Like most everyone else, catalog companies are always looking for ways to cut costs. And now, with the pending postal rate increase, there’s a greater sense of urgency in seeking ways to reduce expenses. If the current U.S. Postal Service rate case is approved, catalog mailers could see their postage rates increase up to 14% in mid-2007.
But there is a sure-fire strategy to lower mailing costs that many catalogers are already doing — and that many more should be testing: comailing.
What is comailing? It involves taking two separate, already-bound catalog titles and combining their mailings to drop at the same time from the same printer so that both mailers realize additional, volume-based postage discounts. In the opinion of Tom Murray, executive director of postal affairs and distribution for Menasha, WI-based printer Banta Corp., comailing is the best way for catalogers to save money on postage.
Especially for smaller companies, the savings from postal discounts can be significant — about $0.03 per book, according to Jim Coogan, president of the Santa Fe, NM-based consultancy Catalog Marketing Economics. “It can also increase your profit up to 2%.”
The Southwest Indian Foundation, a Gallup, NM-based nonprofit organization that supports Native Americans through catalogs, a Website, a gift shop, and donations, shaved about 10% from its postage costs thanks to its comailing program. “It’s one of the last real frontiers in postage savings for catalogs,” says CEO William McCarthy. “For me, this is directly impacting our bottom line by $250,000. It really is very innovative.”
Housewares and home goods cataloger Home Trends has cut its postal expenses about 5% since it started comailing four years ago, says president Jane Glaser. The Rochester, NY-based cataloger has three titles — Home Trends, Sleep Solutions, and Picket Fence — with a combined annual circulation of more than 60 million.
“When the day is done, we’ll save about $700,000 a year” thanks to comailing, Glaser says. “It’s pretty significant, considering that just 10 years ago, comailing basically didn’t exist.”
What’s involved
There are two basic types of comailing partnerships, Coogan says. A mailer can partner with a specific fellow cataloger and combine their schedules, or it can arrange to have its catalogs comailed with any other compatible catalogs mailing from the same printer during that week’s mail pool.
“The base goal,” says Janie Downey, president of Cumberland, ME-based production consultancy PublishExperts, “is to mix shorter-run [lower-circulation] catalogs with longer-run [higher-circulation] catalogs to be able to qualify for the maximum amount of postal discounts. The printers use demographic binding to build separate books on one binding line that are all part of one postal sort. This way, the books come off the line in postal order and get good postal discounts.”
Overall savings from comailing varies depending on circulation. “I would say that every cataloger should ask their printer about comailing to find out what they would need to do or change to comail and what the potential savings are,” Downey says.
Howdy, partner
To comail with a partner, the two catalogs need to have the same bindery run, and they must mail at the same mail drop from the same printer, so they must have the same schedule in terms of drop dates and in-home dates. The books must have the same trim size, and they have to weigh approximately the same (the amount of variance allowed depends on a number of factors), so they need similar page counts. And they need to have enough of a combined circulation to justify the administrative cost of joining the two mailings. Typically, Coogan says, when two titles partner to comail, the combined circulation needs to be at least 800,000.
In addition, Downey says, the partners’ mailing lists need to be processed by one group so that “you have one merged list that directs the bind.” The mailing address area has to be positioned in the same place for all titles, and the mailing indicia have to be the same.
Southwest Indian Foundation, which is in its third year of comailing, has an annual catalog circulation of about 20 million. McCarthy says his company’s comailing partner — which he declined to name — adds about 80 million to the pair’s combined circulation.
Despite the discrepancy in volume, “we split the savings down the middle,” McCarthy says. To accommodate its partner, Southwest Indian Foundation had to whittle its catalog’s trim size by a quarter-inch, but that “cost us next to nothing. My inhouse creative guy took about two weeks to change the book, but it was not an added expense. Also, we probably saved an additional $100,000 on paper and postage because of reduced weight.”
