The Postal Direct Mail Nightmare Continues: BREAKING NEWS: USPS Appeals Exigency Rate Case


Note: this just in from our good friends at ACMA
October 22, 2010 

Special Bulletin: USPS Appeals Exigency Rate Case
 

 

Dear Catalogers, Suppliers & Others With Catalog Interests: 

While mailers were still rejoicing over the victory on the exigency rate case, the USPS filed a lawsuit today in the U.S. Court of Appeals to reverse the widely heralded Postal Regulatory Commission decision. The Postal Regulatory Commission on Sept. 30 denied the USPS’s extraordinary request for a well-above-inflation-rate postage price increase that would have effectively nullified the Congressionally-imposed rate cap.

 

In its latest filing, the USPS requests a review of the PRC’s interpretation of the law that governs how prices are set and asks the Court to confirm it has the right to file an exigent price increase. It also seeks clarity regarding the rules governing how an exigency increase will be applied should it find itself in a similar situation in the future. According to a USPS statement on the matter, it is also reviewing other options open to it in light of the PRC ruling.
What does this mean to you? Right now, it is a little hard to say definitively. Courts have historically sided with regulators provided it can be demonstrated the regulator followed its own rules and practices in arriving at a decision. We know of no basis to conclude otherwise at this point, indicating the PRC decision should stand. However, clearly USPS execs have an approach they believe has merit, or they would not have gone to the cost and trouble of an appeal.

ACMA’s Approach
As it has all along this process, ACMA will monitor developments closely and may decide to intervene alone or with others supporting the PRC decision. Unfortunately, this development puts into question how much you should budget for the coming year. Until further information is available that suggests otherwise, we recommend sticking by earlier forecasts we gave to members, but you can be sure we will stay close to this matter and let you know when a clearer picture is available. 

Happily, ACMA has some money available from its Special Fund and general coiffeurs that give us options as to how to proceed. This is a great reason why it is in your best interests to make sure you have a properly resourced group to address unexpected developments quickly to protect your interests.

More to come…

Sincerely,

Hamilton Davison
President & Executive Director
American Catalog Mailers Association
Direct: 401-529-8183

The Postal Rate Commission (PRC) Denies Exigent Postage Rate Increase … Big !@#$ Deal


Recently, The Postal Rate Commission denied the US Postal Service an exigent postage increase.

So, OK, now what?

So, Direct marketers aren’t getting slammed with another 5 percent-plus postage rate increase in January. Big whoop-de-doo. Postage is still the biggest expense in all my clients’ mail campaigns. And the cost of mailing vs. the risk of the unknown is still the biggest reason marketers shy away from the direct mail channel.

The second biggest reason? Well, everybody has heard the horror stories. All that money spent on killer creative, design, lists, printing, postage, and then the campaign bombs.  And then everybody talks about how the campaign bombed and direct mail sucks.

OK, so many of those direct mail campaign “bombs” forgot to follow the basic principles of the business — i.e., the 40/40/20 rule. They probably did the creative first and then figured out lists last like most companies I see do.

This kind of activity perpetuates the urban legend that direct mail doesn’t work. Well, except for a few companies. Those companies, you know, the junk mailers, the big companies with unlimited budgets who don’t care about results and just want to build their brand images… they are the ones who do well.

Now I won’t even get into the whole environmental argument of direct mail not being green. Believe what you want, but that’s a myth. The direct mail and paper industries are ultracautious to replenish the environment.

And let’s not forget about our internet marketing brethren, who have done such a wonderful job throwing direct mail under the bus, positioning it as passé or old school, while they prop themselves up as the future of direct marketing. I won’t even go there today.

Let’s face it, direct mail has a bad reputation. But that can change. Here’s how:

The smartest thing those wunderkinds at our beloved Postal Service can do is nurture the direct mail industry. Imagine what would happen if the USPS actually offered discounts for online marketers to give direct mail a chance? Now imagine the same thing happening with small and emerging businesses. How many companies would try direct mail if the risks were reduced? How many tests? How many rollouts?

And what about nurturing those retailers who still use direct mail as a major part of their marketing programs? Sure, the USPS has tested some “Summer SalesOpens in a new window,” which is a move in the right direction, but it’s time for the Postal Service to stop dipping a toe in the water and give volume mailers an opportunity to push their circulations up. Seasoned mailers know the results are there, they’ve just been beaten down by a constant barrage of postage increases.

More importantly, over time, how many direct mail pieces are needed in circulation to drive additional revenue for the post office? Some way the USPS is going to have to get itself out of the bureaucratic hole it’s dug for itself.

Hey, I’m not dreaming here. It’s a simple business model: high costs = less volume, lower costs = increased volume.

