direct mail, Government, Marketing, Media, Thank You, USPS

Their Appointed Rounds

The United States Postal Service closed out their fiscal year September 30.  Never mind that the rest of the world goes by the annual calendar; the USPS wanted to beat the Christmas rush.

All in, the giant continues to perform well, within the confines of its quasi-government walls.  I wish the rest of the Federal government departments spent as much time looking after their own performance and expenses as does the USPS.

But from the latest Revenues Pieces And Weights report, here are a few glimmers of surprise and excitement.

  1.  It is a $69.6 billion dollar enterprise.  In the Fortune 500 list, it hovers around #37, bigger than Target, and smaller than Procter & Gamble, both good neighbors.  Like both of these companies, the USPS is an indicator of the USA’s pulse rate, though we will admit that it has slipped a bit.
  2. In 2017, the USPS revenues slipped $1.8Billion.  We know why.  The Web, social media, email have all disenfranchised much of the USPS core business: first class mail and standard mail.
  3. First class mail continues to fall, $1.9Billion.  Compared to last year, it delivered 2.5Billion fewer pieces of mail, a drop of 4.1%.  Why? Because we receive our invoices, checks and statements electronically.  We pay electronically too.
  4. Standard Mail, now call Marketing Mail, dropped 2.6Billion pieces, about 3.2%.  Why?  Last year was a mail-infused election year.  It was distinguished by huge volumes of mail, from you know who, despite his predilection for Twitter.
  5. Overall, in its market dominant categories, that is, where it holds monopoly rights, revenues fell just over $4.0Billion.
  6. In the open competitive markets, ie., parcels and packages, revenues were UP over $2.2Billion, a 12.5% increase.  Wow! Who knew?

The Web Taketh, And It Giveth

Here’s what I find impressive about the USPS.  Despite the constant nagging of the digital futurists who want to write the Obit for the post office, it continues to hold its own.  In an environment where Internet media are running rampant, the USPS has found a broad new niche: parcel delivery, a $20Billion business.  If anyone should be worried, it will be the brick and mortar retail stores. Ask Sears.  Ask Toys R Us.  Ask Amazon.

American consumers have taken to the Web in all respects, but at day’s end, they need physical product delivery, and the USPS has risen to serving that need.  After all, they were coming by our house anyway.  Their two main competitors are UPS and Fedex, the latter using the postal carrier to make the “last mile” delivery.

Neither Rain, Nor Snow, Nor Gloom of Night…

Postal carriers are the only American entity which visit 157,000,000 addresses every day.  They delivered, all in, 149 billion items in 2017.  They lifted 24 Billion pounds, or 12 Million tons, of physical product: mail, checks, magazines, parcels and yes, live bees and plants. The USPS has over 500,000 career employees and another 140,000 part-timers.  While this may seem like a wildly aggressive employer, I put it to you that the postal employee actually delivers, a claim many can’t make for other government institutions.

So hats off to the USPS.  It continues to fight the currents, and with little help from its political friends, it far surpasses its governmental cousins.

Thanks for reading! If you would like to take a look at the USPS 10-K for 2017, click here!

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Culture, Media, Science

Tip-a-Tip-a-Tap-Tap-Tap-Ching

Typewriters deliver a physical honesty.  No spellcheck!

My 8-year-old grandson cautioned me that to write important stuff in an email for posterity was not a very good idea.   “It’s technology'” he explained, and pointed out, “it’ll get lost really fast.”

After 40 years in the writing, printing and mailing business, I experienced a moment of happy vindication.

He made a good point. Despite the pervasive and indelible nature of social media, unless you know what you are looking for, ten years later, that little nugget of an email is crystallizing somewhere in a cloud far away, never again to fall to earth.

I have spent most of this summer reading hundreds of hand-written letters dated between 1943 to 1947. These nearly daily journals record my mother’s life in England as the war was finally won, and reconstruction had begun.

Mom’s letters to her dad 1944-1947.

It is a safe bet that had the stories been written as emails, they would never have resurfaced. But these did, unbidden, and made for an arresting and revealing read.

They appeared in a box from her estate, neatly tied together with a shoelace. The bundles were collected and saved by her father, in New York. No internet cloud at work here.   But without doubt, their physical presence could not be ignored; they had to be saved, and they were.  As a result, her story was available to be read, 70 years later. I’ll share more on that another time.

