MAILING SOLUTIONS 101:THE 2014 UPDATEAN INSIDER’S GUIDE TO POSTAL SAVINGS TO GROW YOUR BUSINESS

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TABLE OF CONTENTS

INTRODUCTION

DIFFERENT MAIL CLASSES

HOW TO LOWER MAILING COSTS

WHICH POSTAGE CHOICE WILL WORK BEST FOR YOUR BUSINESS

WHY DIRECT MAIL IS STILL ALIVE AND KICKING

SUMMARY

RESOURCES

ABOUT NEOPOST USA

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INTRODUCTION

Despite the prevalence of all things digital, business mail is here to stay. Businesses rely on the mail every day to send invoices, sales letters, payments, contracts, announcements and direct mail. The issue facing business mailers isn’t whether mail is relevant, but how to select the right mail classes and rates for their mail pieces. There are so many choices available that understanding which are the most cost effective and convenient for your business isn’t always simple. To help you make the right choices, Neopost USA assembled information from a group of mailing experts to share insights into how businesses can take advantage of the wide array of options to deliver their mail in the most efficient and cost effective way.

Mailing 101: The 2014 Update now includes the latest insider info on choosing the best mailing options to simplify the process allowing more time for important business tasks.

The insider information is broken down into four main topics:

WHAT ARE THE DIFFERENT MAIL RATES, CLASSES, AND EXTRA SERVICES?Priority Mail Express®, Priority Mail®, First Class®, periodicals, packages, eServices, Delivery Confirmation, Certified Mail and more.

HOW TO LOWER MAILING COSTS?An overview of when to use bulk mail, presorting, and commercial based pricing to maximize postage discounts.

WHICH POSTAGES CHOICE WILL WORK BEST FOR YOUR BUSINESS?A review of stamps, online postage and postage meters.

WHY DIRECT MAIL IS STILL ALIVE AND KICKING?A look at recent studies that show consumers prefer direct mail when it comes to receiving marketing messages.

WHAT ARE THE DIFFERENT MAIL RATES, CLASSES, AND EXTRA SERVICES?

The Postal Service divides mail into different services, called “classes.” Each class of mail hasdifferent features, service levels, postage prices, and presort requirements.

For most of your mailings, the content of the material and postage will determine the class of the mail you select. To learn more about each class of mail including what can be mailed, the minimum and maximum weights and sizes, and the number of pieces needed for commercial prices, look at the matrix below to determine what class of mail best matches your priorities.

MAILING SOLUTIONS 101

If you are unsure about what class your mailpiece will or should be visit www.usps.com for advice.

First Class Mail® (FCM)FCM is the most common class of mail because it’s fast and affordable, with reliable national delivery times averaging 1-3 days.

Specific mail types that are considered FCM are cards and letters weighing up to 3.5 ounces, and flats (large envelopes) and parcels weighing up to 13 ounces. Other advantages of First Class Mail® are that it’s forwarded free for the first 12 months and it includes return service, which is not an option with other classes of mail. Some items must be mailed as First-Class Mail® (or Priority Mail®). These include handwritten or typewritten material such as a letter to a friend or customer, bills, statement of accounts, invoices, or credit card statements.

Priority Mail®Priority Mail is First-Class Mail that weighs more than 13 oz. and less than 70 lbs. Priority Mail is another type of FCM, so the items that must be mailed using this class are the same as those listed above.

Priority Mail is the best choice if delivery is needed within 1-3 days. Saturday and residential deliveries are available for no extra cost as these options are a part of the USPS® regular business practices. Also, there’s no additional charge for supplies, boxes, envelopes or fuel surcharges. Priority Mail can also be sent using the flat rate boxes whose advertising tag line is “if it fits, it ships.” Flat Rate boxes are mailed at one set price regardless of what is placed in the box. For example, a business can place heavy auto parts, or feathers in the same size box and both will be charged the same postage rate.

The good news for 2014 is there is no price increase from last year for Priority Mail . There are also 2 other pricing options: regional rate and by weight/distance.

