That’s what a lot of financial services companies are saying when they look at the rising costs associated with their direct mail campaigns.
Trucking and paper expenses have gone through the roof this year, and sadly, there’s no sign that things will improve in 2019. So how are leading banks and credit card companies dealing with this threat to profitability and growth?
With DMA 2018 coming up next month, we thought we’d offer some helpful answers, based on what we learned while consulting with a top financial services company earlier this year.
Putting a pencil to it: our analysis reveals a few costly mistakes
As the details of their direct mail program emerged, we could see why this well-respected retail financial services company was struggling to hit the mark, month after month.
Their campaigns are HUGE, involving at least 10 million pieces. (Not uncommon in the financial services industry, which sends billions of packages to consumers every year.)
Production is handled on both coasts, which affects the cost of everything from paper to logistics to printing labor.
There are 5 unique vendors involved in every campaign:
• One to produce the outer envelope.
• Another to create the BRE.
• A third one to print the inside letter wrap.
• A fourth to print the buckslip.
• And a fifth to handle lettershop and postal sort/prep.
Managing multiple programs with as many as five vendors per project (depending on the program) means you are potentially dealing with 5 vendors on the west coast and 5 on the east coast.
In our view, this was the BIGGEST ouch! Even an informal look at the situation told us that trucking materials from plant to plant to plant was costing the company far too much. And that’s before you consider the extra staff time … the frightening data security risks … and the costly do-overs when things inevitably fall through the cracks.
Our solution: a 5-point plan to streamline work and cut costs
To ease headaches, reduce costs and lift response rates, we recommended that the company make these 5 crucial moves, which just might work for your financial services company, too.
1. Move production to the Bolingbrook Corridor. One estimate shows that half of all national campaigns are shipped here for consolidation before going back out to consumers. So why pay to have millions of mail pieces trucked here from both coasts, then mailed out nationwide? Instead of traveling 4 days, your mailing can arrive in USPS’s hands within 45 minutes, greatly reducing costs and cycle times.
2. Work with one integrated direct mail company. Higher trucking costs alone would justify this move. But think about the staff time spent chasing so many vendors! That’s time you can’t invest in making your direct mail programs more creative, appealing and cost-effective. Moving to a full-service direct mail company that will cleanse and analyze mailing data and seamlessly produce your mail package from start to finish will help you work smarter and more profitably.
3. Slash paper costs and delays. How vulnerable are you to paper shortages? The company’s marketing team admitted they had a problem in this area. Switching to a vendor that has stronger relationships with paper mills and also keeps a healthy inventory of in-house stocks would make good sense. Bonus points if that company has a state-of-the-art sheeter in the plant, ready to cut roll stock into any size or shape needed for the job.
4. Do the math on logistics. No direct marketer can afford to ignore this part of the equation anymore. Is your direct mail vendor proactively coming to you with ideas to cut trucking expenses? Are there ways to save cash using rail freight instead, especially between the paper mill and production plant? All good questions to raise in a time when over-the-road options are costing more by the day.
5. Reformat your package to make it slimmer, sleeker, more appealing. When it comes to controlling costs, format matters. Choose a direct mail company that offers dozens of customizable direct mail formats that have been proven to get customers’ attention, plus an in-house design team that can come up with something entirely new for you. Changing the size, shape, color or texture of your mail piece can greatly increase the impact of your message. The higher the ROI, the more cost-efficient your direct mail outreach will become.
How does saving $1 million sound, just for starters?
The company was thrilled to learn that, simply by reducing logistics costs alone, American Litho could save them $1 million each year. Of course, that’s just the beginning. Switching to a creative, cost-conscious team with ONE point of contact from start to finish could transform their results in 2019 and beyond.
If the math we did for this potential client sounds intriguing to you, let’s talk at the DMA &Then 2018 event next week. We will be meeting with financial services companies who are interested in planning for phenomenal growth and success next year.
Let’s arrange a time for you to talk, send us some details about your next project.