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, 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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Marketing, Media

USPS: Taking A Retail Moment

USPS4

The USPS card display is there to capture the impulse to do something nice.

Kudos to the merchant-minded individual who suggested that the Post Office should sell greeting cards in their lobby. After all, if you want to receive letters, you need to send them too.

Part invites! Looking for a venue.

Party invites! Looking for a venue.

It turns out that the USPS does an audit every year to measure how long we wait in line. Two minutes is the national average. During that time we have a variety of scenery to peruse.

Beyond the oddities of humanity that lean over the counter to ship parcels bound up like mummified hat boxes, or to mail extravagantly addressed purple letters, or the restive small children that roll across the floor, we can look at the card displays.

The USPS selection is not encyclopedic, but it is enough to trigger the impulse.

The USPS selection is not encyclopedic, but it is enough to trigger the impulse.

The selection isn’t anywhere close to that found at a card store, and that’s good. We only have two minutes to make a choice. But the cards available still represent a middle of the road attempt at gentle humor, quiet sympathy, and friendly reminders.

Next to the greeting cards is a rack of retail gift cards, perfect for the last minute desperate search for an overdue birthday gift.

Stationery sets as starter kits. After all, if you want to get letters, you have to write them.

Stationery sets as starter kits. After all, if you want to get letters, you have to write them.

Across the lobby is another display of stationery sets, and party invitations.
When we are there to pick up our mail, or buy stamps, we have a brief opportunity to snatch a couple of cards, and whip them off to someone who is on our mind at that precise moment.

The USPS is demonstrating a simple case of vertical integration here. They are providing the total service: stationery, gifts, attractive postage stamps and delivery.

What better way to merchandise the universal service that gives you access to over 150,000,000 addresses across the continent?

The next time you visit your post office, take a look around. This is the perfect place to yield to the impulse to greet and treat someone, two blocks over, or on the other side of the country.

It only takes a couple minutes.

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direct mail, Economics, Marketing, Thank You

Ten Reasons You Should Thank The USPS

Teddy StampWe are all cheesed that the USPS is looking for a 1.97% increase in postal rates.  But before we run to our social media to complain, let’s open the envelope.  What are we getting?

1.   Door-to-door, pick-up and delivery.   Not only does a real person come to your home to deliver mail, but they are charged to pick it up, too.   Beats driving downtown.   And they do this 6 days a week.

2.   Equal representation.   The USPS is probably the only government institution which situates an office based on population density, rather than political handouts.  For sure, it’s the only federal presence in your community that isn’t there to administer laws and levy taxes.

3.   Legal authority.   A USPS postmark is an official seal, and when your letter is in the system, it’s a completed act.

4.   Jobs.   The USPS employs over 600,000 people.   It’s also the network that directly supports another 1.3 million people who use the mail to make a living, according to the Direct Marketing Association.

5.   The Grid.   There are 142,000,000 delivery addresses in the United States which are visited daily by the mail person.   The USPS grid is like a vast capillary system that beats nationwide, touching the most distant extremity.

6.   Innovation.  Maybe hard to believe, in the face of digital networks, but the USPS has refined and streamlined delivery to the point that it is cheaper to mail a letter today than it was 10 years ago.

7.   Protection.   Your mail is protected by federal law.   The space inside your mailbox is federal property.  The blue boxes situated across your community are safety deposit boxes, in effect.   Drop your mail, and it’s secure in the system.

8.   Culture.   What other government body continually picks new designs to celebrate on the face of a stamp?   Rock stars, writers, artists, scientists, athletes, discoverers… and they are BIG stamps too!

9.   Resilience. Despite a whirlwind of communications technology advances, the USPS still has cache, delivering nearly 500 million pieces a day.   When was the last time you saw a public phone booth?

10.   Fiscal control.   Yes, it has a $5 billion budget deficit.   Works out to $8,333 per employee.   The federal government has a $483 billion budget deficit.   $112,013 per federal employee.   In the bigger scheme of things, go figure.

Nobody likes price increases, but it is a sure thing that the USPS has done leagues more work to control costs than any of its government cousins.  In light of its value, can you really complain?

By the way, the price of a first class stamp remains at 49-cents after the hike.   Good anywhere in the nation.  Buy a bunch, they’ll last forever.

