Meet The Mailers: Finding Hidden Savings in Mail Spend

In this episode, I chatted with Adam Lewenberg, President & CEO of Postal Advocate. Postal Advocate manages the mailing and shipping spends for some of the largest organizations in North America, and is headquartered in Framingham, MA.

We talked at length about how structural challenges and lack of visibility lead to inefficient postal spending:

Among the many topics we covered:

• Unmanaged spending on postage
• What Postal Advocate does for its clients
• Why financial leakage happens at companies
• Strategies to handle costs
• How to future-proof your mail operations

Here are some questions and answers from our conversation (edited for clarity and space):

• You’ve described postage as one of the largest unmanaged spend categories in most organizations, right? So why does postage remain so invisible compared to other expenses?
  

That’s really interesting when you think about this. Like if you look at the industry of like auditors, companies that go in and help people manage spends, there are hundreds, if not thousands of companies that help people manage their UPS invoices, their electric invoices, their copiers, their whatever the category is, there are these cottage industries that help people manage those spend categories.

We’re the only ones who focus on mail because [in] most of those other categories, someone can hand you an invoice and say, “OK, this is the details of what we do.” And “take my spend from UPS” and “here’s a listing for the last year and go audit this”, “help me negotiate a contract”, “get me refunds,” whatever the case may be.

In mail, it’s fragmented. Like nobody’s got the visibility to it. Our biggest part of our job is going to find out where all those spends are for the client, building them the visibility in the dashboards of where all this stuff is.

And what’s interesting is mail is huge. Like there’s $90 billion of postage. There is at least $80-$100 billion in outsourced print and mail spends. There’s a whole industry, there’s hundreds or thousands of companies that do these services. There’s equipment providers, there’s pre-sort services, like all in, it’s somewhere between $150 and $200 billion spend that we’re doing just in the U.S. And very few clients have their arms around it. And when I say very few, I’m talking even the biggest banks, the biggest healthcare systems, they don’t have controls in place to manage this.

• Do they have a lot of internal mail experts?
  

No. Now what’s happened in the industry is there’s very few. Like, I mean, if anyone here is like in the postal community and they’ve been to, you know, a Postal [Customer] Council meeting in a local area or gone to a regional show or even gone to the National Postal Forum, they’re not that well attended. Like there aren’t that many mail experts. And the reason is because people retired. Like mail is not sexy. So people have left the industry. Companies have outsourced it to third parties. And there are very few people on the client side managing this.

• What kind of steps do you do for your clients and that other companies can do as well on their own to get control of all that?
  

So the biggest thing is to figure out what data do people have to start out with, right? Like what do they know about? Who are they using for outsourcers? Where are their equipment agreements so we can track the work that’s done in-house? And then, how do we expand the scope to like other things that are happening?

And to do that, we typically will go to their accounts payable department and we’ll check, we’ll have them pull invoices from key vendors. We’ll take whatever data that we can get and we’ll create portals, access to their vendors. So whether it’s their mailing equipment providers like Pitney Bowes, Auctane, Quadient, the stuff they do internally, whether it’s USPS will build a Business Customer Gateway login that links all their different CRIDs and different account numbers. So we can see that we’ll get access to invoices from their outsourcers, and then we’ll take all that data and plug it into a dashboard that the client can access.

So clients could do the same thing on their own. Most people would just be managing out the spreadsheet. The issue is that no one’s developed an architecture besides us to be able to ingest all this information into a place in which it can be managed. And then once it’s there, you need a team or a person that has some expertise to know what they’re looking for. So just because the data’s into a place, you need to know what are the tolerances, what are the areas that you look at to say, okay, that’s an issue, that’s an opportunity to drive savings.

• You pointed out that mail data and ownership are often fragmented across departments and vendors and locations. So how does that translate into actual financial leakage and what does a full unified strategy look like in practice?
  

Some of our clients are the largest businesses in the country. And even if they’re not, companies are constantly adding locations, acquiring companies, closing, divesting. So it’s this constant ebb and flow in corporate America. And the issue that we find is if there was a person in the company that was responsible for this category, they might maintain this, but there typically isn’t.

So you might have like a corporate mail center or a production site in-house. But that person doesn’t handle the spends that go on throughout the locations. They don’t handle other divisions. They don’t handle stuff that’s outsourced. [E]ven if they’re a production manager, they still only have visibility to a piece of it.

We find leakage in all places … I’ll give some examples. Leakage could be that people aren’t taking advantage of the right postal discounts internally. They’re overpaying on equipment because they’re being oversold by their vendors. Nobody’s claiming that there’s accounts that have been sitting with meters or in permits that nobody ever claimed and the money gets sit there, sits and goes dormant and maybe gets lost. And we found millions of dollars in postage recovery. They’re using the wrong services. They’re not paying attention to their mailing, using services in the wrong ways, in the wrong mail classes. They’re submitting things to their mail houses in the wrong way, in ways that make it more expensive than the process.

