Let’s face it. We need to “modernize” the USPS for it to become profitable again. And this doesn’t mean just incorporating more high-technology to scan and move mail more efficiently; the “new and improved” postal service must look radically different than it does today. With a multitude of digital communication options available today, all competing for the finite direct marketing budget of businesses, radical change is inevitable.
The current challenge the USPS is facing is twofold. In 2007, the USPS delivered approximately 226 billion pieces of mail. Today, they are mailing approximately 170 billion pieces of mail. This equates to a 20% decrease in postal revenue. Additionally, on average, they add between 1 and 1.3 million new delivery points each year. So, while businesses are diverting their direct mail into testing other mediums such as email, social media, banner ads, SEO, PPC, etc., the USPS is continually expand their delivery service infrastructure to keep pace with a growing population, and associated delivery points. USPS postal revenue is going down, while costs associated delivery is going up.
So yes, change is inevitable. Whatever changes are decidedly made, those changes must include a long-term plan for continued financial viability. Here are 5 key areas that must be addressed.
1. Variable Postage Rate
Does it make sense for the cost of a first class stamp to be the same, whether it is mailed across the street, across town, or across the county? Albeit easier to calculate, the price of postage should adjust to reflect the delivery distance and rising cost associated for that delivery. No matter how efficient our current system is, I think we can all agree, more energy is spent on delivering a mail piece from Florida to Alaska, than is spent mailing to the other side of town. Even dividing stamps by delivery zones will more the price/cost issue. So, let’s the price to deliver out of market is twice what it is today, but ½ the cost to deliver within the market. All things being equal, local deliveries will go up and the more costly deliveries will be reduced. Let’s not fiddle with the numbers at this point, but you get the point.
2. Privatize Key Links in the Chain
Of the 36,000 stand-alone post offices throughout our country, only 6,000 are actually turning a profit. Where it makes sense, privatization of certain facilities, delivery systems, and office locations will create competition and efficiency. Privatization will also help to encourage these private enterprises to promote more business mailers. Privatization for various components of the delivery chain seems inevitable. It’s just a matter of what “links” in the chain will have the greatest cost recovery impact with the lowest “collateral” damage.
3. Embrace Digital Integration
The USPS must continue to evolve as the internet does. As will the Mobile Barcode Summer Promotion, the USPS needs to take the lead on introducing new digital technology, so as to have the opportunity to encourage direct mail marketing. If an existing business mailer is considering alternative mediums of advertisements, the USPS should know about it and perhaps be the media buyer for that alt medium, rather than simply watch those revenue dollars go elsewhere. The more involved the USPS is, the more they are able to influence these buying decisions.
Can the USPS profit from introducing new “online” technologies where there is an associated direct mail campaign? Would it make sense for the USPS to purchase a technology provider, so as to have more influence into the direction of a new medium? As an example, could the USPS purchase a company like Constant Contact? Doing so would give the USPS an immediate profit center, as well as a lead generation system to businesses that may be ideal for direct mail testing.
4. Pronounce Those Direct Mail Attributes
No digital medium can deliver a message that can be touched, or felt, like a handwritten letter from a friend. Direct mail is uniquely different than an email, tweet, or text message. You can touch it, feel it, smell it, and even taste it. Like the “slow food movement” happening in America today, there is a growing thirst to “getting back to the basics”. To combat the “disconnect” that many families suffer because of digital handheld technology, more and more people are taking action by spending their weekends “unplugged”. A hand written letter has become a lost art. Should the USPS not test a campaign that highlights the benefits of a hand written letter? By itself, this wouldn’t solve the financial woes of the postal service, but the idea of promoting the human side life has merit.
Also, the most underappreciated mail piece is the irregular parcel. The USPS has delivery trucks passing by our homes every day, carrying less and less mail. So few realize that they can mail a coconut, or ceiling fan blade, or flip-flop. Effort needs to be made in the area of “out of the box” idea’s. Why are car dealers not mailing an air-tight can of new car smell? We must celebrate these attributes and shift the mindset of the business mailer to differentiate direct mail from digital medium.
5. Home Court Advantage
The USPS must think of ways to generate more revenue from its existing infrastructure. With its already massive fleet of delivery trucks and 31,871 brick-n-mortar office locations, what other businesses can utilize this network? Not a new idea, but how much revenue could be had by placing ad space on the truck fleet? What other goods and services could be sold within the Post Offices? The trucks are already driving and the brick-n-mortar post offices are already there. The USPS must take a step back from the carrier route polygon maps and consider the tremendous mountain of underutilized assets already in existence.
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