Help with First Direct Mail Operation

[jared530]

Hi All,

I own a home buying company, where we market to homeowners in attempt to buy their home. In efforts to save on marketing costs, we've decided to buy all the equipment to make mail ourselves. I want you guys to look at the equipment I currently have, and make suggestions given our goals.

Goal
Month 1- 20,000 pieces
Month 2- 30,000 pcs
Month 3- 40,000 pcs
Month 4- 50,000 pcs
Month 5- 60,000 pcs
Month 6- 70,000 pcs
Month 7- 80,000 pcs
Month 8- 90,000 pcs
Month 9- 100,000 pcs

By Month 18, I want to be consistently putting out 250,000 pcs per month. I dont forsee us going above this monthly threshold unless we open up another market.


Mail Piece

1 single sided piece of paper folded into either:

a) #10 pastel colored envelope
b) A9 pastel colored envelope

Pre-canceled fixed stamp

List of Equiptment

(2) HP 585z inket printers
(2) Continuous ink systems for HP Printer w/ genuine HP ink.
(1) Pitney di950 folder/inserter - all rollers replaced, and completely serviced.
(1) Paper Jogger
(1) SECAP 26k Envelope printer
(1) Accufast XL Stamp affixer


Data on both paper and envelope will be variable data with mail matching. I will be using Accuzip software to pre-sort all the mail to optimize postage rates.

I need comments/suggestions. I've never ran something like this before.

Thanks,

Jared

 

[arossetti]

You forgot the $100 you will need to slip the BMEU rep each trip. Do you have experience with mailing software and working with bulk mail? It is a steep learning curve for most so if you have that knowledge it will help a lot.

To me I would find the value of sending it out, you will quickly find how frustrating and time consuming this industry is when equipment does not work the way it is suppose to. Dealing with paper jams, ink head issues, an inserters throat settings being just a few fractions of a mm off, a paper jogger with a dead motor, a worn out feed roller on an envelope printer, or a bad sensor on a stamp affixer. Those issues are just a normal day in a mail house but when you are trying to do that on top of your normal duties it makes you want to throw a SECAP 26k Envelope printer through a window. Not saying it isn't possible because it is but I personally would rather drop it off and pay the extra $.25 a unit.

 

[AP90]

I'll just point out the obvious and say that with an end goal of 250,000 pieces a month you'll be buying new printers all the time. And you'll be spending all your time doing the printing. My Xerox 1000i would take 42 straight hours to pump out 250k 8.5x11 4/0 prints. And that doesn't account for things like jams, toner changes, parts changes, SLEEP. Sounds like a tall order.

Id venture to say most printers on here would farm out a 250k mailing.

 

[jared530]

I'll just point out the obvious and say that with an end goal of 250,000 pieces a month you'll be buying new printers all the time. And you'll be spending all your time doing the printing. My Xerox 1000i would take 42 straight hours to pump out 250k 8.5x11 4/0 prints. And that doesn't account for things like jams, toner changes, parts changes, SLEEP. Sounds like a tall order.

Id venture to say most printers on here would farm out a 250k mailing.

For example, outsource the printing of the envelopes & letters, and fold/insert/stamp them in house?

 

[arossetti]

For example, outsource the printing of the envelopes & letters, and fold/insert/stamp them in house?

Just the inserting of 250m pieces is 50-60 hours. I don't know if you have ran an inserter but it is not something you setup and walk away from and then come back an hour later. You are constantly filling the inserter.

25 hours for stamp affixing, your Accufast looks like it has a envelope feed and delivery that can hold maybe 50 envelopes, again - requiring someone to stand at that device for 25 hours feeding and stacking. Not to mention you would have the envelopes already addressed at this point as to not waste postage so keeping them in tray order adds a layer of complexity.

 

[arossetti]

Also if I read your post correctly you are going to put a personalized letter into a non-window envelope with a printed address. What is your plan to ensure that the letter matches the envelope?

