Why rising postage costs create smarter use of mail
With another round of postal price increases approaching, much of the conversation understandably focuses on postage costs. But after more than 25 years of working with physical mail, we need to look at the economics of mailing differently.
The real cost of a mailing isn’t necessarily the price you pay to put it into the postal system. It starts with the quality of the data, the purpose of the communication and the audience being targeted, and continues through production, distribution and, ultimately, the result the communication achieves.
The better question isn’t simply “what does it cost to send?” but “what is the most effective way of getting the right communication to the right audience, and what will it achieve?”
Not all mail is trying to sell you something
It is important not to confuse physical mail with direct marketing. A publisher sending a magazine to a subscriber isn’t trying to sell that customer something. The customer has already bought it. The postal system is fulfilling the purchase.
The same applies to membership publications, subscription services, statements, invoices, renewal notices, customer communications and regulatory correspondence. Some physical mail generates a sale, some retains a customer, some fulfils a purchase, and some simply delivers important information.
There is therefore a much broader physical-mail economy than simply direct marketing, and the distribution challenge and economics need to reflect the purpose of the communication.
Mail still gets noticed
Despite the growth of digital communication, physical mail continues to command attention. The latest JICMAIL figures show that 76.3% of mail is read, looked at or glanced at, while 9.4% of mail items prompted a website visit. Perhaps more interestingly, 56% of purchases prompted by mail were ultimately completed online.
That rather challenges the idea that physical mail and digital marketing are competing channels. In many cases, they are actually working together. A piece of mail can create the initial awareness, prompt someone to scan a QR code, visit a website, search for the business or respond to an offer online.
The same applies when physical mail is combined with other advertising. A local retailer might use radio to create awareness, digital and social media to reinforce the message and then put a physical promotion through the letterbox, which gives the customer a reason to visit the store. The channels aren’t necessarily competing with each other; they are providing different touchpoints in the same customer journey.
That is particularly relevant when the objective is to drive people into a physical location. A voucher, store opening, event, local promotion or time-limited offer can turn general awareness into an action. The value of the mail is therefore not simply what it cost to deliver it, but what happened because it arrived.
The economics start with the data
This is perhaps the biggest opportunity and one that is often overlooked. How good is your mailing data? Are there duplicates? Have customers moved? Are businesses still trading? Are there obsolete records? Are you communicating with people who are no longer relevant?
If a company has 100,000 records and data cleansing and profiling identifies 15,000 that are duplicated, obsolete or unsuitable for a particular campaign, the saving isn’t limited to 15,000 postage items. There is also the printing, paper, fulfilment, handling and distribution associated with those unnecessary communications.
More importantly, the remaining 85,000 may now be a much more relevant audience. That’s why data cleansing, updating and profiling are part of the economics of mailing rather than simply an administrative exercise. Better data can reduce the volume of mail, improve targeting and potentially increase response at the same time.
The objective isn’t necessarily to mail more people; it is to make sure the people who receive the communication are the people most likely to value it.
Then look beyond the traditional postal route
Once the data and audience are right, the next question is how the communication should actually be distributed.
For many businesses, Royal Mail will continue to be the appropriate solution, particularly where the requirements of the mailing suit its business services. Businesses sending significant volumes should, however, make sure they are taking advantage of available discounted business services rather than simply working from standard rates.
There are also alternative postal routes, including Downstream Access providers and other postal operators. We don’t believe the answer is to promote one operator as universally cheaper than another. The right solution depends on volume, format, weight, geography and the service requirement. Sometimes an alternative route can produce a meaningful saving; sometimes the Royal Mail service is the better option.
But there are also circumstances where the most economical answer is not conventional addressed mail at all. If the objective is to reach households within a defined area, a door drop may be more appropriate. If the audience can be targeted geographically, SMART-Drop and other data-led approaches can reduce unnecessary distribution. Partially Addressed Mail provides another option between a conventional door drop and fully addressed mail, while specialist local distribution can make sense where a campaign is concentrated around particular locations.
The question should always be: “What is the most appropriate way of reaching this audience?” Not simply: “What is the cheapest postage rate?”
Don’t overlook international mail
The same thinking applies to international mail. Businesses and publishers sending magazines, catalogues, membership communications or marketing material overseas can sometimes reduce the cost per item by consolidating compatible volumes before the mail enters the destination country’s postal system. The opportunity depends on destination, format, weight and volume, but it is an area where the benefits of consolidation can easily be overlooked.
The physical specification can make a difference too. Weight, dimensions, format, paper, envelope, sortation, address quality, volume and frequency can all influence the eventual cost. Sometimes changing the specification or segmenting the audience can produce a greater saving than simply negotiating another small reduction in the postage rate.
Measure the outcome, not just the postage
Ultimately, the cheapest piece of mail isn’t necessarily the most economical piece of mail. A 50p communication that produces no response is not necessarily better value than a £1 communication that generates a customer.
For a marketing campaign, the meaningful measurements may be cost per response, cost per enquiry or cost per acquisition. For a subscription publication, it may be the cost of fulfilling the customer’s purchase reliably. For transactional mail, it may be customer retention, compliance or simply ensuring important information reaches the recipient.
The measure needs to reflect the purpose of the communication.
That is why the conversation about rising postage costs should simply be about finding the cheapest way to put something in the post. It should be about understanding the whole process: the data, the audience, the communication, the production, the distribution route and the outcome.
Sometimes the answer will be Royal Mail. Sometimes an alternative postal route. Sometimes a door drop, Partially Addressed Mail or another targeted distribution method. Sometimes international consolidation will make the difference. And increasingly, the most effective campaign may be physical mail working alongside radio, digital, social or other forms of advertising.
The common thread is making the communication work harder.
Don’t simply ask how cheaply you can send 100,000 pieces of mail. Ask how efficiently you can communicate with the people who matter, and what you need that communication to achieve.
Because despite the growth of digital communication, physical mail still has one rather powerful characteristic:
It arrives.
The opportunity now is to make sure it arrives with the right communication, to the right audience, at the right time, and at the right cost.
That is the real economics of physical mail.
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