To Barcode or Not to Barcode – That is the question?

The goal of this article is to give you the tools to make the best decisions for your business around bar-coding your mail and getting automation discounts.  We are not going to discuss the technical details behind bar-codes, but the business reasons of where and when it makes sense.  I have the authority to write this article because I am the self-proclaimed King of Barcoding.  I am responsible for over 5000 companies barcoding their mailing during my 18 years in this industry.  I managed major accounts in Boston, grew the only national presort service offering to over 4000 customers and was in charge of sales for all barcoding equipment for the largest provider.  With this title comes responsibility.  That is to teach you how to save the most money with the simplest processes that can be set up for your business. First off we need some basic housekeeping.

Here are the minimum requirements to barcode your mailings: •  Pieces – At least 500 pieces for First-Class Mail® or 200 pieces for Standard Mail®.
•  Software – Need software that meets all USPS certifications.
•  Permits – Need to have at least one permit from the USPS
•  Preparation – All mailings must have barcodes on each piece, be sorted, placed in trays with tray tags and reports need to be brought with the mail to the USPS for processing.

Click on USPS Quick Service Guides which is an easy way to get specifics for your mailings.  

Pros to barcoding:

1.  It saves you postage!  This is the main reason most companies barcode their mailings.  (See the chart below)  As the pieces get larger, the savings can increase dramatically.  Many customers doing mailings without any discounts will also try to apply for Standard Mail® rates.  Standard Mail® is designed for newsletter or a solicitation where every piece is the same and the customer can live with a slightly slower delivery.  Things like invoices, statements and checks have to go First-Class Mail® because every piece is slightly different or has personal information.

2. Cleaner Addresses:  In order to qualify for discounts your mail list must be compared to the national address list held by the USPS.  Every barcode software provider will be able to comply with these rules with CASS and DPV certifications.  All this means is that inside the software they have every deliverable address and can check that yours matches this list.  Common mistakes are fixed automatically and exception lists are produced. Updates are typically provided every 1-3 months to make sure the addresses are up to date.
3. Keep track of customer moves:  The USPS requires that you comply with one of several move update requirements.  Most of the vendors can link in with the national change of address database and give you the changes real time on your list.  This is really helpful for companies to eliminate “Undeliverable as Addressed” mail.  Think about the college Alumni department.  How many times have you told your school your new address so they could solicit you for donations?
4. Faster to Process Mailings:  Many barcoding systems come with an envelope printer that can print 2-30,000 pieces per hour.  If you have ever tried to feed large quantities of envelopes through your local laser printer or office copier you understand how painful it is.  Envelope printers can feed large quantities of envelopes quickly and easily and give you flexibility on what parts of the envelope you print.  Mailings also print in the proper sort order.  Many people have horrible memories of trying to sort mail by hand.  All those steps have been eliminated.
5. Faster Delivery:  Barcoded mail travels faster than mail without a barcode.  This is because when you submit your mailing to the USPS you have set it up to skip steps.  It is in a tray with the correct forms telling the USPS what they need to do with it.  They can then move it to where it needs to go.  Also, since the USPS sprays a barcode on every piece, you bypass this step as well.

Cons to Barcoding

1. Software and Hardware Costs:  Software/hardware combinations typically start at about $250 per month and can go much higher with faster feeders and color options.
2. There are many steps to barcoding:  If mailings are only done sporadically it becomes difficult to remember all of the steps.  As a rule of thumb make sure that you are doing mailings at least once per month or have staff with experience.
3. Who will do it:  Barcoding software is typically loaded onto one PC.  Most companies have many departments or people doing mailings.  I have seen many barcoding projects fail because the company thought they would train large groups of people to use software and people could share the tool.  This never works because of the complexity mentioned above.  To barcode mail in house requires one or a few dedicated operators.
4. Taking to the USPS:  In order to get automation discounts, mail needs to be submitted to postal centers that accept discounted mailings.  Not all do and with the USPS’s budged cuts, this list is getting smaller and smaller.  In some cities there are courier services that can be contracted to help with this.
5. Keeping Software up to Date:  In order to qualify for discounts the software needs to be updated at least quarterly with all of the USPS updates.  Again this is a reason why it is better to have dedicated operators who can manage the updates.
6. Requires Programming for Window Envelopes:  If you want to barcode things like invoices, statements and checks you will need to have custom programing that can put the barcode directly onto your document.

Other Options Many companies want the benefits of automation and barcodes but cannot cost effectively manage it inside their operation.  Here are some other methods to consider:

Presort Services – These providers have one or several sorters that are similar to what the USPS uses in their facilities.  These sorters read the address on the mail piece and spray the barcode on the bottom right.  They can then sort the mail into bins to where it is going throughout the country.  Presort providers work on a revenue split arrangement with the customer and the USPS.  Here is the most common:

First Class Single Piece Postage Rate                    $.45
Rate the customer meters the mail                         $.424 ($.026 savings)

The presort service sorts the mail as deep as they can get it.  Hopefully most will be to the deepest sort levels the USPS offers of $.35-.374 and the USPS pays them the difference.  This payment by the USPS covers their transportation and operations cost as well as their profit margins.  This has been an increasingly popular way to barcode mailings and there are over 200 Presort Service providers in the US.

Pros: 

1. They do all of the work!  They pick up the mail at your office, run it through their sorters and take it to the USPS.
2. They can manage the move update requirements.
3. The more you mail the higher the discount you can typically negotiate.

Cons: 

1. The savings are not as great as doing it yourself.
2. These services are most common for First Class® mailings.  Some presort services do Standard Mail® as well but many require the customer to have the mail barcoded up front and they will only move it deeper into the postal system.
3. Many arrangements require you to date the mail for the next day.  This can delay local mail.  Also, many providers are bringing mail to a center that is out of your postal area.  This can cause further delays in local mail delivery.
4. Lastly, many presort services will tack on extra fees for services so you have to look at your bills carefully.  Know what you are paying for prior to signing their contract.

Mail Service Providers (Mail House) – These services do all of the work for you.  They will take the files and take care of all aspects of the mailing. Pros:

1. You can focus on your core business and leave the mailings to the professionals.
2. They can get it done faster with higher level production equipment.
3. They can typically do different types of sizes and shapes that could not be run on office barcoding equipment (Thicker pieces, glossy stock, varying inserts).
4. You can get the lowest postage rates.
5. There are a huge number of service providers that can be shopped against each other for the best rates.

Cons:

1. These services can be expensive especially on smaller jobs (Less than 5,000 pieces).  Mail Service providers charge set up fees that range from $50-300 per job on top of the per piece costs.  This is fine when you are doing large mailings but gets expensive on a per piece basis for smaller jobs.
2. Their bills can be confusing – I have looked at thousands of mail house invoices and they are all different.  They each describe their services in different ways and some try hard to disclose very little so you do not know what you are paying for.  It is recommended that you get the quote in writing broken down by the fees they are charging for each service.
3. Scheduling – If you are not one of their largest customers you want to make sure that your mailings get the priority they deserve.

Conclusion

As you can see there are a lot of options you can consider.   You need to look at the quantity and frequency of mailings to see what works best for your organization.  With the USPS deficit increasing by the minute it is inevitable that rates will increase and barcoding can be the best way to save money.

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