In the first of our guest blogs, James Shand catches up with Paul Brough of Brough Consulting, previously CEO of Opus Trust in Leicester to hear his views on Postal Services in the UK. Postal services is often the greater part of the cost for transactional mailings and can contribute significantly to the overall end-to-end solutions for delivering cost-effective communications.
James Shand: How many years have you been in the Customer Communications and Print Industry?
Paul Brough: After a successful career in Production Management working for various engineering companies, I joined Royal Mail Group in their Electronic Services division 23 years ago this year.
I stayed at Royal Mail for 5 years and then a Joint Venture was formed with Opus Trust Marketing (OTM) where I stayed for a further 16 years.
JS: What were your responsibilities during your time at OTM?
PB: I started out in production management at Royal Mail moving to head up the Client Services team at the OTM Leicester site, focussing on transactional mail. I was responsible for all their customers at the time such as Royal Mail, BT, Post Office and some large financial organisations including Banks and Pensions Providers.
I set up a new postal services division from scratch within the business which now processes tens of millions of mailpacks per year. I worked closely with Royal Mail over many years helping them implement the new Mailmark® service being the first to go live out of all providers.
Finally, I became CEO over the last 5 years of my tenure, growing the business from £15m to £26.4m.
JS: Tell us about Brough Consulting?
PB: I formed Brough Consulting in 2018 as I believe there is a lack of independent advice for customers who are reviewing and selecting their end to end communications providers. I have forged relationships with leading industry directors and companies in the marketplace such as TriPartum.
I recognise I cannot provide this single-handedly, and that is why my partners cover a broad spectrum of services such as document design, composition, data processing, digital services and one to one messaging systems. My specialisms are print, e-services, and postal services.
JS: How do you keep up to date with the Postal Industry?
PB: I have been a Non-Executive Director of the Mail Users’ Association (MUA) for four years and member of it for nearly ten years. The MUA is an independent organisation which seeks to influence and advise the postal services industry. This is done through lobbying government, unions, Ofcom and Royal Mail and working with other relevant groups across the sector. I am heavily involved with this group and we believe we have created both opportunity and influenced great changes to the benefit of the whole postal supply chain through our efforts.
I also currently sit on the Royal Mail Letters Advisory Board (LAB) as a representative of the MUA, a forum hosted by Stephen Agar, MD of Royal Mail Letters. This again is a key part of how change is managed and driven by the major mail provider in the UK.
I was a board member of the Royal Mail Strategic Mailing Partnership for 6 years, this board focussed on mail producers and how the industry could grow and benefit if we all worked together.
JS: How do you help the customer make savings on Postal Services?
PB: My knowledge of the wide range of postal services ensures that we find the most competitive rate available, secured through my relationships with the main Downstream Access (DSA) providers such as UK Mail and The Delivery Group (Secured Mail). Then we look at a number of areas:-
1. Do the existing document and pack designs attract high postage rates?
The most basic example of this is where it is still surprising to see how many customers use C4 size packs when C5 production can be as much as 30p cheaper in some cases.
Other factors are quality of data and machine-readability to ensure that that the documents are addressed to Royal Mail’s requirements.
With OCR and Mailmark®, there must be clear zones around the address block, barcode and on the envelope.
2. Can the print provider produce mail packs that access the most competitive rates?
Mailmark® attracts the lowest postal rates and should be considered where the print run meets the criteria (min volumes, data quality and format).
Where the print provider is able to merge streams together to maximise run sizes this will attract discounts for pre-sortation.
Addressing standards is a key factor and must meet all of the correct address line elements in the agreed format.
3. How can we make changes to reduce postal costs?
Where mailpacks are produced outside the tolerances of the specifications, surcharges may be applied, and we seek to eradicate or minimise the risk of these being applied by attending to every detail of the document and pack design.
Therefore, the initial review includes obtaining samples of all documents and then understanding how many print streams there are, volume per stream, frequency, format, current service used, current provider(s) and review of data sets.
The next stage is understanding the print provider’s capabilities, if they can pre-sort mail, can they produce Mailmark®, do they have colour print facilities to enable merging of print runs, what formats can be produced (DL, C5, C4, booklets)? Their location may be another factor when looking at postal rates from DSA providers.
JS: Are there any other ways of making postal savings?
PB: Yes, there are a couple of areas depending on the customer type and willingness to make document changes. For example:-
1. VAT savings for charities and financial organisations.
With DSA the postal rate is made up of two parts:-
Access charge – this is the Royal Mail price for final delivery of the mailpack.
DSA charge – this is the charge made by the DSA provider for collection and onward delivery to Royal Mail.
Typically, the bulk of the charge, around 95%, is the Royal Mail access charge and the remainder DSA. By setting up an ‘Agency Agreement’ the access charge can be charged at zero VAT. We help our customers set up these arrangements in the best way to reduce their VAT costs.
2. Incentive schemes
As UK postal volumes have reduced by at least 5% per year and around 7% in the last year, Royal Mail set up incentive schemes for Advertising Mail to encourage customers to use direct mail. Advertising Mail makes up 31% of UK letter volumes and volumes have been hit by digital substitution, economic uncertainty and the effects of GDPR. These schemes were a good start in reducing costs for customers and making some of them choose mail again over other channels.
Royal Mail then introduced a scheme for transactional mail users producing Business Mail. This makes up 60% of UK letter volumes and has suffered the biggest price increases over the last few years despite volumes being in decline due to a drive to digital.
We have set up applications to qualify for the Business Mail ‘Testing and Innovation Scheme’ where up to 30% discounts can be applied for a 6-month period and in some cases further discounts for up to 12 months. This involves a test using mail for a purpose not tried before or to test innovative changes to existing mail to improve its performance. For example – this could be a company testing changes to the format of a document in order to reduce customer queries through call centre traffic.
There is an approval process with Royal Mail and Brough Consulting take on this process on behalf of our customers to provide a seamless service. As part of our initial review for postal cost reductions we consider the incentive options available to maximise savings from the beginning of the process. Working with TriPartum who may already be reviewing the end-to-end document process, we add further value by considering the postal discount options available concurrently.
JS: Do you have an example of what value of postal savings can be delivered?
PB: I have recently reviewed a major IT provider’s application and postal profile and identified six figure savings per year by changes which also included switching provider.
Savings obviously depend on a number of factors, some of which we have discussed, however, I have not yet come across an operation or customer where savings cannot be found. One simple change can result in considerable savings.
There is no doubt that there are opportunities for organisations to reduce their operational costs by investigating and reviewing their postal requirements. This is just a part of the overall opportunity in reviewing your end-to-end customer communications strategy to enhance the customer experience and save further operational cost.