Five years ago, individuals and businesses paid the U.S. Postal Service (USPS) $58 billion to transport 24.8 billion pounds of mail. Last year, they spent $5.8 billion more than that to mail 200 million fewer pounds.
As anyone who conducts business through the mail knows, the Postal Service's problems are mounting: Rates have increased, service has slowed and the agency's finances are in disarray. The USPS lost $676 million last year. Its troubles are so widespread that the Bush Administration created a blue-ribbon panel last December to investigate Postal Service reform. Even so, true reform is likely years away. In the meantime, we all can expect more of the same. What's a small business to do?
One company has a solution.
Mail Stream™, a 30-employee direct mail specialist located 30 miles northeast of San Francisco, has crafted a print-to-mail service philosophy based upon its expertise regarding USPS rules and prices. Other direct mailers ignore the 228-year-old lumbering elephant in the living room, but Mail Stream's knowledge of postal-rate nuances helps clients save money. In short, Mail Stream rides the elephant to customer savings and increased sales.
Streamlining a Slick Process
At the start of a project, Mail Stream counsels the client on how to design an efficient document that will guarantee the lowest possible postage rate when shipped. In Silicon Valley, this concept is called "design for manufacturability," or "DFM." Mail Stream executives keep the acronym and label what they do "design for mail."
"We want to give customers the biggest bang for their buck without taking anything away from the creative message or marketability," says Mike Sullivan, Mail Stream's business development director. "It's a complicated process. The postal service doesn't make it easy to understand."
With its highly automated machines and skilled workforce, Mail Stream prints, cuts, folds, addresses with ink jet printers and inserts--all in house. These timesaving capabilities are attractive to clients, says Mark Engelman, the company's vice president of business development. What really lures customers, he says, are savings resulting from sorting and shipping.
Mail Stream's bar coder/sorter from Stamford, Conn.-based supplier Pitney Bowes Inc. sorts mail documents to USPS specifications. The mail is combined with the company's large daily mail stream and bundled based on area code. Finally, Mail Stream trucks deliver mail to specific post offices, then each document is hand-delivered by a mail carrier.
The process helps clients save money for two main reasons. First, Mail Stream is reimbursed by the Postal Service for bar coding and presorting the mail and thus bypassing the Postal Service's large distribution centers. "We call it revenue sharing," says Greg Hollman, the company's co-owner. Second, combining the mail allows for the maximum reduced bulk rate. Mail Stream typically ships 600,000 to 800,000 pieces of mail a day, Hollman says. And because Mail Stream controls the addressing and sorting, it guarantees clients low rejection rates.
Mail Stream's process saves so much money, Engelman says, he can't believe many advertisers and distributors are willing to pay first-class rates to send mail to the Bay Area. "Those people are leaving a lot of money on the table," he says. Postage accounts for approximately 70 percent of print-to-mail costs, Hollman says, and Mail Stream consistently knocks 3 percent to 7 percent off that total.
Hollman says Mail Stream's ability to cull savings as a streamlined print-to-mail specialist has lifted the firm's sales from approximately $5 million last year to a projected $14 million this year. Remarkably, this growth has come amid economic woes in nearby Silicon Valley and a struggling national economy. "I love a down economy," Hollman says. "When we started this company in the early 1990s, people kind of shook their heads because of the recession. But I knew that everyone was concerned about saving money on their budgets and that we had a better mousetrap."
Engelman took notice. In addition to his role as vice president of business development for Mail Stream--a commission-based job--he's owner of distributorship Integrity Business Forms, Antioch, Calif. The 1-person distributorship began working with Mail Stream six years ago. Because of the relationship, Engelman says, Integrity Business Forms' sales have increased 25 percent.
"The first thing Mail Stream does is look at what you're paying for postage," Engelman says. "People are so worried about the cost of printing a piece. It's, 'Oh, we'll just pay whatever for mail. If it costs me, it costs me.' Mail Stream makes sure you get the right postage price for the right size."
