or USPS efforts to grow use of Marketing Mail, or any of the other initiatives the USPS is putting forward targeted at retaining and growing mail volume? If those are all pointless exercises, perhaps eliminating them would result in the savings the PRC is looking for? Of course these initiatives are not pointless; they are representative of things the USPS can do to retain and grow mail volume by adding value to its products/services. Not to mention the impact on mail volume that comes from rising prices and declining service — are both of those out of the USPS’ control as well? Not to mention the fact that mail is protected by two USPS monopolies — access to the mailbox and preventing much of the mail volume from being delivered by alternative carriers. What other government monopoly is protected from competition but allowed to continue raising prices rather than focusing on reducing its costs and growing its business through new innovative products… or just improving service on its existing products? Industry has come out hard in saying that the USPS has a lot of control and impact on whether mail volumes increase or decrease. And in the case of another recession (something the PRC’s proposed density category seems designed to combat), were that to happen and negatively impact mail volumes, there is the “exigency” price increase process the PRC already established, which the USPS utilized after the Great Recession volume declines (of course, those additional price increases just accelerated pressure on businesses to seek other more affordable communication methods). Second, looking at the “retirement” rate authority category, there currently is legislation gaining traction that would repeal the

USPS’ pre-funding requirement entirely. In its proposal, the PRC clarifies that if Congressional action were to impact the USPS’ retirement liability or fundamentally alter the structure of its retiree obligations, the PRC would reevaluate the rules and rate system. But there is little detail, or confidence among industry stakeholders, as to exactly what that would mean… and it could only impact one category of the proposed additional rate authority the PRC envisions. When you look at the USPS’ financial condition — which is what the PRC did in the first phase of its review and what drove it to proposing additional rate authority for the USPS — it is clear that if the pre-funding requirement were repealed, that should change the entire picture of the USPS’ finances and eliminate the requirement for these additional rate authorities beyond CPI altogether. Industry stakeholders also feel that mechanisms designed to drive the USPS to become more efficient and improve service are insufficient since service performance could continue to deteriorate under the proposed rules and the USPS could still meet the requirements necessary to grant it another one percent rate authority.

The workshare piece of the proposal has a great deal of benefit to the industry, and there is nothing stopping the PRC from moving ahead with that piece of its proposal while putting the brakes on the rest to see if other significant changes can have the desired impacts without significantly raising prices and driving business out of the mail. The workshare piece on its own can result in significant cost savings for the USPS as it better aligns the incentives to drive efficient mail preparation and entry. But there are also other significant changes in the USPS’ oversight that should be allowed the chance to succeed. Give Change a Chance! Coming in 2020, we will have new leadership at the USPS with the appointment of a new Postmaster General, which undoubtedly will bring fresh approaches, new ideas, and a different perspective on the USPS’ place in the larger mail supply chain. In 2019, we saw the appointment of three new Governors on the USPS’ Board — bringing it to a quorum for the first time in many years and allowing it to regain the ability to steer the USPS’ direction. 2020 will also be a year with some events that will give mail volume

a boost — the 2020 census mailing and a Presidential election, and while that is not an ongoing boost, it helps buy some time for the new USPS leadership to implement changes. And implementing well-designed workshare incentives would also help drive much-needed change. So why move to raise postage prices above CPI before seeing if these significant changes in leadership, oversight, and more can have the desired impact on the USPS’ finances? Why not implement some well-designed changes to workshare alone, which, combined with all the other changes, could give the USPS just the boost it needs, then revisit the situation after giving these changes the time to make an impact? The bottom line is, it’s imperative we give change a chance to be successful.  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.