 

[jared530]

I have 2 guys who have 15-years of mailhouse experience, who will be running the show. I will be paying them $15-18/hour. So duration isn't a problem. Its more of wear/tear/lifetime of machines, and if I need to keep extra machines on hand when some die ect.

 

[jared530]

Also if I read your post correctly you are going to put a personalized letter into a non-window envelope with a printed address. What is your plan to ensure that the letter matches the envelope?

From what I understand, I can have the di950 output finished envelopes onto a conveyor, and have someone check every 10th envelope to ensure mail match.

It was also recommended to have accuzip label each letter & envelope print a very faint number to keep letters/envelopes in order in the case there is a mismatch. Apparently it would be easy to identify what needs to be reprinted ect.

I want to keep these letters as "handwritten" and non-commercial as possible...barcodes for an OMR will reduce the genuineness...

Any recommendations?

 

[MailGuru]

Wow! What a mess. Where to even start?

First, lets talk about your methodology. While direct mail advertising IS the best advertising medium in relation to response, it is also one of the most expensive forms of advertising due to the postage costs. So, in order to get the most out of your direct mail advertising, the idea is to continually "tweak" your messaging to increase response rates.
This is called "A/B" testing. For instance:

Month 1 - 20,000 pieces (since this is your initial mailing, this piece becomes your control or "version A")
STOP - Hold off 1 month while you measure your response)

Month 3 - 30,000 pieces (20,000 pieces using your control "A" piece, and 10,000 pieces using a new version "Version B")
PAUSE for 2 weeks while you measure the compared responses of the new piece (Version B) against your control.
Did version B beat the control? If so, Version B now becomes the control, and you create a a Version C to try and beat version A.
Did version B not beat the control? Then version A is still your control and you tweak the verbiage on a version C. And so on.

Using this method, minute changes in response rates can equate to hundred of thousands of dollars in profitability.

For instance if you mailed 100,000 pieces and got a 1/2% response rate, you would receive 500 responses.
With your particular mail piece configuration, between paper, envelopes, print, processing & postage, you will spend right around $0.50 per piece (+/- $0.10). I only know this because I've been in the business for over 30 years, and, the description of your mail piece is a little on the inexpensive side.

So, to produce and mail those 100,000 pieces, you will spend around $50,000. So, each response will cost you about $100.

Ok, let's assume that you changed your message, or, offer on the B test, and, that test got a 1.2% response rate. That means you got 1,200 responses. Now, your cost per response is only $42 each. A big savings! The name of the game is to keep testing and trying to beat the control so that, you get the desired number of monthly responses with the lowest number of mailing pieces. In other words, your ultimate goal is to get the same number of responses off a 100,000 piece mailing that you would have gotten off a 250,000 piece mailing without testing.

Now, let's look at your equipment mix. While the HP585z advertises a "80,000 page per month duty cycle", the actual recommended monthly volume is only 2,000 to 6,000 pages per month. As anyone on the forum will tell you "Duty Cycle" is a bunch of crap and has absolutely no correlation to the number of pages you can print in a month. So, I think you are way under-manned on your printer, even if you had 2 or 3 of them.

I could go on about the rest of your equipment choices (they are all desk-top office class instead of production class), but, the item that sticks out the most in your plan is the logistical error of printing a personalized letter, and matching it to an ink-jetted outside envelope. Unless you have a 2-D bar code camera device on your DI950 inserter (which I don't believe it comes with), it really can't be done that way. You can try, but, if you get just ONE envelope off, your entire run will be ruined because the outside of the envelope will say "John Smith" but the letter inside will say "Jane Doe". It can be done by hand without spending a fortune on a high-end inserter/camera setup, but, not at those volumes.

-Best

-MailGuru

 

[MailGuru]

From what I understand, I can have the di950 output finished envelopes onto a conveyor, and have someone check every 10th envelope to ensure mail match.

I've done this before. It's slow, and not very full-proof. I rationed, if it is off, I only have to go back through 10 envelopes to find out where it jumped the track. Son of a gun if it didn't happen several times. Took forever. Faster just to hand-match/hand insert.

