When digital advertising gained momentum and the economy was struggling, many direct mail marketing companies started to look for other sources to utilize their infrastructure because their marketing budgets were reduced.
One of the easiest options they could look for was transactional communication space. These marketing companies compared their equipment, workflows, suppliers, employees, and USPS knowledge to ones who needed transactional mailing and many identified that the high jump into transactional mail was not great.
Meanwhile, most companies realized that even though transactional mail looks similar to direct mail, follows the same process, but it’s the fact that it is not direct mail.
Transactional mail has its own unique trick than the apparent cursory review of the print, insert, and mail workflow.
Though there are many differences between transactional mail and direct mail, the major ones include:
- Project-based vs Fulfillment
Direct mail jobs are usually project-based and have specific requirements that need to be met within a set timeframe. Transactional mail, on the other hand, is a regular process that occurs on a daily, weekly, or monthly basis and follows the same business rules and procedures each time.
Direct mail data files are often processed manually using the data processing stages, whereas transactional mail files are automated, meaning that the system can handle the files without any human involvement. These files are automated from file receipt to print queue. However, this automation requires more time and effort to set up and needs an efficient system to ensure that everything runs smoothly.
- Mail Piece Integrity
When creating direct mail, the focus is usually on the accuracy of the data rather than the quality of the printing and mailing process provided by direct mail printing companies. In fact, where direct mail is a 100% pricing option, it is innate in transactional mail.
Mail piece integrity is essential to ensure that the right documents are placed in the right envelopes. It is the least complex and costly method that can be achieved through manual tracking of piece counts reconciliations once the job is inserted.
High-level integrity is achieved by using barcodes and photocells to track each document’s progress through the inserting process. This helps to ensure that all documents are correct and accounted for.
If there is an error in the mailing process, such as a wrong document in an envelope, the piece must be destroyed, and a new one must be printed and mailed. To prevent human error, many transactional mailers use an automated reprint process that identifies any pieces that were not inserted correctly and create a new file to be printed and mailed.
- Direct Labor
Direct mail campaign companies often hire temporary employees to manage their workforce since production volumes and schedules can be unpredictable. Temporary employees are seen as a good fit for direct mail because the quality standards are well-known and understood.
However, in transactional mail, where precision and accuracy are crucial, temporary employees are usually not used because they may not have the same level of investment in the work. Full-time employees are preferred because they are more committed and reliable.
But, having full-time employees also presents challenges, such as labor management during slow times and at extremely busy times.
Pricing for direct marketing jobs offered by direct mail campaign services providers is usually based on a la carte or on individual services, while transactional mail jobs are priced as a package that includes data processing and basic mailing materials such as one simple sheet with a reply envelope. Additional services like more pages or color would be add-on costs.
The most significant difference in pricing between the two is the postage cost. For direct mail, the cost is based on each file’s saturation and is determined by presort software. In simple terms, the postage cost is finalized by the individual file saturation.
For transactional mail, the postage cost is a fixed rate per piece and guaranteed. This is because it’s too difficult to track and presort each individual transactional mail file, and the mailing company in the USA don’t have enough volume and saturation to qualify for postal discounts. Instead, most mailers use third-party presort services that offer fixed-piece pricing to the mailers.
- Service-Level Agreement
When it comes to direct mail, we create a schedule for our customers and they must meet certain deadlines. The schedule usually takes about 7 to 10 days from when we receive their file to when it gets mailed. This allows us to plan ahead and reschedule as needed.
However, with transactional mail, customers often demand a 24-hour turnaround time and they don’t always provide us with volume information in advance. This means we have to be prepared to handle any volume that comes our way. While some mailers set volume boundaries for larger customers, it’s important to have real-time reporting of incoming volume and batching jobs efficiently to meet service-level agreements (SLAs).
- Working Capital Requirements
In direct marketing, companies usually collect all postage deposits before sending out a job. This has reduced the working capital requirements as direct mailers don’t have to face any postage for the audience. This way, they don’t need to spend their own capital on postage for their clients.
In transactional mail, it’s more complicated. Many transactional mailers require a 45-day postage deposit upfront for a certain period of time, but with days sales outstanding (DSOs) customers take longer to pay their bills up to 45 or 60 days after the invoice date (10-15 days after month-end), this can leave transactional mailers fronting the cost of postage for a long time.
Even though the differences seem overwhelming, the current technology, software, and equipment in today’s market provide solutions to everything mentioned. Moreover, direct mail marketing companies need to be aware of these challenges, they have most of the key pieces and infrastructure that are required to make the transition from direct mail to transactional communication i.e., transactional mail which is more than half the battle.