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USPS® MAIL CLASSES

First-Class Mail®

Priority Mail®

Standard Mail

Priority Mail Express®

Periodicals

Package Services

MAIL TYPE EXAMPLE

Anything mailable, bills, invoices, personal correspondence, merchandise

Anything mailable, bills, invoices, personal correspondence, merchandise

Advertisements, circulars, newsletters, small parcels, merchandise

Anything mailable, letters, merchandise

Newsletters, magazines

Merchandise, catalogs, printed material, computer media

MAILING SOLUTIONS 101

Significant discounts are available with Commercial Base Pricing* available on digital postage meters. As an example the 2014 discounts available are:

Priority Mail – Average savings Commercial Base Pricing vs. retail -15%Priority Mail Express® – Average savings Commercial Base Pricing vs. retail - 33%Priority Mail Regional Box B – Average savings Commercial Base Pricing vs. flat box retail-50%

One of the special benefits available to Priority Mail® is delivery confirmation at no extra cost. This is a free service for mail that is processed with a postage meter or online.*More on Commercial Base Rates on pg. 7

Standard Mail All mail that is not required to be sent First Class can be sent via Standard Mail. The most common types of mail that are sent this way are periodicals, advertisements, circulars, flyers, newsletters, bulletins, catalogs, and small parcels. Standard Mail is used primarily because it has a reduced rate, taking advantage of “bulk” prices. More information on bulk mail will be described in the next section. To qualify for Standard mail pricing, a mailer must have a minimum of 200 pieces or 50 lbs of mail.

Priority Mail Express Priority Mail Express® is an expedited postal service used when you need the fastest delivery possible. Within the U.S., Priority Mail Express® is available in three basic service offerings. The options are: Next Day Service (to most U.S. locations), Second Day Service, and Military Service. Priority Mail Express is also available as Global Priority Mail Express to send expedited mail between the United States and most foreign countries. Pricing for Priority Mail Express postage varies for each addressed piece according to its weight and the service option chosen by the mailer. A key advantage of Priority Mail Express versus alternative mailers for business mailers is Saturday is included as a USPS® regular delivery day.

PeriodicalsAll periodicals must be a USPS® authorized “type” in order to receive the reduced rates. Periodical mailings are authorized for one of five qualification categories (general publications, publications of institutions and societies, publications of state departments of agriculture, requester publications, and foreign publications).

PackagesChoosing the right class of mail and type for sending a package depends on a few variables: size, weight, distance, and expected delivery times. For the most cost

HOW TO LOWER MAILING COSTS?

Now that the insiders have shared what mailers need to know about the classes and typesof mail, it’s important to understand how to take advantage of postal discounts offered with the different mail types.

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MAILING SOLUTIONS 101

Bulk MailThe term Bulk Mail is synonymous with three other postal terms often used by the USPS®: Commercial First-Class Mail, Standard Mail (Advertising Mail), and Presorted.

Bulk prices are lower than single-piece prices but require minimum pieces for each mailing.First-Class® Bulk Mail requires a minimum of 500 pieces for each mailing.Standard Bulk Mail requires 200 pieces or 50 pounds for each mailing.

In order to qualify for bulk prices, you must:Have a mailing permit & pay the annual fee ($190).Pay for postage using a postage meter, permit imprint or pre-cancelled stamps.Ensure addresses are accurate. (Services ensuring address quality are listed in Resources).Presort the mail by zip code.Take your mail to the Post Office where you hold your mailing permit.

By complying with the Bulk Mail criteria, the USPS® Presort mail provides lower postage cost because your business is doing some of the work. As a result of your extra effort, the Postal Service can spend less money to process and deliver those pieces of mail, and can pass the savings on to you in the form of business/commercial postage prices.

To make the presorting task easier, you can start your sort for specific areas, and then work your way up to more general areas. All pieces of mail that don’t fit into groups already created can be combined together as their own group.

If your business doesn’t have the resources, time or people to complete the presort steps, you can still take advantage of Bulk Mail prices by using a presort house or lettershop to prepare your mail. A presort house is a business that takes mail from smaller business mailers and combines their mail with other businesses to get the best bulk rate available. The presort houses will charge you the lower postage fee as if your business was mailing a larger quantity and qualified for the bulk rate. A lettershop is a business that prints mailpieces and can also provide presort mailing services by combining their client’s mailpieces together in a large quantity and eligible for the lowest bulk rate.

A presort house can apply the postage for you and you can set up an account ahead of time to arrange for postal payments. If your business uses a postage meter you can still benefit from working with a presort house. A postage meter allows you to print the postage at your convenience at your location and is one of the best options for maintaining control over your mail. If you choose to work with a presort house you can agree to the postage rates in advance and then apply the correct rates at your business, and take the mail to the presort house for processing.

