Direct mail is one of the most powerful ways to communicate with current customers, especially when it comes to new customer acquisition and reactivating dormant accounts.  One of the most significant portions of the overall expense of any direct mail program is the mailing costs, specifically postage.  Paying attention to the USPS promotional calendar can result in significant savings without reducing the effectiveness of the direct mailing.  The USPS’s recently announced 2017 Postal Promotions plans will surely help deliver more impact for less cost.

The New Promotions

According to the Federal Register, the USPS plans to continue offering five promotions from 2016 with some updates and will also add one more. These promotions take effect on January 1, 2017, so you have plenty of time to prepare your strategy.

Here is a summary of the five promotions USPS is planning and their timeframes:

Earned Value Reply Mail Promotion (January – June 2017)

This promotion offers a $0.05 per piece rebate on all Business Reply Mail, Courtesy Reply Mail, and Alternate Postage pieces that meet program requirements and are placed in the mailstream by the recipient and scanned during the program period. To receive the rebate, registered customers must have distributed a Business Reply Mail, Courtesy Reply Mail envelope, or Alternate Postage card or envelope, and must comply with all other eligibility requirements of the program.

Tactile, Sensory, and Interactive Mail Piece Engagement Promotion (February – July 2017)

Direct mailers that enhance customer engagement via the use of advanced print innovations in paper stocks, substrates, inks, and finishing techniques will be eligible for promotional discounts. Regular and non-profit Standard Mail letters and flats that meet the promotion requirements will be eligible for an upfront 2% postage discount during the promotion period. The optional fifth toner station in some of today’s digital production printing presses enables print providers to add spot, flood, or multiple coating layers to printed output to create unique textural effects while also highlighting variable information. White, gold, and silver inks are available to make direct mail pieces pop. Other offline digital enhancement technologies can also give printed communications a unique tactile feel.

Emerging and Advanced Technology Promotion (March – August 2017)

As mobile and print technologies continue to evolve, the USPS believes that mail has the potential to offer greater value by engaging customers across various media. This promotion is designed to encourage direct mailers to explore mail opportunities that incorporate near-field communication (NFC) tags, “enhanced” augmented reality, video in print (ViP), beacon technology, and other developments. This strategy provides substantial advantages for the integration of these innovations in mail pieces now and in the future. Direct mailers that leverage these emerging technologies will receive an upfront 2% discount.

Personalized Color TransPromo Promotion (July – December 2017)

The Personalized Color TransPromo Promotion is intended to encourage producers of bills and statements to send statements that create a greater connection and response from consumers by using personalized color transpromotional messaging. Bills and account statements with four-color process messages receive a 2% postage discount for First Class mail automation letters sent as part of a full-service Intelligent Mail™ barcodes (IMb) mailing during the established program period. The color messaging must be on the bill or statement and must be used for marketing or consumer information purposes.

Mobile Shopping Promotion (August – December 2017)

This promotion is designed to drive online product purchases by putting mobile-optimized promotional offers, coupons, and catalogs into consumers’ hands. The U.S. Postal Service’s Mobile Shopping Promotion will offer a 2% discount on Standard Mail letters and flats that include, inside or on the mail piece, a mobile barcode or other qualifying technology inside or on the mail piece that facilitates a mobile-optimized shopping experience.

Direct Mail Starter Promotion (May-July 2017)

This new promotion is targeted toward non-profits and commercial organizations that may not be using direct mail at this time. Specifically, small and medium-sized businesses (SMBs) can receive a 5% discount on eligible mail pieces, up to 10,000 pieces per mailer. The postal service offered this promotion in response to feedback from mail service providers that the cost and complexity of participating in postal service promotions is too high for many smaller, less sophisticated business mailers. In an effort to retain the volumes of current small business mailers and attract new mailers, the postal service is introducing a temporary postage discount on mail pieces that contain print-mobile technology (such as a QR code), that when scanned, leads the recipient to a mobile-optimized website. The mail piece must also contain directional copy instructing the recipient on how to scan the barcode and a printed uniform resource locator (i.e., URL address).

