When you think of efficiency, you may not think of the U.S. Postal Service. However, throughout most of its history, the postal service has provided exactly what was needed—timely delivery of mail and packages across the country at a relatively low cost.
Founded in 1775 by Benjamin Franklin, the postal service was able to change with the times, adding the Pony Express for cross-country delivery in the growing West and rural free delivery in 1896. For more than 100 years, anyone could have mail delivered right to their door for the price of a postage stamp.
For the fiscal year that ended in September of 2012, however, the Postal Service reported $15.9 billion in net losses, despite having generated an annual profit as recently as 2006, according to The New York Times. What happened to make this economic necessity such a losing proposition, and what does it mean for the future of direct mail marketers?
How Did We Get Here?
The post office currently processes about 563 million items per day, making it one of the largest organizations in terms of volume in the world. It moves these items over staggering distances. It would seem the Post Office has a very unique and satisfactory business model.
However, some of the things that make successful businesses work are simply denied to this organization. It cannot raise prices on its products without a literal “Act of Congress.” It is dependent on the income generated from its delivery system to sustain the entire model. It cannot simply stop delivering just because it is not cost effective due to various financial obstacles—the increasing cost of gasoline and the prefunding requirement for employee health benefits, to name a couple.
And the attacks on “snail mail” in the past 30 years have been astounding. Almost any other business, faced with the erosion of its customer base due to changes in technology, would either adapt or close. The post office has been forced to do the same thing in the same way when others were doing it differently—and quicker.
Faxing in the 1980s dampened the need for some overnight mail. Email and the advent of the Internet for communications further eroded the postal service’s mission. Today, mobile texting allows people to communicate on the go. Even bills are primarily paid online now, obviating the need for buying stamps or mailing checks. And direct mail marketing, the staple of marketers, is healthy but changing. The big shotgun mailings are becoming less common. Instead, marketers are mailing smaller, personalized and more targeted campaigns.
The postal service did not necessarily do anything incorrectly, but when the market shifted, people’s thinking began to change. Suddenly, it was not the price of a stamp that was the concern but the speed with which communication could be accomplished.
What Is The Post Office Doing To Cut Costs?
The postal service has not been entirely blind to the value shift. At least ten years ago, the Post Office beefed up its online offerings, including record retention, automated bill payment, and other services more in line with an online populace. However, it was not enough to avoid the rapid downfall of the entire postal economic system.
Now, the post office plans to close about 3,700 non-essential stations in the United States. Many of these are the tiny neighborhood post offices that will linger fondly in people’s memories.
The post office will also suspend Saturday deliveries. This may affect more than simply the delivery of birthday cards and chatty notes; many direct mail marketers worry that they may see lower ROI as a result of this.
Will The Closures Affect Direct Mail Marketing?
Direct mail marketers could take a lesson from the postal service’s woes. In order to fit into the new and changing economy, businesses have to change.
The New York Times claims that rather than seeing prices increase, direct mail marketers will see prices stay the same, or even decrease. To make up for the deficit, the USPS may be “cutting deals” with direct mail marketers in the hopes they will send more mail. On the other hand, if this happens, direct mail marketers will now have to make their product stand out among the potential influx of direct mail.
Despite the fact that prices are unlikely to increase, direct mail marketers will still need to make changes. In her interview with Forbes, Lisa Formica, president of FMI, asserts “the impact from this decision will vary by marketer and their direct mail strategy. If they are trying to time mail delivery in conjunction with a specific offer, then some altercations to their schedules will have to be made.”
Saturday closures may indeed affect businesses that rely on shipping in short time periods. However, with planning, these businesses may have other options. Direct mail marketers will find success in their power to adapt to change. Most customers will be content to wait a bit longer or pay a higher price for delivery. If direct marketers change their shipping strategies and time their mailings carefully, they can roll with the changes of the new postal schedule and still serve their customer’s needs as well as generate positive ROI from their direct mail efforts.
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