direct mail, Economics, Marketing, Media, USPS

The Last Post

This is my last post on USPS performance. If you are in the direct marketing or direct mail business, you have seen these before, but unless things stabilize, I don’t want to report, thanks.

The USPS Postal Regulatory Commission has just released the latest Revenues, Pieces and Weights quarterly report. They call it FY Q1/2020.This covers October 1 to December 31, 2019.

Cutting to the chase, I highlight these numbers:
1. First Class revenues are off $161 million, down 2.3% just for the quarter. This was supposed to be the Christmas, Thanksgiving, Halloween and holiday greetings season.
2. Direct Mail or “Marketing Mail” as they have renamed it, down $252 million, or off 5.4% during what was traditionally a good season.
3. Direct mail volume for the quarter was off 1.7 billion pieces…down 7.9%. Hello??
4. Periodical mail continues its slide, revenues off 7.7%, volumes off 7.4%
5. Competitive Packages and Parcel mail, revenues up $137 million, or 2.1%, but quantities down 68 million pieces, off 4.0%.

I suppose I am naiively conservative, but I really expected for this past quarter to shine, and I have been rudely shaken to grasp what everyone else has been saying for years.

On an annual basis, the numbers are no more encouraging. I have created the chart below, converting the USPS fiscal year reports to normal business calendar years: January to December.

Compared to 2018, here are a few highlights about 2019 volumes:
1. First Class revenues off 2.2%; pieces off 3.4%
2. Direct mail revenues off 3.7%; pieces off 5.6%
3. Packages and Parcels revenues up 3.5%; pieces down 2.8%

Clearly, email, chat, web, and social media has displaced the need to use the mail. The only beneficiary in this trend is the package delivery business, which the USPS has carefully cultivated, though the decline in pieces is still a concern.

If there is any bright spot in this numbers soup, it might be that the direct marketers who mail to live know what they are doing; that it’s the small local businesses which used to mail have opted for web and social media instead.

We’ll see, but unless they do, this is my last post on the USPS.

Thanks for reading and sharing.  If you are in the DM business, and have an alternative observation to make, I would love to hear it!

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Culture, Media, Thank You, Thanks, USPS

Will You Write Me?

Back in Delhi, my home town, everyone got their mail at the post office.   Built in the 40s, this was the largest civic building in a small tobacco town of 3,000.  We climbed, what seemed at the time, a grand set of concrete steps, and entered by a glass and steel door into the lobby which held a vault of perhaps a thousand burnished steel postal boxes, secured by brass key locks.  The vault had a permanent pungent fragrance of paper, and marble floor cleaner.

I took those steps two at a time for several years through my early teens, hopefully opening our PO box #580 in search of letters for me.  The trick was to get them before the folks got there, because these letters were my first tentative steps into romance, and I couldn’t stand the investigatory barrage I would endure, had someone else seen them before me.  Worst of all, my brother, who might be on a letter quest of his own.

What’s the power manifested in these testaments of our youth?  To clutch the page that had been in the hands of someone special, reading over the words they had written bravely, carefully, giddily, for our entertainment and contentment.  I treasured every one.  And I wrote back in kind.

I just reviewed the latest report from the United States Postal Service wherein it reports that ‘single-piece first-class letter mail’ is down 7.3% from a year ago and 48% since 2009.  Now granted, the category includes small business invoices, bill payments and volumes of responses to direct mail. But among that steadily disappearing tide of mail, swept out to the depths of a dark, unforgiving and wordless ocean, there is a loss too profound to ignore, and that is the personal letter.

The post office reported that post cards are down 11.4% from a year ago. 67% since 2009. What clearer evidence can there be that we no longer send picture post cards from a remote station at the edge of Grand Canyon, or outside a cabana in Puerto Vallarta?  Maybe off a log boom in Vancouver?  Now, it’s Facebook, Instagram, IMs and Twitter all the way.

The reality we are ignoring is that hard copy has staying power.   Despite the pervasiveness of social media imagery, if we want to leave a trail for others to study years from now, we will have to rely upon the impulsive selfies we posted as the core sample of our achievements. There will be no words to explain.

Wise beyond his ten years, my grandson cautioned me not to commit stories to email. “That’s technology. It’s gonna disappear. You need to write it out, so that it’s saved.”

Smart kid.  Long live the printed book.

But more than the written word is lost. We received a letter from a long-missed friend a few weeks ago. In it, she recounted the routine of her days, the status of her children,  and their families, her health, the current politics of their village, and what to wear to a party.

