ANOTHER POSTAL RATE INCREASE: WHAT'S A CATALOGER TO DO?

The following is an article by PostCom President Gene Del Polito, which was prepared for publication in the New England Mail Order Association newsletter.

Any direct marketer with a pulse knows that the U.S. Postal Service (USPS) has filed with the Postal Rate Commission (PRC) a request for new, higher postal rates. What also should be known is that the USPS has asked the PRC to pass along some of the highest percentage rate increases to those who market their goods by mail order catalogs.

For instance, while the average increase sought from First-Class Mail is a relatively modest 3.6%, the increases in those rate categories used most often by catalogers are substantially higher, i.e., 13.8% for barcoded, automation-rated flats and 7.5% 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% increase in Bound Printed Matter rates. Then, as if to add insult to injury, the Postal Service is seeking to increase the Standard A parcel surcharge from the present 10 cents per piece to 18 cents per piece, and to increase the rates for Priority Mail (often used for fulfillment) by 15%. It almost seems as if the Postal Service is endeavoring to squelch mail order growth.

Fortunately, these are proposed rates, and the Postal Service still must seek the approval of the Postal Rate Commission before any new rates can be 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 that are ripe for contesting in this case, including issues pertaining to the overall amount of new revenue the Postal Service's 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 many others.

If you want to be involved in the only legal avenue for seeking redress, then you should make sure that your company is a member of at least one of the associations that is involved in your behalf in the present postal rate case. Other than that, 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.

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 multiplicity of software programs and services that can ensure that your mailing lists are in good form, e.g., CASS-certified software, the National Change of Address (NCOA) service, the Locatable Address Conversion Service (LACS), the 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.

Unfortunately, the rates the Postal Service wants to charge for larger than letter-size catalogs will rise much more precipitously than for letter-size pieces. Take a look at whether your mail marketing program can succeed just as 

profitably by transforming some (if not all) of your present catalogs to a letter-size format. In addition, you also should explore whether using a lighter base weight paper offers you any advantages. If you don't know the answers to these questions, then start by talking with your printer.

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.

While the Postal Service seems to have "lost its way" as far as the rates it's proposed for automated entry is concerned, the fact still remains that automation-compatible mail is and will remain much 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.

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 World Wide Web, 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 make sure it's tied directly to your back-office fulfillment operations. Make sure it's easy to find the goods for which you are looking, that it's easy to order directly on line, and that the speed by which an order can be consummated 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 email 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 present customers and prospects in lieu of your larger, flat-size catalog might be sufficient to attract your 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.