Neither rain, nor snow, nor dead economy?

mailtruckPoor Richard thought it was only printers that had it bad. It had been a while since I had visited our local BMEU (Bulk Mail Entry Unit). The printshop next to Grant’s Lounge (name withheld to protect the sensibilities of the franchise) had a mailing to go out Friday, and no one else was available, so I loaded up the Suburban and headed for the post office.

First, let me say that the people we work at the Macon BMEU are nice folks. Ken, the boss, helped me get started in mailing several years ago.  I called him looking for information and he actually came out to the shop and spent a couple of hours going through the regulations. Randy, Charlotte, Gary and John are always helpful and friendly.  They play by the rules and let us know when we screw up, but they have always been patient and very good to work with.

This part of the post office (the BMEU) used to bustle with activity.  On any given day, There would be several mailers there with at least one who had made a royal mess of a mailing job.  One of the folks mentioned above would be patiently explaining the rules, even if the customer was irate. There is a Merlin machine behind the counter that checks barcodes and machinability. In days past, this machine was generally running. Other postal folks were continually going in and out behind the counter doing the things that postal folks do.

Yesterday’s scene was quite different. Only Ken and Charlotte were there and there was no activity at all. The first words from Charlotte’s mouth were, “This is my last week. I’m taking early retirement.”

And apparently she’s not the only one. The USPS has offered its employees an early opt-out program in recognition of the changes in their business. And the mail business has changed indeed.  The official statement from USPS on the Voluntary Early Retirement (VER) program reads like this:

Automation and technological advances coupled with mail volume reductions has the Postal Service continuing to look for ways to voluntarily reduce its workforce while maintaining excellent customer service.

Source: Liteblue.usps.gov

Dear readers, I hope you don’t think it inappropriate for Poor Richard to read a bit between the lines and hazard some not so bold inferences.

First, the reduction in mail volume is easy to document.  First Class mail peaked in 2001 and (with one year’s exception) has been declining steadily ever since. In FY 2008, the USPS lost $2.8 billion (yep, billion) on it’s operations and total mail volume decreased by 4.5% from the previous fiscal year. It’s a no brainer . . . email continues to replace mail.

The recession has impacted direct mail in the same way that printing has been affected. Direct mail is an easy target for businesses cutting expense. Standard mail piece volume for FY09 was down almost 20% from the same time period in FY08. (Source USPS Financials).

Staunching the flow of red ink seems to be more important to USPS than excellent customer service, though. It seems obvious that USPS is moving toward a much less customer-friendly environment. Bulk mail facilities in smaller communities have already been shuttered with customers told to carry their mailings to centralized units in larger communities.

The postal service is also quickly heading towards enforced online entry of mailings for mail service providers. At this point, the online service (PostalOne) is kind of clunky and complicated. That’s no big surprise. The problem, though,  is that all of the customer-friendly postal employees are taking early retirement. There’s no one to explain the new systems.

Finally, transferring costs to the customer may be exacerbating the problem. Poor Richard thinks that it started with rubber bands. Only a year or so ago, the bulk mail offices actually supplied rubber bands to their mailers for use in packaging standard mail. When mailers were told that there would be no more free rubber bands, most of us just shrugged our shoulders and passed that little cost on to our customers. Since then, there have been a lot of incremental cost increases that we’ve had to pass along. For example, the USPS has added a move update requirement that has increased the cost of list processing. They’re also charging a small fortune for address corrected pieces that are returned to the mailer.

Postal rates and costs continue to increase while the perceived cost of electronic communication is low.  Even when the potential impact of mail can be very positive (high ROI), it is perceived as an expensive way to market.   Simply put, the cost to mail has gone up while the perceived value of mail compared to the alternatives has diminished.

This is not a winning scenario for the USPS . . . and it does explain the drastic changes at the Post Office.

So we have to ask the question. Is printed mail, especially direct mail, still a worthwhile endeavor? Is there a place in the new economy for the US Postal Service?

NEXT POST – Direct Mail and the Internet

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One Response to Neither rain, nor snow, nor dead economy?

  1. […] including direct mail (advertising) volume is down and the USPS is in a bind. In the last post Neither Rain, Nor Snow, Nor Dead Economy, we went over some of the dismal numbers that the USPS has “posted” in recent months. […]

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