Every organization, no matter how good they are, has leakage. I can make that universal statement because we’ve never worked with an organization, no matter how big or sophisticated thatt hasn’t had significant leakage in one or a few areas that we could identify.

• Well, what kind of strategy can companies put together to make an impact?
  

So with or without us, they can do this on their own. But the number one thing that we tell anyone is: get access and visibility to your data. Understand, how can you manage anything if you don’t have the details to what you’re sending? So that is, what is the equipment? What is the postage spends going through that equipment? What are the outsourced relationships? What are the volumes? Where are the postage counts? Get that stuff into some sort of manageable process so you have an inventory of what this is.

And what’s interesting is you would think, I’m going to give just a hospital system, right … a hospital you would think might have a corporate mail center. I’m going to use this as simplistic because we all have hospitals that service our local communities. But that hospital might be spending a few million dollars in postage because they don’t only have the main hospital mail center, they have a physician’s practice that supports it, that has locations. They have annual fund development-type work that they’re doing. Every time a doctor leaves, they send out “Our doctor is retired” or moved or anything like that. And so we find even simple hospitals might be spending a couple million dollars in postage using multiple different outsourcers across anywhere between 3 to 10 different separate departments orchestrating their own work. So that’s just like a simple example to show, like in an organization that we all go to, that we have that same type of issue.

So you need to get the visibility to the data. And then have someone on your staff that you’re giving some controls to that knows something about mail. The biggest issue is not just the visibility, it’s that internally, there typically isn’t anyone who understands postal discounting, doesn’t understand how to access the data, doesn’t understand what the mail class differentials are, to know what’s even available to reduce costs.

• Right. So someone on staff that knows something? They didn’t have that decision making to be able to do something about it.
  

Exactly. And there are a lot of cool things that are available. Like the post office is offering a growth incentive now. They give 30% refunds if you do more than a million pieces a year and you have any growth, you can get 30% of that growth back.

We are all, as a country, every mailer in the country is footing the bill for that incentive. And we have clients that are getting millions of dollars back on that because they’re taking advantage of it. And the more people that take advantage of it, everybody else pays the bill because it raises everybody else’s postage costs.

The post office feels that we’re going to incentivize people that increase their mail volumes. But the point about bringing that up is, it may not be that your actual volume is growing. It may be just that there are more things linked to you that we can pull together that makes it look like growth. And we find that in lots of companies it’s not necessarily just about growing, it’s about the visibility and putting it in the right systems to be able to take advantage of these types of programs.

• Wow. That’s something, and theoretically, of course, too, is if you have all that visibility and you have all that data in the same place to look at it, you begin to look at it and say, “Well, maybe we don’t need to do some of this, but we can strategize about other parts of our business and do something with mail that we didn’t think about doing before.”
  

Exactly. And the biggest thing for people to think about is a good chunk of work, I would say of the 90 billion pieces of mail that are done in the U.S., probably 75% of that work is outsourced to a third party, right? And this is the Wild West. Like people think “Oh, this is an organized industry. People charging pay a consistent rate.”

They don’t. Because most people don’t know how to rate compare between one service and another. They don’t bid out all their work. They don’t have standards for how this is done. They don’t know all the rules. So the outsourcer kind of dictates the dialogue and how things work. It’s an area that needs to be looked at and viewed and managed because it’s not only the $90 billion of postage, it’s the extra $80, $100 billion in outsourcing spends. We spend more on this area in the United States than we do in UPS and FedEx combined. And there are hundreds of companies who help people manage their UPS and FedEx spends.

But we’re the only ones we found on the postal side.

• So looking ahead, considering pricing pressure, service changes, shifts in regulations, what should organizations be doing now to future proof their mailing operations?

I would say staying engaged with what’s actually happening inside your organization, understanding the types of mailings that you’re doing, like following some of the regulations to see what can be eliminated, making sure that you’re taking advantage of promotions, incentives, discounts, ways to reduce costs, getting rid of waste … things that you wouldn’t believe how much money people spend in equipment in offices that are doing fractions of volumes of postage that just don’t justify it, spending ten times more on equipment than the postage being run, because no one’s thinking or looking at it, just having a structure around managing the spend, but looking for ways to do things for less money.

And I would say staying engaged in what are the best practices around automation, success rates, response rates, being able to mail more efficiently, taking advantage of the best tools and and insight that is available.

Here is our conversation (with all questions and answers). We’ve added timecodes for your convenience.

Thank you very much, Adam, for sharing your perspective and your expertise! To learn more about Postal Advocate, visit their website at PostalAdvocate.com.

Your comments and ideas are very important to us in making your Who’s Mailing What! experience even better for you. Through these engaging talks, we hope you’ll take away practical tips, insights, and personal stories to inspire and build your own success.

If you have any feedback — or are interested in sharing your story and viewpoint with our wide and diverse audience on “Meet the Mailers” — please reach out to me. I’d love to hear from you!