The workhorse 1915 Underwood–engineering marvel.

Along with the letters, I also inherited her Underwood typewriter. As a child I recall working this machine, struggling with its keyboard, stumbling through sentences like a child inebriate, unable to find the right letters, the right case, the right push.

Last year I purchased some new ribbon to replace the one that was now leathery dry. The new reels came from England.

Today I installed the ribbon. It’s black and red, and very, very fresh.

Changing a ribbon: lost on today’s digerati

The Underwood is about 100 years old, and is an elegant, and beautifully engineered piece of machinery. It is built on a solid black cast iron base, and probably has about 500 moving parts, all in perfect working order. A priceless possession.

The Underwood’s engineering was as intricate as a Swiss watch…or a steam locomotive.

The QWERTY keyboard is easier to manage now, after a career of hammering away on computers. But there are some niceties, too. An exclamation mark (!) is accomplished by striking the apostrophe (‘) key over the 8 key. Back space, and drop in a period. Voila!

Wordwrap had not yet been conceived, let alone invented, so there is the iconic bell to warn that the margin is in sight. Better than that, there is NO spellcheck. What you type is what you get. The typewriter  has a physical honesty about it that today’s word processors cover up like embarrassed parents viewing a child’s essays.

Dad’s portable Corona was the picture of efficiency

At the same time I acquired the Underwood, I also received my father’s Corona portable. It comes in a cardboard leatherette case, tied together with a length of electrical cord. This machine is remarkably lighter, only 10 pounds.

The 1914 Corona flipped open to reveal a tiny keyboard

Opening the 100-year-old container, I discovered that the upper half of the machine, ribbons and all, flips over revealing a modest set of keys. These are faithful to QWERTY, but there is special efficiency in the Corona. The actual slugs have 3 different characters each. An informed operator can do upper case, lower case and special figures off of the small keyboard.  My father wrote his doctoral thesis on this relic.

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Three characters for every slug, a clever design.

Again, I marvel at the care and diligence of the engineers who designed these machines. They are quite exquisite pieces of working technology.

I recently read a book entitled, “The Iron Whim – A Fragmented History of Typewriting“, by Darren Wershler-Henry. This Canadian author has assembled a fascinating thesis about the role of typewriters in our culture. After our 30+ years of PCs and laptops and smartphones, his book is a brilliant perspective on how we have developed.  You think it’s just about stenos and typing pools?  Get the book.

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The #5 Underwood, 25 pounds of literary punch 

And then there’s Tom Hanks and John Mayer, who have just concluded a documentary “California Typewriter“.  They too are quick to tell you about the beauty of typewriters, especially as Hanks says– his typewritten messages “can never be hacked by the forces of evil.”  Apparently Hanks also has a book in the works, featuring three stories involving typewriters.  He has time on his hands?

So, returning to the advice of my grandson, I will continue to use my laptop, and thumb my way through the iPhone keyboard, but I am much more respectful of his intuition on these things.

Hard copy doesn’t go away, and especially in the long run, is probably easier to find.

 

Post Script: October 26–I just finished Hanks’ new book, “Uncommon Type”, a series of short stories written by the actor.  A great read!

 

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Culture, Government, Media, Politics

A Note To My Canadian Friends

Leading up to the final election results today I have received a pretty consistent flow of commentary through social media and the occasional conversation that suggested perhaps we have all gone nuts in the land of milk and honey.

Since this morning, I have been presented with sound bites of disdain, disgust, and some pithy, intellectual thoughts about the decline and moral decay of America.

The latest was a clipping from the New Yorker “An American Tragedy” with my friend’s comment, “A sad day…”

First of all, let me say, I totally get it.

It is extremely difficult to swallow the language, the rude, boorish nature of the President-elect. But before we blame the winner, we need to ask why such a perceived lout could still mop up the electoral college with such surprise and certainty.

It reminds me of a story the late Art Buchwald told a gathering of we Canadian direct marketers back in the ’80s. This was a luncheon of about 200 business folks at the Boulevard Club alongside Lake Ontario in Toronto.

