Direct Mailers In All Verticals Calling For Comprehensive Solutions To Help Reduce Postage Expense and Improve Deliverability, Says Study From Leading Strategic Consulting Firm

NEW YORK, — High postage costs, diminished consumer response rates and increased “clutter” in the mailbox are collectively presenting direct mailers with a daunting challenge: Improve the performance of your campaign execution processes, or lose ground to competitors with deeper, more efficient marketing platforms.

For many, the solution to that challenge rests in applying established production tools in a whole new manner. That’s the finding of a new white paper release this morning by Winterberry Group, a leading New York-based strategic consulting firm serving the marketing industry.

The white paper, entitled A Strategy for Savings: Postal Optimization and the Future of Direct Mail, explores the very significant opportunities now emerging around the development of comprehensive postal optimization strategies, which integrate multiple cost-saving direct mail production techniques— like commingling, copalletization and drop-shipping—in a manner that drives unique incremental value for mailers both large and small.

Sponsored by Direct Group, a leading integrated direct marketing solutions provider, the paper explores both the leading drivers of postal optimization adoption, as well as the factors that are expected to continue supporting expansion of the practice in coming years. Among other findings, it concludes that:

• Driven by both rising rates and several years of severe price compression among marketing service providers, postage costs are growing to assume a more significant proportion of direct mail budgets

• General maturity of the direct mail channel and heightened competitive intensity in several mail-dependent vertical markets have conspired to depress typical direct mail response rates, forcing marketers to re-evaluate the approach by which they derive value from the channel

• Mounting pressure to adopt environmentally-friendly business practices has focused attention on the reduction of direct mail waste—including both undeliverable packages and those that ultimately fail to achieve a specified marketing objective

• Though widespread understanding of postal optimization and its high-level benefits finally reached an industry-wide “tipping point” about 18 months ago, many marketers—including several of the nation’s largest direct mailers—have yet to fully integrate a comprehensive postal optimization execution plan into their long-term direct mail strategy

• Effective postal optimization execution requires the integration of multiple tactical tools, potentially including data hygiene, commingling and various logistics solutions depending on the marketer and the specific needs of its direct mail program

• The critical importance of scale in driving optimization efficiency (especially in relation to volume-oriented commingling production) has served to bifurcate the direct mail production industry into a small corps of “mega-players” that have the tools and the capacity to drive such value, and a large general community of smaller providers that have little choice but to outsource such work or offer less comprehensive optimization solutions

• Reduced postage rates may provide the initial motivation for investment in postal optimization, but a wide range of ancillary benefits—including improved targeting capability, enhanced flexibility with regard to mail timing and significant potential reduction in “waste mail” expense—may ultimately emerge as more significant long-term benefits.

“For the last several years, we’ve watched closely as comprehensive postal optimization strategies grew from ‘nice-to-have’ to ‘need-to-have’ elements of every direct mail execution program,” said Bruce Biegel, Winterberry Group’s senior managing director. “It’s now clear that these programs are more important than ever—driven by marketers’ needs to mitigate high postage costs and production expense, as well as continuing demand to eliminate needless waste in their mailing efforts.”

“What this report confirms is the absolute critical importance of postal optimization in every mailing strategy,” added Don McKenzie, president and CEO of Direct Group. “Even a few cents of postal savings per package—enabled by a combination of commingling, copalletization or one of several data-driven processes—can make a huge difference in the profitability of a given campaign. It’s great to see that the industry is finally recognizing these opportunities.”

A Strategy for Savings: Postal Optimization and the Future of Direct Mail is available for complimentary download via the Research page of Winterberry Group’s Web site, http://www.winterberrygroup.com/research/.