postage increase
Pay your taxes, then get ready to pay more postage
Get out the erasers and prepare to rewrite that marketing budget because the USPS made it official today that the rates for their market dominant services will be increasing as of April 17, 2011. Perfect timing, everyone will already be upset over the amount of money they or their company have to fork over to Uncle Sam and then BAM!, a little salt in the wound courtesy of the USPS. Do not be too alarmed however, the average of the increase is a mere 1.741%. We have broken down the new rates by First Class Mail (1 oz pieces) and Standard Mail (under 3.3 ounces) and have come to some interesting conclusions.
First was that the USPS either has gained quite a bit of efficiency regarding Flat processing or they realized they came down a little heavy with the increases last go around. In either case the current increase for Flats averaged only .38% across First Class, Standard, and Nonprofit. The average increase for First Flats was actually -.12% or better put the average cost is less than it was 2 years ago. It appears that the increases is minimal across all of the automation categories, which leaves the non-auto categories bearing the brunt of the price hikes. This is good news for mailers who currently are preparing their mail as automation compatible. The worst part of the rates is that the discount for mail prepared for the NDC will decrease by $.01 or $1 per thousand. This one does not make sense since mailers are taking on the financial burden of preparing and shipping this mail to the specified facility, which saves the USPS processing and transportation expense. Again it is only $.001, but it goes against the concept rewarding work-share by the mailer. The discount for SCF mail will remain the same as before.
The following links will give you my breakdown of the old rates vs. the new rates and the various increase by percentage. The complete table of new rates is available on the Postal Explorer website.
Please weigh in with your thoughts regarding the increase and as always fmi is here to help assist mailers take on this increase with the least possible damage to your marketing budget.
Latest info on Postage Rate Increase
Thursday, the Postal Regulatory Commission (PRC) agreed the U.S. Postal Service would be allowed to raise rates on the Postal Service’s competitive shipping products. This means new prices (not lower) for Priority Mail, Express Mail and other Shipping Services. The new rates will be implemented on Jan. 2, 2011.
The decision on price increases for standard and non profit mail as well as other services is still pending.
A complete listing of 2011 prices at www.usps.com/prices.
Postal Increase Causes Outrage
Yeah, I know, shocking right?
Where’s all the people dancing in the streets, celebrating with glee the new proposed postal rate hike? 
According to an article from dmnews.com, “some mailers said they will move more aggressively to the Internet…”
‘Move more aggressively to the Internet?’
To those marketers who are initiating an “online aggressive movement” I say…
WHERE HAVE YOU BEEN LIVING, UNDER A ROCK?
“If this proposed increase goes through, it would have a very negative impact on an already struggling channel,” said John Princiotta, SVP of marketing for Publishers Clearing House. “This would certainly cause us to further accelerate our shift toward online programs.”
Oh wait, now I know where you’ve been living, er working… thanks for clearing that up.
Seems as if new proposed increase hasn’t irked everyone, however…
“We support the US Postal Service’s total recommended changes, or restructuring. We are in support of that because we believe in a stronger Postal Service with affordable rates and predictable service is in the country’s best interests, certainly in [[our]] best interests, rather than a weakened Postal Service that is facing such huge deficits. Nobody likes rate increases or reduced delivery, but as part of a total restructuring plan, we believe it is necessary to save the Post Office. We think everyone should step up, [[us]] included, to share some of the sacrifice.”
Now, who do you think uttered such transparent nonsense?
Hmmm, could it have been someone say who works for a company that relies heavily on the USPS? Say someone like Steve Swasey, VP of corporate communications for Netflix?
But according to the blog NewTeeVee.com, the rate increase could cost Netflix an additional $50 million a year.
So, what gives?
Call me cynical (I’ve been called much worse) but why do I get the feeling Netflix knows something the rest of us don’t?
Little Less Postal, Lot More Social?
As we reported this past Tuesday, the U.S. Postal Service Governors recommended increasing the price of a First-Class stamp to 46 cents effective January 1, 2011.
Of course the increase must first be approved by the Postal Regulatory Commission.
So, what’s a direct marketer to do?
Because of the pending postal rate increase do you think about cutting back on your marketing and advertising?
Well before you do, consider the fact that “more than 48% of U.S. adults believe that a lack of advertising during a recession indicates the business must be struggling. So the perception then becomes that if you do not advertise, people will think you are struggling and therefore not be able to provide the quality product, service, ware, etc that you’ve delivered in the past” according to Ad-Ology.
So, what recourse do you have? You know you need to still reach your current and potential customers. And you know how impactful a Direct Mail campaign can be…
The answer?