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direct mail, Marketing, Media

Tempting The Fates: 21 Ways To Miss A Mail Date

Just taking the time to share a thought or two while rushing to the airport.   My apologies to all my faithful readers who wonder why they have to scan this post.   But I was a direct mail guy, and the tangled webs of direct mail production may well be a metaphor for life in general.

Calendar-date-circledFor mailers, timelines are tight, the post office has rules, and nobody sees your see emergency as their emergency.   The laws of physics trump all wishes to the contrary. This catechism of faux pas are all reminders of actual events.

 

How To Miss The Mail Date And Likely Disappear Into A Black Hole

1.   Start late.   The corollary: take up the wacky idea by your boss to be in the mail by Easter.

2.   Assume that three weeks is 21 days.   It is actually 15.

3.   Skip the research: the offer is so powerful only a knucklehead could goof it up.

4.   Pull in the Creative folks with a “team-building” challenge: just give them the offer and let them work out the rest.

5.   Demand copy, comps and layout before you settle on the budget.

6.   Demonstrate your economic intuition: estimate the numbers, response, cost, sales.  Don’t be scared by the unknowns; you are a visionary risk taker.   Guess!

7.    Lean on your list provider.   Maintain project secrecy.   Ask for competitor ideas.

8.    Once Creative gives you format design, get your Printer to price it.   Ask for competitor ideas.

designs-envelope-clean

9.    New Printer specs!  Get Creative to revamp copy.   Be firm with the deadline.  No dilly dallying, this is a mega opportunity.

10.   Flex your muscles. Go out to bid on print anyway.  Don’t tip your hand to the competition. Quantities should be secret.  Vague drop date.

11.    Don’t bug your lettershop with production schedule questions.

12.   A Power day for you!   Bless the newly found low-bid printer with their first order.   Advise impending drop date.  Quantities may go up.   Or down.

messy-desk

13.   Delay approving final art.   Experience has taught you that something could change later!

14.   You are a team player.  After rushing  final art approval, pass to Legal to keep them in the loop. (Noseyparkers!)

15.   Marketing brainstorm: boss adds a new version for a paper test.  No problem!

16.   Hold off approving printer’s proofs until Legal edits are changed on press.

17.    Advise the lettershop: a split run over two weeks.   Re-run list for goofy, inflexible postal demands.

18.    Ask your list house for more names.   Your boss wants to add his parents to the seed list.  No problem!

19.    Play hardball: hold off postage deposits with the USPS.

20.   Get proactive: advise your inbound phone center of the impending promotion.   Set up a separate meeting with the website folks.

21.    Share your wisdom with the new trainee: test the phone number.    When a “telephone dating service” answers, ask if you may borrow their number while your promotion runs.

I am sure that none of these instances have ever occurred in your career.  Lucky you!

I have to go now as there is an unaccountably stupid, long, glacially slow line-up in airport security today.

Be sociable! Share!

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Economics

A Nickel For Your Thoughts

penny-1936-7877445Our neighbor nation to the north– those hardy, conscientious folks who are the first line of defense against the arctic chill lost a battle this past spring.    The Canadian penny was removed from the endangered species list, and officially extinguished, i.e.. it is extinct.

The argument against its survival was that it cost more than it was worth.  Which is a stunning confession to be made by any government official anywhere.

But there you have it.   The upside is that every child in the nation will now learn the important arithmetic of rounding up and down to the nearest five cents.   There is the clever, political subtlety that the Canadian government did not eliminate “cents”.  It is still legal to use a cent: talk about it, write it, or include it in important bank interest statements.   Retailers can still charge you cents, but you will pay according to nickels.  The penny is the ghost on the sales counter that haunts all transactions.   Everyone senses its presence, but it can’t be seen.

The move has rocked the net worth of the country.   According to the Royal Canadian Mint, there are 35 billion pennies at large in Canada.    About $10 per person.    Turns out there are nearly 19,000 tons of pennies stashed away in cans, desk drawers, pants pockets and chesterfields which have been devalued by a factor of two.   You thought you had a jar of $12 bucks in pennies?  Nonsense.   You have enough copper and zinc for a Venti Frappuccino.  

