Faced with an estimated $7 billion shortfall in 2010, the United States Postal Service (USPS) had filed for an exigent postal rate increase which proposes a 5.6 percent postage-rate increase to start January 2011. Also proposed is a reduction in service, from six days of mail service to five. What will all this mean to an already declining use of classic direct marketing services?
As of last week, the Postal Regulatory Commission (PRC) has denied USPS’s proposal of a postal rate increase. With USPS in massive debt, this forces USPS to resort to their second proposal of cutting service from their six day delivery service to five, leading to time sensitive material, coupon books and brochures, to reach potential consumers later than usual. Sending mail, often referred to as “snail mail,” has already seen a drastic decline in this technology driven world. Not to mention the “green” initiative where everything is now made digital to reduce waste. With a touch of a button, e-mails and text messages are sent, bills are paid, and advertisements are delivered right to a person. So why does this seemingly obsolete service still exist? Because believe it or not, there are people out there who still don’t own a computer. There’s a very specific market, i.e. the less tech savvy and older generation, that still needs to be catered to and for some businesses direct mail has seen excellent results. Many households still use coupons delivered by mail. They also receive their statements and bills. Some are wary of putting their information on the internet so they rely on old fashioned postal system. Mail is more likely to be seen than e-mails that may go into junk or spam mail folders. Not everyone has an e-mail address or check it regularly.
USPS is an independent agency of the United States government responsible for providing postal service to all Americans, regardless of geography, and at uniform price and quality. This gives them exclusive access to home mailboxes and anything labeled US mail, while competitors such as FedEx and UPS must leave packages at the door. There are no alternatives; either marketers pay the increased postage or stop using Direct Marketing Services. While many are discouraged by the decreased in service and proposed price hikes, some look forward to it. The discouraged who were already entertaining the idea of leaving direct mailing behind will be more inclined to leave. The ones who stay will be rewarded with less competition and a still highly profitable market.