Here’s a hint…
By now you’ve heard all about Social Media and the power that lies within it…
Now is the time to put it to use.
As part of an integrated campaign that yes, still includes Direct Mail and Email -Social Media, when utilized correctly, is an extremely valuable response-generating tool.
The bottom line…
If you’re not interacting, getting “social” with your customers, you can bet your competition is.
USPS summer sale, look for your letter!!
Release No. 09-020 Summer Mail Sale Returns
Customer Loyalty to Be Rewarded Again in 2010
WASHINGTON—The U.S. Postal Service did something for the first time last year, and it was so successful, they’re planning to do it again: launch a summer sale.
The 2010 Summer Sale is scheduled to run July 1 through Sept. 30 and will provide a 30 percent rebate to eligible mailers on Standard Mail letters and flats volume above a predetermined threshold. The threshold will be five percent over each participating mailer’s volume for the same period in 2009. Invitations to participate in the sale will be sent to customers in early March.
“The 2010 Summer Sale is our way of rewarding our most loyal customers and demonstrates that we value their business,†said Robert F. Bernstock, president, Mailing and Shipping Services. “We expect the 2010 Summer Sale to provide as much excitement about direct mail as the sale did last year and to generate between 300 million and 1 billion new mailpieces.â€
Nearly half the 960 customers enrolled in the 2009 Summer Sale increased their mailing volumes. This resulted in approximately 1 billion incremental pieces during the sale period, producing a net revenue contribution of $24 million.
“Direct mail works, and our customers know that,†said Bernstock. “That’s why we will continue to invest in programs that promote the health of our customers’ businesses as well as our own. We very much appreciate our customers’ business, and we will compete aggressively for their advertising and promotion dollars in this highly competitive marketplace.â€
To be eligible to participate in the 2010 Summer Sale, a company must have mailed 350,000 or more Standard Mail letters and flats between July 1 and Sept. 30, 2009. Approximately 3,525 customers are expected to be eligible to participate in the sale, representing 67 percent of the Postal Service’s Standard Mail volume.
The 2010 Summer Sale is a component of a broader pricing strategy that creates incentives to grow and retain volume. It was one of many solutions discussed this week at a Washington, D.C.-stakeholder event in which Postmaster General and CEO John E. Potter addressed hundreds of customers, business partners, employees and the media during a presentation: Envisioning America’s Future Postal Service. At the event, Potter outlined an aggressive plan of cost cutting, increased productivity, and an array of legislative and regulatory changes necessary to maintain a viable Postal Service.
The 2010 Standard Mail Summer Sale is subject to approval by the Postal Regulatory
How Would You Make Over the U.S. Postal Service?
From Inc.com
With bankruptcy looming, the U.S. post office needs a major fix. We asked Inc. 500 CEOs how they would approach the problem
By Darren Dahl | Oct 1, 2009
Everyone agrees that the U.S. Postal Service could do better. With bankruptcy looming, there’s a consensus that big changes need to happen, most involving cutting staff and scaling back services. But what if we could unleash the creative ingenuity of entrepreneurs to improve the post office? We asked Inc. 500 CEOs how they would approach the problem. Here are some of their responses.
The USPS needs a digital mail system. Your physical address could become your username, with the post office allowing you to turn off physical delivery of mail, like banks have done with bank statements. Recipients could choose to have their physical mail delivered to their home mailboxes for archiving once a month. By creating and owning the digital postal service market, the USPS could greatly reduce costs and become profitable, useful, and relevant for the next 100 years.
Aaron Houghton
Chairman and co-founder, iContact
Durham, North Carolina
The mail carrier could do pickups and charge a monthly pickup fee, just like FedEx and UPS, while keeping the letterbox as a free service. Simply adding a $25 monthly fee for businesses that want a daily mail pickup would be something that many businesses would jump on. If you had even 20 percent of the small-business market, you could generate an extra $60 million a year. If the USPS also cut retiree benefits by 40 percent and operating costs by 10 percent, along with raising rates by 5 percent, it could turn a $7 billion loss into a $4 billion profit.
Sandeep Walia
CEO, Ignify
Cerritos, California
Raise the rates on first-class mail. It is the postal service’s core, and it has a monopoly to deliver it. This system actually works and is the most profitable part of the USPS. When the USPS’s first-class rates are compared with those in other industrialized countries, though, they are grossly underpriced. A similar-size letter mailed in the U.K. costs 65 cents versus 44 cents with the USPS; in Germany, it costs 78 cents. Using 2008 statistics, each one-penny increase in the first-class mail rate would add over $900 million in revenue. If you raise it by 5 cents, you add another $4.5 billion.