Figure 1: Proposed Mailing Promotions Calendar for USPS

The Bottom Line

Rather than focusing on saving a few pennies on production and squeezing your margins, work to create direct mail that is colorful, personalized, and interactive or leverages emerging technologies. Oversized envelopes with QR codes, NFC tags, and augmented reality can enable direct mail pieces that truly stand out. Focus on the real savings associated with optimizing the latest postal savings and promotions and you’ll deliver direct mail that gets noticed!

Color has the power to invoke a variety of responses from consumers and is a critical marketing tool for building a brand and winning customers. Adding color to printed transactional and promotional communications can highlight important information, make advertised products more attractive, and improve response rates. While the added value delivered from color printing compared to black & white is often difficult to quantify, recent research from InfoTrends makes a compelling case for the power of color.

According to preliminary data from a new InfoTrends survey–Customer Engagement Technologies: State of the Market—businesses that invest in printed communications overwhelmingly believe color to be a vital component of their print communications. About 61% of firms reported that color was very important in transactional documents, while 63% indicated the same for printed promotional materials. These companies reported that using color in their printed materials generated a higher ROI, strengthened brand image, and made documents easier to read and review. Many also noted that since their competitors print in color, they must do the same to keep up with the competition.

Historically, direct mailers and transactional communication service bureaus have digitally printed in black & white and relied on offset printed shells to provide color design elements such as logos, highlighted text, and tints. In recent years, variable color printing has enabled these providers to eliminate the use of pre-printed offset shells while simultaneously leveraging full-color personalization to improve response rates. According to InfoTrends’ research, businesses that plan to add variable color to printed bills and statements believe that doing so will improve the customer experience (62%), improve brand perception (59%), and increase the effectiveness of marketing messages (55%).

Although color is certainly effective for a variety of marketing initiatives, it can be overused. Designers often advise using color moderately and strategically because overusing color can undermine its effects. For example, too much color in a transactional document can negate its ability to highlight important information or direct the reader’s attention to a specific call for action.

Strategic use of color in direct mail often leads to improved response rates. Full-color images can capture a consumer’s attention with realistic depictions of advertised products. Color can also be used to personalize messages by matching pictures or text to items that the customer has purchased in the past. Furthermore, as shown in the Figure below, nearly 49% of consumer respondents reported that seeing color on an envelope had a moderate or major effect on their likelihood of opening it.

Figure 1: How does the use of color on a direct mail envelope impact your likelihood of opening it?

While color is an important component of the success of mailed communications, it’s important to remember that it’s only part of a larger direct mail communications strategy. For example, a key determinant of success is focusing an offer toward the best possible prospects—ones that are selected through robust data analytics and addressed with targeted, relevant personalization. Color works best when it is used in concert with an attractive design, an appealing offer, and personalization. Printing in color can enhance other elements and assist in maximizing the return on investment, but it can’t be used in isolation.

Millennial consumers (individuals between the ages of 18 and 34 and generally referred to as Generation Y and sometimes Z) are the largest and most diverse generation that the world has ever seen. Born between the early 1980s through about 2000 (in the early years of the “Information Technology Revolution”), Millennials are a highly connected, “always on” audience. These individuals don’t know a world without personal computers and mobile devices. According to a Millennial Marketing Infographic powered by Futurecast, here are some key aspects of Millennials:

• They account for 25% of the U.S. population.
• They make 21% of consumer discretionary purchases. This is estimated to be over a trillion dollars in direct buying power, and it has a significant influence on the older generations.
• 1 in 4 Millennials are parents today.
• They are social—40% of Millennials have 200+ friends on Facebook compared to 19% of non-Millennials.
• Millennials are 2.5 times more likely than other generations to be early adopters of technology.
• 80% of Millennials want brands to entertain them.

Today’s marketers must identify the best media types to effectively communicate with Millennials. Although some might think that direct mail is only for Baby Boomers, InfoTrends’ research indicated that Millennials are also responsive to direct mail marketing. Millennials reported reviewing about 67% of their direct mail pieces, and this is consistent with the open rates for older generations. If the direct mail piece had a QR code, over 45% of Millennials scanned it with a mobile device versus about 20% of those aged 50+. When asked about preferences for direct mail versus e-mail, nearly 29% of Millennials said that a tactile piece of direct mail was more effective at getting them to take action. Meanwhile, less than 24% reported that e-mail was more effective.