The USPS has traveled the higher-priced road before, and in the process did an amazing job of building up the internet and literally exploding the size of the online marketing community (to which it offers thanks, by the way).

Maybe now it’s time to think things through and encourage more mailers and subsequently more volume. And inevitably if they do it right, more (well, to be fair … SOME) profits.

BREAKING (GOOD) NEWS: postal-regulatory-commission-denies-exigent-rate-increases


The Postal Regulatory Commission Denied the Postal increase.  Read about it here

http://www.dmnews.com/postal-regulatory-commission-denies-exigent-rate-increases/article/180018/?DCMP=EMC-DMN_iMktingNewsDaily

We at Gilbert Direct Marketing, applaud the PRC for denying the exigent postal rate case.  As I have said before every penny direct marketers have to spend on direct mail, with it’s biggest expense already postage, we have to add 2 cents of revenue to cover the increased costs.

Despite its negative image lately, mostly fostered by environmentalists and internet marketers, direct mail remains a highly targetable and enormously profitable marketing channel.  Presently I have clients who are seeing ROI in the range of 6 to 1.

FAIL: As an online marketer I applaud the US Postal Service for it’s Exigent Rate Case. Read my letter to them


Dear Mr. Postmaster General and the honorable members of the Postal Regulatory Commission,

As an online marketer, I want to thank you. I cannot wait until you raise postage rates come January. Now some people may not agree with me, but I applaud your efforts to consistently raise postage rates.

As I was starting my business a few years ago, you announced an incredible postal rate increase — if I remember correctly, around 20 percent — that really helped my business take off. So many direct marketers, who could no longer afford to profitably mail catalogs and other direct mail, came calling. As a result, my business flourished (as did many of my comrades in the online space).

Now I hear you’re on the verge of passing something called an “exigent” rate increase, pushing postal costs up another 5 percent.

Very cool, thanks!

I also love how you got around the specific language that was designed to keep you from arbitrarily raising rates. :-)

Right now I bet many direct marketers are pretty angry with you. They’re probably feverishly calculating their profit-and-loss statements to determine how many previously profitable mailing lists aren’t going to be profitable anymore. How fortunate for me. I wonder how many new customers I can pick up come the first quarter?

And one other thing I want to mention as long as you’re reading this: You know those summer postal “sales” you’ve had the last two years? Yeah, those ones where the criteria for qualification to receive the discount are ridiculously hard for mailers to meet? Well, I really appreciate your help in disillusioning the direct marketing community. Remember, the more jaded and disillusioned it becomes, the better for my business.

That’s it for now. I hope this letter finds you all well. Keep up the good work — my business needs it!

Sincerely,
Steven M. Search

EDITORS NOTE: Some people, mostly internet marketers, are commenting on linkedin that they applaud this article – like it’s real!!!  Folks, this post is meant as pure acidic sarcasm and irony.  Its intent is to skewer the USPS, The Postmaster General and The Postal Rate Commission for their stupidity in biting the hand that feeds them, and single-handedly destroying their future earnings potential as they drive marketers out of a highly targetable and profitable channel.  I find it both humorous and horrifying that people would take this post literally.

Jim

From Politico and SEN. SUSAN COLLINS: Rate hikes won’t help Postal Service!


if you are in the direct mail business, or you ship packages via the USPS (also known as The US Postal Service), read this article now from Senator Susan Collins and as published on Politico.  Click here for the story (and a definition of what Exigent Circumstances SHOULD mean to the band of thieves called Postal Rate Commission)

For a sarcastic look at what a field day our good friends at the US Postal Service are providing the internet marketing industry, click here

I find it totally inconceivable how stupid the USPS, The Postal Rate Commission and Postmaster General Potter are.  Every penny they increase postage for our direct mail campaigns means we have to get 2 cents more per piece mailed in order to be profitable.  That means profitable mailers (and lists) become marginal or worse.

Another article I wrote that addresses this issue is: How To Heal The USPS in 8 Easy Steps.

Guest Post: Debunking the Myth of Trees vs. Direct Mail


Editor’s Note: This week’s post comes from Evelyn Milardo , a direct marketing consultant, whom Jim has hand-picked to serve as a guest columnist in his place this week.

OK, direct mail has an environmental impact. Almost everyone still receives and sends mail, creating a footprint for sure. But what’s myth and what’s reality?

In 2007, there were 212 billion pieces of mail. Of those, households received 150.9 billion pieces — or about 71 percent. The balance of the mail was received by business, government and nonprofit entities. Households also sent 21.1 billion pieces of mail, with the balance of the mail sent by nonhouseholds. In 2008, the average U.S. household received less than three pieces of direct mail per day.