Harry Geller
CEO, SoDel Concepts
Bethany Beach, Delaware
When it comes to shipping small packages, the USPS is cheaper than its competitors and offers comparable and sometimes even faster delivery times. However, since it doesn’t offer reliable tracking, we pay a premium to ship most of our packages with UPS. If the USPS tracked packages as well as UPS, it could capture a lot of business.
Sean Harper
Co-founder, TSS-Radio
Chicago
The USPS is an out-of-date concept. I don’t think my 18-year-old son has ever written a letter. For him, the post office is about as relevant as cassette tapes, rotary phones, and broadcast television. The USPS doesn’t need to be fixed — it needs to be sold off.
Tony Paquin
CEO, Paquin Healthcare Companies
Celebration, Florida
Copyright © 2009 Mansueto Ventures LLC. All rights reserved.
Inc.com, 7 World Trade Center, New York, NY 10007-2195.
Postal Service announces mix of price cuts, increases for 2010
From DMNews: Frank Washkuch November 09, 2009
Less than a month after the US Postal Service announced it will not raise rates for 2010 on its “market dominant products,†a category that includes services used largely by direct mailers and publishers, the agency revealed a mix of increases and rate cuts on other services for next year.
The agency disclosed that the price of a domestic priority mail flat-rate envelope will drop from $4.95 to $4.90, while the cost of a priority mail small flat-rate box will remain at $4.95 for next year.
However, the agency also disclosed that priority mail customers will see an average price increase of 3.3% next year, while express mail users will see prices jump by 4.5% and international shipping services prices will go up by an average of 3.3%. The price changes are effective January 4, 2010. The price of a first-class mail stamp will remain at 44 cents next year.
“The object is always to ensure that each particular product category handles its own individual institutional costs, and I think these prices reflect that,†said Dave Lewin, PR representative for the USPS.
In a frequently asked questions section on the USPS’ Web site, the federal agency explained that prices are increasing due to “the cost of doing business – for things like transportation, utilities and healthcare benefits.â€
The Postal Service told customers last month that it will not raise rates for next year on its first-class and standard mail, periodicals and single-piece parcel post services, although it has said its fiscal-year 2009 mail volume is as much as 20 billion pieces lighter than the year before. Direct mailers told DMNews at the time that the decision not to raise those rates will have a positive impact on mailers. The announcements also come at a time when the USPS is deciding what local postal office branches to close.
Delivering Something Extra
From the New York Times
By Stuart Elliot
Published: September 23, 2009
Since 1907, United Parcel Service has been delivering packages ordered by consumers. Next week, the company plans to deliver packages they have not ordered, in a test of an effort to expand into direct marketing.
United Parcel Service will begin testing its direct marketing service on Monday.
Beginning on Monday, U.P.S. will experiment in five major markets with a service it calls Direct to Door, giving advertisers and retailers a chance to provide offers and product samples to U.P.S. customers. The marketing materials will come inside small boxes labeled Direct to Door Paks, and will be delivered to customers along with merchandise they actually ordered.
The test, to run through Oct. 2, is intended to gauge whether there is interest in having U.P.S. serve as an alternative to marketing mail delivered by the United States Postal Service or by companies like Valpak.
If Direct to Door goes forward, the added revenue could help United Parcel offset declines in demand for its mainstay package delivery service since the recession started.
In July, U.P.S. reported its sixth consecutive quarter of lower package volume in this country. The decline in the second quarter was 4.6 percent compared with the period a year earlier, which Bloomberg News described as the worst result since United Parcel went public in 1999.
“I wouldn’t say it was developed as a result of the economy,†said Lisa Lynn, marketing director for new-product research and development at United Parcel in Atlanta.
Rather, she said, it stems from “some opportunity we saw at the heart of what we do every day working off our delivery network.â€
The test is also meant to see if U.P.S. customers welcome unsolicited packages or dismiss them as some new type of junk mail.
One effect of the economy is that “people are very receptive to offers right now,†Ms. Lynn said.
An experiment in figuring out how to better aim traditional, tangible marketing materials at consumers may seem quaint when so much of the buzz along Madison Avenue is about aiming virtual pitches at them online.
But direct marketing remains a lucrative business. According to the Direct Marketing Association, it accounted for $176.9 billion in ad spending last year in the United States — 52.1 percent of the total, by the association’s tally.
“We did some focus-group research and it really indicated that people were receptive to receiving offers from U.P.S.,†Ms. Lynn said. “What we heard was, ‘If U.P.S. brings it to me, it’s not junk.’ â€
Still, the company is taking several steps to try to ensure that a Direct to Door Pak is received more like a gift than another application for another credit card.
