Intelligent Mail: To Wait or Not to Wait?

ANY CONVERSATION that
 involves maximizing postal
 discounts begins and ends with the United States Postal Service (USPS) and its Intelligent Mail Barcode (IMB) technology, especially in recent months. In order to claim automation discounts, mailers must switch from using the Postnet barcodes to what is casually referred to as basic or full-service IMB by May of 2011.

Simple, huh? Well, not quite. Sit down; this requires a little explaining, but it behooves you, as a printer/mailer, to do a little investigating of the options and canvassing of your mail clients to determine what is your best fit.

By USPS definition, the IMB is used to sort and track letters, cards and flats, and offers enhanced versatility by allowing many services to be requested and embedded within one barcode. It combines the data of the existing Postnet and Planet Code barcodes, along with other data, into a single barcode. The barcodes are affixed to mail trays and containers, as well as the mail pieces.

Proceed with Caution

For starters, not everyone is a fan of IMB in its current form. One such person is Mary Ann Bennett, president of The Bennett Group, who consults printers and mailers on all matters regarding the mail stream and reaping maximum benefits. She has compiled a list of 10 reasons why mailers should delay implementing the full-service IMB, but also cautions that the implementation of IMB is "very fluid" and the information is subject to change.

Bennett's list is proprietary and will not be restated here in its full form (visit www.the-bennett-group.com for more information), but we'll look at a couple of talking points. Some of the major drawbacks to full-service IMB, according to Bennett, include:

• Mailers will need to invest money to participate at the full-service level, and it does not provide an ROI benefit.

• The automation discounts are low—just $3 per thousand for First Class mail and $1 per thousand for Standard Class—and those incentives may go away in the future.

• The IMB is not human readable, which necessitates the purchase of scanning equipment to read and interpret the data embedded in the barcode.

"Right now, this is not mandatory," she says of full-service IMB. "The Intelligent Mail Barcode is fraught with problems on all levels. The financial risk is significant. There are major mailers in the country that have spent well over $1 million on trying to implement the full-service IMB. Imagine how long it's going to take for them to begin getting an ROI with the incentives that the post office is offering?

"I recommend that people wait for the dust, and the dollars, to settle," Bennett adds. "Let all of the bugs and problems with this implementation get worked out. Stick with something that is safe and without problems until you absolutely have to implement usage of this new barcode. From a business owner's perspective, the rules and the guidelines associated with the IMB are going to change a gazillion times between now and a year and a half from now.

"This program has been flawed from the very beginning," she continues. "Most industry veterans are very concerned with what the Postal Service is doing. They think it could lead to the demise of the First Class mailers in the industry."

No Need to Rush

Bennett stresses that there are no repercussions associated with waiting to implement full-service IMB. She feels that many of the issues and bugs associated with it will have been worked out by the spring of 2011, and cites historical precedence that supports her wait-and-see philosophy: the 1991 barcode discount requirement of tabbing.

According to Bennett, letter-sized mail pieces needed to be tabbed to receive automation discounts from the USPS. The industry lacked automated tabbing equipment back then, she says, and some of the gear that was rushed to market was ineffectual and the price of tabs was high. Within eight to 16 months, the equipment improved, while the tabs dropped in price and increased in variety.

"The marketplace had to adjust to the requirement that the Postal Service put in place," Bennett notes. "The USPS didn't care how the industry got there. All they said was, 'If you're going to claim this discount, you'll have your mail pieces tabbed.' "

The Postal Service is stressing the value of the overall Intelligent Mail program, which goes beyond the barcode. Pritha Mehra, vice president of business mail entry and payments technologies for USPS, says Intelligent Mail is, well, more intelligent and more electronic, specifically with the submission of mailing information from the sender to the USPS.

"Part of the reluctance (to IMB) is that it's an investment for the industry to get there, because they have to change their process of affixing barcodes," Mehra notes. "It may require them to change the design of the envelope, or upgrade their printers. And full-service IMB requires capabilities to send information (to the USPS) electronically. It requires a lot of deliberation across the supply chain."