Where this new found economy takes us, is to another government agency in on the conspiracy: the post office.    Canada Post has announced its new plan to modernize and overhaul the postal system.   This includes raising the price of a single first class stamp to $1.00.    A buck!  Unless you purchase stamps in bulk, when you will only have to pay 85-cents.    See how that works?   No pennies!!

lady letterbox

Compounding this elaborate pricing strategy is the plan to curtail household delivery.   Before long, Canada’s mail will be delivered to a community box at the end of your street.   This will precipitate two additional behaviors.  First, neighbors will have to speak to each other when they visit the box.  Second, they can remove the riveted, burnished steel “No Junk Mail” signs from their doorsteps.

junk.letterbox

Truthfully, the United States Postal Service has a similar history of thriftiness.   They too decided that the customer should share in the work of delivering the mail.   In 1928 they thrust the responsibility of addressing onto the back of the writer!   No longer was it acceptable to merely place your aunt’s name on the envelope.   The USPS unilaterally demanded a street address and number.   Another typical example of  heavy-handed government.  Added to that insult was the price of a stamp: 3 cents.

IMG_6200And if you couldn’t find the pennies, you had to round up to a nickel.

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direct mail, Marketing

DM: Cheaper By The Gallon

junk-mailIs it possible today that any direct mail we get is still worthy of the moniker, “junk mail”? Once upon a time it seemed that mailbox was overflowing with incredible stuff. But after the shenanigans of the 70s–no, not junk food; and in the 80s.. no, not junk bonds — that government and the USPS put the brakes on junk mail. Mean time, reputable cataloguers, mail order companies, insurance, fundraisers, retailers and publishers had raised the art to a science.

Today, there is a legitimacy hurdle so high for any direct mail business, that to clear it, you have to be very, very good. And what is that screen?  Economy.

110601-eggies

A typical all-in cost for a direct mail letter is around 30-50 cents a piece.   Compare that to 39-cents a pound for bananas.    Mail a 100 letters, and you can find the $30-$50 bucks in your back pocket. Mail a thousand, and give up your iPad. But mail 100,000 and you give up your new car. Mail a million pieces, and you have just mortgaged your home, or a boatload of bananas. That’s why direct mail is hardly junk. It is very expensive, and without this expense, it won’t work.  Time to re-think that Eggies-by-mail deal.

So who thinks it is junk? The persnickety consumer, of course. And why? Because they don’t want whatever is being sold that day.

The reality is that on any day, we consumers are suspicious, and very tight-fisted. I bet we only surrender to an unsolicited sales pitch about 2% of the time, regardless of medium: mail, phone, in person, on TV, radio, or email.  I do  admit caving for the Eggies, which for the record are a physical impossibility. The chickens had it right from the beginning.

IMG_5632
Which leads me to a piece I received earlier this summer. A mauve-colored, hand-addressed and stamped envelope, complete with a foil return address sticker. My antennae are up.   Would this be a well-wishing note from a long forgotten contact? A wedding invitation? Birth announcement? A request for money from a relative? All of the above?

No. Inside the envelope was a short note from the desk of Aleksander Olsen advising on the merits of a certain skin creme. Despite the tracks and furrows that criss-cross my shrine-like body, I was not hooked. Perhaps if his credenza had written, I might have been swayed.

But Olsen’s desk also sent me a 32-page booklet, and it is a work of art.
IMG_5586
It is the tale of Hilda, a Norwegian cleaning lady, who, like her entire countryfolk has a crick in her neck from living on the side of a mountain overlooking icebergs in the North Sea. It turns out that she cleans fish tanks in Norway. If you haven’t been to Norway yet, fish is the main protein staple.   Hilda’s job would be similar to that of a stable cleaner on a Kansas beef farm.    Actually, I have never been to Kansas so I am only guessing on that.

In any event, the booklet unfolds a page-turning saga about Hilda’s travails in the tanks. Every evening at home, as she washes up for a night out on the town, she discovers under the layers of fish elixir a fresher, tighter, more supple Hilda.   She has reversed the hands of time!   The story introduces a series of sub plots, so spoiler alert, let me just say that she looks great, smells great, and I can too for just $60 on a tube the size of a shrimp.  Well maybe a lobster tail.

IMG_5587

The thing is, as obscure as this offer is, I don’t consider it miss-applied.   I have the money.   I certainly could use some air-brushing.    And who doesn’t have a secret wish to smell like a school of herring?   I wonder if Hilda has a cat.

So to my point: Mr Olsen’s desk probably holds a business plan that reveals  the path to riches selling oil of tank scrapings to prunes like me.    This is hardly a junk mail enterprise.

But it sounds fishy.

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