For one thing, the offers inside each box are intended to be special rather than “mass offers distributed through other channels,†Ms. Lynn said.
For another, no Direct to Door Paks will be delivered unaccompanied by packages ordered by that household, she said.
And the boxes will not bear the addresses of the recipients, Ms. Lynn said. Rather, they will carry phrases like this one: “Inside are premium offers from some of America’s best-known brands.†They will also include a photograph of the familiar brown United Parcel truck next to the words “Delivered to you by U.P.S.â€
About a dozen companies — advertisers and retailers that use United Parcel to deliver orders to customers — are taking part in the test, Ms. Lynn said. They include the Finish Line; Men’s Wearhouse; Sephora; two Williams-Sonoma home furnishings brands, Pottery Barn and West Elm; and Zappos.com, the online retailer of shoes and housewares recently acquired by Amazon.
“It’s an interesting way to reach out to our customers and partner with one of our closest business partners,†said Aaron Magness, director for business development and brand marketing at Zappos.com in Henderson, Nev.
“We are an online retailer,†he added, “but we want to maintain a high-touch relationship with customers, constantly trying to find different ways to interact with them in whatever means they’re comfortable with.â€
Mr. Magness said he liked the idea that the boxes would not arrive “out of nowhere, from random people knocking on your door.â€
The offer to be made by Zappos.com during the test will invite recipients to “become a member of our V.I.P. program,†he added, entitling them to “free next-business-day shipping on every order.â€
United Parcel plans to deliver about 250,000 Direct to Door Paks in about 150 ZIP codes in Chicago, Dallas-Fort Worth, Miami, Phoenix and Washington.
Those chosen to participate in the test are “high-opportunity consumers,†Ms. Lynn said, meaning that they often order merchandise delivered by United Parcel Service.
“Our drivers have relationships with these people because they deliver to them frequently,†she added. “There’s a lot of trust in the driver and the brand.â€
Mr. Magness also cited the trust factor as a reason Zappos.com was interested in the test.
Ms. Lynn described the customers to receive Direct to Door Paks as ages 35 to 54 in households of two persons or larger and living in single-family, owner-occupied homes.
As for what the service will cost marketers, “I can’t go into specific pricing,†Ms. Lynn said, “but the pricing model is similar to other media.â€
The goal is for the cost to reach each 1,000 consumers — a common media measurement known as cpm — to be “comparable or less than an equivalent piece of direct mail,†she added.
Junk mail delivers a sense of satisfaction
From The Chicago Tibune
By
Steve Johnson
Tribune reporter
September 22, 2009
E-mail Print Share Text Size There’s still time to improve my lawn. Public radio needs me to renew my membership. A “quality closet” can be mine for just $495.
And the Lyric Opera, of course, has another great season of songs in foreign tongues and “projected English translations above the stage for all operas,” information clearly worth sending in duplicate.
I’m supposed to hate this stuff. It kills trees, which contributes to global warming, and weakens the grip of the screws attaching my mailbox to my house wall, which leads to stucco failure.
I’m supposed to hate it for constantly nagging me: Buy this, sign up for that, donate to us. And above all, I’m supposed to hate it for having the temerity to try to make me change, in however small a way, the way I lead my life.
But the truth is, except for the rare, genuinely deceptive stuff — credit-card solicitations designed to look like bills — I don’t mind junk mail.
In a “Seinfeld” episode, Kramer once bricked up his mailbox to fend off a catalog onslaught. I open my box to all who care enough to write or, more accurately, stuff an envelope with printed material.
It’s sad psychological comfort, I know, but far better is the day with two credit card offers and a Jiffy Lube coupon than the one with no mail at all.
And in some ways, a Sierra Trading Post catalog is more satisfying than the latest Esquire.
Instead of hanging onto it for a month in hope of finding time to read the carefully written articles, you flip through it in five minutes while waiting for dinner, then toss it on the recycling pile, secure in the knowledge that companies continue to make more hiking shoes than can be sold at full price.
A two-week vacation recently allowed me to revel, upon return, in the full glory of my junk mail.
There, between the rubber bands, were 15 catalogs, four more than the number of magazines, everything from Athleta to West Elm.
There were 25 actual stuffed envelopes of solicitation and such, compared to just 12 pieces of what you would call meaningful mail: utility bills, a library overdue notice, a car registration sticker.
There were another seven pieces on postcards, including, of course, a Bed Bath & Beyond 20-percent-off coupon (I picture cashiers there fainting if someone actually pays full price). And a once-local, increasingly pan-suburban newspaper I no longer subscribe to decided to take a shot and send me a copy.