Mehra stresses that mailers need not make the switch to full-service, but must convert from Postnet to basic by May of 2011. Full-service constitutes much of the electronic information submission aspects of Intelligent Mail. In making the decision of choosing between the basic and full-service levels, Mehra suggests looking at the following criteria: cost, the value proposition for mailing clients and ramp-up time.

"We do offer some lower risk rates for full-service, free address correction, and we give them additional information around when the mail is introduced to the mail stream," according to Mehra. "The publishing world is very keen on full-service because of address correction. It's also about maintaining a competitive edge. If you don't use it, but the printer around the corner does, that's something to consider."

What about the learning curve? Mehra notes that full-service IMB won't be as challenging for moderately sophisticated mailers, particularly those that already print barcodes, use presorting software—rely on services such as mail.dat to generate their mailings—and track inventory through their own supply chain.

"In the printer world, we're now seeing that the large and most sophisticated printers have been pretty quick to jump into the full-service program," she says. "Any program has growing pains, both for the mailing industry and the Postal Service. It's a pretty mammoth change or evolution in the way that we're doing business, and it's laid the foundation for some pretty exciting things to come."

One full-service direct mail printing firm that has made the jump to full-service IMB is Niles, IL-based Johnson & Quin. Dave Henkel, company president, has spoken on the issue and is a proponent of the Intelligent Mail platform. He points out that the rate of adoption has been relatively slow.

Patience Is a Must

As for his company, Henkel estimates it required roughly six weeks of internal time to make the jump from Postnet to basic IMB, then full-service IMB. Much of the time was spent in developing an automated method for entering each job; Johnson & Quin could have been up to speed in less time had the company opted for a manual job entry system. But that would have required an additional 30 minutes per job going forward. Henkel opted to expend internal work on the front end to speed job preparation time.

"Implementing IMB does take some work and internal organization," he says. "Much of the time involved is in the testing process (the USPS) set up. That took about three months. Although the requirements are quite stringent, the Postal Service has established methods that do help mailers get organized, and there is assistance and feedback on the testing.

"It's similar to a software conversion process. You have to be patient and understand the rules, but you don't have to expend an unreasonable amount of time. There is concern out there about the time IMB takes, but I think it is based on a lack of knowledge and experience more than the reality of the situation."

Henkel notes the full-service IMB discounts for Standard and First Class are on top of the other discounts mailers are able to achieve. With a lack on ongoing costs associated with full-service beyond the ramping-up investment, Henkel believes the discounts—small as some may see them—are not inconsequential.

Bob Arkema, vice president for Johnson & Quin, is a fan of several features of full-service IMB. "We can add a mailer ID of the actual end client, giving them access to all of the postal information," he says. "It eliminates relying upon your vendor to provide you with postal receipts and confirmation of the mailing should you choose to.

Timing Is Everything

"With the Start the Clock feature, the USPS sends out notifications when the mail is actually in the postal stream, so we know when it's going to arrive."

"With the move to IMB, the USPS is supporting a better regimen on the part of the vendors and encouraging compliance with fewer exceptions," Arkema adds. "Some companies may be holding out because they don't want to be an early adopter. They'd rather let someone else go through the learning curve. Plus, I'd hate to be in a last-minute scramble when IMB becomes mandatory."

The $100,000 question is determining what level it becomes viable for a mailer and its clients to embrace basic-level Intelligent Mail as opposed to full-service. One printer that is eyeing basic IMB is VISOgraphic of Burr Ridge, IL. Randy Sloane, vice president, says the company's main consideration is whether it could recoup the cost associated with implementing full-service.

"The real question is, 'How do I charge my customers for that?' " he says. "Then there's the volume of mail. We're a small mailer and, even with the discounts the IMB provides, our customers get the discount, not us. I'm still wrestling with that. For me, the application that optimizes our postal discount is our software as a package."

For Ripon Printers, the pride of Ripon, WI, IMB has not caught the fancy of its Standard Mail clients, according to Jerry Eiler, finishing technical engineer. In fact, Eiler sees many of the attractive IMB features in his current solutions.

"Since there is a lot of overhead in using full-service IMB, the returns just don't seem to justify the costs," he contends. "The Move updates come with a condition, and tracking still involves an additional fee. Besides that, use of drop ship—CoMail and CoPal are also drop ship mailings—has its own tracking reports." PI