Readying for Another Postal Rate Increase

By Gene A. Del Polito

Any direct marketer with a pulse knows that sometime early next year, the United States Postal Service (USPS) will implement a schedule of new, higher postal rates. While the Postal Rate Commission (PRC) has not yet handed down its decision in this matter, we do know that the USPS has asked the PRC to pass along some of the highest percentage rate increases to those who market their goods through mail order catalogs.

For instance, while the average increase sought from First Class Mail is a relatively modest 3.6 percent, the increases in those rate categories used most often by catalogers are substantially higher, i.e., 13.8 percent for barcoded, automation-rated flats and 7.5 percent for non-automatable flats.

To make matters worse, for those who mail catalogs weighing more than a pound, the USPS is seeking an average 18-percent increase in Bound Printed Matter rates. Then, as if to add insult to injury, the USPS is seeking to increase the Standard A parcel surcharge from the present 10 cents per piece to 18 cents per piece and increase Priority Mail rates (often used for fulfillment) by 15 percent. It almost seems as if the Postal Service is endeavoring to squelch mail order growth.

Fortunately, these are proposed rates, and something still may change the Rate Commission outcome before any new rates are implemented. Mailers and mailing-industry representatives, such as the Association for Postal Commerce (PostCom), are actively involved in all facets of the quasi-judicial regulatory process by which postal rates are set. Indeed, PostCom is working jointly with others within our industry to see what can be done to reverse some of the ills the Postal Service would have us bear.

The case the Postal Service has set before the PRC is a comprehensive and complicated one. There are, in fact, several areas being contested in this case, including issues pertaining to the overall amount of new revenue the Postal Service is seeking, automation-related cost savings for which the USPS has failed to fully account, cost data sorely lacking to justify the USPS' proposed increase in the Standard A parcel surcharge and others.

Prudent mail order marketers should begin to look at the circumstances this rate case may present them, and begin the necessary planning to make the best of a bad thing. Here are just a few things that should be considered.

List Hygiene

Let's start with the most obvious. The key to any mail marketing campaign is the address list. An address list that is anything less than up to date and accurate in all other regards is a money waster. Mail that can't be delivered at all or can't be delivered in a timely way does your company no good. There are a multitude of software programs and services that can ensure your mailing lists are in good form, e.g., CASS-certified software, National Change of Address (NCOA) service, Locatable Address Conversion Service (LACS), Delivery Sequence File (DSF) and Address Element Correction (AEC). Use them! If you don't know what they are or whether you need them, then talk with your list-processing vendors and others who prepare your mailings to make sure your lists are spiffed up.

Trim Sizes, Paper Weights

Unfortunately, the rates the Postal Service wants to charge for larger than letter-size catalogs will rise much more substantially than for letter-size pieces. Take a look at whether your mail marketing program can succeed profitably by converting some (if not all) of your present catalogs to a letter-size format. In addition, you also should explore whether using a lighter-basis-weight paper offers you any advantages. If you don't know the answers to these questions, then start by talking with your printer.

Drop Tactics

If you aren't doing so already, look into drop-shipping your catalogs as "deep" into the postal system as you can. Destination-entered mail will cost you substantially less than using and suffering the vagaries of USPS transportation services. Check this out with your printer, as well.

Standard Mail Regular Rate Schedule for Non-letter Size 3.3 Ounces or Less

Rate Category Current Proposed Rate Rate

Presort—3/5 Digit 24.0 25.8

Automation—Basic 24.5 26.7

Automation—3 Digit 20.3 23.1

Automation—5 Digit 20.3 23.1

While the Postal Service seems to have "lost its way" as far as the rates it has proposed for automated entry is concerned, the fact still remains that automation-compatible mail is and will continue to be less costly for the Postal Service to handle than non-automatable mail. The present proposed increase for automatable catalogs is an anomaly. It's still in your best business interests to automate your flat-size catalogs. If you're not doing that yet, talk with your printer about this.

Alternatives to Mail

Mail may have been your most conventional mode of operation, but mail isn't the only way by which you can market and get your business to grow. If your company is not yet marketing via the Internet, begin to look at doing so. But do so smartly, and not by replicating the expensive mistakes of others. Make sure your site is as interactive as possible and tied directly to your back-office fulfillment operations. Make sure it's easy to find the goods for which buyers are looking, that it's easy to order directly online and that the speed by which an order can be fulfilled is fast enough to keep the customer interested and coming back.

If you already market on the Web, explore ways to attract new and repeat buyers to your site. In some instances, you might find that using e-mail with current customers can provide the same pull as mail. In some instances, using a lighter-weight letter-size catalog for some of your mailings to existing customers and prospects in lieu of your larger, flat-size catalog might be sufficient to attract online customers to your Web site. Consider also using offers of gifts and premiums in conjunction with these letter-size (perhaps postcard) promotions to draw traffic to your site.

Gene A. Del Polito is the president of the Association for Postal Commerce (PostCom), formerly known as Advertising Mail Marketing Association, headquartered in Arlington, VA. He can be reached at genedp@postcom.org.