New Rates Approved Effective January 22, 2017
The Postal Regulatory Commission has officially approved rates to be implemented by the Postal Service on January 22. Of course that is a Sunday, so you may have a tough time buying stamps – still, forever is forever so that 47 cent stamp you just purchased will still be good…but it will cost you 49 cents to buy a new one.
Overall, the PRC accepted rates as proposed by USPS with some very small adjustments in certain rate cells. The overall increase is about 0.9% across all classes and categories, but like chunky peanut butter, rates cases don’t always spread evenly. (OK, maybe it’s not like chunky peanut better, but it’s the analogy that popped into mind – maybe I’m hungry.) The destination entry discount was curtailed, so while most local-entry mail experienced a small decrease in rates, most letter-size mail entered at an SCF or NDC rate will see an increase well over the promoted 0.9%. We expect this to have an impact on commingle rates, which are negotiated with the commingling company; generally a blend of presort discounts, destination entry discounts, and trucking and sorting fees. We will notify customers as soon as rates are made available from our commingle vendors. If you work directly with a commingler, make sure you check their new rates before January 22.
We do expect this to be the only rate change in 2017. Postal Reform legislation seems to have pretty well fizzled in this term of Congress, and without legislative changes the Postal Service really doesn’t have the power to change rates more than once in a year. The PRC is reviewing the rate making process in the coming year, and no doubt Postal Reform will rattle around the halls of Congress again in the coming year, so 2018 could be an interesting year. For 2017, what you see is what you get.
You can see a summary of the new rates click here. Masochists are welcome to see the entire rate chart from USPS click here.
A Look Forward at Direct Marketing
2016 was a good year for direct mail. Standard Mail volume had flattened out for the last couple of years and finally showed some growth in 2016. No doubt some of that was from a very active political year, but even without that there would have been year over year growth. Nobody wants to admit they do direct mail any more, but we suspect there’s still some life in the old boy. Some trends we’re seeing:
Email is becoming a more difficult channel. Email continues to work well as a customer retention and relationship tool, but is less effective than ever as an acquisition channel. More and more email screening tools make it harder and harder to get email through and opened;
Mobile is more and more the dominant device for email and web viewing. A significant majority of people at least screen their email and make web searches on a mobile device. If your email and landing pages aren’t using responsive design to render on a variety of devices, your message is losing impact;
The web is a crowded space. General web display advertising is more expensive and less effective. A significant percentage of web and mobile display advertising is generated based on consumer behavior and cookies. It’s harder than ever for your ad to catch someone’s attention;
Postage has become stable, and we expect it to remain so for at least the next couple of years. The threat of a renewed exigent surcharge appears remote.
All of this adds up to a good case for seeing continued growth in direct mail. It’s just harder and harder to find a single channel to reach prospects – the web is crowded it is very hard to reach people who don’t already know you. Publications are experiencing reduced circulation – it’s hard to get eyeballs on your print ads. Mail is a more exclusive channel than ever – your direct mail will stand out among fewer competitors for attention than other channels, and consumers read their direct mail – millennials are even more responsive.
Some things to try this year:
First-Class Mail offers interesting opportunities in 2017. You can now send a presorted First-Class letter of up to 3.5 ounces for the same price as an ounce. This makes the price differential a lot less for heavier letter-size pieces. First-Class Mail generally gets better delivery and better response. It may be worth testing in greater volumes;
Informed Delivery will allow your prospects to see an image of your mail piece in their email before the actual mail piece gets there. This is really just rolling out in 2017, and it will take time for many consumers to subscribe, but if the Postal Service markets it successfully it could be a Big Deal later in the year. Think about how your mail pieces will look on someone’s smart phone in black and white. That may be their first impression of you;
The Postal Service is running some interesting promotions in 2017. Our favorite is the Mobile Shopping promotion that runs from August 1 through December 31. In this one you can get a postage discount for doing what you should be doing anyway – providing a mobile link on your mail pieces, such as a QR code. The homely little QR code remains an underused tool in our estimation.
By any measure, 2017 stands to be a solid year for direct mail, which remains, in our estimation, the essential direct marketing channel.