According to the USPS Household Diary Study, 16 percent of households choose not to read their mail. The vast majority (81 percent) of households read or scan the direct mail they receive. Almost all mail eventually is discarded, thus it’s vital to have recycling options available at the community level.

Direct mail is printed communication. Thanks to sustainable forestry practices throughout North America, the amount of forested lands has grown significantly in recent years, providing for a steady, responsible supply of the fiber used to make paper. Trees are harvested and replanted on a continuing basis, with most trees harvested for paper measuring about 8 inches in diameter — it’s more cost effective and productive to use larger trees for lumber or pole production.

Today, we have more forests in the U.S. than we did 50 years ago, and about the same as we had 100 years ago. Old-growth forests aren’t harvested to make direct mail paper, and the marketplace is beginning to certify paper that originates from sustainably forested lands. Only 14 percent of the wood harvested throughout the world each year is used for paper production. Continue reading

My prescription to heal the US Postal Service in 8 easy steps. (all direct marketers get behind this)


Looks like the USPS is back in the news again- it seems the five day work week issue has reared its ugly head.

The post office is claiming that declining revenue from reduced mail volume is the culprit.

Well Duh!

The USPS bit the hand that fed them way too many times with it’s rate increases.  They drive mailers out of the market, and they drove other mailers to look at alternative methods of customer acquisition and retention too.  Loosely translated, they helped many marketers shift their dollars to the internet to the point where I would hope that the folks from Google sent them a thank you letter.

I’m going to keep it short this week.  If John Potter and the post office want to get out of this mess, they need to take s few steps.  Now I’m not naive enough to assume that my prescriptions to heal the USPS are alone a cure, but hey, it’s a start

So here in simple form even a gov’t run bureaucracy can understand are some tips for the post office to help increase revenue.

  1. Do everything in your power to seek out customers they lost and woo them back.
  2. By wooing them back I mean, come up with ways for these lost customers to lower their postal costs to the point where they can mail profitably again.
  3. I love the concept of mail sales and discounts. Keep that stuff up.
  4. Don’t make the rules so hard and the criteria to get sale prices so restrictive that the average mailer doesn’t get to take advantage.
  5. Create promotions for smaller companies.  There are two kinds, companies who stopped mailing when prices went up, and companies who don’t mail because they get sticker shock looking at postage and printing costs.
  6. Get some postal ambassadors out to all of the local and regional direct marketing groups and clubs, plus internet/social media clubs and promote the heck out of small business discounts, first time mailer discounts, etc.
  7. Have those same representatives of the USPS start teaching more companies how to do direct mail buy the book.  I know they do some of this now, but it’s not nearly enough.  Teach stuff like analysis – the 40/40/20 principle and how to do mail right.
  8. Getting new mailers to test mail and smaller mailers back in the game will eventually create larger mailers!

Bottom line… USPS your image is damaged, and you need to rehab it.  Create products we can grow with using direct mail, promote the heck out of them on a national and grass roots level, and you will eventually get volume and revenue back.

Note from Jim.  Make a difference too.  Contact John Potter, the Postmaster General here and make your voice heard:

The Honorable John E. Potter Postmaster General

U.S. Postal Service

475 L’Enfant Plaza, SW

Washington, DC 20260-0010

E-mail: pmgceo@usps.gov

U.S. Post Office plans another Summer direct mail sale: details…


This is from the Direct Marketing Association website.

At MTAC yesterday, Tom Foti, USPS Marketing Manager described the 2010 Summer Sale. The sale will cover a 5-month period with the sale period starting July 1 thru Sept 30. June and October will be control months. A 30 percent rebate on incremental volume will be offered above a baseline. The sale is for Standard Mail letters and flats only. The customer’s baseline will equal Same Period Last Year (SPLY) numbers plus 5 percent. A downward adjustment will occur if June and October volume is below baseline. To be eligible, a customer has mailed over 360K Standard Mail pieces from July 1 thru Sept 30 2009. According to Foti, there are approximately 3,525 customers eligible or 67 percent of Standard Mail volume. Mail Service Providers are not eligible to participate.

USPS Timeline:

File notice with PRC (late Feb)

Invitation to participate mailed (early Mar)

Customers register online and certify agreement with threshold volume on-line for program participation (Mar-May)

PRC decision (mid-April)

Sale period (July through Sept)

Rebates to customer accts (Dec 2010- Jan 2011)

Dear Mr. Postmaster General, you’ve started a trend… but…


A week ago the USPS Postmaster General sent out a memo stating there would be no postal increase for direct mailers in 2010.  This coupled with the recent postal sale are a start that I applaud.  It seem that the USPS for the first time may be interested in helping business mailers do business.

