Postal Leaders Beat the Drum for Reform

by: Al Urbanski, Senior Writer – Direct Marketing News

The United States Postal Service (USPS) recorded a loss of $740 million in this year’s third quarter versus a loss of $5.2 billion this time last year, but top agency officials told a news conference today that it is still in need of substantial legislative reform to survive.

Though losses for the first nine months amounted to $3.9 billion, CFO Joe Corbett indicated that an earlier forecast of a $6 billion loss for the year was still a possibility. “Without comprehensive reform legislation, we will continue to experience large losses,” Corbett said. “We are operating with low levels of cash, and that will worsen in the fourth quarter when we will make a $1.4 billion payment for workmen’s compensation. At that point we will have only five days of cash on hand.”

“Five days of cash in October,” added Postmaster General Patrick Donahoe, “is as much of a crisis as we’ve been in.”

Donahoe hailed growth in package and standard mail revenues during the quarter, but continued to bang the drum for reform. “I’m pleased with the progress we’ve seen, but we’ve got to get the legislation finished,” he said.

On one score, at least, Donahoe’s idea of reform does not jibe with that of direct mailers. Senators Tom Carper (D-DE) and Tom Coburn (R-OK), included a provision in their new bill that would remove the Consumer Price Index rate cap and give control over rates back to the USPS. This raises the specter of an exigent rate increase that could severely hamper the activities of business mailers.

Donahoe says the USPS needs rate-setting power in order to react to marketplace conditions. “We’ve been on the record saying that setting prices and the timing of those prices should be done by the [postal] board of governors,” Donahoe said. “We think that it would be very effective to act as an after-the-fact review, like a public utility. Speed is the name of the game in this business world and that’s what we need.”

Corbett noted improved operating numbers for the quarter owed much to an improvement in interest rates that reduced expenses by $918 million compared to last year. He also pointed out that a $7.8 billion decrease in losses for the nine months ending June 30 could be explained by USPS making only one $5.6 billion healthcare fund prepayment this year versus two in 2012.

Still, both Corbett and Donahoe expressed optimism that new revenue streams and cost-cutting measures were moving forward in the face of a steady decline in First-Class Mail. Revenue from the USPS’ largest and most profitable mail segment declined by 1% on a 3.4% volume dip, but shipping and package revenue increased 8.8% on a 7.1% volume increase and standard mail receipts were up 3%.

Cost reductions in the quarter came from the consolidation of 104 processing facilities reduced operating hours at 7,397 post offices, and more than 1,000 postal routes consolidated or reduced.

“We expect some stability, contingent on a healthy economy,” Corbett said. “Assuming GDP will grow, the investment in capital goods will grow and employment levels will improve. The package business is tied to that and e-commerce. But the decline in First-Class will continue and that’s three times greater than any other decrease.”

As for reform, Donahoe and Corbett may still be waiting for legislative salvation as the year comes to a close. Senate and House members are expected to hammer out differences in their proposals before either bill is brought to a vote. With healthcare bills expected to dominate fall sessions of Congress, postal issues are likely to be back-burnered until 2014.

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The Zip Code Turns 50!

It took an ad campaign to sell Americans on its value

From Time.com – By Josh Sanburn @joshsanburnJuly 01, 20130

1963 was a momentous year in America: President John F. Kennedy was assassinated, Martin Luther King Jr. delivered his “I Have a Dream” speech at the March on Washington and, somewhat less heralded by all but the most fervent postal historians, the ZIP code was introduced.

Since its founding in 1775, the post office relied on hand sorting based on local addresses to get mail where it was supposed to go. A piece of mail often went through 10 postal workers before making it to its recipient. But by the 1940s, the then-named Post Office Department realized its sorting system was not keeping pace with the growing population of the country it served.

In 1943, as a way to streamline mail sorting for the biggest American cities, the post office began placing one and two digit numbers between the city and the state to help clerks wade through the increasing volume of mail, which was then around 20 million pieces per year.

