Mention the words "quality standard for mail production" (QMP) to the mailing house sector and chances are you would be met with a mixture of support and criticism. But Royal Mail's decision to axe the standard in favour of its own plans (news, May) has prompted a strong reaction from the industry, with many concerned that the loss of the scheme will have financial repercussions.
Whatever its shortcomings, QMP was a scheme that gave direct mailers industry-wide some guarantee of the quality of work they could expect from their mailing house. So how will QMP's demise hit mailing houses, and will Royal Mail's planned replacement be up to the task?
Robin Skinner, group sales and marketing director at 4DM Group, questions whether the withdrawal of QMP will have any effect on quality standards in mailing houses. "The QMP standards should tie in with how a well-organised and efficient mailing house needs to operate, and as such there would be no excuse for standards to drop," he says. "Most clients these days demand the highest level of quality and procedures from their mailing suppliers, and if you have worked hard to achieve a standard, it would be silly to let it drop."
Opinions differ over the effectiveness of the QMP scheme. Peter Frings, managing director of Target Direct Print, says QMP was "always overrated as a quality accreditation". The fact that a mailing house had the accreditation often had little to do with its own internal quality standards, he says. "From my perspective, it was a cosy trade rubberstamp that virtually every mailing house had, but was pretty valueless," says Frings.
Financial impact
Grant Bloomfield, managing director of DPS Direct Mail, is also dismissive. "It's about time QMP was axed," he says. "It has little relevance to the direct marketing sector and falls short on many of its accreditation points."
But despite this low opinion of the scheme Bloomfield feels its demise will have huge financial implications for many mailing houses that rely heavily on commission payments that QMP accreditation allowed them to earn from Royal Mail. "Unless Royal Mail replaces it with a similarly 'paying' initiative, I believe it will push many companies over the edge and out of business," he says.
Elsewhere, others are more supportive. Yolanda Noble, chief executive officer of Corporate Mailing Matters, which recently merged with dsi Group, says the QMP audit process was more rigorous than was sometimes given credit. "One needs to know a bit about the product and have a certain amount of quality control that a purely volume-based scheme cannot cover off," she says.
And some argue that while there were issues with QMP, as there are with any quality standard, it was at least based on the right approach. "It was about enhancing standards and the promotional industry recognised these standards and sought them out when selecting suppliers, so in that respect QMP did its job," says David Higham, divisional managing director of TNT Post Access Services.
Replacement scheme
But what will replace QMP? Royal Mail is working on an alternative but remains tight-lipped. "The firm will continue to support quality in the mailing industry. Royal Mail consulted widely before making this decision," said a Royal Mail spokesman. "QMP has played an important role, but we are developing a new scheme."
This proposal is believed to be volume-based which worries some mailing houses. Yolanda Noble of Corporate Mailing Matters believes there is a clear conflict between a quality scheme and one that rewards volume. "It's not a good step to have a scheme that concentrates on rewards for volume and does not follow market trends," she says.
Target Direct's Frings questions whether Royal Mail would be allowed to offer volume-based discounts to mailing houses. Postcomm, says Frings, may see this as anti-competitive behaviour. Indeed, TNT Post's Higham says the company will be talking to the regulator about Royal Mail's plans. "This can't just be something through which it can channel alternative discounts," says Higham. "We have a price control which licenses the amount of headroom, and if Royal Mail wants to pass discounts through a separate route, those discounts need to be taken into account when looking at the headroom."
However, a spokesperson from Postcomm says: "This is not something for us to get involved with as it is Royal Mail's business. We are aware of the changes and are assessing the process to see how it goes."
Frings also argues that in a deregulated world, where mailing houses are preparing mail for several different operators, including the downstream access operators, to have a standard based on presenting it for just one of them is inappropriate.
"Times have moved on," he says. "The reality is that the standards for presentation of mail for the downstream access operators are massively higher than the standards for how you have to present mail for Royal Mail's retail service. Royal Mail's decision to get out of QMP was probably partly based on that. It is no longer a monopoly supplier, so it is not appropriate now for it to set the quality standard."
Howard Hunt Group was QMP-accredited before the scheme closed. Its sales director, Lorenzo Vasini, says the perception that the new Royal Mail scheme is purely volume-based is not the complete picture. "It's a three-tier proposal," he says. "The bottom tier is about volume, but if you want to achieve the higher tiers, and get more commission for your business, you need to promote direct mail as a medium."
Whatever the final make-up of Royal Mail's scheme, Vasini believes the mailing house sector needs some form of standard, especially in light of Secretary of State for Environment, Food and Rural Affairs David Miliband's comments on the industry. "We are going to come f under so much pressure soon, and if we can't prove we have some kind of quality standard that is common throughout the industry we won't have a leg to stand on," Vasini says.
He adds that the Direct Marketing Association (DMA) should take a lead in creating and promoting a replacement standard. While there is undoubtedly a role for trade associations to uphold quality standards vigorously, some believe the DMA is in an invidious position in trying to do so.
