History has been made and it may have slipped under your nose. Last month marked the first time in over 100 years that the United States Postal Service (USPS) lowered its postage rates. Although only a fraction per package or mailer, when talking about direct mail, that could mean a huge payback for many companies that are thinking of starting a campaign.
So why is this happening now and how does it have an effect on our mail and more importantly the mail you and your business sends to its customers? It’s all for the reason you may have expected. We mentioned in last week’s blog how direct mail in on an incline because of the demand by younger consumers. Well, this wasn’t as true in 2006 when the USPS experienced hardships (like us all) in the Great Recession of the last few years. Total mail volume in 2006 was 213.1 billion pieces and in 2015 it was 154.2 billion. That huge drop in revenue created a tail spin of problems for the postal service which found them scrambling for funds, and so the USPS acted with the Exigent Rate Case.
I don’t want to bore you with the details (which I promise will have you snoring) but basically they proposed to raise the market price cap for a set amount of time. Since the Exigent Rate Case was not a permanent imposition, because the market was expected to correct itself, the postal prices are now dropping. On April 10, 2016 we experienced the first postal rate drop in our lifetime, as well as our parents and their parents before them.
Now, luckily, we see the mail recovering from its downfall, not only because some consumers trust in mail to make purchasing choices but because more people are buying online, like Amazon (it is definitely our guilty pleasure) and even delivery of prepared food goods from sites like Blue Apron. This is good news for us, both as consumers and marketers but it has little helped the Post Office’s problems.
The Postmaster general, Megan J. Brennan said they are still losing tremendous amounts of revenue reaching in excess of $7 billion in 2009 alone. Brennan stated, “Removing the surcharge and reducing our prices is an irrational outcome considering the Postal Service’s precarious financial condition.”
So the decrease in price is something the USPS was definitely NOT looking forward to, but don’t fear, recovery or at least stability is on the horizon (or so we hope).
As much as rate decreases may seem to hurt on the surface there may be a silver lining after all. More businesses, political opponents and large corporations may take advantage of the decrease in price, taking advantage of that direct mail campaign they have always wanted to execute with the USPS the first to benefit. Although this still seems like an experiment with an undetermined hypothesis, right now is the best time to take advantage of direct mail, the perfect incentive to increase your marketing prowess on the world and help the USPS (if you feel your philanthropy is lacking this year).
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