Issue Date: April 2012 e-news, Posted On: 3/28/2012
2-4-1 = A Win-Win for All By Harry Stephens, President and CEO of DATAMATX
Is January 22, 2012 a date that stands out in your mind? It certainly could be as it was the day the prices were once again raised for most mailing services. But this time there is a silver lining amid the rising cost of postage that provides an important break for business mailers. Now, when business mailers mail First-Class Mail Presort pieces weighing between one and two ounces, the second ounce is free.
At first glance one might think that this was just something the USPS decided to do along with the other changes being made to seek better financial health. However, that was not the case. The idea of mailing two ounces for the price of one (I like to refer to it as “2-4-1”) was planted long before the decision was announced. In March 2011, Paul Vogel spoke at a Major Mailers Association (MMA) meeting. As the President and Chief Marketing/Sales Officer for the USPS he is responsible for all domestic and international product development, including pricing, placement and promotion. After his talk, one member of MMA approached him with the initial idea for 2-4-1 and proposed that the USPS consider allowing business mailers to mail two ounce pieces at the one ounce rate. Every major mailer in attendance liked this idea, as well as Mr. Vogel, and he said he would get back to us.
In the meantime, behind the scenes, we did not stay quiet. My company, DATAMATX, along with 30 first class large business mailers—many of which are Fortune 100 companies—who comprise the National Postal Policy Council are always actively lobbying for lower business rates from the USPS. Many of us are also active members on the Coalition for a 21st Century Postal Service who advocates for business mailers. We knew this was one ruling that didn’t need the PRC to rule or Congress to approve, as it is not a rate increase or a mandate. It was confirmed at a National Postal Policy Council (NPPC) meeting held after the Major Mailers’ Spring 2011 meeting when both Bill Baker, legal counsel for the NPPC, and Steve Sharfman, the PRC General Counsel, agreed that this move would not be defined as a rate case. It would also require very little additional capacity to handle two ounces versus one, and certainly no additional labor, given the fact staff has already been cut significantly to reduce labor cost. All it would take is for the USPS executive management and its board to act.
This past summer I put an open letter to Postmaster General Pat Donahoe in another publication asking that he take a serious look at this 2-4-1 opportunity by July 2011, and put it into effect as of October 2011 so we could plan around it for the New Year, keep mail in the system and provide a win-win for everyone. It didn’t happen in October, but still all of our noise paid off and 2-4-1 became a reality on January 22, 2012.
The 2-4-1 ruling demonstrates that the USPS recognizes the fact that business mail makes up an ever-growing percentage of First Class mail. What’s the best news? The new pricing makes it possible for our customers to send marketing pieces such as full-size newsletters on high quality stock along with regular mailings such as monthly statements or invoices at no additional cost. As Paul Vogel previously pointed out, “This gives companies expanded opportunities to advertise new services and products to their customers as part of bill and statement mailings.”
What this means for our customers that are seeking ways to control postage costs while continuing to promote their services is that programs like transpromo can not only be employed, but expanded upon without racking up higher charges for postal delivery. Additionally, the ability to include additional marketing messaging in the same envelope provides another channel to promote and support other service offerings. Take electronic billing solutions for example. Surveys have shown that even though the number of customers submitting payments through electronic channels is increasing, the great majority still prefer to receive a printed bill in the mail. It serves as a physical reminder to the customer, giving them the opportunity to closely review their monthly charges and then keep the bill for their records.
This monthly “reminder” statement is something customers open and read—an incredible opportunity for reaching a captive audience. Here are just a few more of the reasons everyone from business mailers to our customers and beyond win under 2-4-1:
· It opens up the ability to fully use the data we have on customers. Providing relevant promotions tailored to a consumer’s particular needs and interests is a proven way to positively impact response rates.
· Transactional mailers no longer have to "scrunch" the billing detail along with the promotional messages targeted to customers on the bills.
· We can add bigger and more noticeable on-serts and inserts with targeted promotional messaging to regular mailings instead of being limited to only the white space left on the page.
· We can even include higher-quality (thicker) newsletters now at no additional cost. Including important company information, service offering updates and promotions with regular mailings will help to ensure that our news is delivered to a captive audience.
· Along with adding value to our mailings, it will help our Postal Service by keeping more paper mail in the system.
· And last but not least, it may help our economy by selling more laser printers, mail inserters, paper and composition software.
Looking at the bottom line, the difference between a 1 ounce envelope and a 2 ounce envelope is now 12.5 cents—which when multiplied in volume can impact a budget significantly. With the January rate increase, it will average a 23 percent reduction in postage. Additionally, while the discounted automation rates did average an increase of 1.58 percent, this increase is still lower than the 2.1 percent CAP allowed by law—another piece of good news for business mailers. So even calculating a slight increase for that first ounce of First Class mail, the free second ounce is a trade-off that may prove to be very profitable when it comes to stronger and more effective customer communications.
The important thing to remember is that 2-4-1 gives us, as business mailers, the opportunity to help our customers fill their envelopes with additional messaging that in turn helps them grow their businesses and provides value to our Postal Service—a win-win for everyone involved.
Harry Stephens is President/CEO, and founder of DATAMATX, one of the nation’s largest privately held, full-service providers of printed and electronic billing solutions. As an advocate for business mailers across the country, Stephens is actively involved in several postal trade associations. He serves on the Executive Board of the Greater Atlanta Postal Customer Council, Major Mailers Association (MMA), PCC Advisory Committee (PCCAC), and the Board of the National Postal Policy Council (NPPC). He is also president of The Imaging Network Group (INg), an association for Transactional and Direct Mail Marketing service bureaus. As an expert on high-volume print and mail, he has frequently been asked to speak to various USPS groups. You can contact Harry Stephens at firstname.lastname@example.org
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From the client perspective I don't think that is a win-win situation when the prices were once again raised for most mailing services. Although the mailing business is growing fast and has success maintaining their prices low is a standard this business should offer.
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