The US Postal Service is facing a net income loss of $3.9 billion this year and a projected loss of $7 billion in 2011. Many proposals have been made to save this organization, but the most likely will be a cut in services and a raise in postal rates. The effect this will have on direct mailers is enormous and what’s worse, it may only further the downward spiral into an eventual non-existence.
Cutting the deliver days from six to five (eliminating Saturday service) is projected to save the USPS $1.9 to $3 billion annually. But most business owners will tell you that cutting services will only turn away customers and exacerbate the problem.
Airlines have been trying this for years. To deal with enormous losses, most airlines have cut services like food, drinks and even pillows. They have levied extra charges on passengers for everything from picking your seat online to being overweight. The net result? Customer satisfaction ratings for major airlines are at an all time low and revenues aren’t much better.
For those who like to stroll down to the mailbox in your boxers and torn Metallica t-shirts on Saturday morning, fear not. The 5-day deliver plan will likely never become a reality. The two postal employee unions have lobbied hard against this reform and have even offered up pension decreases in place of one less delivery day. Furthermore, there isn’t a lot of political will for the plan, as many members of Congress have come out against it.
So why not just raise rates? This too is a push further down that spiral of death for the USPS, but also a slap in the face of their best customers. As it stands now, commercial mail makes up 85% of all mail, thus it subsidies the cost of mail delivery for everyone else. This means that without commercial mail, the average First Class letter would cost roughly $2.90.
When I was younger I used to help my father label and stamp brochures for his business. We would do hundreds of them by hand then drive them down to the post office. Ironically, this was always on a Saturday morning, but that’s beside the point. I can remember my dad always saying how the postal rates for bulk mailers like him were ridiculously high and that it was totally unfair that he paid the same rate as his father who mails about two letters a month. His point, now twenty-five years old, is still valid in 2010. Of course, I know there are discounts for pre-sorting and other mail handling things you can do, but these are discounts for simply taking on more of the USPS’ responsibility. Why wouldn’t there be a discount for that?
Perhaps a rate increase is appropriate for the “once in a while” mailer who really doesn’t keep the ship afloat. For direct mailers, a rate increase is just unfair. Raising rates will only see an increase in marketers abandoning direct mail, for less traditional mediums. Again, this brings us to our spiral. Or maybe black hole is a better metaphor. Nothing escapes a black hole’s enormous gravity, not even bad business.
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