"Trade associations are funded by members of the trade, so they are in a difficult position when they start to apply standards because these people are paying their membership fees. Most industry bodies that are serious about quality recognise it probably has to be done by someone external to the industry but possibly funded collectively by the industry," says Frings.
Robert Keitch, director of media channel development and environmental affairs at the DMA, says that given the direct marketing industry's "low-hanging fruit status" with policymakers, quality is core to the DMA's approach. It has, says Keitch, invested "a huge amount of time and resource" in attempting to work with Royal Mail on the development of its new scheme. Keitch, like many, is eager to see what Royal Mail comes up with.
"There are some big assumptions flying round," says Keitch. "From Royal Mail's point of view a good part of this will concern presentation standards rather than quality standards, but Royal Mail cannot afford to leave quality standards to one side and say: 'They are not our concern'. It has to be as involved in that process as much as anyone."
While Royal Mail finalises its plans, mailing houses, downstream access providers and client-side marketers can only watch and wait. A shake-out, particularly among smaller mailing houses, seems almost inevitable. But unless Royal Mail is operating in some form of vacuum, given the current status of direct mail among policymakers and opinion-formers, it seems inconceivable that whatever scheme it comes up with to replace QMP will not have a strong element of quality control. But only time will tell.
POWER POINTS
- Royal Mail is working on a scheme to replace its quality standard for mail production
- Many mailing houses earned commission from Royal Mail through the QMP system
- There is concern that a volume-based scheme will not offer a high enough level of quality control
NEED TO KNOW - THE FUTURE FOR MAILING HOUSES
DAVID ROBOTTOM, director, D&S Consultants
There will be two types of mailing house in the future: the 'super' mailing house and the small, local/regional player because of this sector's continued consolidation. It is still over capacity and it is difficult to see how medium-sized mailing houses will survive. They will downsize, acquire or merge with others to create 'super' mailing houses.
These 'super' mailing houses will work with all operators and handle response from all media, including email, web, paper, telephone and DRTV, providing a seamless service. In most instances, they will have a digital print capability. The drive will be to bring added value to clients and increase margins. They will have environmental accreditation, operate plants that are carbon efficient, and work with clients on their environmental activity.
The smaller mailing houses will concentrate on niche areas, providing a personal local service to clients, predominantly small- and medium-sized enterprises. The sector will probably halve in number over the next five years.
ROBOTTOM'S PREDICTIONS:
- More consolidation among mailing houses
- Larger mailing houses will be able to handle multi-media contact with
customers
- They will need environmental accreditation
JOHN RICKETTS, managing director, Buhrs UK
The ongoing challenge for mailing houses is how to stay competitive on price, but the main challenge is innovation. The two are linked; if a mailing house only offers a commodity product or service, then they will be open to a price war. How much innovation is needed depends on the mailing house and client requirements. Do they want a new product or improved service level agreements?
With digital print volumes growing every year, the printer now offers customers more flexibility, complexity and time to make last minute changes to products. So mailing houses will need to offer greater flexibility and more complex products.
Mailing houses will also need to think more like manufacturers and become competent in the use of manufacturing techniques such as Six Sigma and Lean Manufacturing. Management information is key, enabling you to know, for example, that the mailing was sent out, when a particular machine produced 100,000 mail pieces and that another machine is only running at 50 per cent capacity,
RICKETTS' PREDICTIONS:
- Innovation is key for mailing house survival
- They will need to adopt manufacturing sector techniques
- Provision of management information is vital
CLIENT QUIZ
- How important are mailing house standards?
- Which mailing house do you use?
- Is it important for it to be part of an accreditation scheme?
- Are you concerned about Royal Mail's proposal?
GILL SAUNDERS, customer fulfilment manager, AA Insurance Services
We have a print roster, but our main contract is with K2 Direct, based in Manchester.
It's important for us to work with companies that have the ISO and Fire Safety Engineering (FSE) accreditations. The ISO 9002 stands for product, process quality and good customer service. The ISO 14001 means that a company has set out its environmental management system and adopted environmentally friendly practices. The FSE accreditation means that paper is bought from managed forest suppliers.
We're not particularly concerned. We have taken steps in the past to meet Royal Mail's presentation criteria, which have been of some financial benefit to us, so we do not feel that this will limit us in any way. Royal Mail is rising to the challenge of the competition and this reward scheme can only be part of an ongoing, open relationship with our mailing house.
ROGER PERRY, production director, Illuminate (print management)
Howard Hunt and SR Communications are the main ones.
Yes, although probably less so now than in the days before you had all the downstream access suppliers. The fact that mailing houses were accredited gave you confidence that they had a certain level of knowledge and that they were putting something back into the postal system.
Until we see what Royal Mail is going to come up with, I don't know if it will be good or bad. But I don't think a scheme that rewards purely on volume and the way things are presented would get past the regulator because Royal Mail can't be seen to be gaining an advantage. Any scheme will have to be approached from a training or quality angle rather than on discounts.