Buchwald, columnist from the Washington Post, was introduced after lunch to give a few comments. Like a good speaker, he started with a story. Buchwald was about 70 years old at the time and had a dry, gravelly voice that tumbled words out of a mouth you’d swear was filled with marbles.

He was recounting his conversation with the cabbie who drove him downtown from the airport. “I said to the driver, ‘I love coming here. The people are nice. The streets are clean. The architecture is superb. What a wonderful city!’ The driver looked in the rear-view mirror and said, ‘You wouldn’t say that if you lived here.’ ”

The punch line drew lots of laughs predictably.

But you can say the same thing about the view from inside the U.S. today.

By the way, Garden Collective, a Toronto ad agency put together a wonderful 2- minute piece about, “America You Are Already Great“. Watching it on TV, I was speechless, with a lump in my throat, overwhelmed by the kind and complimentary upbeat tone of the message. It was a warm, nice message.

It reflected well on a population which has elected a young, progressive, educated, well spoken, photogenic and popular leader named Trudeau. We Americans can only be jealous, political ideology aside.

But when the verdict is that today was a “sad day” in the United States, let’s be sure why.

Undoubtedly, the election of a person who may personify “bully”, is hard to stomach. I am sure that the nose plug counter at the voting booths cleared its inventory faster than Cubs shirts in one day.

The question is, how many voting Americans picked the winner because they like mysogyny, crudeness, xenophobic language and gratuitous swagger. Not many, I’ll bet.

The reason they held their nose and checked the box is because it has already been a sad day–sad for many years.

Trump won his votes because of the raw facts: only 62% of the U.S. workforce has a job. 45 million Americans are below the poverty level. 43 million Americans live on food stamps.

There are twice as many tax-payer funded civil servants as there are manufacturing employees.   Our enemies disrespect us, and our allies don’t trust us.

We have a $365 billion trade deficit with China, and a $20 trillion national debt, exacerbated by a limitless annual budget deficit.

The economy has poked along at a 2% growth rate annually, for 8 long years.  We are engaged in a middle-east conflict that seems to have no end, with heavy weights like Russia and China picking a piece of the pie.  The icing on the cake: a $12 billion payment to Iran for a nuclear arms deal.

Today there are 61 million immigrants in the USA, myself included, and approximately 25% of those are here illegally, absorbing their share of welfare, medical, educational and social services.

While the numbers may lead to numbness, they add up to a diminution of happy times.  And they have done so for at least 8 years, perhaps longer.  So for a family which is struggling today, to hear the same promises again from the same mouths as the past, the pot finally boiled over.

We all depend upon the media for our news.  And it is the mass media focused on their one dimensional narratives on Obama, Trump and Clinton that have glossed over the very real problems which exist in the U.S. today, leaving you the viewer to wonder how could Americans could elect such an impossible choice for President?

We have been manipulated by pollsters, pundits and reporters who just didn’t see what was happening at street level.  And then in a moment of surprise that only Wile E. Coyote could express, they ran off the cliff.

So I get your disappointment.

I know you are hurt inside that America voted as it did.  But don’t blame it on the electorate.  The numbers are a record– over 120,000,000 made it to the polls, and split the vote like a giant slab cake right down the middle, with just a few crumbs left over on one side.  But hopefully you won’t call out every other American as the stupid one.

More likely, they are holding their breath, like me, and hoping that this sea change, continental shift, tectonic grinding will really change things, and for the better.

In the mean time, thank you for your goodwill and take advantage of a huge dollar exchange advantage: it is a great time for us to visit Canada.

Thanks for sharing!  And don’t stop coming south, we love to see you.

 

 

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Fundraising, Media

Why Don’t You Just Ask?

Charitable Giving, Social Media and Stickiness 

online donationsWhy is it that fundraisers can’t write a note, or pick up the phone and just say what’s on their minds?

Why do they have to float it out there, like smoke, or a bad itch, on Facebook or Twitter?

It brings to mind a lesson from long ago.

As a kid of 10 years old, in my town, ice and skates were intended for hockey.  You know you live in a hockey town when the church tells you to leave your skates and gear in the vestibule before coming into the Lord’s house.

Anyway.  I didn’t play hockey.  I was in the figure skating club which was a popular girls’ sport.  Not so much for boys, but there you have it.

