Snail Mail Is Going Digital, a Boon for Businesses

Scannable bar codes on letters, packages will bring Postal Service into the 21st century.

By Jim Ostroff, Associate Editor, The Kiplinger Letter

September 18, 2008

The U.S. Postal Service (USPS) is going digital on bulk mail service. Unique scannable bar codes will start to show up in May 2009 on business- and first-class mail and packages. The codes should speed up processing of that mail and will allow businesses as well as post offices to track the movement and delivery of each piece sent.

Businesses can expect the bar codes to bring the same kinds of efficiencies in data mining and management found online to snail-mail billing and direct marketing. The digital mail revolution, named "Intelligent Mail" by the USPS, will help companies zero in on their best sales prospects by much more quickly gauging response rates to mail offers and tweaking pitches if they flub. It'll be a huge improvement over today's system of not knowing for weeks whether an ad or promotion was a hit or a dud. "By knowing exactly when a piece of mail has arrived, a company can use e-mail to follow up with the customer and make another offer," says Jerry Cerasale, a senior vice president with the Direct Marketing Association -- assuming the person hasn't opted out of receiving e-mail from that company.

Intelligent Mail will deliver benefits on the businesses operations side, too. Customers won't be able to brush off collections calls by saying "the check is in the mail" because companies can verify that instantly. Analysis of mail and bill paying patterns can save businesses big legal bills, as well. One company that participated in a test of Intelligent Mail reported saving $1 million by using digital mail feedback to determine when it shouldn’t send past due bills to the collections department, which is a costly proposition, says Thomas G. Day, the USPS's vice president of intelligent mail and address quality.

Intelligent Mail also will automatically alert companies to customer returns, helping them to reduce processing time and improve inventory, warehouse management and trucking operations. No more mail forwarding delays caused by address changes, a problem for businesses sending time sensitive offers and bills. That's not a trifle considering that about 10 billion pieces of mail sent annually -- or 5% -- have to be rerouted or wind up in the dead letter office. "The free address correction service just by itself…will financially justify the investment in Intelligent Mail barcodes," says Day.

The cost to get the Intelligent Mail system up and running vary from a few hundred dollars for small firms to millions of dollars for the largest companies mailing millions of bills, letters and direct mail ads annually.

It pays to outsource data analysis for large and midsize firms and even for small ones that mail a few hundred pieces a month. Epsilon, Experian, Grayhair and others manage data from USPS barcodes to focus mailings on best sales prospects and update addresses. Cost estimates start at around a few hundred dollars a month and up. For companies with lighter needs, software by Anchor Computer, Business Objects, MelissaData can help do analysis of customer response rates, returns and update home and office addresses.

By May 2011, all bulk mail must be coded to receive postage discounts, although, at first, mailers can choose whether or not to use Intelligent Mail. Figure about half of first-class mail will be voluntary participants.

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