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The USPS Intelligent Mail Barcode: May 2009 Implementation Could Save…and Cost Mailers Money By John Steib

Direct mail accounts for nearly 60 percent of the 212 billion pieces of mail that the U.S. Postal Service (USPS) processes every year. When you consider that 40 million people move on an annual basis, you can imagine the millions of returned mail created by mailers and changes of address.

The USPS Gets Smart in Digital Age
To limit the amount of undeliverable mail, the USPS is getting creative. In May 2009, the Intelligent Mail® barcode is slated to replace the existing POSTNET™ and PLANET Code® barcodes on all domestic mail. The USPS will require use of Intelligent Mail in order to qualify for automation discounts.

According to the USPS, Intelligent Mail is the result of its efforts “to develop more robust codes capable of encoding more information, while minimizing the space used” on a mailpiece. True enough. Less talked about, though, is how Intelligent Mail will prove to be a powerful tool that serves USPS purposes, too.

Formerly scheduled for implementation in January 2009, Postmaster General John Potter announced on February 29 that the USPS was pushing back the transition to Intelligent Mail in response to public feedback. Insiders believe another reason for the delay is to give the USPS more time to brainstorm ways to use the next generation of barcode technology to its best advantage.

Intelligent Mail Benefits Mailers…and the USPS
Unlike the potential benefits of Intelligent Mail to the USPS, the advantages for mailers are fairly well-known. Replacing POSTNET and PLANET codes with Intelligent Mail will improve the monitoring and quality of mail service. The USPS will have more accountability, and mailers will enjoy these benefits:
   • Greater overall data capacity than existing barcodes;
   • More digits for their use, allowing them to uniquely identify up to 1 billion pieces per mailing;
   • More accurate and detailed information about mailings – for example, immediate knowledge of anticipated delivery dates, where each piece is en route to its destination and which pieces have been rerouted;
   • Increased space on mailpieces due to the eliminated need for multiple barcodes; and the
   • Ability to participate in multiple USPS service programs with a single barcode.

But while Intelligent Mail allows mailers to keep closer tabs on their mailpieces and on the USPS, the new barcode will enable the USPS to do precisely the same thing with mailers. With Intelligent Mail technology, the USPS will know whether or not a mailer is using an updated mailing list. In the past, the USPS required supporting written documentation from mailers to verify the accuracy of their lists.

Intelligent Mail processes that information by scanning the address of the mailpiece and determining its accuracy. If an address is flagged as changed or undeliverable, the information is stored in a USPS database along with the mailer ID, allowing the USPS to follow up with mailers about their address correction processing.

Impact on Small Companies
Less than 10 percent of direct marketers already use Intelligent Mail – most of them large financial institutions. So come May 2009, many companies will be in for some potential new obstacles created by the transition to the smart barcode. Small businesses that own lists may feel the greatest impact. Although the Postal Service will continue to grant automation discounts for POSTNET barcodes through May 2010, it is widely believed that the discount for Intelligent Mail will be higher.

Typically, small companies are not vigilant about or don’t understand the importance of maintaining mailing lists. For example, small mailers may not consider that the cost of updating an address database would be considerably less than the cost of acquiring new customers when existing customers are lost due to address changes. The Postal Service will forward First Class mail for up to 12 months at no extra charge, and private address change service bureaus keep records of changes for up to four years. Any address changes older than four years are lost. If small business owners truly believe one of their most valuable possessions is their customer list, then constant attention to address updates is vital.

What’s more, potential USPS penalties for non-compliance and outdated address files are bound to come into play. Without Intelligent Mail, direct mailers effectively operate on the honor system. Intelligent Mail, however, inherently identifies lists that aren’t fully vetted. Using Intelligent Mail, the USPS will be able to enforce compliance whereas before, there was virtually no way to enforce mailers to comply with regulations. With Intelligent Mail doubling as whistle blower, the USPS will almost certainly take advantage of such functionality.

There’s also the not-so-minor detail that everyone – the USPS included – is aware of, which is that the Postal Service has no competition for letter and postcard-size mail. So, mailers will have to follow all of the rules and regulations to obtain discounted automation rates or face the consequences when – not if – the USPS learns that they are not.

Intelligent Mail: Opportunities and Obstacles
The switch to Intelligent Mail will afford mailers great sorting and tracking benefits in addition to cost savings. There’s no question about that. The latest technology from the USPS, however, may ultimately cut both ways.

I think it will be interesting to see how much the USPS benefits from Intelligent Mail technology. Given the opportunity to recapture revenue lost to rerouted and undeliverable mail, any red-blooded government entity is likely to take it. And while it remains to be seen what action the USPS will take when it finds letter pieces mailed outside of compliance, mailers can count on it being more than a slap on the hand.
 
5 tips to mailers preparing to transition to the Intelligent Mail barcode.

1. Visit the RIBBS Web site at USPS for valuable preparation information at http://ribbs.usps.gov/OneCodeSolution
2. Get your Mailer ID by calling the USPS PostalOne!® Help Desk at 800-522-9085.
3. Clean up your address file! Call your mailing house for costs, or search the Web for “NCOA” and call one of the hundreds of companies listed online. Also note that beginning November 23, 2008, a new regulation will require mailers to update address files for all mail at least 95 days before any pre-sorted automation mailing.
4. Update your address file when you receive returned mail immediately. Don’t risk losing that customer!
5. Run down your inventory of envelopes with old barcodes on them, and direct your printer to add the new Intelligent Mail® barcode to your business reply envelopes and cards.

By John Steib, direct marketing manager at Zillner Marketing Communications near Kansas City, Mo. Steib has more than 19 years of experience in direct mail processing, Postal Service regulation compliance and direct mail letter shop management. Zillner specializes in marketing
to seniors. For more information, visit www.zillner.com.

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