Every year our figure skating club hosted an ice carnival.  This is a 2-hour show where the whole town comes to watch this costume extravaganza on ice, down at the rink.  Little squads of 7-year-old Sugar Plum Fairies skoot out in a circle and pirouette.   Flocks of Skunks wobble on tiny skates across the ice while the town band plays “The Baby Elephant Walk”.

The senior girls kick line does a bouncy number to a Gypsy tune and the crowds roar their appreciation.  The whole time the blue and the red lines plus 5 face off spots map the ice for us.

The crowds are there because they bought tickets.  $3.00 for an adult, $1.00 per child.

Those tickets are sold because we figure skaters were told to go sell the tickets.  Which brings me to the current point in a round about way.   I hated selling tickets…scary and embarrassing, knocking on doors, asking people to hand over money for a non-hockey event on ice.

This was an annual debate between me and my parents:

“Why do I have to sell tickets?  Why can’t people just go to the booth and get them?”

“Because you need to learn to ask .”

“What do you mean?”

“Son, you need to learn to ask people face-to-face for things that you need.   We need to sell those tickets.  It’s for the figure skating club.   Most important, the audience wants to know who they are giving their money to.   This is business.   You are the connection. So get out there, and ask them to buy the tickets. Now.”

Today, with the power and saturation of the internet we can sell anything we want online.  More significantly, we don’t have to ask, beg, beseech, or grovel before anyone particularly.  It’s a non-contact vocation.  We can just float an open invitation out there, and see who bites on it.

Skywriting comes to mind.

If our follower numbers are big enough, we might get all we need without a repeat advertisement.  If not, the public plea is repeated, with urgency, and perhaps a shade of disappointment hidden between the lines.

The shame of this online power is that there is no need to commit, or worse yet, make a plea or promise in return to any one.  Just as bad, the buyer or donor doesn’t get any nod or recognition for rising to the occasion.  If they’re lucky, the online gifting site says “Thanks– your receipt is being emailed.”  And that’s about it.

So I am all for charitable giving.  And any time someone just asks me, I am happy–no, delighted– to give.  Charitable giving is a way for someone to participate and to help, and most importantly, the giver is thankful for being invited.

People sometimes wonder why there is so much fundraising mail.   While those letters may be mass-produced, invariably they are still individualized, signed and thoughtful requests.  They connect and stick.  And that’s why they work.

So drop a line, or pick up the phone, and just ask.

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direct mail, Fundraising, Marketing, Media

Battles In The Mailbox

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The Memorial Day rush begins.

There is an ongoing, armed conquest being waged in our mailbox.

Whether it was my donation to a certain political party that flagged my name, or perhaps a popular consumer magazine subscription, the ensuing barrage of fundraising mail from veterans’ associations is non-stop in our mailbox.

Regardless, the creative pitches are stunners, and deserve a closer look.  You are hereby invited to read my mail!

Most of these charities are profiled and rated on Charity Navigator.org, which strips away the emotion to detail actual performance against their stated missions.

Turnkey Office 

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As big as a door mat, and packed, too.

The Disabled Veterans National Foundation takes overwhelming force to a new level with their glossy, Flat-sized embossed package.  Despite the red-stenciled “DO NOT FOLD” our faithful USPS carrier did just that to get it in the mailbox.   It measures 12 x 15, and according to the weigh scales at our grocer’s fish counter, weighs 13.4 ounces.  If that seems heavy to you, perhaps we have been paying too much for our halibut.

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The field ready office with solar powered personalized calculator and stationery.

Inside this doormat-sized kit is a desk pad, calculator, calendar book and ball point pen.  Along with this prefab office kit is a $2.50 check drawn on a Bank of America account.   Surely a mistake, it is signed, dated and made out to me.   In the enclosed letter, the writer, smitten with remorse, asks me to return the check.

Check mailings are iffy because in many cases the marketer needs to have funds held in escrow to honor the checks if, fates forbid, the recipients decide to take the money.

Disabled Vets FNDN182

“Made in China”–The disturbing bug that must be shown.

This kit ain’t cheap.   Postage alone is nearly a dollar, and considering the hand-applied “Philip Brown” label on the calculator, plus its die-cut and tensor-ribboned place mat, the overall cost has to be at least $4-$5 dollars each.

Which may explain why the kit was made in China– not an encouraging signal for U.S Veterans.  I wait to see if they will send me a typewriter next year.