MailingSystemsTechnology.com | JANUARY-FEBRUARY 2020

By John Leininger

ENSURING YOUR MAIL PIECE’S SUCCESS Just because a piece of mail arrives at its intended address doesn’t mean the message is getting through. Here’s how to make sure your mail stands out.

very piece of mail has a purpose — the mailer may want to sell something or promote a sales event, ask for a donation, promote a new product, announce an event, send a message to a friend, send a bill or bank statement, wish someone a happy birthday or anniversary, send a rebate check, invite someone to a party, or mail out something that keeps the mailer’s business top of mind. The term “failed mail” could apply to any piece of mail that does not make it to the address, is not opened, or does not accomplish the 28

JANUARY-FEBRUARY 2020 | MailingSystemsTechnology.com

task it was intended to when it was sent. If you send out a large mailing, no one expects 100% of the people to engage with you, but you also need to recognize that many people never even open the mail piece, which means that the purpose of the mailing had no chance of succeeding with these particular customers. So, the challenge with every mailing is to at least present the message in a way that the recipient will consider opening the envelope and reading the message. The first element every mailer should consider (and the USPS now requires) is

to validate the addresses. Does the person actually still live there? Then the address needs to be formatted properly so the USPS equipment recognizes the address. These two steps are the easiest part of the task to prevent failed mail. They can be automated with tools from the USPS and with various mail prep software. The second factor of the process is a bit more challenging — is the message relevant to the recipient based on their age, gender, whether they own a home or rent, own a pool, travel a lot, etc.? Again, this is something that can be automated

ery and text of the mail piece has to be adjusted to show relevance to each group. Design is more than just the aesthetic of a mail piece; it has to be integrated with the images, the text, the offer, and the listed benefits for the precise audience to which the mailing is targeted. In the past, this would have been done with different versions, but this has limited effectiveness and cost benefits. Today, with the use of variable data printing on toner-based digital presses and high-speed inkjet printers, a mailer can make each piece unique for every single piece in a multi-million piece mailing. When one talks about the design of a mail piece, they typically think about what the graphic designer does to make the piece look attractive. That is only half of the design component. Designers may have a good sense of balance, proportion, rhythm, contrast, and unity — but communicating effectively is about more than making the piece look pretty. The design cannot get in the way of the message and the action you want from the recipient once they look at the mail piece. There are a number of things to consider as you design a mail piece, the first

being the goal you hope to accomplish by sending it. What is the specific goal of the marketing campaign? It surprises me how many times people cannot quickly state that goal or are only thinking in the short term and not the long-term results (for example, what is the lifetime value of the customer?). What is the call to action? What is going to make the recipient want to respond? Giving recipients an option to connect further online is an additional tool. Is there a timeframe for them to respond? If you do not give them a deadline, it is easy for them to put things off and forget about it. If you want to create an effective mail piece, you need to think like a salesperson or a marketing manager, not just as a printer or mailer. The plan is the most critical element of any designed mail piece. Knowing the audience, knowing the product, and understanding the value to the customer results in a targeted message that calls recipient to the offer.  John Leininger is Professor Emeritus of Graphic Communications at Clemson University. He formally retired in 2018 but remains involved in the printing and mailing industry.

Additional Resources

If you are looking for a strategy on how to better serve your customers, consider reading the following four books: with the assistance of list companies that collect and data mine for this information. Separating the Successes from the Failures Now, once this fairly simple but yet crucial task is done, it’s time to ask yourself, “What separates success from failure when I was able to automate all of this?” It comes down to the design and strategy of the mail piece. That does not take away any of the importance of making sure the address is right, but it does put more value on targeting the message so it can be more focused and directed to the particular audience. You need to design a mail piece differently depending on whether you are sending to a Baby Boomer, Gen-X, or a Millennial. Let’s say you are selling something that would be relevant to all three generations, such as an activity tracker. All generations use them, but they use them in different ways. The imag-

1. Steal These Ideas!: Marketing Secrets That Will Make You a Star, by Steve Cone. This book focuses on how to look around at great ideas that you can repurpose to serve the needs of your customer. You do not need to reinvent the wheel; there are already great ideas that can solve the problem you are working on. 2. Disciplined Dreaming: A Proven System to Drive Breakthrough Creativity, by Josh Linkner. For years, companies (including printers and mailers) have been trying to systemize their production process, and this has stifled the creative and innovative initiative in their employees. This book can help to energize the creative talents in your company. 3. The Challenger Sale: Taking Control of the Customer Conversation, by Matthew Dixon and Brent Adamson. This sales book focuses on how sales is more than just selling a service, it is selling a solution and the sales person needs to engage the customer to understand what they really need. 4. Strategic Database Marketing 4th Ed: The Masterplan for Starting and Managing a Profitable, Customer-Based Marketing Program, by Arthur Hughes. This book is all about personalization; Arthur Hughes was doing personalized mailing long before Xerox invented the DocuTech (all the way back to the 1950s). This should be a must-read for anyone managing the data in an integrated campaign.