There are some potential drawbacks to comailing with one partner, however. For starters, finding an appropriate comailing partner can be difficult. Home Trends recently switched comailing partners in part because their schedules were no longer in sync. “There are a lot of issues you need to look at, like trim size, compatible printing schedules, and quantity of books,” Glaser says. “You have to make sure all of these things are lined up properly. There is a level of sophistication to it, and there has to be a willingness to compromise to effectively comail. Sometimes it’s difficult to find all those characteristics.”
Indeed, Downey says, “catalogers are often reluctant to change trim size or in-home timing.” Printers have tried to help with this by seeking ways to allow for different trim sizes, “to find new ways to bind that keep postal discounts across different binders.”
Everybody in the pool
With a single partner, Coogan says, you can save only to the extent that the other catalog’s circulation increases your sortation discounts. Being in a weekly mailing pool offers the potential for greater discounts through larger circulation.
Many of the larger catalog printers already collect all the mail for that week and combine it for postal entry discounts, Coogan explains. The printer trucks the mail to 50-100 entry points in the mail stream, such as bulk mail centers (BMCs) and sectional center facilities (SCFs). All the catalogs in the mail pool realize postage savings of 10%-15%.
“Some of the printer mail pools truck deeper than the BMC and send trucks to SCFs, but the number of destination entry points varies by printer,” Coogan says.
Now these same printers are going beyond combining disparate types of mail pieces in order to achieve postal entry discounts. “Printers are aggressive about finding catalog comail partners,” Coogan says. Rather than your having to seek out a compatible partner, printers will sort through their myriad other clients to find compatible comailing partners for you.
Why do they go to the trouble? “Because the savings make it hard for catalogers to switch printers,” Coogan says. “Printers love to produce comparative studies of how much members of their mail pool would save to try to show that their mail pool delivers more postage savings than another printer.” Besides, it’s easier for the printer to find potential partners for you because it has precise information about each client’s specifications and requirements.
“As the weekly pool concept gets more established and catalogers standardize their trim sizes, they should offer larger savings than having a single partner,” Coogan says. “The weekly pools are definitely easier for a smaller catalog to participate in than finding partners with compatible schedules.”
Participating in a weekly comail pool not only helps a smaller catalog reap bigger discounts, but it also keeps the smaller party from being at the mercy of the larger partner’s schedule and other requirements. There’s also less concern about meeting the minimum required circulation per drop. “There isn’t a theoretical limit to how many catalogs can be combined in a weekly mail pool,” Coogan says.
As beneficial as comailing can be for catalogers, not all of them are jumping on the bandwagon. “There are a lot of people who haven’t considered it, and they’re not aware of it,” Southwest Indian Foundation’s McCarthy says. “People may be intimidated by it. People might say that we have our own program and we don’t want to be at the mercy of other people.”
But for his catalog, comailing has been “rather seamless and painless,” McCarthy says. “The Postal Service is getting the volume. It’s in their interest if we mail more, and we’re going to mail more if we get the discounts.” Comailing, he says, is “one of the last places you can really save significantly, and it’s good for the industry. We make [comailing] a prerequisite when we’re dealing with printers.”
Words to the Wise
Before you start talking with your printer about comailing, you might want to be sure you’re fluent in the terminology. Here’s a glossary of pertinent terms:
Bulk mail center (BMC): One of 29 postal processing facilities that distribute third class mail.
Carrier route presort mail: Mail sorted by carrier route to qualify for postage discounts.
Destination bulk mail center (DBMC) rate: A discounted postal rate received when a mailing is delivered by the mailer to the appropriate BMC.
Destination sectional center facility (DSCF) rate: A discounted postal rate for standard mail, Parcel Post, and Bound Printed Matter that is delivered by the mailer to the sectional center.
Perfect binding: Using glue to bind the edges of the catalog together, rather than stapling them together.
Saddle-stitching: Stapling the spine of a catalog or magazine to keep the pages together.
Sectional center facility (SCF): One of more than 450 postal sorting facilities where mail goes after it’s been sorted at a bulk mail center and before heading on to the destination delivery unit, or local post office.
Signature: A folded sheet of paper that consists of a set number of pages. All signatures are multiples of four, with 16-page signatures the most common; also called forms.