The United States Postal Service (USPS) is currently undergoing a significant transformation, and this reality understandably creates some uncertainty within the direct mail industry. For mailing services organizations, sales teams, and marketers, the ongoing discussions surrounding postal reform, rising costs, and evolving communication channels require a strategic and proactive approach.
During times of change, considering the experiences of other industries can offer valuable insights. Take LEGO, for example. This globally recognized brand faced an existential crisis in the early 2000s. Struggling with substantial financial losses, declining relevance due to over-diversification, and significant market shifts, LEGO's future looked precarious. By refocusing on its core strengths and committing to innovation, however, LEGO managed to make a remarkable comeback and is once again a dominant force.
By addressing the perceived threats to direct mail’s future, we can uncover powerful lessons in resilience. Just as LEGO reinvented itself by embracing change, the direct mail industry must assemble its own set of essential building blocks to adapt and thrive in today’s dynamic marketing landscape. This article explores the striking parallels between LEGO’s transformation and the current state of direct mail.
Volume Drops, Strategy Rises: Finding Opportunity in Postal Shifts
The USPS continues to handle a substantial volume of mail, delivering nearly 137 billion pieces of mail and packages annually to over 168 million addresses across the United States. The volume of mail pieces has declined by approximately 11% over the past decade, down from 154.2 billion pieces ten years ago. Keypoint Intelligence’s USPS Delivery Forecast provides insights into what the mail industry can expect in the coming years.
Over the next two years, direct marketing and transactional mail anticipate a decrease in their mail volumes across nearly all applications. The only exception is packaging, which is expected to see a compound annual growth rate (CAGR) of 3.1%. The anticipated decline in mail volumes is closely tied to changes in postal rates; greater increases in rates are expected to cause larger decreases in volume.
Figure 1: US Mail Delivery Forecast (Billions of Pieces)
Despite the organizational changes occurring within the USPS, printed mail and packages are unlikely to disappear anytime soon. Even so, these declining volumes present an opportunity for marketers to reevaluate direct mail strategies and learn from the challenges they face.
The Power of Rediscovery and Innovation: Lessons from LEGO
The USPS’s decrease in volume mirrors what LEGO encountered in the early 2000s. Once a dominant player in children's toys, LEGO experienced a significant drop in market share as kids increasingly turned to digital entertainment. Essentially, LEGO faced its own version of declining volumes, along with decreased relevance and less engagement with its core audience.
The similarities between the challenges faced by LEGO and the direct mail industry are noteworthy. Both have experienced significant disruptions to their traditional business models, raising questions about their ongoing relevance and viability. However, LEGO's subsequent resurgence provides a compelling narrative for the direct mail sector, demonstrating that adaptation and a renewed focus on core strengths can help drive a remarkable turnaround.
LEGO's comeback was not simply about clinging to nostalgia; it involved a deliberate and multifaceted strategy. The company recognized the enduring value of creativity and learning across generations and made a commitment to quality and appeal. Additionally, LEGO invested heavily in understanding its diverse audience. The company identified the motivations and preferences of different age groups and meticulously tailored its products and experiences to meet these specific needs. This customer-centric approach enabled LEGO to create appealing products and engage in marketing that truly resonated with its target demographics, fostering stronger connections and renewed interest.
Finally, LEGO embraced strategic innovation, showing that progress doesn't always mean abandoning core principles. Instead of avoiding new technologies and formats, the firm thoughtfully integrated them in ways that enhanced the customer experience. For instance, LEGO ventured into video games and movies, always maintaining a clear connection to the physical product. This intelligent integration enabled the company to reach new audiences while engaging existing ones in fresh and exciting ways, ultimately strengthening its brand.
If you look closely, you'll see that direct mail campaigns also have similar opportunities to enhance the recipient's experience. By incorporating new elements like video content, tactile embellishments, or personalized messaging, direct mail can create more engaging interactions.
Building Blocks for Direct Mail's Future Value
The direct mail industry can draw significant inspiration from LEGO's journey. First, though, we must acknowledge the elephant in the room—the rising costs of direct mail. This reality demands that marketing campaigns be executed with precision and strategy. Just as LEGO was prompted to reevaluate its market fit and future direction, answering the following questions is crucial for the evolution of direct mail:
·Are we perceived as an outdated option in an increasingly digital world? Are marketing budgets being disproportionately allocated to newer digital channels? Instead of viewing this as an either/or scenario, savvy marketers recognize the strength of an integrated approach. Here, direct mail complements and enhances digital campaigns. Service providers must present data that demonstrating direct mail's return on investment (ROI) for specific objectives, such as customer acquisition, high-value customer engagement, and brand building. By doing so, these providers can prove direct mail’s relevance and secure its rightful share of marketing budgets.
·In our pursuit of innovation, have we inadvertently diluted our core offering? The future of direct mail lies not in abandoning the core business but in amplifying it through smart innovations. A unique advantage is the tangible connection; it provides the ability to deliver a physical message directly to consumers. It’s important to focus on creating truly personalized and immersive experiences using tactile elements, unique formats, and high-quality design. Innovations should enhance these core strengths to make direct mail even more engaging and impactful.
·Are we truly adapting to evolving consumer behavior? Just as children's play preferences have shifted, consumers’ communication expectations have also changed. It’s time to move beyond static mailers and create dynamic, relevant experiences that resonate with today's consumers, who seek personalized and engaging interactions across all channels. It's crucial to demonstrate how direct mail is becoming more data-driven, interactive, and integrated to meet these evolving demands.
·How can direct mail effectively compete with the allure and perceived efficiency of digital channels? LEGO faced intense competition from video games and other forms of digital entertainment. Similarly, direct mail competes with e-mail, social media, and various other digital marketing avenues. While digital excels at broad reach and immediate action, direct mail can foster deeper connections. It conveys complex information in an engaging format while also cutting through digital fatigue.
·Who is the core audience for direct mail in today's environment? Just as LEGO rediscovered that its core audience valued hands-on creativity, the direct mail industry must leverage data and analytics to distinctly define the segments where its medium delivers the highest ROI. This involves understanding consumer preferences, purchasing behaviors, and channel engagement. By focusing on these core audiences and tailoring messaging and formats accordingly, direct mail's ongoing power and relevance can be highlighted in today's diverse marketing landscape. It’s about smart targeting (not mass mailings) to connect with the right people in a meaningful way.
The Bottom Line
The challenges facing the direct mail industry are real and require immediate attention. Despite these challenges, LEGO's remarkable comeback serves as a powerful reminder that even amidst considerable disruption, focusing on core values, deeply understanding the audience, and committing to strategic innovations can lead to renewed success. For the direct mail industry, the building blocks for a thriving future lie in embracing its unique strengths, creatively integrating with the digital landscape, and consistently demonstrating its tangible value within the modern marketing mix.
Karen Kimerer of Keypoint Intelligence has experienced the many challenges of expanding current market opportunities and securing new business. She has developed a systematic approach to these opportunities, addressing the unique requirements of becoming a leader in our changing industry. She is well-versed in 1:1 marketing, web-to-print, direct mail, book publishing, supply chain management, data segmentation, channel integration, and photo products.
This article originally appeared in the May/June, 2025 issue of Mailing Systems Technology
