As we conclude the trends week here at InkOnDaPaper we wrap up with postal trends. This is by far one of the areas that is greatly effecting our clients and causing them to move to digital communications. The mismanagement of the post office has scared many companies and driven them away from direct mail. Now we all know direct mail works, but we need the post office to help in not constantly raising rates, but looking for ways to lower them as well.
Fingers crossed that things will change.
Anyway have a great Friday and weekend! See you back and better than ever next week!
What You Need to Know about Current Postal Trends
Comprehensive postal trends are making significant impacts on direct mail companies and other print shops, industry experts say.
Leo Raymond, vice president-postal and member relations for Epicomm, noted critical issues remain unaddressed since 2006 legislation mandating the United States Postal Service re-fund decades of future retiree health costs in a 10-year period.
The multi-billion dollar annual payments toward this obligation continues to threaten the USPS’ fiscal stability, he added. Bills revising rate-making limitations are stymied in Congress by partisan bickering, lack of stakeholder consensus, and the absence of a looming postal crisis, he says.
Two of the Postal Regulatory Commission (PRC)’s previous decisions are under review following U.S. Court of Appeals remands relating to rate cases originating in late 2013. In one, the PRC denied the USPS the opportunity to link Full-Service IMb (Intelligent Mail barcode) with eligibility for automation rates.
The “full service” requirement includes application of an intelligent mail barcode on mail pieces, electronic submission of mailing data and postage, and compliance with various mail quality standards. The court asked the PRC to better define the basis on which it denied the USPS request and issue a new order.
The PRC also denied the USPS a permanent rate increase requested under a statutory exemption from the usual rate increase cap. The court directed the PRC to redo its count of Recession-related lost mail volume and allow the USPS to recover related additional revenue, Raymond said.
The USPS already was recovering some lost revenue as a PRC-authorized temporary ‘surcharge’ in lieu of the requested permanent increase, expected to end in July when originally-approved additional revenue collection is complete, he added.
Now that the court has found the PRC should have approved a greater recovery amount, concerns exist over whether the PRC can issue a new order before the current ‘surcharge’ expires and by how much it will allow the USPS to collect even more revenue, said Raymond.
Although the Full Service IMb requirement for automation rate eligibility was denied, the USPS nonetheless requires it for nearly every optional program from promotions and incentives available to mailers to the in-plant acceptance operations authorized for high-volume mailers, noted Raymond.
Much of the industry voluntarily moved to Full Service IMb and though the mail stream visibility it affords benefits the USPS and the mailer, associated costs and implementation challenges impede its wider adoption, he said.
Seamless Acceptance requires mail production, documentation, and presentation sophistication to yield high-quality mail, accurate mailing data and postage documentation, obviating the need for traditional manual USPS verification steps, Raymond added.
Full Service IMb and Seamless Acceptance will inevitably be required with penalties for failure to maintain mail quality or accuracy levels, Raymond said.
While voluntary adoption is raising industry standards, smaller, less sophisticated, and less resourced mail producers are at a growing disadvantage, Raymond said.
The PRC and the Postal Service’s Office of Inspector General (OIG) continue to examine discounts offered to mail producers for ‘worksharing’ – steps taken by the mail producer that allows the USPS to avoid doing the same work such as barcodes, presort and destination entry, said Raymond.
“The law allows some discounts to be larger than the value of the work avoided by the USPS, but most are less, meaning the Postal Service passes through only a portion of the savings resulting from the mailer’s work,” said Raymond.
The PRC annually examines discounts to ensure they’re appropriate and statutorily legitimate, flagging some as excessive. The OIG recently questioned the continued offering of some presort discounts that, because of changes to USPS processing methods, have become counter-productive. Postal unions are calling for a worksharing discount reduction or elimination to generate more work for postal employees, Raymond says.
Fluctuations of even a tenth of a cent can impact mail preparers’ profit, production costs, and client mailing choices, Raymond said.
The Postal Service has recently been striving to reduce costs through aligning facilities, operations, and staffing with the current and anticipated mail volume workload and customer expectations, said Raymond.
That includes reviewing low-volume post offices’ operation hours, a reduction by about half in the number of nationwide mail processing facilities, a revision to eliminate overnight First Class Mail, a gradual career workforce reduction with supplementation by part-time workers, proposals to eliminate Saturday and door deliveries, and ongoing strategy deployment to improve mail quality and reduce processing costs.
