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Money-back guarantee fails to draw US corporations into direct mail

Wednesday, January 9th, 2013

Offering a money-back guarantee for major corporations to try out direct mail campaigns has not proven successful for the US Postal Service.

The trial attracted no customers over the past 18 months.

It launched the “Mail Works Guarantee” trial in June 2011 with the hope of giving cast-iron proof to large potential customers that direct marketing through the mail brings a good return on investment for the average marketing dollar.

But alerting regulators to the end of the trial yesterday, USPS conceded that its offer was not taken up by any suitable corporations.

“As a result, the Postal Service was unable to conduct the market test or collect data,” the Postal Service reported to the Postal Regulatory Commission.

The concept behind the trial was a good one in theory – building new volumes in the mailstream by showing companies the benefits of the physical mail channel for carrying their promotional messages, with postage reimbursed where agreed return on investment targets were not met.

USPS had been hoping for as many as 16 major advertisers to try out the Mail Works Guarantee programme, targeting those firms who spend at least $250m on advertising each year, but for whom postage represented less than 0.36% of their advertising budgets.

Refunds of up to $250,000 would be on offer for those direct mail campaigns that did not fulfill their targets.

“Valuable insights”

The Postal Service said even though its market test did not become fully operational, the project had proven useful in gauging customer responses and the feasibility and cost implications of such a service.

“Valuable insights were gained from this test that will be of benefit in future Postal Service efforts,” said chief counsel, pricing and product support Daniel Foucheaux in the regulatory filing.

USPS told the regulators this time a year ago, following the first six months of the trial, that no customers had committed to Mail Works Guarantee, but said at the time that it was still working with potential customers, some of whom it expected to begin participating within a few months.

The Mail Works Guarantee programme was one way the Postal Service had hoped to generate new revenues and bring new volumes into its network.

The Standard Mail service, which is largely comprised of advertising mail, has seen volumes fall by more than 5% in the last year, from 84bn pieces in 2011 to 79.5bn in 2012, even though the year saw a major Presidential election boosting use of advertising mail across America.

USPS generated $16.4bn in revenue from its Standard Mail service last year, down 4.3% on the year before.

Source: Post&Parcel/PRC

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