While the news touched many levels of importance and substance–both high and low– it was the actual writing of these items that made the impact. Putting it all down on paper was a commitment to her personal history. Had she merely emailed, the missive would be digested and eliminated. Instead, her letter is saved, rubber-banded with others.

All our parents wrote, and frequently.  Last summer I took the time to read and absorb about 100 letters that my mother wrote to her dad in New York City. From 1943-1945, she was a newly married war bride, making a home in England while the war continued.  By 1948 she had moved to Delhi, and to a new world.  Her tale is all on paper.

Thank goodness she hadn’t emailed her stories, or they would not exist.  I learned more from those letters than I would have otherwise, even if she had told me face to face.

Letter writing isn’t difficult.  Once you start, it just flows.  The challenge is getting paper, stamps and envelope, and time.

Time is the premium resource.  It takes time to sit and consider what to say.  Why?  Because you know that your written word will be received, read, re-read and pondered upon.  Unlike a text, a two-line email, a photographic burst on Instagram or a re-post of someone’s pithy life motto, your written letter is a physical fact, and it will be read carefully.

It’s a shame really we squander our thoughts on slippery social media choices, only to find they are misinterpreted at the receiver’s end.  ‘Would to God I never wrote that!’ is a common remorseful statement following a late-night email that really did not come out right.

If you do consider taking up the pen, a good place to start is with a simple thanks. We keep an inventory of greeting cards–blank inside– which we use simply to thank people.  Thanks for the gift, the visit, the letter, the phone call, the gesture.  Thanks for just being there.

Some would call this just good etiquette.  And old fashioned.  But that again shows how much we have fallen when even ‘thanks’ is relegated to a text.

Meanwhile I still recall the adrenalin, the blush, the quiet excitement of opening that mailbox and seeing an envelope for me.  Irreplaceable, even today.

I hope you find the time to write!

“Well I got my mail, late last night, a letter from my girl who found the time to write…”

~Gord Lightfoot, “Big Steel Rail Blues”

“I read again between the lines upon the page, the words of love you sent me,”

~Gord Lightfoot, “Song For A Winter’s Night”

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Culture, direct mail, Marketing, Media, USPS

More Change In The Mail

For you marketers, the latest USPS Revenues, Pieces and Weights was just released. It is a good indicator of the health of the economy, but also reveals just how we count on the post office in a different way than what Ben Franklin had in mind.

First off, the USPS jiggles their year-end to March 31, so the numbers I show you here have been adjusted to report a full normal calendar year, January – December, 2018 and 2017.

First Class mail continues its slow descent, losing 4% of its volume over the past 12 months. That is, we mailed 2.2 billion less pieces. The big drop is again in business and financial mailings, as more and more consumers opt for email statements and invoices. Anyway, First Class mail shrank by 119,000,000 pounds, or nearly 60,000 tons.

The USS Ronald Reagan: 103,000 tons.

Marketing Mail, otherwise known as Standard, grew by 258,000,000 pieces. The percentage growth is negligible, which is mind-boggling, but considering the minimal, steady slide over the last few years, this is a big deal. Direct marketers put more money into mail. Remarkably, piece-weights are down.   Down 133,000 tons in fact. Hard to grasp?  It is a lot. Let me remind you, the USS Ronald Reagan only weighs 103,000 tons.

Periodicals, fell 7% year over year, representing 363,000,000 fewer magazines and newspapers. Put into terms you may relate to, that’s equivalent to 30 million monthly subscriptions, cancelled.  While page counts are hard to calculate, the average weight of a single magazine shrank by 0.178 ounces, too.

The rising success in postal delivery however is packages and competitive parcel services. Overall, thanks to Internet, catalog and direct mail order, the USPS volume grew 8% in 2018, by 477,000,000 pieces, or just over 1 billion pounds. That’s 530,000 tons, or for you navy folks: five USS Ronald Reagans.

Conclusions:

We are always pointing to the USPS as a struggling giant.  But it is a terrific barometer and thermometer for consumer behavior.  Why? Because it is the only organ in the U.S. that still takes the pulse of over 150 million business and consumer addresses every day.  It does not sample and extrapolate.  It measures the whole body of the nation.

Understanding that, we see the real change in ourselves: we write fewer letters and cards to one another, and prefer to get our important mail electronically: email and website.  We also shun the retail experience in favor of direct order over the Internet, and through catalog and direct mail.  Lastly, we are steadily running away from browsing the printed page for news. Instead, we go to a screen or tablet.  Still Benjamin Franklin watches.

Thanks for reading!  If you would like to see the entire USPS report for October-December 2018, check it out here: Revenues, Pieces and Weights.