Postal Advocate noted a “huge overcapacity of equipment and day-to-day volume streams decreases” particularly in postage statement First Class, said Adam Lewenberg, president.
Company consolidation has left existing companies to operate “smarter” in mailing operations, integrating print and digital into the same stream, and driving attention to the electronic medium through print output, he added.
Additionally, companies are moving billing-type operations into centralization with a larger trend toward outsourcing of smaller volumes in companies lacking staff expertise to manage it, said Lewenberg.
Kurt Ruppel, IWCO Direct marketing services manager, said in addition to rate uncertainty – making it difficult to create accurate postage budgets – service performance was affected this year through the implementation of Operational Window Change combined with the Northeast’s harsh winter.
The USPS future will be data-driven, leveraging vast data amounts from its Intelligent Mail program, including the build-out of an enhanced Informed Visibility platform providing mailers and the USPS actionable mail delivery data. The Real Mail Notification program, to be beta tested in New York City this fall, provides subscribers with electronic mail interaction and advance notice of what’s in their mailbox.
Pitney Bowes is USPS’ largest workshare partner. In addressing the National Postal Forum in May, Debbie Pfeiffer, president, Pitney Bowes Presort Services, pointed out that while “people don’t always associate the words ‘innovation’ with ‘mail’,” she was intrigued by the technological innovations in hardware, software and data analytics driving current trends.
“These innovations enable us to be more precise and accurate in everything we do,” she says “They are making it easier for our customers to send and receive the critical communications that drive their businesses.”
With e-commerce growth translating to higher volumes of parcels, it makes it easier and less expensive to sort, track and send packages, Pfeiffer added.
Pfeiffer pointed out that last year, businesses sent 24 billion statements to their customers last year, with the documents opened 97 percent of the time and read for an average of two to five minutes each.
“No marketing team has ever created a social media post or even a television spot that has attracted that level of customer engagement – it will never happen,” she added. “But , if we aren’t thinking of ways to help our clients beyond the mail piece, we’re doing them a huge disservice.”
Anchoring mobile, web and video-based communications with an effective mail piece creates even greater opportunities for meaningful customer engagement, said Pfeiffer, adding that “innovations in data analytics, coupled with the explosion in e-commerce, creates significant opportunities in parcels and shipping.”
Pfeiffer said the industry needs to become experts in the “integration of both physical and digital communications channels, as well as the physical and digital technologies that can have real impact on our businesses” as well as continue to innovate and deliver accuracy.
Cheryl B. Keedy, PS Digital’s director of strategy and trends, noted mail pieces are “much more highly personalized and high touch, with attributes like stamping and cancellations,” calling for a balance of time efficiencies and accuracy.
Ruppel noted an accelerating shift from traditional production workflows to those built around full-color digital print, especially inkjet, as mailers quickly embrace one-to-one communication with Personalized URLs, QR codes, Augmented Reality, and Near Field Communications.
Influenced by rising postage costs and multi-integrated channel communications, direct mail competes with and complements direct response television and web and digital channels, Keedy noted.
Mail shops and other service providers find it difficult to recapture per-piece revenue lost after the onset of the recession, she added.
Direct mail companies and print shops need to help customers navigate service challenges and pricing uncertainties by adopting new USPS technologies such as eInduction and Seamless Acceptance, Ruppel said.
Amie Sharaf, PS Digital strategy and trends manager, says deriving more efficiencies and accuracies in increased mass mailings calls for shops to invest in increased automation, “whether that’s camera-matching equipment or more training on their existing equipment.”
Smaller operations can provide niche services for clients lacking funds to pay for highly personalized digital pieces, noted Keedy.
Jody Berenblatt, senior advisor, Gray Hair Advisors, said print shops “need to know the new postal programs, such as incentives for mobile augmented reality and USPS scorecard programs that measure mail quality. Printers need to monitor and manage scorecard results to avoid additional invoicing and penalties.”
With printed pieces having become a commodity, creative color implementation and driving people to web sites through bar codes or web links helps compete, says Lewenberg.
Those shops that help clients market, save money and embrace postal incentive programs will successful take more market share, he added.