One beneficiary of the alliance between Integrity Business Forms and Mail Stream is the Concord (Calif.) Police Association. Prior to using the firms to print and mail its fund-raising letters, the group used a "sleazy" fund-raising company that kept 60 percent of the profits, says Colleen Siri, the Concord Police Association's office manager.
Last year, the police association mailed 60,000 fund-raising letters that included return post cards and give-away labels that read, "We Support The Concord Police Association." Siri says she received excellent customer service and paid minimal shipping costs. "It's clear that Integrity passed those savings on to us," she says. Siri says the abundance of labels affixed to store windows and car bumpers around Concord are proof that the letter campaign was successful.
Growing in the Mailing Niche
Mail Stream was founded in 1947 as Ireland Direct Mail. In 1990, Hollman and his wife, Michelle, purchased the firm. Greg Hollman says the company generated only $40,000 in sales in 1989.
"When Greg and Michelle purchased the company, it was a small direct mailing house," Sullivan says. "They have turned it into a full direct mail company. They have made major capital investments in equipment, hardware and software. This is a company that has proven longevity, above-the-curve automation and good customer service."
The Hollmans carved out their niche in the Bay Area by embracing technology and automation early and tackling increasingly difficult jobs. Greg Hollman remembers reading an article about the future of bar coding in a trade magazine and soon investing in bar coding equipment. Mail Stream also invested early in direct impression printing. "We didn't let the customer dictate what kind of services we would offer," Hollman says.
Today, Mail Stream offers a variety of services, including full-service direct mail, bulk mail presorting, ZIP code correction and bar coding, variable data statement processing, demographic and target mailing lists, intelligent inserting, hand inserting, reprographics, ink jet addressing and cheshire labeling. The company also offers direct mail advertising and processes recurring statements and commercial billings. Its clients include utility companies, medical groups, government agencies and financial institutions.
Until three years ago, Mail Stream used an outside vendor to sort its mail. That's when Hollman completed a 4-year process of transitioning the firm into an all-out print-to-mail facility. "Sorting and transportation cost money, but we realized we could save more with the reduced postal rate," he says. To punctuate the new era, the company renamed itself Mail Stream in October 2000.
One of Mail Stream's prouder achievements came earlier this year, when it successfully completed a complicated mailing for the state of California. In California, citizens who file their taxes online must receive computer access codes in the mail from the state. Traditionally, a Utah company handled the printing of these forms. But this year, Mail Stream won the account and sent 1.8 million secure, double post card-sized, glue-welded documents to Californians. Hollman calls the order a success for both Mail Stream and the state, which had sought to keep taxpayer dollars in-state.
Aiming for Continued Improvement
Though Mail Stream's growth has been "tremendous," Hollman says, the company still can expand by targeting four key growth areas--national sales, mail sorting, high-end printing and highly targeted direct mail.
Approximately 70 percent of Mail Stream's clients are in California, Hollman says, but he and Engelman foresee a day when distributors in New Jersey or Ohio that are mailing to the West Coast will call Mail Stream. "I believe there are a lot of people like me in 1- or 2-person shops who aren't selling these services, who don't even know they can sell these services," Engelman says. "It's so important to forge these alliances. We want to reach that person on the East Coast or in the Midwest who wants to do business on the West Coast. We want to partner up with them."
Mail sorting also is a growing segment of business at Mail Stream. The firm's bar coder/sorter now runs the entire first shift and part of the second. "We'd like to have that sorter running all three shifts," Sullivan says. And with its new Komori Lithrone printer, the company plans to capture a larger share of the high-end printing market by producing posters and catalogs. This is in keeping with the company's commitment to tackle increasingly difficult jobs. "Thanks to the new printer, we're getting calls from people who wouldn't even let us in the door before," Hollman says.
In addition, Mail Stream and Canadian firm Buskro have built a machine that allows for 2-sided, high-speed variable data printing. Hollman says the machine is faster and more cost-effective than Hewlett-Packard's Indigo digital press. "The trend for the long term is more specialized, more focused, more short-run work," he says. "We're going to be able to do more jobs simultaneously with higher quality."
If only the postal service could make the same promise.
