The U.S. Postal Service Board of Governors has approved a negotiated service agreement with Bookspan.
The governors voted May 31. The unanimous decision was filed June 1 with the Postal Rate Commission, and the NSA took effect that day.
NSAs are special service and rate arrangements between the USPS and a mailer or group of mailers. Proponents say NSAs encourage greater volume by rewarding postal service customers with discounts and premium services. The changes in rates and mail classifications needed to implement the NSA require review and recommendation by the PRC and then approval by the USPS governors.
Bookspan, Garden City, NY, is a direct marketer of general-interest and specialty book clubs. It is a partnership between Doubleday Direct Inc. and Book-of-the-Month Club Holdings LLC. With 8.5 million members, Bookspan’s clubs include Doubleday Book Club, Book-of-the-Month Club, The Literary Guild and Quality Paperback Book Club.
The NSA applies only to Standard letters, not packages containing books ordered by club members.
Bookspan joins Capital One, Bank One (now JPMorgan Chase), Discover Financial Services Inc. and HSBC North America Holdings Inc. in having approved NSAs.
However, this agreement “is the first NSA for Standard Mail, which is much more important as an advertising medium generally than First Class Mail,” said Mike Plunkett, USPS manager of pricing strategy. “Also, it is important because it is the first time we had an NSA approved by the regulator that did not have an explicit cost-savings component, so it is purely an incentive for additional volume.”
This NSA’s volume-driven nature is particularly important to the USPS, Mr. Plunkett said, because in the earlier agreements, the cost-savings component involved mailers adopting the USPS Address Change Service, which is designed to reduce the number of address correction notifications provided manually and replace them with electronic notifications.
However, the number of customers who can produce cost savings by switching to ACS is limited because a fee is involved, so it is cost-effective only for very large mailers. But “the number of customers who can benefit from our ability to offer volume-based incentives is much greater,” he said.
The NSA gives Bookspan volume discounts on Standard letters used to solicit new members to the clubs. Though the NSA is structured to encourage more use of Standard letter volume, other classes will grow as well: As Bookspan increases membership in its book-order clubs, it will send more First Class Mail and fulfill more orders through USPS package services offerings.
The Bookspan NSA was filed July 15, and PRC testimony ended Dec. 15. The PRC issued a recommended decision May 10.
It is not the only volume-driven NSA, however. On March 29, the USPS filed an NSA with Washington Mutual Bank based on encouraging the company to increase its use of First Class Mail. The NSA was suspended earlier this year so the parties could review two recent PRC filings and revise their own, but it is no longer suspended.