HINT: Insider Tip: Work with a USPS® Mailpiece Design Analyst (MDA) at regional postal centers about size, shape & weight of your mailing. Mailpiece Design Analysts (MDA) are postal employees specially trained to answer mailpiece design questions of acceptability for mail processing, and they consult free

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MAILING SOLUTIONS 101

of charge. Working with an MDA is especially helpful for direct mail pieces where your business wants to use a creative font or size. Click here to find the MDA closest to you.

Commercial Based RatesCommercial Based Pricing is available to maximize postage discounts. Commercial Based Pricing offers reduced rates to business customers who use digital mailing systems( includes postage meters) that generate an IBI (Information Based Indicia) and submit data electronically to the USPS®.These reduced rates apply to Priority® Mail and Priority Mail Express® mailings and are significantly lower than retail rates. To take advantage of these rates, a business must have a USPS® account.

The rates are accessible in several ways, including:Authorized online servicesCommercial rate compatible postage meters

Another qualifier is a package’s contents must reasonably fit within the Flat Rate Box or Envelope. The maximum weight is 70 lbs. and delivery is usually within 2 days.

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FLAT RATE RETAIL RATE COMMERCIAL BASED PRICING SAVINGS

Priority Mail (1 2 3 day delivery)Flat Rate EnvelopeLegal Flat Rate EnvelopePadded Flat Rate EnvelopeSmall Flat Rate BoxMedium Flat Rate BoxLarge Flar Rate BoxPriority Mail Express (overnight)Flat Rate EnvelopeLegal Flat Rate EnvelopePadded Flat Rate EnvelopeFlat Rate Boxes

$5.60$5.75$5.95$5.80

$12.35$17.45

$19.99$19.99$19.99$44.95

$5.05$5.25$5.70$5.25

$11.30$15.80

$18.11$18.11$18.11$44.95

10%9%4%9%9%9%

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MAILING SOLUTIONS 101

WHICH POSTAGE CHOICE WILL WORK BEST FOR YOUR BUSINESS? Along with the choices in USPS® mail class and rates, there are other decisions to be made in selecting the right postage provider.

The charts that follow include details on the three most commonly used postal providers for business mailers. The choices are: stamps, online postage, and postage meters. The three types are:

StampsA postage stamp is a small piece of paper that is purchased from the USPS® and is applied to an item of mail as evidence of payment of postage. Stamps are available in different denominations and are made of special self-adhesive paper.

Online PostageUsing a PC or a Mac you can purchase, calculate, and print official USPS® postage for anything from postcards to packages domestic or international right on envelopes including the address all in one step.

Postage MetersA postage meter is a mechanical device used to create and apply postage to mail items envelopes, address labels for packages, or postcards. The postage is provided directly from the USPS®. A postage meter imprints an amount of postage, functioning as a postage stamp, a cancellation and a dated postmark all in one.

To guide you in the decision making process, below is a detailed chart of the primary options available to help determine which will work best for your business.

POSTAGE CHOICE

Availability

Equipment needed

Supplies

First-Class LetterDiscount Rate

Discounts on USPS® Rates

Postal Fund Management

Postage Expense Tracking

Free Trials

USPS® Extra Services available

POSTAGE METERS

24/7

postage meter withintegrated scale

ink, labels

yes

yes

credit extension available

yes

yes

yes, with discounts included on digital meters

ONLINE POSTAGE

24/7

computer, printer and separate scale

proprietary lables, ink

yes

yes

credit card required

yes

yes

yes, with discounts

STAMPS

post office hours

separate scale

stock of stamps

no

no

n/a

n/a

n/a

yes, discounted online only

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MAILING SOLUTIONS 101

There are additional considerations to weigh in selecting the right postal choice. The chart shows the operational properties of each choice. A review of these details allows you to better understand the options that will fit best into your existing mail processes.

With a detailed knowledge of the different classes and rates available and how to use the right ones, it’s easier to become cost efficient. Selecting the postage choice that will fit best with your current mail pro-cesses is another important factor to help your business maximize postal savings. These two factors are necessary parts of a solid foundation that will help grow your business. With this knowledgebase, your business can leverage the most responsive and effective marketing channel available to impactyour business’s revenue: direct mail. In fact, direct mail has staying power and provides better Return on Investment (ROI) when combined with other marketing channels.