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Culture, direct mail, Economics, Government, Marketing, USPS

USPS: Hidden Good Fortunes

Every quarter the USPS publishes their Revenues, Pieces and Weights Report. For the numerical savants out there, this is a feast of numbers beyond one sitting, for sure.

But the big story is, the USPS continues to perform in a stellar fashion, despite the ravaging onset of online displacement of hard copy as we know it.

If you think the post office is in trouble? Have another think.

Q3 YTD Results–9 Months Only
~The bad news– and what is publicly perceived, First Class revenues have fallen from $22.7 billion in 2013 to $19.9 in 2018. (off $2.7B or -12%).

~In the same 5 years, Magazines and Periodicals dropped from $1.3 billion to $984 million. (off $276M or -22%)

These two categories accounted for a $3 billion shortfall in revenue.

~Direct Mail, which includes catalogs, has ceded $294 million over the past 5 years. (off -2%) to $12.5 billion in the first three quarters of fiscal 2018.

Now for the good news.

In 2018, competitive Parcel and Package delivery has grown from $9.8 billion in 2013 to $16.9 billion. That’s a $7.1 billion growth, or 73%!

So we can certainly see how internet and digital media have blasted the legacy paper and ink communications business to smithereens.

What we did not see however was that online commerce has grown so rapidly that the USPS has found its newest niche: order delivery.

Year to date, 9 months, FY 2018, the USPS has delivered 4.2 billion pieces. Compare that to 2.3 billion, 5 years ago.

The USPS has another interesting report available, entitled Public Cost and Revenue Analysis, Fiscal Year 2017.

I like this report because it tells you how well it covers its costs of operation.  For instance, First Class Mail has a cost coverage of 210%.  Basically, its revenues are double its costs.

Direct Mail cost coverage is 153%.  Magazines and Periodicals, only 69%.  But the Package and Parcel delivery business, in the competitive markets, cost coverage is 155%.

Overall revenues for 9 months are $53.8 billion, up 5% from $51.2B 5 years ago.

These numbers indicate the ebb and flow of the door-to-door, pick-up-and-delivery business, and how the USPS is responding to America’s choices in communications.  True, the numbers do not account for front office costs, and legacy benefit and pension challenges, where there is a different story to tell.

But for making their daily appointed rounds, no one does it better than the USPS.

 

Thanks for reading!  If you would like to see these reports for yourself, have at it!

Click here: Fiscal year 2018 Q3 Revenues Pieces and Weights

and here: Public Cost and Revenue Analysis 2017

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Culture, direct mail, Marketing

Feel-Felt-Found

A Tough Customer?

Have you ever found yourself searching for the right way to win over a person who resists an idea?  You know you are right, but you don’t need to pound the table to prove it.  I recalled this tactic from years ago in the infancy of my sales career.  It works.

I decided to include Feel-Felt-Found in my book Many Happy Returns, which is all about writing and designing good direct mail.  Feel-felt-found is an excellent tool for a testimonial, and even an opening statement.   It can be a third party insert to disarm the most resistant buyers of their reservations.

‘Feel-felt-found’ is a logical progression that brings a reader around to a positive point of view. The seller is identifying with the potential buyer: “Look, I know how you feel…” and continues to list the potential negatives of the offer. This concession aligns the buyer and seller on the same side of the issue.

Continuing, “I felt the same way myself…” describes the suspicions and reservations in some detail. And then turns the tables, “But here is what I found…” and concludes by cashing the objections for a happy discovery that it’s a good deal after all.

He delivers perfectly.

Tom Selleck, best known for his convincing portrayal of the gruff, conservative, New York Police Commissioner on CBS “Bluebloods”, delivers a perfect ‘feel-felt-found’ for American Advisors Group which markets reverse mortgages for seniors.

He sticks close to script:

“I know what you’re thinking. I thought what you thought. Some things are just too good to be true. Just like you, I thought that reverse mortgages had to have some kinda catch –just a way for banks to get your house…right?
Well then I did some homework and I found out that it’s not any of that – it’s not another way for the bank to get your house and it’s also not too good to be true!

The script continues to explain the financing procedures and the benefits. Selleck concludes:

“I know what you were thinking – I did too. I felt the same way. But I checked it out and I found out a lot more. It’s pretty simple, a reverse mortgage from AAG can give you the retirement stability you’re looking for. Maybe you want to check it out.”

The script goes on to offer a free brochure and video for interested viewers.

‘Feel-felt-found’ is a powerful sales tool and delivered in the voice of a satisfied customer, or a company employee, makes a great testimonial for the reader to re-assess an offer.

