07 Jun 2022 Postal Update
Even in the world of instantaneous digital communication, the postal service remains a marvel. We take the ability to send a letter to the most remote corners of the country in just a few days for granted, and a stamp—58 cents at the time of this writing—remains an incredible value.
Marketers understand the value of direct mail, reaching readers in their homes or workplaces with a targeted message they’re sure to see. In fact, marketing mail is the only category of mail that has continued to grow as bills and other correspondence have moved online. In all, US Postal Service (USPS) volume is down 35% since 2007—and the USPS reported a 9% drop just from 2019–2020 related to the COVID-19 pandemic. This resulted in a net loss of $9.2 billion in 2020 and $4.9 billion in 2021.
These declines in volume and resulting loss in revenue have presented with USPS with challenging circumstances of declining revenues while their fixed costs remain. The losses related to these changes continue to mount while, economic and political circumstances have put the postal service—a government entity—under pressure to be financially independent.
Considering the losses, The Postal Service Reform Act was recently passed through Congress to increase the efficiency of the United States Postal Service. The sum of the reform will be a $107 billion bailout to aid in revenue lost and fund improvements. A portion of the bailout will be allocated to create an online dashboard comprised of local and national delivery time data. Additionally, updates will be made to outdated technology to modernize and speed up the delivery process.
In an effort to further close the gap, increases were approved by the Postal Service Governors to occur once in January and once in July, as part of a 10-year plan to achieve financial stability. During announcement of the decision, it was stated that there would be no January 2022 increase, but rather that the incentive will be initiated July 2022— rates are expected to be regulated on a semi-annual basis. Overall, it is anticipated that postage rates will increase 6-7% across the board this year.
How We Can Prepare for these Hikes
In preparation for the expected increases, the best defense is to budget and plan accordingly. Companies are advised to appropriate funds to anticipate increases as the plan their initiatives. That means assuming steadily rising per-piece postage costs, and in the case of fixed budgets, honing lists further to focus on your most important targets. Today’s consumer and business mailing lists are more targeted than ever, and can be narrowed down to reach specific geographies, income levels, ages, job types and more.
Another strategy is to take advantage of promotions. That’s right, the postal service runs sales! These programs encourage marketers to take advantage of new services and non-traditional approaches. Robert Schimek, director of postal affairs for Quad explains, “I would say the main strategy we’re recommending for customers to help try and offset these increases is to really look into whether or not they can qualify for any of the promotions that the Postal Service is running… the incentives for each one of the different promotions are slightly different, but they vary between 2% of total postage up to 4% of total postage.”
We’re here to help you navigate these changes, and to strategize the best approach to maximize your direct mail efforts. To find out more about bringing your ideas to life and discuss your options, call 631-757-8300 or email [email protected]