Figure: Which is more effective at getting you to take an action, e-mail or direct mail?

Although Millennials are hooked on technology communication and spend a lot of time on the Internet, they have become numb to digital advertising. This is precisely why an envelope in the mailbox cuts through the clutter and still grabs their attention. According to the Quad/Graphics Customer Focus® 2014 Research Study on Millennial Channel Engagement, the most three popular types of direct mail that Millennials read include retail (82%), grocery (79%), and clothing (69%). Furthermore, direct mail is a driver of web traffic—over 84% of Millennials prefer to respond to direct mail by visiting the company’s website (via PC or mobile device). Millennials are substantially more likely than any other generation to respond via web.

According to research by Cassandra, Millennials are careful with their money. These diligent researchers always consider whether something is a good investment and are less likely to make impulse purchases. According to Quad/Graphics, the most popular offers among Millennials include Buy 1 Get 1 Free (57%), gift cards (55%), and percent off total purchase (51%). Millennials that respond to direct mail will do their research before making a purchase, consulting online reviews, blogs, and product experts to learn more and make price comparisons.

As you work with your clients, remember the techniques that can help make their direct mail stand out:

• Make it simple: In today’s “always on” world, Millennials want answers immediately. They need to be informed right away about a product and its benefits. Information has always been just a click away to these consumers, so marketers risk losing Millennials if they force them to watch a video, create an account, and/or wait for an e-mail confirmation.
• Make it personal: Millennials are hardened by a lifetime of managing spam e-mails. To be effective, direct mail must be relevant to the individual. Relevance instantly adds a degree of appeal and believability to a direct mail piece.
• Make it interactive: For young adults who have been inundated by online requests and marketing initiatives, direct mail has a certain credibility. It can also be tremendously effective for leading Millennials to online resources. When it comes to marketing success, the right blend of print versus digital is critical.
• Make it omni-channel: Brands must ensure that their product information is available in all forms—mobile, in-store, online—so Millennials can access it anytime and anywhere at a moment’s notice. Millennials should also receive a consistent message as they navigate across various channels.

Marketing to Millennials isn’t optional for marketers; these consumers possess a huge amount of purchasing power. In today’s “all channels on” environment, direct mail continues to cut through the clutter. Service providers must work with marketers to develop fully integrated marketing plans that comprise newer mediums like social, while still understanding the importance of more traditional printed assets.

Surcharge Removed; USPS Postage Rollback Effective on April 10
Even though the United States Postal Service’s financial condition is expected to worsen, your marketing budget just got better. On April 10, 2016, the USPS will be required to reduce certain postage prices on items including letters, large envelopes/flats, and postcards. This rate change reverses the existing exigent surcharge of 4.3% (average) that was enacted back in January 2014. This surcharge was put into effect by the Postal Regulatory Commission (PRC) to help ease some of the financial hardships that were suffered during the Great Recession of 2008-2009. The exigent increase was intended to be temporary, limited by a cap of about $4.6 billion in extra revenue. The PRC expects to reach this cap by April 10 of this year.

Although you might be excited about the removal of this surcharge, the post office is decidedly less so. During a statement on February 25, Postmaster General and CEO Megan J. Brennan reported that the surcharge “only partially alleviated our extreme multi-year revenue declines resulting from the Great Recession, which exceeded $7 billion in 2009 alone.” It should come as no surprise that the USPS had been hoping for a legislation or court action to prolong the higher rates. “Removing the surcharge and reducing our prices is an irrational outcome considering the Postal Service’s precarious financial condition,” added Brennan.

At this time, the congress and court actions that the USPS was hoping for are not looking too promising, so you can probably start planning on seeing some extra dollars in your marketing budgets before long. You might consider using those extra funds to create more mail pieces, buy better lists, improve creative capabilities, or even upgrade your production options.

The Table below shows how First-Class Mail prices will be adjusted once the surcharge is removed.