Parade-Ready Flag

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Steel plate reveal: your own desk ready Stars & Stripes.

Wounded Warrior Project also approached us with a package, a 5 x 10 windowed boxlet   displaying a real flag inside.  This Army-green imitation steel-plated ammo box is nearly half an inch thick, so it’s non-automation all the way..40-45 cents to mail.   The flag is intricately folded into a die-cut foam holder that also holds the addressed donor form, a hand-assembled product for sure… which explains again, why it was made in China.   In the mail, $1-$1.50 each.

We’ll talk about cost/response in a minute.

Photo Wallet

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A photo wallet… a hard to discard gift.

Wounded Warrior Project also sent along a separate request which included a 4×6, 20-page photo wallet.   Inside a regular 6 x 9 envelope, this gift actually made immediate sense, and the wallet now holds images of our ridiculously  brilliant, and beautiful grandchildren.  Not being one to take anything for granted, we will reward WWP for the effort.  Still, with postage, in-the-mail cost is 40-50 cents each.

Calling Cards

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Ersatz calling cards stuck in place to get the letter opened.

Help Our Wounded, and Armed Forces Aid Campaign have learned how to affix 3 plastic phone cards to a page.   Technologically, this is pretty cool, if not done by hand.  The cards are stuck on top of each other and appear jumbled through the large glassine window….as if they were thrown in quickly, sealed and run off to catch the 3 o’clock mail.  The impact, especially for the uninitiated such as me, is strong.   Their job is to get the envelope opened, and indeed, the ploy works.   Help Our Wounded, aka Healing American Heroes is not found on Charity Navigator.   My bet is the mailing costs 50-60 cents all-in.

Going For Our Stronger Feminine Side

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A pretty package with writing in mind. This one’s for Gramma.

Disabled American Veterans is the senior classman in veteran’s charities.  Despite that, they have assigned a female status to my record, so I receive kits that reflect more genteel tastes than one might expect.   Putting the gender bias aside, especially in North Carolina, this kit is in keeping with DAV’s efforts to send along quality gifts.

I can’t use any of this one, which is resplendent in lavender-hued Forget Me Nots.   Still, if I was desperate, making a struggling attempt to write to my passed on mother, or to scratch out a hasty last will and testament, I have notepad, and mauve colored, simulated vellum sheets for assigning my debts to chosen in-laws.

The kit is tasteful, if gender specific, and is certainly an eye opener.   DAV also uses real stamps on the reply envelope.  While the accountants may come unhinged at this largesse, DAV’s frequent use of the costly stamps is proof that the presumptuous gesture works in bringing in more donations.

One wonders how many codgers will steam off the stamps, versus cross out DAV’s return address and use the envelope to pay their water bill instead.

All in, this piece must tip the scales at $2.00 in the mail.  But it works.

Subtle and Cautious

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Creative use of stamps–just enough to impress, but maybe a challenge for the USPS accountants.

The USO is the most conservative kit to ask us for a donation, and that is in return for a genuine Stars & Stripes Flag plus good feelings.   I included this under-played kit because of their creative use of postage.

Non-profit letters get a privileged postal rate, somewhere between 8-18 cents depending upon address density and automation compatibility.   USO chose to affix 5-cents worth of stamps to their outer envelope, and to use their postmark (#440) to make up the difference at the counter.

Their reply envelope reveals their cautionary approach to wasting postage money.  Rather than place the full 49 cents on the envelope, like DAV, they are willing to go for 5 cents, but left the Business Reply Mail (bill us) indicia in the corner.

We guess that this itsy-bitsy effort will drive the postal accountants nuts.

In the mail cost: 40 cents, tops.

Drop Another Nickel

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Just when you thought the nickel was yours, they want it back.

Paralyzed Veterans of America is one of several charities which has a conveyor belt from the US Mint to their mail room wherein millions of shiny new nickels are deposited on glossy label stock letters.

Just yesterday we discussed at lunch how many of us keep the nickel, which after all, adds up when everyone is mailing them, March Of Dimes excluded.

PVA’s piece is a max-sized letter, 5 x 11-1/2.   This is a smart move because the postage is the same large or small, so you might as well get the most paper into the package that you can for the same price.  However, nickel-enhanced gold foil labels are heavy, so the rule is to keep below 3.3 ounces or the rate goes through the roof.   $1.25-$1.50 in the mail.

