What is the path forward for print to mail industry players? If the question is asked of 10 people with a working knowledge of the industry, you would get 10 differing answers. I suspect, however, a general theme would be the following: “Yes, mail volumes have declined, but the industry is right-sizing in the face of competing communication channels. Each channel compliments the other, if executed properly.”
Keep in mind, this would be the answer from those with a working knowledge of the industry and, more importantly, those spending dollars on print to mail and other channels. In the final analysis, money always talks the loudest, and print to mail is not going anywhere in our lifetimes.
If it’s true that the industry’s “reports of death have been greatly exaggerated," to quote Mark Twain, what is the path forward for printers and mailers? As a former owner of a print to mail service bureau and now as a business engineering provider to the industry, we tell our clients to continually Evaluate, Automate, Validate and Demonstrate. In this post, we will explore the first step, Evaluate.
Evaluate your commitment to the operation or business model. For those printers and mailers on the fence about viability, this is an anxious time. Volumes may be declining, though Standard Mail is increasing slightly; complexity and risk is certainly accelerating with the Intelligent Mail barcode, Seamless Acceptance and potential loss of workshare discounts; and as always, labor costs are increasing. For small to medium service providers, this is a crossroads, more so than in the last 20-plus years. For large print and mail originators, debating the age-old question of whether to insource or outsource, the same is true. For large-scale service providers, the search for more revenue dollars and reduction in cost per unit is more important than ever.
One thing is true for all players: Doing business “the way we’ve always done it” is a decision to die a slow, or in today’s environment, quick death. In any right-sizing or downsizing, there are winners and losers in the space. There has been too much capacity in the industry for some time, and it is more evident now. The good news is there are multiple acquisitions taking place, and for some, quitting while you are ahead and merging or being acquired is not that same as quitting. It’s best for owners, employees and customers in the end.
As a former mid-sized player myself, it is completely understandable to think of the business and your employees as extensions of your family. As a matter of fact, it’s the reason you have been successful in the past in many cases. Sadly, I’ve seen more than a few that held on too long without embracing change either because of an unwillingness or inability financially to do so. In an ever-increasing commoditized industry, unfortunately, loyalty without change or a forward plan is not a good recipe for any business. Customers and employees have to do what’s best for them and are more willing to “jump ship” quicker than ever before. Don’t get left holding the bag for you and your actual family’s sake. It’s a business, not a family member, so treat it like one. Take advantage of the opportunity, either as a seller or buyer, to have a business that still has value.
For large print to mail generators (think in-house print and mail operations), insourcing or outsourcing is more a straightforward economic decision. The cost center or, in some cases, the profit center of mailing operations is always being evaluated as a viable business unit. Increasing risk due to compliance issues, investment in technology and rising labor costs, especially considering Affordable Care Act implications, are all game changers. Layer in the available capacity and pricing discounts, printers and mailers are cannibalizing each other, which now may present a scale-tipping moment for those that have been on the fence about outsourcing. For in-house mailers where outsourcing simply isn’t an option for whatever reason, change for the better has to be mandated. Decision makers at the top need to be better educated on what is going on in the industry right now. Tools are needed for risk avoidance and compliance, especially considering the traceability and potential loss of postage discounts for mailers that can’t prove a bulletproof process to the US Postal Service (USPS) and customers.
For large-scale service bureau operations, differentiating your operation going forward is paramount. Survivors will have found a way to absorb business from smaller scale operations with more agile processes, lower operating cost per piece and completely traceable and provable process to embrace the coming changes from the USPS and beyond.
In my next post for players committed to “staying in the game,” we will explore Automate and how this has to be part of the plan forward.