Postal De-Regulation: Value Added Services

As regular readers will know, over the last two issues I’ve been discussing the opportunities for publishers in the liberalised UK mail market. So far, I’ve discussed opportunities for the letter based mail our industry generates such as renewals, customer service letters and most obviously DM. Most recently, I looked at the options available for magazine subscription copies, which until very recently was virtually sown up by Royal Mail and their Presstream service. At this point, I’m sure many of you will be thinking that suppliers have got nothing else to offer us and we have nothing else to offer them, so why on earth is this series of articles continuing? If this is you, you’ll be delighted to learn that Royal Mail and their competitors have a whole lot more to offer us and we them. However, unlike the bulk mailings I’ve discussed to date, many of the savings may not be anywhere near as big or quite as obvious. Unfortunately, they could also take a great deal longer and require more work and effort to quantify and measure them.

With this in mind, publishers must first establish whether they are prepared and resourced to manage the task in hand for what could be a fraction of the savings in comparison to those realised from letters and magazines. I say this because finding and appointing a suitable supplier for letters and magazines is relatively painless in comparison to the effort it will take to maximise the savings deregulation is delivering. From my point of view, the answer is clearly a resounding yes, but then I have the benefit of being able to concentrate on the project and leave the day to day mailing operations to my team.

So, apart from the services I’ve already covered in past issues, just what else have postal suppliers got to offer our industry? The answer, at least on paper, is that there are a number of services being offered which are suitable for our industry and some benefits which might not be immediately obvious to the publisher and supplier alike. It’s only when we start letting our minds do what they do best and that is to imagine what could be, do we really start to see the bigger picture as to what is and isn’t possible. What follows is a basic overview of the value added benefits or services Royal Mail and their competitors may be able to deliver for you:-

1. Office based post room operations
"You’re the expert; just get it there as quickly and cheaply as possible." How many times has anyone who’s spent any amount of time in a logistics or distribution type role heard that statement? The people who work in our post rooms have probably heard this more than anyone else, including circulation professionals. We walk in to their domain and make unreasonable demands of them to access services we don’t even know exist. Not only that, if they do exist we don’t know how much it is going to cost or how good the service is and probably don’t care because we just want the item delivered on time and in good condition. Instead, we rely on the perceived knowledge and expertise of our post room staff and assume that they will know which supplier is offering the most cost effective service suitable for our needs. In reality though, many post room staff have little understanding of the industry in which they work and have no more distribution expertise than the editors and publishers they service. In fact, all they do is route mail through whichever supplier the company has a contract with regardless of the service levels or the cost. Postal suppliers, including Royal Mail, have been quick to recognise this fact and may be able to offer a real value added benefit to your business and deliver a tidy saving in the process.

There are a number of ways this can be achieved. Firstly, inbound mail can be pre-sorted to department or even individual level prior to delivery to your office. This will free your own staff for other duties and / or allow you to redeploy them or even reduce the hours they work. On the other side of the coin, many postal suppliers will offer to imbed their own staff into your office and run your post room operations for you. They will of course want you to agree to an exclusivity deal, whereby all mail for which they have a service which meets the delivery requirements, will be routed through them. But I see no reason why it isn’t possible to secure an agreement to route with third party suppliers where it is more cost effective to do so. In doing all this, what you end up with is people (hopefully experts) who at the very least have an excellent understanding of the services offered by their employer, running your post room and consequently routing mail through the most cost effective service. All at somebody else’s expense. Sadly, this will almost certainly mean your existing post room staff would be facing redundancy, but I have heard of occasions where the supplier employed the customer’s existing post room staff to aid the implementations process. All they needed to do was train them on their own delivery services.

2. Warehousing and Pick & Pack
Another area where value can be gained in a similar way is from warehousing, general fulfilment and pick & pack type operations. Many publishers offer free gifts as an incentive to subscribe or make special product offers to readers or sell back issues etc. All these items need to be stored, picked, packed, posted and delivered. Nearly all the large operators are offering these services and, as you’d expect, they’re quite good at it. As an added bonus, they’re also competing with the wider fulfilment industry and are consequently highly cost effective.

3. Lettershop
You may also find a number of suppliers offering lettershop facilities. Basically, they will print and mail your customer communications such as renewal letters, invoices and statements etc, and mail on your account at the rates you’ve negotiated. Not only can this allow you to get the best price possible for ad hoc mailings, it also offers the opportunity to centralise your DM and lettershop requirements and potentially reduce the cost of these services at the same time. This is obviously a bigger job than simply changing postal supplier, but is highly achievable.

