Direct Mail Commingling for Reducing Postage Costs and Delivery Times

There is a collective wince among direct mail marketing professionals every time an increase in postage costs is announced by the US Postal Service (USPS).  Marketing budgets are already spread thin, and an increase in postage means that something has to be cut from the budget, or system efficiencies have to increase to maintain budget levels. One of the ways that marketing professionals can soften the blow of postage increases is by taking advantage of a process called commingling.

Normally, when a piece of direct mail is dropped at a USPS office, it follows this path:

  1. Piece is received at the USPS office
  2. Piece is sent to the local Sectional Center Facility (SCF)
  3. Piece is sent to the regional Network Distribution Center (NDC)
  4. Piece is sent to the destination NDC
  5. Piece is sent to the destination SCF
  6. Piece is sent to the destination USPS office
  7. Piece is delivered to the recipient

This process involves a lot of steps; the piece in the example above is moved six times after being dropped at the local USPS office.  These movements take time and cost money to perform.  Commingling can be used to reduce the number of steps, resulting in cost and time savings.

What is Commingling?

Commingling is a process by which mailings from more than one company are combined to meet USPS discount minimums for quantity for mailings to targeted neighborhoods.

In general, the process involves:

  • Combining mail lots from multiple companies
  • Sorting the mail by zip code
  • Tagging the mail with intelligent bar codes
  • Bundling mail into trays by zip code group
  • Deliver bundled trays to either the destination USPS NDC or SCF

A commingling vendor will pick up the mail and put it on sorting equipment that takes each individual piece of mail and sorts it to either the NDC or SCF level based on what they’ve received from other mailers. As a result, this gives companies deeper postal penetration and discounts.

This is essentially the process that the USPS performs to every piece of mail it receives.  However, the USPS focuses their efficiency on delivering mail, not sorting it. When mail pieces are pre-sorted before arriving at USPS facilities, USPS grants a discount, since it no longer has to do the sorting and transporting itself. This discount is greater than the cost of using a commingling vendor, so the individual mailing companies realize cost savings on every piece.

Both first class mailings and standard class mailings that meet letter rate can be commingled (but not together).  Both for-profit and non-profit mailings can be commingled. Letters, postcards, and self-mailers can be commingled, as long as they are machinable.[1]

Commingling systems consist of two components: sorting hardware and processing software.  The hardware scans mail pieces and feeds information to the processing software.  The processing software determines how the mail pieces should be sorted, and directs the hardware to move the mail pieces into the proper tray. Commingling system developers include Siemens (Paramount hardware and SortGen software)[2] and Pitney Bowes (Vantage equipment and SortEngine software).[3]

There are two methods for commingling:

  1. One-Pass Commingle – Mailing input data files are used to determine the optimal presort. Mail pieces are sorted by commingling equipment based on the input data files into final destination trays.
  2. Two-Pass Commingle – Mail pieces are sorted by commingling equipment that creates a mail plan based on the actual addresses. The mail plan is then used by the commingling equipment during a second pass, where the mail pieces are sorted  to trays based on the mail plan.

 

Benefits of Commingling

Commingling mail with multiple mailers saves money for all of the mailers, no matter what the volume or mailer configuration, or whether the mail was stamped, metered, or permitted.[4]

Commingling works very well for multi-panel mailings.  For example, a company that was sending 500,000 pieces with 10 different panels would be charged postage based on each 50,000 piece panel.  When the 10 panels are commingled, the postage charge is based on the 500,000 piece lot, resulting in cost savings.

Most vendors that provide commingling services will offer a guaranteed per piece price.  This includes postage, freight and processing, so there is no surprise freight bill after the job has been  mailed.[5] That being said, confirm with your commingler if they charge extra for a heavier piece such as a magalog.

In addition to cost savings, companies can also see a reduction in delivery time. National mailings normally  take up to 12-14 days to be delivered. A commingling service that sorts and trucks mailings directly to the destination NDC or SCF can help companies reduce delivery time to 8-10 days4 by skipping over the local post office and origin NDC and SCF. Also, by eliminating three to four transportation stages, of which each could experience its own variation in delivery time, commingling can help to reduce the variation on the actual delivery date.

Citations:

[1] http://npf.org/

[2] http://www.siemenscms.com/commingling/

[3] http://www.pitneybowes.com/us/shipping-and-mailing/mail-and-parcel-sorters.html

[4] http://blogs.pb.com/brilliant-communications/2015/01/20/direct-mail-service-bureau

[5] http://www.dmaw.org/blog/to-commingle-or-not-to-commingle-that-is-the-question/

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