All told, it was 4 1/2 pounds of clutter. And thumbing through it, opening a piece here, recycling one there, was almost as enjoyable as going through the “real” mail. Sure the junk mailers are after your money, but they’re only asking for it. An actual bill makes demands.
You’d think that junk mail is dying. Beyond the environmental complaints, there’s the relative economic efficiency of spam e-mail.
And although it’s true that last year, for the first time, direct-mail spending actually declined, it’s also true that it continues as a huge business.
I know the statistics (because I looked them up): U.S. junk mail accounts for almost one-third of all mail delivered in the world, and each American household gets an average of 850 pieces of it a year.
Households average 18 pieces of it a week, one survey found, versus one piece of personal correspondence.
I know that not enough people recycle their junk mail, and that direct marketers send out 36 pieces to get one response. I won’t argue that it is all overkill, the sign of a culture with too much disposable income, even now, and too little concern for the ways it chases that income.
But at the same time, junk mail is largely responsible for keeping the U.S. Postal Service afloat; without it we’d have another institution to bail out.
And without all the impersonal stuff around it, the one birthday card in that whole two-week pile wouldn’t have seemed half as special.
Plus, I would have had no way of knowing that I could run an 8K to help abandoned pets, that Clipper Magazine is not about ships or that Trader Joe’s is featuring spicy peanut slaw. Information like that is, literally, priceless.
sajohnson@tribune.com
BMW: Luxury Auto, Meet DRM
BMW is kicking the tires on a direct response campaign targeting luxury auto enthusiasts, turning to an often undervalued marketing platform as a means to entice Mercedes, Volvo and Audi drivers to come in for a test drive.
In a bid to draw likely buyers to their local BMW dealership, last week the New Orleans-based DRM firm Dukky began sending out some 25,000 mailers to premium vehicle owners in the Tri-State (New York-New Jersey-Connecticut) area. Upon registering for a test drive, the recipients of the direct mail material are presented with a $25 American Express gas card.
Participating consumers are directed to visit a unique URL, which directs them to a personalized activation site powered by Dukky. Once the user has registered for a BMW test drive, he or she can share the promotion via email or social networking sites. The digital activity feeds into a dashboard which reports back to the client in real time, thereby creating a database of purchase intent and user feedback.
Although the DRM strategy may seem a bit low rent for the likes of BMW, there are a number of advantages to targeting the mailbox. “BMW for years has been all about acquisitions, whether you’re talking email lists or traditional mailing lists,†said Scott Couvillon, chief marketing officer, Dukky. “By its very nature, direct mail is much more impactful than even the greatest email because it’s there and it’s tangible. Then you take the next step with the PURL and you’re getting feedback on an individual consumer level.â€
Couvillon added that Dukky’s ability to track the target’s subsequent interaction with the material, from signing on for a test drive to alerting friends to the offer on his or her Faceboook page, is what separates the initiative from the shills for garage door openers and pizza chains that clog the mails.
“We have no interest in dethroning Valpak,†Couvillon said. “Our technology allows a highly respected brand like BMW align itself with what is essentially an interactive coupon.â€
Consumers were also targeted by the specific brand of vehicle they currently own, said Erik Wennerod, vp, director of CRM at Dotglu, the interactive unit of Kirshenbaum Bond Senecal + Partners. “Quite frankly, we wanted to go after each one of the 25,000 competitive vehicle owners with a message that was targeted to their demonstrated preference,†Wennerod said. “So for the Volvo owners, we went after them with a safety message. With Audi, it was tilted toward performance. With Mercedes, it was all about luxury.â€
The gas card works as an incentive to get prospective clients deeper into the purchasing funnel, down past the initial part of the decision-making process where people start talking themselves out of a buy. “For better or worse, they start to add practical reasons for not buying,†Wennerod said. “One of the advantages BMW has is, once you drive one, there’s a much more emotional experience that takes place. If we can get them to that step, the car takes care of the rest.â€
Wennerod expects activations to begin later this week, as the first recipients of the mailer begin making the jump to the online site. “One of the things we love about this is it’s essentially a turnkey approach,†Wennerod said. “Dukky was able to turn this around very quickly, from the DRM piece to getting the microsite online. It all went live literally just a few days before Labor Day, so we’re hoping to start getting the first round of feedback toward the middle of the week.â€
While the typical return on direct mail is less than 2 percent, Dukky’s marriage of DRM, online and social media allows the company to guarantee returns of 8 percent. And in the case of the BMW promotion, Dotglu’s exposure is minimal. “It’s a variable cost deal,†said Wennerod. “We only pay for the people who take the test drive. That’s a lot of upside.â€
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