Here are some tips for taking advantage of the reduction:

• Understand the mailing products that are affected by this reduction. They include First-Class Letters, First-Class Large, Envelopes (Flats), First-Class Postcards, Presorted (First-Class & Standard), and Non-Profit.
• Some customers may need to change their meter settings to print postage to three decimal places. Metered First-Class 1-Ounce Letters will decrease two cents from $0.485 to $0.465, retaining their 1% discount over retail stamp prices.
• Follow the USPS Postal Explorer for confirmed rates and other spring 2016 rollback pricing files at http://pe.usps.com. You can also visit USPS Service Alerts to subscribe to near-real-time announcements regarding disruptions or suspensions to domestic and/or international mail due to weather emergencies, natural disasters, and other events.

As direct mailers and marketers, you already know that every penny counts. Based on this expected rollback in spring postage rates for most envelopes, it turns out that every two pennies counts.

Selecting the right mailing list is the key to a successful direct mail campaign. Getting an offer or a call-to-action delivered to the right audience is critical to the success of a direct mail communication. Unfortunately, the most common mistake marketers make in direct mail campaigns is not selecting the right mailing list.

Budget dollars are wasted on producing and sending out mail if it never reaches its intended target. An attractively designed direct mail piece with a great offer means nothing if it is sent to people that have no interest in the offer. Picking the right list starts with understanding the types of available lists.

They all basically fall into two general categories:

• A house list is an organization’s internal list of active and former customers, members, or employees.
• Purchased lists are available from many sources and can be rented or owned. These lists are customized to fit characteristics of the target audience. There are several different types of purchased lists ranging in cost and appropriateness for reaching an audience, but key types include:
  • A specialty list targeting a select audience (e.g. new parents, health enthusiasts, accountants, IT professionals, Fortune 1000 companies)
  • A custom mailing list based on select customer criteria
  • A cloned list that finds customers similar to an organization’s best customers

The quality of a list is of paramount importance. The correct mailing list will contain your most valuable prospects. The more careful you are in analyzing and selecting direct mailing lists, the better your chances for success.

A good mailing list has a few important characteristics:

• It is updated on a regular basis. Lists need to be cleaned or “scrubbed” to remove duplicate entries, undeliverable addresses, or names on do-not-mail lists. They must be kept up to date, and this means adding, updating, and deleting entries on an ongoing basis.
• It focuses on the market segments and or geographic coverage that you need.
• It is formatted to comply with the latest postal regulations, and comes in a form you can use.

Let’s put the importance of maintaining list quality into perspective with an example. Each year, over 40 million Americans change their addresses. Updating mailing lists reduces the volume of undeliverable mail. The United States Postal Service (USPS) formally calls this type of mail Undeliverable-as-Addressed (UAA) and has mechanisms in place to reduce it. Not updating lists can result in the forfeit of postal discounts.

Here is list of questions to ask when evaluating a mailing list.

• What sources are being used to create the list—where do the names come from?
• Are new names continually added? How often is the list updated? And when was it last updated?
• What demographic selections are available?
• Have other mailers used the list recently? If so, what for?
• Will the provider suppress your client database against their list? (You don’t want to purchase list full of your existing clients.)
• What are the terms and costs for one-time use and multiple uses?

There are four main sources for purchasing or renting mailing lists. A good provider will work with you to identify your target market and select the lists best aligned with your strategies and goals. Here is a description of list providers:

• A list broker’s primary role is to rent lists from other companies. Usually, a list broker researches what lists and segments will work best for what you’re trying to accomplish.
• List managers supervise and promote the rental of specific mailing lists that they manage. Before giving approval to rent the list, they typically ask the prospective list renter to provide a copy of their direct mail piece for review. The list manager may decline renting the list if the piece is too competitive with the list owner’s own offer, or it might offend the list owner’s customers.
• List compilers manage lists that they’ve assembled using multiple sources, such as warranty cards, government records, corporate reports, telephone directories, Yellow Pages, credit bureaus, etc.
• A list manager/broker is typically the most versatile source for renting lists because they offer their own lists and those created by others.

Your mailing list can make or break your direct mail campaign. It’s important to invest the time upfront to select the best list. Mailing to quality prospects leads to higher conversion rates and more revenue for your company.