The U.S. Postal Service filed a request yesterday to allow the first negotiated service agreement for Standard mail with Bookspan, a direct marketer of general-interest and specialty book clubs.
An NSA is a contract between the postal service and a company, providing customized pricing incentives based on the company’s mail operations.
According to the filing, Bookspan would get declining block rates for Standard mail letters soliciting membership of people who are not current subscribers to the book club Bookspan is promoting.
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 would apply only to Standard letters, not packages containing books ordered by club members.
Bookspan must mail 94 million solicitations in the first year of the agreement, 95 million in the second and 105 million in the third (the latter two subject to adjustment) to receive discounts. If Bookspan does not mail at least 73 million pieces in the first year, it will pay the USPS a one-time transaction fee of $200,000.
The changes in rates and mail classification needed to implement the NSA must be reviewed and recommended by the Postal Rate Commission and then approved by the USPS Board of Governors.
According to the filing, the NSA is to give Bookspan incentives to increase its use of Standard letters for soliciting members for its book clubs. Otherwise, “solicitation volumes are expected to be flat or falling.”
The filing said the USPS would benefit from the revenue generated by higher Standard mail solicitation volumes as well as from the revenue generated by an increased volume for each new club membership in the form of Standard mail catalogs, Bound Printed Matter book fulfillment and First-Class correspondence.
“The filing is important for the industry because Standard mail is the locomotive that drives the postal train,” said Robert J. Posch, senior vice president at Bookspan. “Mail has impact in 2005 America.”
The filing said that functionally equivalent NSAs, involving declining block rates for Standard letter solicitations for book or analogous club memberships, may be devised with other customers.
If approved, Bookspan would join Capital One Service Inc., Bank One (now JP Morgan Chase), Discover Financial Services Inc. and HSBC North America Holdings Inc. in approved NSAs.
The USPS said testing Standard mail is consistent with its transformation plan goal of testing NSAs across various postal service product lines. And “since the NSAs we have done with First-Class mailers have been so successful, we wanted to give other mailers, such as direct marketers, the same opportunity,” USPS spokeswoman Joanne Verto said.
The postal service said it netted more than $21 million in benefits from the first year of its NSA with Capital One.
Bookspan is a partnership between Doubleday Direct Inc., owned by Bertelsmann AG, and Book-of-the-Month Club Holdings LLC, owned by Time Warner Inc.
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