MailingSystemsTechnology.com | JANUARY-FEBRUARY 2020

SAY WHAT?

THINK ABOUT IT

Adding technology like QR Codes and Augmented Reality needs to create a fun, engaging experience to work. You need to use the technology to its fullest to reap the highest returns. — ROB HANKS

Between the postage increases in January 2020 and ones that will take effect in July 2020, postage rates for international small packages from the US to other countries will increase more than they have in the past due to the agreement reached among the member countries at the UPU Extraordinary Congress in September. And we may see higher postage increases for international packages in the future, since they will be considered competitive products as of July.

— MERRY LAW 30

JANUARY-FEBRUARY 2020 | MailingSystemsTechnology.com

Mail already has advantages over digital communication channels. Mail comes out on top in areas like less competition in the mailbox, higher trust levels, and better conversion rates. The cost to communicate via the mail is the biggest disadvantage. Mail skeptics often cite the cost of materials, production, and postage as reasons to avoid mail and concentrate on email, social, search, and online ads.

THE TERM “FAILED MAIL” COULD APPLY TO ANY PIECE OF MAIL THAT DOES NOT MAKE IT TO THE ADDRESS, IS NOT OPENED, OR DOES NOT ACCOMPLISH THE TASK IT WAS INTENDED TO WHEN IT WAS SENT. IF YOU SEND OUT A LARGE MAILING, NO ONE EXPECTS 100% OF THE PEOPLE TO ENGAGE WITH YOU, BUT YOU ALSO NEED TO RECOGNIZE THAT MANY PEOPLE NEVER EVEN OPEN THE MAIL PIECE, WHICH MEANS THAT THE PURPOSE OF THE MAILING HAD NO CHANCE OF SUCCEEDING WITH THESE PARTICULAR CUSTOMERS.

Savvy managers know that the most tangible evidence of addressing errors in any mailing is the volume of return mail. Instead of treating return mail as a nuisance, managers should consider it another tool to improve their address list.

— JOHN LEININGER

— MARK M. FALLON

— MIKE PORTER

The PRC also included a formula-based mechanism to provide for additional rate authority based on year-to-year changes in mail volumes and USPS delivery points. The PRC’s premise in creating this “density” category of additional rate authority is that the USPS has little to no control over mail volume declines, yet its delivery points continue to increase, meaning that the cost per piece for the USPS continues to rise as volumes decline. The density rate authority is designed to make up for that additional cost. — KATHLEEN SIVITER

APPLICATION ARTICLE

THE POWER OF MATCHING Nearly every company on the planet struggles with compiling merged customer profiles. They want to associate customer buying history, transactions, customer service interactions, sales, servicing, and more into a Single Customer View (SCV). That’s a tall order. Most organizations have all the data they need. It’s the consolidation part they find difficult. Matching data from multiple sources is not easy. Duplicate records and redundant or conflicting data make consolidation tasks harder than they need to be. That’s why the first step for any company seeking to create a Single Customer View is to clean up their existing data and find the matches. In The Power of Matching, the third eBook in a series about data quality, Firstlogic explains how strong matching and consolidation practices benefit every

company. The book covers the essential elements of matching and consolidation: data, rules, and results. The book also includes behind-the-scenes explanations of the science behind matching, including deterministic and probabilistic matching techniques. Even organizations who do not consider mail as their primary customer communication channel benefit from the functionality found in matching and consolidation software. As the book points out, the task becomes more complex as data sources increase. A full suite of data standardization and data quality tools are necessary, along with a comprehensive and flexible matching/ consolidation solution. Also covered in the eBook are ways companies can use matching and consolidation software when an SCV isn’t the object. Some examples

include uncovering new markets or identifying an organization’s most loyal followers and best prospects. Data matching and consolidation software provides much more than the traditional “merge/purge” function used by direct mail companies for decades. Download The Power of Matching to learn the whole story. Get the free eBook from Firstlogic HERE or request it at www.firstlogic.com/ contact-us

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