WHY DIRECT MAIL IS ALIVE AND KICKING Many people think that getting your marketing messages delivered effectively today is morechallenging because of the multitude of channels your customers engage with on a daily basis. But whether it’s email, social media, online videos, or interactive web sites, recent studies have shown that the proliferation of channels is actually beneficial for the reliable, established, direct mail marketing channel. Direct mail is producing higher Return on Investments (ROI) and has unique attributes that distinguish it from its digital counterparts. The statistics speak for themselves as described in a recent article published at A Brand New View:

POSTAGE CHOICE

Stamps

Online Postage

Postage Meter

PROS

l No Commitmentl No equipmentl Need for scale optional at office

l Multi-users at one locationl Low monthly-fee l Software displays delivery timel No contractl Print address and postage in one step

l Simple process for postal applicationl Expense tracking availablel Not server dependentl Free credit for postage advancel Dedicated “all-in-one” integrated scale

CONS

l No discountsl Maintain inventory of different rate stamps

l Substantial supplies costl Need proprietary ink l Complex postal applicationl Easy to misplace preprinted postage

l Contract requiredl Occupies floor/desk space

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MAILING SOLUTIONS 101

The studies cited above clearly demonstrate why marketers can still rely on direct mail to deliver results. Some of these results are driven by direct mail’s unique, established attributes: It’s portable, it’s measurable, it’s tangible, and you can manage it. But direct mail’s ability to support and enhance new marketing techniques is making it even more successful. Direct mail is now a significant component of the most effective marketing approach called integrated marketing. Integrated marketing simply means that direct mail is partnered with its digital counterparts to reinforce the message in a unique way. Examples of successful integrated marketing efforts include businesses sending a mail piece that includes an offer redeemable on a web site. The direct mail piece and the web site have been designed to perform as two parts of the same campaign.

Today’s direct mail can be as attractive and interactive as any of its digital counterparts especially with newer tools developed to reinforce the integration.

While integrated marketing has changed the rules slightly, it’s important to keep in mind the tried and true key components of a strong and successful direct mail campaign. The key components of an effective direct mail campaign include:

Clear ObjectiveThe objective and goal of your direct mail campaign will greatly influence the messaging and the offer. The objectives can vary from building awareness, lead generation, or thanking customers for their loyalty. Each of these objectives has a different goal, and needs tailored marketing messages and offers to get the best results.

IF YOU’RE STILL NOT CONVINCED OF DIRECT MAIL’S SUSTAINABILITY, BELOW ARE SIX STATS FROM RECENT STUDIES THAT CAN’T BE IGNORED:

In over 80% of homes the person in the household responsible for collecting and sorting mail will collect the mail at their first opportunity. And, once the mail is brought into the home, 80% will sort the mail immediately while 18% will sort it later that day – USPS 2012 Mail Moment Study

59% of U.S. respondents and 65% of Canadian respondents agreed with the following statement, “I enjoy getting postal mail from brands about new products” – Epsilon’s 2012 Channel Preference Study

48% of the UK population responded to a direct mail piece they received in the past year – Central Mailing Services 2013 Direct Mail Statistics

80% of marketers surveyed plan to invest in direct mail in 2013. 28% reported increases in their direct mail budgets – Target Marketing Magazine’s Media Usage Forecast 2013

U.S. advertisers spend $167 per person on direct mail to earn $2,095 worth of goods sold; a 1,300% return – Print Drives Commerce 2013

73% of U.S. consumers and 67% of Canadian consumers said they prefer direct mail for brand communications because they can read the information at their convenience. Additionally, 62% of Americans and 63% of Canadians said they enjoy checking the mailbox for postal mail – Epsilon’s 2012 Channel Preference Study

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MAILING SOLUTIONS 101

Marketing MessageWith objective and goals understood, the next step is to define the marketing message. As an example, if the objective is to generate leads, the marketing message needs to convincingly state the competitive advantages and benefits a customer will receive when they choose to do business with your company.

More Than One MailerA single direct mail piece can’t be counted on to meet all your objectives. Seasoned direct marketing professionals rely on a series of direct mail pieces to reinforce the messaging, and to give it time to achieve the best results. The Direct Marketing Association tests show that a mail campaign must be delivered at least four times to pull the desired rates.* DMA Study June 2010.

