Marketers eye USPS' struggles with caution
Jim Sampey, executive VP and COO, Valpak
The embattled U.S. Postal Service (USPS) faces a host of new challenges, several of which threaten to directly impact marketers. However, many who rely on direct mail say that in spite of the tumult, they'll wait and see how things pan out before altering marketing strategy.
Prices on shipping services are expected to increase 4.6% — an average of 3.1% for Priority Mail, 3.3% for Express Mail and 3.7% for First-Class Package Service — starting Jan. 22, pending approval by the Postal Regulatory Commission. David Partenheimer, a spokesperson for the USPS, said that the service will still be a competitive choice for business shippers.
At the same time it's raising rates, the U.S. Postal Service is considering cutting services, although the agency agreed Dec. 13 to a five-month moratorium on post office and facility closures that will end May 15, 2012. USPS Postmaster General Patrick Donohoe told the National Press Club in December that the agency needs to achieve $20 billion in savings by 2015, which may require closing as many as 3,500 low-performing post offices and ending Saturday delivery.
The U.S. Postal Service also hired the investment firm Evercore Partners to assist it in the restructuring that it hopes will staunch its losses and achieve the prescribed $20 billion in savings.
Jerry Cerasale, SVP of Government Affairs at the Direct Marketing Association (DMA), said the organization is not “pleased” with a shipping increase that “is almost double the [consumer price index],” but said DMA members are prepared for the hike.
Cabot Wooley, SVP of Trialogue Direct, said that because of the strife, he expects the focus of direct mail to shift from brand awareness to return on investment (ROI). “Marketers only want to spend their direct mail dollars on high-value customers who have been responsive in the past,” he said.
That's the case with ValPak, a prominent direct mailer, which expects to continue using the channel in spite of any proposed increase in mailing costs.
“Direct mail is a trusted option for many local and small business owners who rely on direct mail to get customers in the door,” Jim Sampey, executive VP and COO at Valpak, said via email. “In addition, we are still seeing open rates of the envelope of 90%.”
Direct mail will also remain an important focus for Gum Soft-Picks, an oral health care product that reports high conversion rates from mailed samples. The brand's direct mail budget will probably remain the same, but increased shipping rates may mean fewer samples ship, said Ann Foppe, senior director of trade marketing at the company.
“It's important for consumers to try our product,” she said. “Other marketers may find they can eliminate direct mail, though. It's about how well the product experience translates across channels.”
Time Warner Cable, for example, plans to focus more of its marketing efforts on multichannel segmentation and targeting in the next year, according to spokeswoman Jeannette Castaneda.