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Mailers warn of side-effects from USPS pursuit of new mail volumes

Friday, May 27th, 2011

The mailing industry has urged the US Postal Service to take care not to undermine existing business in its efforts to grow mail volumes through initiatives to attract new mail users.

This week’s Mailers’ Technical Advisory Committee (MTAC) meeting, at the Postal Service headquarters in Washington DC, saw much enthusiasm and praise for many of the innovative ways in which the USPS is seeking to slow the decline in mail volumes.

Among mailing industry leaders at the meeting, there was particular interest in the Postal Service’s Mobile Barcode Promotion – an initiative promoting use of smartphone barcodes (QR codes) that is scheduled for the summer – as well as other incentives such as a second-ounce-free initiative for commercial First Class Mail letters, and plans to promote use of the mail through advertising.

But while the new Every Door Direct Mail initiative was also attracting a great deal of interest among mailers, it has also been courting controversy.

The initiative targets the 77% of American businesses that are not currently using the mail to promote their goods and services, by offering simplified acceptance and addressing for advertising mailings to be delivered to every address on a local carrier route.

A key concern that has arisen is that offering new business advertisers the chance to try out local direct mail services by waiving permit fees and other acceptance requirements has actually attracted existing customers – effectively, poaching business from USPS partner mail shops.

Some 975 post offices have so far run “Grow Your Business Days” events to promote the effectiveness of local direct mail advertising through the new initiative, bringing in $20m in revenues since May 1. The USPS has been pleased at the response, with the average business in the initiative providing about $300 worth of mail, or 2,000 pieces.

However, mailing industry representatives at MTAC said there was anecdotal evidence that USPS sales teams were approaching businesses that are already using the mail for advertising, with the simplified program undermining sales at USPS partner mailing companies.

Speaking at MTAC, USPS chief marketing officer Paul Vogel conceded that he had no idea how much of the revenue from Every Door Direct Mail had come from new mailers, or from cross-selling to existing users of the mail.

“There is some concern that the USPS direct sales team has been trying to sell to existing customers,” he said, urging anyone with information about such activity to come forward and let him know specifics.

Bulk mail

The cross-selling problem appeared to be particularly apparent in the bulk mail side of the EDDM initiative, rather than the retail side. This is where larger mailers can take unlimited volumes to Bulk Mail Entry Units (BMEU) using simplified addressing and avoiding permit fees.

Vogel said the BMEU strand had provided 95% of the revenue from EDDM so far – $19m from the $20m total sales.

But he insisted: “The intention is not to sell to existing customers out there, and disrupt existing relationships. It’s targeting the 77% of businesses not using the mail. We have 800 to 1,000 sales people on this – let me know who’s doing it, I will fix this.”

Steve Colella, representing the Mailing and Fulfillment Service Association, said “a lot of sales” had been going to existing customers under the EDDM promotion.

He also warned of other side-effects of the simplified addressing initiative. “Simplified addressing is a concern to those that sell residential lists (of addresses),” he said. “One company we’ve heard from has lost $20,000 in revenues a month from this.”

Mailing data companies speaking to Post&Parcel at the MTAC event said there were concerns about losing revenue since one of the major USPS priorities at the moment is to make the whole mailing process easier to customers.

But, the fairly pragmatic view was that the Postal Service does need to improve usability in order to promote use of the mail, and that mailing service providers would have to evolve alongside.

The Postal Service has said mail service providers losing income from list sales, processing fees and less costly address application and mail preparation could offset the losses with new business resulting from advertisers responding to the responses seen from the EDDM campaign.

“Once new EDDM mailers experience the power of mail, many will want to begin using targeted mail that requires lists,” said the USPS in a statement. “Simplified Mail will grow the number of businesses using mail for marketing purposes.”

A major national direct marketing campaign to promote the EDDM initiative is now scheduled for June, to target more than 90,000 printers and mail service providers across the States, USPS said.

Source: James Cartledge, Post&Parcel

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