 

[namelessentity]

Our shop does a lot of that kind of mail and we always hire temps to hand match/insert. I would never trust the inserter to do it without a 2d barcode. Hell, even the temps screw up sometimes and that's already a nightmare just fixing a single tray.

Also, that inserter is not going to keep up with volume. We do mailing for a client that tried using that inserter previously. We can do in half a day what took them 3 with a used Bell & Howell inserter that's barely in working order.

 

[jared530]

Whats the definition of "hand-match/hand insert."?

I was looking at a Bell & Howell - Thats on my list of equiptment to buy within the next 6-months. Just want to get mail out the door, leads flowing, and houses purchased.

MailGuru- Excellent advice, I appreciate it.

First thing I want to replace is my envelope printer. Someone high output, low maintience, and low printing costs. I will only be using a single color (blue) for the recipient and return address, and black for the barcode. Any suggestions?

 

[jared530]

If im going for a "handwritten" style letter, do you think having a window envelope will kill the response rate?

 

[arossetti]

If im going for a "handwritten" style letter, do you think having a window envelope will kill the response rate?

I personally would think a window would kill the image you're going for.

 

[namelessentity]

Whats the definition of "hand-match/hand insert."?

I was looking at a Bell & Howell - Thats on my list of equiptment to buy within the next 6-months. Just want to get mail out the door, leads flowing, and houses purchased.

MailGuru- Excellent advice, I appreciate it.

First thing I want to replace is my envelope printer. Someone high output, low maintience, and low printing costs. I will only be using a single color (blue) for the recipient and return address, and black for the barcode. Any suggestions?

Hand match/insert is folded on a folder and hand inserted by checking the name to the envelope. We tend to do it for winery clients that are very picky about things looking personal. It's usually an order form, letter and some marketing piece that are all variable.

 

[jared530]

Hand match/insert is folded on a folder and hand inserted by checking the name to the envelope. We tend to do it for winery clients that are very picky about things looking personal. It's usually an order form, letter and some marketing piece that are all variable.

Wow, how many hours does it take to get 100,000 out the door like that?

 

[namelessentity]

Oh God, they're usually 2-5000 pieces. Usually takes several days though. 100k pieces I''m pretty sure we would outsource, or require barcodes for machine insertion. I can't imagine any way to do that efficiently by hand.

 

[MailGuru]

The way this is done professionally, if you have the right equipment, is, that it is really not a match process. The finished product only looks like a match process. When you print your letters, you print a small 2-D barcode somewhere on the letter. That barcode represents the record number in your mail run, and, needs to be able to show face-up when your inserter pulls the piece from the pocket, and, drops it on the inserting track. A barcode camera (scanner) then reads that record number and hangs on to it. The letter is then inserted in to a blank envelope, which then passes under an ink jet head which then ink jets the name and address information that is associated with that record number on the face of the envelope. There are several of these "inserter/inkjet" combination machines on the market, and, it's not really new technology, so, you may be able to pick up a used machine for $30k-$50k. One such machine, I believe, is called a "FlowMaster", and, I think it is (or, used to be) sold by Pitney Bowes.

 

[MailGuru]

Wow, how many hours does it take to get 100,000 out the door like that?

It's not really as bad as it looks. Once you get a rhythm, 1 person should be able to produce about 300-400 per hour. 10 temps, and you are producing at a combined rate of 3,000 to 4,000 per hour. At the low end, that means about 25,000 per 8-hour shift. 4 Days and you're done.

 

[MailGuru]

I'm a little concerned over the AccuFast XL Stamp affixer. I can't find any actual specifications, but, it looks like it will only handle a very small stamp roll. From the looks of it, I'd say only 1,000 to 2,500 stamps per roll. We use our Kirk-Rudy KR535CS tabber to affix stamps. The stamp rolls we use are the big rolls (10,000 stamps to the roll). If you have to do 100,000 through your Accufast stamp affixer, even if it will handle a roll of 2,500, you would have to pause 40 times to change out to the next roll. You're never going to get any production speed under those conditions.