Crown Commercial Service

Top tips to make greater savings on your postal services in the public sector

Postal services is often a forgotten area of spend within organisations, however, simple changes can lead to significant savings. I am passionate about post and relish the opportunity to speak to customers when they ask me how they can make greater savings on their postal goods and services and ensure they’re achieving the best possible value.

I have worked in the postal goods and services sector since 2001, when I joined a large public sector organisation to lead its postal services transformation, where I learned valuable insight into developing a postal strategy that would deliver savings and efficiencies across a multi-disciplinary organisation. I joined CCS in 2006 to head up our postal goods and services team.

Here are the key steps I recommend you take to review your current mail processes, along with my top tips for making savings, from quick wins to longer term recommendations.

1. Establish how you use postal services

Firstly, I would recommend going back to basics and looking at how you use postal services and how that relates to your business requirements. Ask yourself the following questions to build a picture of your end-to-end process:

  1. What are you trying to achieve with your postal activity?
    1. Do you need to use postal services or can you use a lower cost communication method such as e-mail or SMS for your customer and intra office mail?
  2. Where are your despatch points?
    1. How many dispatch points are there?
    2. Are these fixed or is there flexibility to centralise or reduce the number?
  3. How much mail do you send?
  4. What products and services do you use?
  5. Is speed or predictability most important?
  6. How much undelivered mail do you get returned?
  7. Is your postal activity centrally managed?
  8. Are there any statutory or policy requirements you need to consider?
  9. Do you have senior level buy-in to introduce change?

2. Quick wins for savings

There are some simple and quick steps you can take right now to start making savings in the short term. I would suggest you look at the following:

  • Reduce 1st Class mail output – there’s a common misconception that 1st Class mail must arrive the next day. In fact, it is often no faster than 2nd Class and by switching to this you can save 14% on your spend.
  • Improve the presentation of mail items – i.e. reducing the amount of handwritten mail across your organisation and ensuring the way you address mail items is correct can provide an immediate saving of 12.8%
  • Where possible, only use letter size envelopes (DL or C5) to provide a saving of 33.3% against larger sized envelope formats
  • Can your organisation undertake a level of sortation prior to collection? If your answer to this is yes, then you could achieve savings of between  7.8% and 19.69%.
  • Reduce or eliminate use of Special Delivery – Special Delivery is ideal for when you require a guaranteed next day tracked service, but what is your rationale for using this within your organisation?
    • Do you require a proof of delivery? If that is the case, then other products such as Recorded Delivery could meet your needs at a fraction of the cost.
    • If you do need a fully tracked service, do you need to pay the premium rate for this arriving before 10am? If not, guaranteed Next Day Delivery by 1pm or 5pm could work better for your organisation and help you achieve savings of approximately 64%.
  • Reduce or eliminate use of Business Response:
    • Do all customers need a reply envelope? Each Standard Business Response and Standard Freepost licence costs £95.00 per annum. Each returned 2nd Class envelope costs 39p (Standard Business Response and Freepost).
    • If your organisation requires Business Response services can you rationalise the number of licences you have to save on licence fees?
  • Reduce or rationalise use of PO Boxes – do you really need a PO Box address or multiple PO Box addresses? A PO Box licence fee ranges between £265 to £315 per annum.
  • Reduce or eliminate use of franking machines for savings of between 5p and 13p per item of mail sent. If your organisation is spending over £5,000 per annum on postal services, you could qualify for an online business account.
  • Ensure you review your current postal provider against other suppliers to achieve best value

3. Short to medium term savings

Once you’ve achieved some quick wins, it’s time to delve deeper to look at short to medium term actions you can take to improve your postal services in the public sector.

  • Develop a communications strategy, if you don’t already have one – this should focus on whether you are using the right communication channels for your target audience
  • Identify the lowest cost options for internal, customer and stakeholder communications e.g. email, SMS messaging or telephone
  • Switch to web based services, such as intranet or email communications, where legally permissible
  • Cleanse address databases – sending items to the right address first time will result in savings
  • Examine the effectiveness of your bulk mailings – are electronic or other methods of communications more suitable?
  • Review contract management processes – who manages your postal budget? Have you reviewed your usage? You might want to consider getting involved in our category board sessions and speak with other postal users to understand how they have delivered change. Get in touch to register your interest.
  • Use supplier expertise to provide solutions to your challenges
  • Rationalise mail dispatch and delivery points – by centralising dispatch points, you could take advantage of volume related discounts and reduce collection charges.
  • Centralise management and budgetary control of postal services
  • Improve forecasting to take advantage of cheaper products with longer delivery timescales
  • Consider cross departmental procurement – collaboration and aggregation of postal volumes can attract volume related discounts from suppliers. Get in touch to register your interest.
  • Explore the option of using Hybrid Mail Services – this means all your mail is securely printed, enveloped and despatched off-site. This offers a potential savings opportunity through the decrease in in-house resources required, print costs and volume related discounts. It also provides a more sustainable option by potentially reducing the carbon footprint of transporting mail.

How we’re helping customers to save on postal services

Our Postal Goods and Services framework (RM1063) is helping our public sector customers improve and achieve cashable savings on their postal output. Some examples are:

  • Chelsea & Westminster Hospital – by improving the address quality of their mail and switching mail products, the number of Did Not Attend (DNA) to clinics reduced saving the organisation circa £10,000 per day in administrative costs
  • Leeds Teaching Hospital standardised their envelopes and reduced cost from £1.09p to 51p per item
  • Collaboration of mail requirements between London boroughs has helped them achieve savings of 17%

For more information please read our full ‘Steps to Savings’ presentation within the documents section of our Postal Goods and Services framework page or get in touch for guidance from our industry experts.

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