Mail Use Grows Despite Rate Increase

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Two months after a postal rate increase that averaged 5.4 percent across the board, direct mail quantities have not declined and, in some cases, they're even on the rise, according to several mailing services companies. The U.S. Postal Service, however, says Standard mail volume is growing but is weaker than officials expected.


American Mail Communications, Farmingdale, NY, handled 30 percent more direct mail in January than in the same period last year, president Greg Demetriou said.


"There was not one sector of our mix that took a hit," he said. His shop handles direct mail for advertising, fundraising, marketing and membership clients.


Volume also is up this year at catalog printer Arandell Corp., Menomonee Falls, WI.


"Most [of our catalog customers] have been accepting of this change and are moving ahead with their campaigns," said Don Landis, vice president of postal affairs at Arandell.


Joseph E. Schick, director of postal affairs at Quad/Graphics Inc., Sussex, WI, called the rate increase "a non-issue," adding that "some customers may have pulled back on their mailings slightly, but we haven't seen anything noticeable as a result of the rate case."


From Oct. 1 to Jan. 31, the USPS planned for a Standard mail increase of 4.7 percent, but the actual increase was 1.5 percent. There have been no significant changes to the state-by-state circulation strategies, according to the February issue of Libey Economic Outlook by Donald R. Libey. Intermediate-term and long-term outlooks remain positive, Libey said.


Mailers cited several reasons why the increase has had so little effect, including the relatively low level of the increase compared with previous double-digit raises. However, they aren't as optimistic about the next one.


"It's been four years since we had an increase," Schick said. "And, the 5 percent increase was manageable for most mailers."


However, mailers are turning their attention to the next rate case, which likely will be filed this spring. Because rate cases can take as long as 10 months to be decided, any ruling based on the next case probably would take effect next year. USPS board chairman James C. Miller has said to anticipate a mid-single-digit increase in 2007.


Others fear it may be higher.


For example, all of the postal union and management association contracts expire in 2006, which could influence rates in 2007 and beyond. In addition, while the last increase was an across-the-board rise, mailers this time expect variable increases, if not a full reclassification.


"Everybody is really concerned about what we are going to see in the next filing, and what it is going to mean to everybody in the industry," Schick said.


Another reason the recent increase has been relatively painless so far is that mailing services companies tried to prepare their clients as much as possible.


American Mail Communications got "proactive in the fall and kept in front of clients to remind them of the right way to do things so they wouldn't incur increased costs," Demetriou said. As a result, around November the company started getting phone calls from clients with questions related to design, paper stock and other areas where they could save costs, he said.


In addition, many mailers are making an extra effort this year to have clean, current mailing lists, he said. If they're not, "we're try to tell them that they need to save money and that usually gets their attention."


In contrast, Landis said Arandell hasn't seen a change in the interest in list hygiene as a result of the postal increase.


"Catalogers know the importance of list management, and annually we have seen an improvement in mailing lists," he said. "Whether there is a rate increase or not, all catalogers are looking to reduce costs."


Chantal Todé covers catalog and retail news and BTB marketing and Melissa Campanelli covers postal news, CRM and database marketing for DM News and DMNews.com. To keep up with the latest developments in these areas, subscribe to our daily and weekly e-mail newsletters by visiting www.dmnews.com/newsletters


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