4. Consolidated Invoicing / Departmental Billing
One of the less obvious benefits of competition is the amount of work that can be removed from your internal processes. Consolidated invoicing and departmental billing is one such example of the benefits that can be achieved. Imagine how many invoices can be removed if one of the operators offers you a single monthly invoice, split by product or department. Or how about all your DM split by department or team? This kind of benefit is less easy to quantify and measure in monetary terms, but any analyst worth their salt should be able to assess the amount of work that has been removed and attach a value to it.

5. Day Certain Delivery
Unlike Mailsort 2 or 3 which can be delivered over three, four or seven days, once you start using a Down Stream Access service such as TNT Premier, you’ll find that you can be quite confident as to when your mailing will be delivered to recipients. This can be particularly useful for marketers planning a renewal or new business campaign where the customers are given the option to place an order by post or over the telephone. Call centre and post room managers are better able to predict peak times and staff up appropriately, thereby helping you to reduce the overall cost of the campaign.

6. Transparency & Service Level Agreements
How many publishers have a service level agreement with Royal Mail? I suspect the answer is none. The story changes with their competitors though. Where they are able, I think you’ll find that they will be more than happy to agree and commit to a certain level of service standard. It’s entirely up to you what service standards you think you’ll need, however I’d recommend you ensure collections, processing, invoicing, customer complaints and query resolutions are all covered in some detail. The more you can nail the process, the better and clearer each company’s responsibilities become.

It’s also possible to find that you receive a better level of transparency with regards to performance. Many of the operators track each mailing either to the point where mail is handed to Royal Mail for delivery or, if routed through a hand delivery operator, even to the point of delivery. I can’t sit here and say that I’ve found this level of transparency useful in reality, but I can see the potential. Imagine you have a customer whose copy is always late or, worse still, never arrives at all. How useful would it be if you could identify the bag in which that customer’s copy is contained and track it through the supply chain to the point of delivery? I don’t think it will be too long before we can start to track individual items of mail through the system and identify the point at which everything is going wrong.

7. Account Management
Unlike many smaller publishers, I have been lucky enough to enjoy the services of a Royal Mail account manager and back up team who understood our company, the services we used and the publishing industry in general. However, as the Royal Mail cuts start to bite, so our level of account management has been reduced. Consequently, I’m starting to experience exactly what my colleagues in other companies have had to put up with for years. However, I’ve found that Royal Mail’s competitors have been quick to pick up on this and allocate an appropriate level of resource for the size of the business. What I like about this arrangement and where, for many publishers, it will differ from Royal Mail, is that they’re not faceless voices on the end of the phone. These people will actually get of their backsides and come and see us. They will actively seek to help you save money and access the cheapest services they have to offer.

8. Bundling
The final benefit I’m going to mention will help to maximise the potential savings from all mail items offered to suppliers. By bundling all the postal services used by your company and putting them out to tender, buying power can be maximised and costs can be reduced to the absolute minimum. Depending on the submissions received, it’s quite possible to find that a single supplier is capable of providing all or most of the services you are looking for. Alternatively, you may just want to cherry pick services from a number of suppliers. From the supplier’s perspective, this arrangement can work in their favour too. The more of a single customer’s business a supplier can secure, the more tied in that customer becomes and the harder it is for a competitor to come and take it from them, particularly at short notice.

Personally, I favour running a basic audit of each supplier and the services they offer before doing anything else. From that audit, it’s then quite easy to see which suppliers are of most interest and from there it’s a simple case of compiling a tender document tailored to each supplier and the services they offer.

However, there are risks associated with such a strategy - all your eggs in one basket being the most obvious. And, what happens if the relationship sours or the supplier doesn’t deliver on their promises or live up to your expectations? The simple answer is, you revert back to your previous processes and start again. For these reasons, I’d recommend publishers insist on a get-out clause should the reality of such a deal not live up to expectations, to enable you to do just this should the worst happen.

All in all, the UK mail market is starting to deliver benefits for our industry and I hope and believe that this will continue for some time to come. The postal industry is 300+ years old, yet since deregulation we’ve seen more innovation over the last three years than we have in the last 30 from Royal Mail. I hope you’ve found this series useful, informative, and most of all that it has inspired you to get the most out of the benefits de-regulation is delivering.