Postage techniques to save money on your direct mail

We face pressures to our net income from all sides:

  • Response rates are down
  • Retention is down, challenging and expensive (but well worth the effort!)
  • Costs of materials are up
  • Platforms and consultancies have high fixed costs before you ever send the first email or mail piece
  • Postage can be expensive

jefferson-nickel-unc-obvThis week, we want to look at tips and tricks for getting everything you can get out of your costs.  As someone who will squeeze a nickel until Thomas Jefferson begs for mercy, I hope these can help you recover little bits of your net.

In the mail, one of the primary cost drivers is postage.  As nonprofits, we get lower postage rates than commercial mailers (but less than members of Congress), but even this cost can be very high, especially for smaller mail runs or non-standard envelope sizes.

So the first tip is test a standard envelope size if you aren’t already doing it.  That oddball envelope may help you get noticed in the mail, but at what cost?  Some research shows that a simple plain white envelope has the highest offline open rates, so you may be paying more for your postage to little or negative effect.

You should also try commingling.  As you might guess, the USPS’s cost of delivering a mail piece increases the number of times a mail piece needs to be touched.  Let’s say you dropped a letter to a donor into your local mail box.  It would then go to, in order:

  • Your local USPS office
  • Your local Sectional Center Facility (SCF)
  • Your regional Network Distribution Center (NDC)
  • Donor’s NDC
  • Donor’s SCF
  • Donor’s USPS office
  • Donor’s mail route
  • Donor

At your NDC, your donor’s NDC, and your donor’s SCF, your letter has to be sorted, organized, and bundled with like envelopes.

Thus, if you can get 150 pieces in the same three-digit ZIP code (the first three digits) and deliver them bundled, you get a discount.  If you have 150 in the same five-digit ZIP code, even better and even more of a discount.

The trick is that you don’t have 150 pieces for each ZIP code.

But your mailer likely does.  Thus, you can save money if your mailer bundles your mailing with other mailings that it is doing (and packages them properly and puts on intelligent bar codes and such).  This is called commingling.

You might ask why someone wouldn’t do this.  When I took over a program, it was specifically banned, because the powers that preceded didn’t want our pieces to go out at the same time as everyone else’s.  I reversed this and laughed all the way to the bank.

There’s another trick you can use beyond commingling and that’s drop shipping.  This involves delivering your mailing to your SCF or NDC yourself, thus cutting two or three steps out of the process.

Note that by “yourself,” I don’t actually mean yourself.  Your mail vendor should be able to do this.  Talk with them about the cost trade-offs of doing this.  If your mailing is large enough (or the mailings you are commingling with are large enough), you should be able to get cost efficiencies here as well.

At the very least, these should be worth discussing with your mail vendor.  If they have never heard of these things, that’s probably a good indication that you are now in the market for a mail vendor.  They should be able to discuss with you the tradeoffs and efficiencies they are able to get.  Also, ask them about how many commingles they do per week.  Ideally, you want three or more so a missed commingle doesn’t delay your mailing by more than two days.

It may only get you a couple pennies per piece here and there, but those are the types of advantages you will scratch and claw for on the response rate and average gift side.

Postage techniques to save money on your direct mail

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