Did You Get Our Card?

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Flowers, fuzzy puppies and kind sentiments… a happy birthday for some one.

The Veterans of Foreign Wars by comparison uses a tiny 3-3/4 x 7-1/2 envelope, aka a “Monarch” to ask the nagging question, “Did your special edition birthday cards arrive?”   Somewhat reminiscent of the neighbor’s kid who knocks on our door to sell Christmas wrap.  We still have six rolls from last year.

Well, yes, the cards did arrive.   I am sorry, but so far I have not found a suitable target for them which are best described as lovely and softly sweet.   My Mom might have liked one, but not from me.   Again, these are estrogen-energized, and if I get my hands on the person who tagged me as female, I am going to scratch their eyes out.

A simple little kit, probably 40-cents in the mail, at most.

How Do They Make Any Money?

As you can see, these kits range in cost from 40 cents to perhaps $5 each all-in.   Can a non-profit actually make a profit from these mailings?  Check the Charity Navigator for details. You will be enlightened.

But realistically, the acquisition of a brand new donor will always be at a loss.  The strategy is to keep that donor giving for a long time afterwards, hopefully with a final bequest of planned gift when they pass on.

accountant

“How the @#$%^%$$ will we ever make this work?”

For the accountancy gene in you however, rest assured that every fundraiser has a donor acquisition cost they won’t exceed.   This is the anchor point in a campaign.  To respect that restriction, a good forecast on the cost of a response is to divide the piece-cost by the expected response rate.

For instance, a piece costs $2.00 in the mail.  This is big money, and the accountants are squirming in their chairs.  But the marketing folks believe the kit will get a 7% response.

$2.00/7% = $28.57 cost per response.

If the charity can show that a new donor at that cost will stick around on average for 5  years and return $150.00 in donations, then that is a reasonable investment.

Meantime…

We are digging in for more incoming mail.   Hopefully without flowers.

Thanks for reading!   We do support our Vets and and respect all that they do.  If you are inclined to donate to a cause, check out their website for a financial report, or visit  Charity Navigator.

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Culture, Media, Thank You, Thanks

Running Off The Cliff

wile-e-coyote-2You know the Wiley Coyote scene where he runs off the cliff in hot pursuit of the Roadrunner. There, hung in blind suspension of disbelief, he looks at the camera before reality sinks in.

Then he falls with a vviipp or a boink. We chuckle happily at his dusty, bruised remains in the canyon below.

So it is that I now admit to a similar, sad and painful realization.

Last December 6 I advised you that despite the falling volumes of the post office, one thing blossomed like a fresh spring crocus on a sunny hill… our continued, warm-hearted custom of sending greeting cards.

Stamps 965 copy (1)Christmas, Hannukah, Thanksgiving, Halloween were all good reasons to pick up our pens and write.

I detailed in colorful charts how “Single Piece Cards and Letters” sky-rocketed in the last quarter of the year, from October to December. Poring over the figures from the regular USPS reports, I found that the numbers went up, even while general mail volumes went down.

It was, as I said, revealing our brighter side.

Mail may be an antiquity, but by golly, we are sending a card anyway.

wiley's canyonRevisiting that article, I discovered to my shock and dismay, that I had reported on revenues, not pieces. Aaarrrggghh!

Yes, patient reader, I misled you, big time.

The truth is, Cards and Letters for Q4, October 1-December 31, remain virtually the same share of the total, for the years 2004 and 2014— 27.5% to 27.7%.  Meanwhile the whole category tumbled 55% over ten years.

Do they jump up in the last quarter as our good intentions begin to materialize?

Yes, as always.  In 2004, an uptick of 18%, and 2014, up 22%, just in time to make delivery by Christmas.

But who’s going to calibrate a blip…a minor swelling…a mild burp in goodwill based on these numbers?  The fact is, we have laid down our pens.

With that, Wiley Coyote looks down into the abyss.  In his descent, he contemplates what went wrong.

wile-e-coyote-off-cliff-largeYes, email for sure.  Good grief, why send a thank you card for a dinner when a two-liner on Gmail will tick that off the list?  Want to bang off a birthday greeting fast?  Hit “send” and it’s done.   And is there any need to spin post card carousels in some tourist trap when you can celebrate your vacation on Facebook?   Hardly.  And so much for mailing pics of the Grandkids when there’s Instagram.