Offer and DistributionA strong offer included in the direct mail piece has to be compelling and ideally demonstrate the value of your business. If it’s designed to bring new customers to your pizza shop, a coupon for 10 percent off the first visit is an example of an offer to potentially convert prospects into—at the very least—trial customers. Another option is to utilize integrated marketing techniques to send the direct mail readers to a specific landing page with the coupon offer details.

The other key to ensuring that your offer is well received is the distribution of your mail piece—the list. The more targeted the mail piece is to your ideal business customers, the better its performance. Understanding your audience by shopping habits, location, or other demographic data will ensure that your message reaches the most receptive audience possible. The mail list is the most important part of all the direct mail components, and merits the maximum time and budget on its selection.

MetricsIdentifying how the results will be measured and defined a success is important in planning the direct mail campaign. The measurements can include tracking of the sales or responses received from the specific mailing. Totaling the sales from the mailer divided by the direct mail execution costs will provide the campaign’s Return on Investment (ROI).

WHICH MEDIUM DELIVERS THE STRONGEST RETURN ON INVESTMENT (ROI)?

B to B - ACQUISITION Email 27%

Direct Mail 16% Telemarketing 14% Search Engine Marketing 14%

Others 29%

B to B - CONTACT/RETENTION Email 44%

Direct Mail 34% Webcasts 7%

Telemarketing 15% Others 17%

B to C - ACQUISITION Email 25%

Direct Mail 34% Affiliate Marketing 7% Search Engine Marketing 10%

Others 23%

B to C - CONTACT/RETENTION Email 31%

Direct Mail 37% Telemarketing 7% Social Media Engagement 6%

Others 19%

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MAILING SOLUTIONS 101

QR Codes: An example of an integrated marketing design tool Once you have mastered the components of successful direct mail campaign planning, the next step is determining which creative design will work best to ensure that your goal and objectivesareachievable.The creative design step is where the concept of integrated marketing comes into play. There are many tools to consider, including one newcomer that has gained wide acceptance in the past few years, the QR Code. Briefly, the QR code, which stands for Quick Response, is:

A two-dimensional barcode designed to have its contents decoded at a high speed with a scanning device such as a smartphone.

A technology that was developed in 1994 but has resurfaced with the proliferation of smartphones.

Printed on the outside of an envelope and, when scanned with a Smartphone QR Reader, delivers the user to an online Web page that provides video and/or print product details, coupons and other marketing information. QR Codes are just one example of an easy way to add integrated marketing to your direct mail to boost its results. “You will see at least a 20% increase in pull, if your direct mail effort is integrated with another vehicle in your plan.” Research report by MSP (Mailing Services of Pittsburgh;2010)

SUMMARY Direct mail marketing is still alive and kicking, especially now with integrated marketing inthe mix. Combined with new media, it has been shown to improve the results that can lead to increased revenue growth for your business. The lessons shared here on how to utilize direct mail ensure this time-tested marketing channel will continue to work for you. It's just a layer on top of Mailing 101 basics. The basics provide the best ways to use the different mail classes and rates along with the right postage choice provides a solid foundation to grow your business using all the mailing tools and methods available today.

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MAILING SOLUTIONS 101

RESOURCES The following are links to web sites which provide more information on postal classes, rates, address quality and direct mail.

USPS.com

Mailpiece Design Analyst Look up

USPS® Postal Addressing Standards

Postal Explorer - calculators, price changes, domestic and international mail manuals, rates & descriptions

USPS® Address Quality

DMA (Direct Marketing Association)

SPEAK WITH NEOPOST USA To find out how Neopost USA can help you cut mailing costs and improve your mailing productivity, visit www.neopostusa.com or call us at 1.800.NEOPOST (1.800.636.7678)

ABOUT NEOPOST USA Neopost USA provides mailing, communications and shipping solutions. For generations, we have worked with our customers to prepare, deliver and manage their customer communications in the most secure, efficient, and professional manner possible. As businesses increasingly move to digital communications, we continue to help our customers communicate – whether in traditional mail, digital communications, or packages. All of this is provided by a network of sales and service professionals providing sales, supplies and service to their customers. For more information on Neopost USA, visit www.neopostusa.com.

Jan 2014