Postal Operations

Purpose: Explain USPS mail classes, discounts, and postal optimization for direct mail.

Overview

Postage is one of the largest costs in direct mail (often 30-50% of total campaign cost). Understanding postal operations and optimization strategies is essential for cost-effective campaigns.

USPS Mail Classes

Marketing Mail (formerly Standard Mail)

The primary class for direct mail marketing.

First-Class Mail

Premium service for time-sensitive mail.

Periodicals

For magazines and newspapers.

Bound Printed Matter

For catalogs and books.

Postal Discounts

USPS offers discounts for mailers who do work that would otherwise be done by the Postal Service.

Presort Discounts

Presort means sorting mail by ZIP code/destination before presenting to USPS.

The more you sort, the less USPS has to sort, the more you save.

Automation Discounts

Automation-compatible mail can be processed by USPS machines without human handling.

Requirements:

• Readable barcode (IMb - Intelligent Mail barcode)
• Standard dimensions and thickness
• Machinable format

Discount: Significant savings over non-automated mail

Destination Entry Discounts

Bypassing parts of the USPS network by delivering mail closer to final destination.

ORIGIN ENTRY (lowest discount)
Mail enters at local post office
    │
    ▼
NDC ENTRY (Network Distribution Center)
Mail delivered to regional NDC
    │
    ▼
SCF ENTRY (Sectional Center Facility)
Mail delivered to sectional facility
    │
    ▼
DDU ENTRY (Destination Delivery Unit)
Mail delivered to local delivery unit (highest discount)

2025 Postal Changes (Important)

Effective July 2025, USPS made significant changes:

• NDC discounts eliminated for Marketing Mail, Periodicals, Bound Printed Matter
• SCF discounts reduced by approximately 30%
• Strategy shift: Mailers should maximize SCF entry to preserve remaining discounts

Impact: Higher postage costs; increased importance of postal optimization

Postal Facilities

NDC (Network Distribution Center)

Large regional facilities that serve as hubs for mail processing and distribution.

• Function: Centralized processing for geographic areas
• Volume: High-volume automated processing
• Coverage: Each NDC serves multiple states/regions

SCF (Sectional Center Facility)

Facilities serving specific 3-digit ZIP code areas.

• Function: Sort and distribute mail within ZIP prefix area
• Relationship: Receives mail from NDCs, sends to local offices
• Entry point: Key destination entry opportunity

DDU (Destination Delivery Unit)

Local post offices that handle final delivery.

• Function: Last-mile delivery
• Coverage: Serves specific carrier routes
• Entry: Highest discount but most logistically complex

Mail Piece Design

Format Types

Automation Requirements

To qualify for automation discounts:

Letters:

• Minimum: 3.5“ × 5“
• Maximum: 6.125“ × 11.5“
• Thickness: 0.007“ to 0.25“
• Must have readable barcode

Flats:

• Minimum: 6.125“ × 11.5“ (larger than letter max)
• Maximum: 12“ × 15“
• Thickness: up to 0.75“

Postcards:

• Minimum: 3.5“ × 5“
• Maximum: 4.25“ × 6“
• Thickness: 0.007“ to 0.016“

Commingling

Commingling combines mail from multiple mailers to achieve higher presort densities and better discounts.

How It Works

Mailer A: 50,000 pieces ─┐
Mailer B: 30,000 pieces ─┼──▶ Combined: 130,000 pieces ──▶ Better presort density
Mailer C: 50,000 pieces ─┘                                  Higher discounts

Benefits

• Smaller mailers access discounts normally requiring higher volumes
• Better postal rates through combined density
• Professional postal optimization

Providers

• Large service bureaus
• Mail consolidators
• Postal optimization specialists

Postal Optimization Strategies

1. Maximize Automation

• Design mail pieces to automation specs
• Use Intelligent Mail barcode (IMb)
• Avoid dimensional issues

2. Presort to Deepest Level

• Work with service bureau to maximize presort depth
• Consider commingling for small volumes

3. Strategic Entry Points

• Evaluate SCF vs. DDU entry based on volume and geography
• Consider drop shipping to multiple entry points

4. Address Quality

• CASS certification required
• NCOA processing for current addresses
• DPV validation to avoid undeliverable addresses

5. Clean Lists

• Remove duplicates (merge/purge)
• Suppress deceased, moved, DMA pander
• Validate addresses before mailing

Key Terms

Related Documentation

• Direct Mail Fundamentals - Industry overview
• Service Bureau Operations - Merge/purge and production
• Path2Acquisition Flow - Where postal fits in campaign flow
• Glossary - Term definitions