“Ahhh, to heck with it,” Wiley concludes as the ground rises before him, except… there is one factor to consider…

The physical delivery of the letter made a big, personal-brand impact.   When someone took the time to compose, and write, in ink, on a nice card, address and lick an envelope, buy a pretty stamp, and find a mail box, it communicated in ways far beyond digital.

It’s a nice thought.

~Splat.

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direct mail, Economics, Marketing, Media

Awakenings: What Happens When USPS Cuts Prices

Spoiler Alert: This Is All About Direct Mail Math

It was not a well publicized announcement, 10 days before Christmas, that the USPS will most likely cut the price of a first class stamp by 2 cents, April, 2016.  That’s a 4% cut!

Whether the consumer figures out that a letter will mail for only 47 cents is a question, but for the direct mail community, the news is big.

First of all, direct mailers don’t talk cents. They communicate in thousands. (‘000’s.) A 2-cent drop in mail cost is worth $20 per thousand pieces mailed.

Hopefully the marketing folks at USPS have now awakened to the merciless mathematics of direct mail. In the civilian world, when we experience a cost of living increase, we suck it in, or look for a raise in pay to compensate.

In direct mail however there is a brick wall facing an increase in mailing costs.   The reality is, mailers don’t manage by total program cost. Rather, they manage by cost per response.

For instance, if a charity spends $1,000 to mail 3,000 letters, it is because they expect to get a 2% response…60 donations, at a cost of $16.66 each.

That cost per response (CPR) is bedrock..an anchor around which all other budgeting decisions are made. So when the USPS issues a 1% increase in postage, the CPR goes up, which is unacceptable.

The Story Behind The Story

When the post office raises its prices, we experience the inelasticity of direct mail performance, because mailers must preserve that cost per response.  The only way to do that is to spend less on something else, and that is exactly what happens: smaller envelopes, fewer pages, cheaper paper, less ink, for example.

The bogeyman in this reduction process is that the cheaper the package, the lower the response, which drives up the cost per response again!

The end game option in this vicious circle is to cut out lower responding markets, by mailing fewer pieces, and diverting funds to other direct media.

None of this helps the USPS.

Mail Trends 2008-2015 Prove The Point

In 2007 the USPS delivered 104 billion pieces of direct mail, its highest performance in a 240-year history.  Next year, the U.S. economy had a collapse, and there was a 4.3% drop in direct mail.  In 2009, there was another drop of 16.8%, eroding 21 billion pieces over two years.

Slide1

From 2007 to 2015 Direct Mail volume shrank 24 billion pieces.

Revenues likewise fell from $20.8 B in 2007 to $17.3 in 2009.  $3.5 billion dollars–gone.  Looking for cash, the USPS raised its prices nearly 13% from 2006 to 2009.

The bottom line is that the USPS has held direct mail revenues in the $17 B tier ever since, with three more price hikes from 2009 all the way up to 2015.  Its actual revenue per piece has gone up from 20 cents to 22 during that time.  Direct mail volumes have stabilized around 80 billion pieces, down 23% from its stellar 2007 year.

What You Don’t See

Slide2

Revenue per piece grew 10% while weights decreased 13%.

While the USPS has been able to weather the economic storm, the quality of mail has deteriorated.   In 2007 the average piece weighed 1.83 ounces.   In 2015 that shrank to 1.60 ounces, a 13% decline in paper, ink, pages and envelope.  More post cards, fewer envelopes, fewer flats.

The irony in this is that the USPS is actually earning more money for every ounce delivered: 11 cents in 2007, versus 13.8 cents in 2015, a 25% increase.

The Good News

A 4% reduction in postage in 2016 may not mean much to the consumer, but to the direct mailer, it opens the door to better creative, design, and production.  These lead to better response, lower cost per response, which drives up mail volumes.  Whew!

This price cut is good, good news.

PS: Kudos to you for getting through this important math lesson!  Please share.

PPS: You can check all the numbers by reviewing the USPS Revenues, Pieces and Weights report which they faithfully publish very quarter.

 

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