Mailing/Fulfillment - Postal Trends

Offering a money-back guarantee for major corporations to try out direct mail campaigns has not proven successful for the U.S. Postal Service. It launched the “Mail Works Guarantee” trial in June 2011 with the hope of giving cast-iron proof to large potential customers that direct marketing through the mail brings a good return on investment for the average marketing dollar.

But alerting regulators to the end of the trial, USPS conceded that its offer was not taken up by any suitable corporations.

USPS had been hoping for as many as 16 major advertisers...those firms that spend at least $250 million a year

The (Postal Service) review by the nonprofit National Academy of Public Administration will analyze the benefits of restoring the agency’s financial health by using a “hybrid” model, which would farm out to the private sector postal operations other than the last delivery mile. A letter carrier would still drive or walk that last part, dropping letters and packages in mailboxes.

The idea of taking postal operations private is popular in conservative circles but will be a non-starter in others. It is staunchly opposed by congressional Democrats and postal unions, which stand to lose tens of thousands of members.

The U.S. Postal Service has said it will adopt above-inflation rate increases for its loss-making Standard Mail Flats service each year up to 2016. The move is prompted by the Postal Regulatory Commission’s 2010 order that rates should rise towards full cost coverage.

To make the Flats rate increases without violating its inflation-based price cap, USPS said it would be unable to increase rates for other Standard Mail services by quite as much as it would like.

One key reason USPS has shied away from increasing Standard Mail Flats rates…it would push catalog publishers into finding alternative distribution channels

I’ve always been a proponent of clean mailing lists. Why would you want to ship your or a client’s direct mail piece or catalog to anyone that is not remotely interested? So, as we approach the New Year and resolutions are bound to be made:

The U.S. Postal Service, at the urging of publishers, is planning to sell magazine subscriptions on its website and to promote them at post offices. “The USPS is moving forward on a plan to offer magazine subscriptions for sale on usps.com,” says Idealliance’s summary of the recent Mailers’ Technical Advisory Committee (MTAC) meeting, a joint USPS-mailers group.

Postal officials’ interest in promoting magazines may seem odd in light of the Postal Service’s claim that the Periodicals class is its most unprofitable type of mail. But that supposed unprofitability is the result of allocations for fixed costs, some questionable cost accounting,

Direct mail is still considered the marketing channel of choice by a vast number of marketers across verticals ranging from telecom and utilities to nonprofit, publishing and financial services. According to the Direct Marketing Association's “2012 Response Rate Report,” the rates for letter-sized direct mail (3.4 percent) were 30 times higher than those for email (0.12 percent). The belief that direct mail is dead or dying will have to be suspended for the time being.

USPS released preliminary financial results late yesterday showing net income of $61 million last month, the first month of Fiscal Year 2013, versus a budgeted loss of $244 million and last year's loss of $139 million.

If not for a $467 million charge for prefunded retiree health benefits, the agency's net would have been $528 million—a profit margin of more than eight percent on revenues of $6.03 million.

Those prepayments have been likened to an interest-free loan to the federal treasury that are designed to obscure the true size of the federal budget deficit.

The thrill of running to check the mailbox will not be going away anytime soon. With the holidays upon us, it is the perfect time for organizations to use direct mail to reach out to consumers and form a connection. “The Big Thank You” campaign of The Bert Show in Atlanta, provides the perfect example of how moving the gesture of personalized mail can be.

While the Hostess Twinkie may not be as central to the U.S. economy as the mail, Postmaster General Patrick Donahoe sees uncomfortable parallels of iconic products within unworkable organizational structures. Like Hostess Brands Inc., where a labor impasse prompted the snack-food maker’s liquidation, the Postal Service, with 28 times Hostess’s workforce of 18,000, has been squeezed by labor costs and changing consumer tastes to the brink of extinction.

The post office’s insolvency is less imminent while no less ominous, with Donahoe projecting that the service expects to run out of cash in October without intervention from Congress.

The stakes are high for our industry, with 65 percent of all print distributed through the USPS system. What would happen if the system shuts down? Within the next year, that is a real possibility and we must not continue to ignore it. Postal reform means different things to different people, and the ticking we hear is either the countdown of the clock…or the countdown of a bomb that could explode our industry.