The company
PM Solutions is a digital printing and mailing company established in 1998 when founder Ron Davidson decided to move away from traditional litho printing to pursue what he believes is a more "lucrative" developing market. Having outgrown two sites in East Calder and Hardengreen, Dalkeith, Scotland, the plant is now located in Loanhead just outside of Edinburgh. Davidson has recently purchased more land in anticipation of constructing larger purpose-built premises powered by two 50kW wind turbines.

The aim
Catering mainly for the transactional mail market, specifically for clients in the motor, debt collection, builder merchant and financial sectors, PM Solutions has always sorted its customers’ mailouts after printing. The company’s ‘soft sort’ software worked by instructing inserters to mark the post each time the postcode changed, indicating to the other machines where to offset the mail so an operator could see the change and manually separate the piles ready to be sent straight to TNT or UK Mail.

By sorting the mail into the postcode zones, PM Solutions could offer a discount to companies running large-volume jobs. They could not, however, offer the same saving on jobs of less than 4,000 items, classified by Royal Mail as low-volume and so not eligible for a mail sort discount.

"Royal Mail is very good at giving discounts, but you’ve got to jump through hoops to get them," says Davidson. "The smaller users get crucified as they can’t get the discount because they don’t have the volume."

With some companies "hanging on by their fingernails", Davidson realised that finding a way to offer a discount on the mailing of low-volume jobs could be lucrative for both him and his customers.

"The problem with mailing now is that the majority of companies are slashing their prices in a totally unsustainable way," explains Davidson. "I wanted to offer customers an opportunity to make savings on an area where they weren’t saving before and an area that I could discount in a way that wouldn’t jeopardise the business. The cost of the postage is the biggest part of any mailing so I thought it was a bit unfair that smaller runs were disqualified from any savings."

The method
Davidson’s solution came in the form of a Böwe JetStar mail sort machine, which enabled the firm to consolidate jobs of less than 4,000 to benefit from the mail sort discount – essentially ganging mailings together to get the total numbers past the 4,000 benchmark. The company has its own accounts with TNT and UK Mail and sends clients’ mail using their own docket book, retrieving the postage costs back from the customer.

"Now when we see the piles come in on any given day, we can calculate which jobs can be consolidated," says Davidson. "We can say to the customer ‘today you only have 500 letters, but I’ve got customers with several thousand so we should put them in with that’."

This means that customers who used to delay jobs to send them out with another job a couple of days later and benefit from the mail sort discount that way, no longer have to. And as any printer knows, offering the fastest turnaround time often secures the contract.

For those customers who had previously posted their mail without the mail sort discount, Davidson can offer a cheaper overall price. The saving made on one low volume job may not seem particularly significant he says, but further down the line it equates to a very worthwhile discount for companies typically running a lot of low-volume jobs.

"We work out a price on a case-by-case basis," explains Davidson. "At the moment its 20p for a Second Class stamp and that would take three days-plus to deliver the letter. I can do a two-day First Class service from 27p all the way down to 22p depending on the volume. Even if someone’s only getting a penny off their post that’s £10 per thousand that they’re saving and it all adds up over the year."

The new system also means that high-volume jobs don’t run the risk of falling foul of the ‘Mailsort 70 OCR’ scheme which PM Solutions uses. Davidson reports that in the past jobs that were only just over the 4,000 mark would often lose out on the mail sort discount due to some not meeting Royal Mail’s criteria for ‘clean’ address data.
"For the JetStar to process the addresses they must have full correct addresses with postcodes," says Davidson. "Somebody might have 4,000 letters in a job, but if 300 are faulty they won’t receive the discount. So what we do now is pair

jobs together even if they’re slightly over 4000, to make sure they still receive the discount even if the company has missed a line of the address for example."

The result
There is no doubt in Davidson’s mind that the extra business the service has brought in has justified the investment in the JetStar mail sorting machine. Although the sorter certainly doesn’t come cheap –Davidson paid over £200,000 for his – he estimates that the machine has brought in an extra £300,000 since its installation in March 2010.

Being able to offer a complete transactional mail package to all customers is invaluable in attracting customers Davidson believes. "It makes for a good relationship with the customer when you can cater for every aspect of their job, from printing to posting," says Davidson. "A customer can download a file such as an invoice to us, we would print it out on our laser printers, envelope it, sort it and then its in one of IMC’s mailing centres the next day and on the doorstep of the customer the next."

Transparency in their pricing system is also key to good customer relations, reports Davidson. For many, transactional mail and mail sorting are a confusing business so it is important to explain to people, he says, exactly how the discount you are offering them is being made.

"There are some mailing companies who can do postage for less than 19p, but they don’t tell their customers that so they can charge them more," says Davidson. "We talk to the customer and explain to them about downstream access and the costings so they see exactly what they’re getting- I make money and they save money. We’re all winners."

The verdict
Davidson has no regrets about buying his mail sort system, believing it to be a business win-win in the sense that both he and his clients benefit.

It did require extensive investment – PM Solution’s current premises were designed by Davidson and so purpose-built for the company’s needs regarding the system (the machine alone is 17m long) – and Davidson also stresses that the sorting machine requires three people to operate, so the cost of implementation was quite substantial. He’s pleased he did it, though, and so are his customers.

"The system has been so well received by the customers and they’re delighted that they’re making good savings," Davidson says. "But I’ve got to find money for the new factory we’re building and for the wind turbines we’re installing there. And of course I’m a typical Scotsman..."

Comment
How to keep customers happy is a question that will constantly play on the minds of those running a company. Much of the working day will be spent thinking about what can be done to win over new clients and retain existing ones. There are few easy answers to this, however, and the problem will not go away by just trying to squeeze a bit more out of production.

Often, when confronted with a problem, one’s thoughts turn first to the question of how to overcome it: do we need to work longer hours? Should the sales team make more calls? This step will bring some benefit, but does it solve the problem, or just cover it up?

Before diving headfirst into trying to implement a solution, there are some steps that we can explore first.
As with most parts of business, a strategy for improving performance already exists and, by employing it, a better solution may be found.

First we need to address the ‘what’, to identify exactly what the problem is. Qualifying and making sure that the problem is understood will give clarity to the next step: the ‘why’, why the problem has occured now and, also, why there is a problem in the first place. After exploring these two questions, the business will then be able to move on to the ‘how’ part, how to solve the problem.

There is one more part of this process that is worth considering: the ‘who’. Getting a group of people together to discuss the what, why and how will, more often than not, generate a solution that is more comprehensive than just one person struggling with it on their own.

PM Solutions has been able to come up with a profitable solution that enables their clients to save money and boost their margin. In this instance, it was a big commitment, requiring significant investment, but not all problems require such a response. Often, after the process of asking the what, why and how, solutions can often be easier and cheaper than first imagined.

Philip Thompson,
head of BPIF Business