By the early 1960s, the post-war population boom and continued western growth led to even greater use of the postal service. Mail volume doubled between 1943 and 1962, putting further pressure on the post office to sort mail efficiently. On July 1, 1963, on the recommendation of an internal advisory board, the post office introduced the Zone Improvement Plan Code, which divided the entire country into coded delivery areas. The first two or three numbers told carriers to which states mail was being sent. More populous regions like New York were given five digit numbers starting with 10-14, for example, whereas less populous areas like Montana received five-digit numbers. These new ZIP codes helped the post office better pinpoint where mail was headed while allowing it to expand machine-based sorting systems that could quickly read digits. But many Americans were reluctant to adopt the new system.

“People were concerned they were being turned into numbers,” says Jennifer Lynch, a U.S. Postal Service historian. “They thought it was depersonalizing them.”

To get people on board, the post office began an extensive marketing campaign centered around Mr. ZIP, a friendly looking cartoon mail carrier. A folk group called The Swingin’ Six sang about ZIP Code usage in a lengthy public service announcement video. “Put ZIP in your mail” ran in magazines across the country, including TIME, while a series of short TV ads showed postal workers drowning in a sea of letters and used slogans like “Only you can put ZIP in your postal system.”

Evidently the ads were persuasive. In 1966, three years after ZIP Codes were introduced, 50% of Americans said they used ZIP Codes. By 1969, 83% said they did, according to a 1969 study conducted by Roper Research Associates.

In 1983, the post office expanded the ZIP Code to nine digits to identify which side of the street the mail was being delivered to, as well as particular office buildings. Today, ZIP codes are translated into “automation-readable barcodes” that are placed on pieces of mail when sorted and contain 31 digits of information that tell the post office everything from whether it was presorted, if the mail is first-class or a periodical, and even which business sent it. It also allows the U.S.P.S. to track virtually every letter and package around the country.

The post office estimates that increased efficiencies for both large mailers and the postal service itself add almost $10 billion of value to the U.S. economy a year.

Today, 50 years after the ZIP code debuted, the postal service’s Office of the Inspector General is recommending that they be linked to digital geographic information systems based on latitude and longitude to further increase delivery accuracy. This time, however, Mr. ZIP will stay in retirement.

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Tuesday, July 2nd, 2013 Going Postal: News You Need No Comments

Making Drip Marketing Work for You

One of the topics we are hearing a lot about these days is drip marketing. Drip marketing is the practice of conveying your message by sending gentle marketing touches over time rather than trying to hit your customers or prospects with a single offer all at once. Especially when paired with cross-media marketing, the results can knock it out of the park.
Here’s how it works.

One marketer wanted to increase sales to affluent customers, so working closely with its print production and marketing partners, it devised a three-step, cross-channel marketing campaign that would build name recognition, develop trust, and bring in sales.

In its first phase, the company sent an eye-catching, high-gloss trifold mailer that would grab attention inside the mailbox. Once recipients opened the mailer, they were greeted with name personalization, highly relevant text, and a personalized URL that allowed them to enter an email address and download a free, high-value white paper, as well as fill out an optional survey giving the marketer more insight into their individual needs.

The second mailing went only to people who did not respond to the first. This phase capitalized upon the name recognition built by the initial contact, but the styling of the mailer was tweaked to differentiate the two. Like the first mailing, the piece included a personalized URL that allowed recipients to download a white paper and fill out an optional survey.

After the second mailing, the marketer was swamped with responses — so much so that the third mailing was delayed for several weeks so that the response team could keep up.

In the third phase, the names of those who responded to the first two mailings were removed from the list. For this mailer, the marketer used an invitation-style A7 envelope with full-color brochure insert, personalized note, and personalized URL. To sweeten the pot, respondents were offered the chance to win a sporting package or high-end coffee brewing system.

The results? The company exceeded its sales goals by 400% and achieved more than 1400% ROI!
What made this program such a success? This marketer understood that, especially when mailing to a new list and prospect base, sometimes it takes more than one contact to build name recognition and trust. Each piece builds upon the next, and in the end, you gain results not possible with a single marketing touch.
Want to tap into the power of drip marketing to reach new customers and cross-sell to existing ones? Give us call, 215.464.0111 OR EMAIL LFormica@fmidm.com.

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