I hope you liked this.  I have never used this blog for promotion, but in this case, I felt compelled.  It’s part of a life story, so I included it.  There’s plenty more for direct marketers who are on a quest for success.  You will find uniquely helpful clues in Many Happy Returns–Rules, Reckonings and Tales Told From The Mailbox.  It’s available now!

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Marketing, Sports

The Deal: With Six You Get Egg Roll

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In spring, a young man’s fancy turns to…testing.

It’s a sure sign that Spring is on the way. The March issue of Golf magazine arrived, and after the most dismal stretch of dull weather in recent memory, the green pastoral images of fairways and beach-like bunkers beckon irresistibly.

But among those pages floats another stimulant. Golf blew in 4 different subscription order cards. These 4 x 5-1/2 reply cards exemplify the art of mail-order merchandising.

One would ask, why do we need any cards? I am already a subscriber!

Golf Tees

 It’s all in the numbers.

True, for the longest time I used to let my subscriptions expire so that I could re-up and get the free gift. In the past our home was filled with calculators, phones, binoculars, hats, world maps and globes… all manner of stuff with somebody else’s logo on them. Not only did we like the goo-gaws, but it was fun to get them in the mail.

But Golf’s four order cards demonstrate the great science of offer testing. And there is practical beauty in that:  when you understand what excites the buyer’s brain, you make more money.

Analysis

Each of the cards has exactly the same deal. One, two or three years for hefty discounted pricing off of newsstand. With each, the same gift premium is offered: a “Golf Distance Finder”.

I couldn’t use the distance finder. It would be perennially set at “Too Far” with only occasional gauging at “Fat Chance”.

Anyway, the cards are all different.  The result of long, worried debates in Golf’s conference room about how to best wring a dollar out of a new sub, there are four gradations.  Each effort targets a different dark corner of the golfer’s bunkered mind.

Card One: It’s blue, with giant GOLF titling.  In simple fashion it provides the basic deal with a mention of the discounts off newsstand price.

For the unassuming habit-driven: "yep, sure, whatever."

For the unassuming and habit-driven: “yep, sure, whatever.”

A small un-captioned picture of the gift is featured with, “yours free”. This card is the control sample, and wins or loses on brand loyalty.  Ideally suited for the unassuming, doubtless, committed player.

Card Two: It’s grey, with a smaller GOLF title, same deals but highlights “Your Price $16.00”. Understanding that some may not know what the gift is, “FREE Distance Finder” is inserted below the picture.

"The distance between me and the cup, and between me and Jupiter is negligible."

“I may never hit the green, but I can see Jupiter.”

This card is for the cash-strapped grinder who is figuring one year is just long enough to suspend the inevitable realization: golf is just a good walk in the wilds ruined. Or they figure $16 bucks is the right price for a telescope.

Card Three: It’s powder blue and screams to the wealthy and permanently, irrevocably, hopelessly optimistic, driven player: “Tomorrow will be a better day and the BEST DEAL! is a 3-year commitment.”

"This will be my year. Well, maybe, then again, sometime in my lifetime."

“This will be my year. Well, maybe, then again, sometime in my lifetime.”

The distance finder is featured, but it’s the 83% discount that grabs.

Card Four: This is the gutsy guarantee card. “Lower Scores. Lower Price.” is for the duffer who has journeyed through four painful levels of acceptance and will now  admit they couldn’t hit a basketball with a broom in a closet.

"This year I will not tear up my score cards."

“This year I will not tear up my score cards.”

They figure literature, technology and a little learnin’ might be the answer. If that still turns out to be a whiff, then they are ready to go for the money refund.

Results

At the end of the test, which could go on longer than the season, the Golf sales department will look at the results for each card, which got the most orders,  which deal worked best for each card, which got the most email addresses, and which got the most money up front.

This is not a double eagle fantasy for statisticians.  Rather, the results of this inexpensive test will predict which offer is worth rolling out in other media with the promise of the highest return on investment.

While solo direct mail may be proud of a $20 cost to get a new subscriber, the numbers may dictate that direct mail is still stronger than web display ads, email or simple on-page advertising.   Knowing which deal is strongest can shave a few pennies off acquisition cost.

Long ago, we used to puzzle over the best offer: “buy one get one free” vs. “two for the price of one” vs. “50% off”.

It isn’t easy, but you can test.

Thanks for reading!   Direct marketing tests are a way of life, and you never know when a new angle won’t build your margins unexpectedly.  I swing at the ball with the same giddy optimism.

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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.

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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

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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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