But we as direct marketers must keep the pressure on the USPS.  We must make our voice heard and hold their feet to the fire to keep the direct and catalog marketing business moving.  Therefore I wrote the letter below to the USPS.  I urge you to send in your own letter, or use/modify my letter to suit your needs.  The Postmaster General’s Contact information is below…

Dear Mr. Postmaster General,
You’ve started a trend here. Between the postal summer sale and now this offer to keep postal rates stable in 2010, catalog and direct mailers believe that you may actually be interested in working to our benefit. We look forward to the next postal sale, and hope that the USPS opens it up to smaller mailers to take advantage of. We truly hope that you’ll continue to stop thinking like a bureaucracy and encourage more mail volume with innovative special offers and such.

But we’re also wary. Direct marketers are wary because the USPS holds a great deal of power and leverage over us. The last substantial postal rate increase nearly put us under with rate increases of 20 percent-plus. What was the USPS thinking? That move single-handedly drove more and more mailers into the online world. If we were to do the math, we believe the increase in postage actually caused your revenues to go down due to less mail in the mailstream.

Remember this Mr. Postmaster General: Every penny more it costs us to mail means we need to generate about two cents more per catalog and direct mail piece mailed just to breakeven. In this economy, we need every opportunity we can get to mail profitably. We’re struggling to stay alive and keep our workers employed and our customers satisfied.

Keep up the good work, Mr. Postmaster. Please continue this trend.

Sincerely, 
The Direct Mail Industry

As to you, my loyal readers, I encourage you to send your letters to the Postmaster General (or just copy mine and send it). Make your voice heard! Remember, the squeaky wheel gets the grease.

Reach the Postmaster General at the following:

The Honorable John E. Potter
Postmaster General

U.S. Postal Service

475 L’Enfant Plaza, SW

Washington, DC 20260-0010

Email: pmgceo@usps.gov

Kudos, an open letter (and a warning) to the USPS Postmaster General (spread this around)


Over the years I’ve been super vocal about my dislike for the U.S. Postal Service and its less-than-forward-thinking bureaucracy. When it slammed direct marketers with a 20 percent postal increase back in 2007, I went (pun intended) postal on it in my Catalog Success Magazine Column.

Earlier this year after it announced its summer postage sale, I was optimistic. But once I looked at the fine print (i.e., how much you had to mail to qualify), I was critical then, too.

I try to be fair in the offering of my opinions.

Therefore, I have to applaud the USPS for its announcement last week that there would not be a postal rate increase in 2010 for dominant classes.

For those of you not aware yet, last week the Postmaster General sent out a memo announcing no 2010 rate increase, which has spread around the internet faster than a scandalous YouTube video goes viral. That memo can be reviewed here.

I know, I know: Postal rates are already ridiculously and restrictively high, but at least mailers can build their 2010 mail plans without having to cut circ from marginal lists and housefile segments.

But along with my kudos to our Postmaster and the USPS, I also want to put them on notice.  Here goes:

Dear Mr. Postmaster General,
You’ve started a trend here. Between the postal summer sale and now this offer to keep postal rates stable in 2010, catalog and direct mailers believe that you may actually be interested in working to our benefit. We look forward to the next postal sale, and hope that the USPS opens it up to smaller mailers to take advantage of. We truly hope that you’ll continue to stop thinking like a bureaucracy and encourage more mail volume with innovative special offers and such.

But we’re also wary. Direct marketers are wary because the USPS holds a great deal of power and leverage over us. The last substantial postal rate increase nearly put us under with rate increases of 20 percent-plus. What was the USPS thinking? That move single-handedly drove more and more mailers into the online world. If we were to do the math, we believe the increase in postage actually caused your revenues to go down due to less mail in the mailstream.

Remember this Mr. Postmaster General: Every penny more it costs us to mail means we need to generate about two cents more per catalog and direct mail piece mailed just to breakeven. In this economy, we need every opportunity we can get to mail profitably. We’re struggling to stay alive and keep our workers employed and our customers satisfied.

Keep up the good work, Mr. Postmaster. Please continue this trend.

Sincerely, 
The Direct Mail Industry

As to you, my loyal readers, I encourage you to send your letters to the Postmaster General (or just copy mine and send it). Make your voice heard! Remember, the squeaky wheel gets the grease.

Reach the Postmaster General at the following:

The Honorable John E. Potter
Postmaster General

U.S. Postal Service

475 L’Enfant Plaza, SW

Washington, DC 20260-0010

Email: pmgceo@usps.gov

Speak to you next week, when I’ll discuss a tactic to help you reduce mail costs by doing a specific suppression on your housefile and list rentals.

Orignally published in All About ROI (formerly Catalog Success) Magazine.

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