Surcharge Removed; USPS Postage Rollback Effective on April 10
Even though the United States Postal Service’s financial condition is expected to worsen, your marketing budget just got better. On April 10, 2016, the USPS will be required to reduce certain postage prices on items including letters, large envelopes/flats, and postcards. This rate change reverses the existing exigent surcharge of 4.3% (average) that was enacted back in January 2014. This surcharge was put into effect by the Postal Regulatory Commission (PRC) to help ease some of the financial hardships that were suffered during the Great Recession of 2008-2009. The exigent increase was intended to be temporary, limited by a cap of about $4.6 billion in extra revenue. The PRC expects to reach this cap by April 10 of this year.

Although you might be excited about the removal of this surcharge, the post office is decidedly less so. During a statement on February 25, Postmaster General and CEO Megan J. Brennan reported that the surcharge “only partially alleviated our extreme multi-year revenue declines resulting from the Great Recession, which exceeded $7 billion in 2009 alone.” It should come as no surprise that the USPS had been hoping for a legislation or court action to prolong the higher rates. “Removing the surcharge and reducing our prices is an irrational outcome considering the Postal Service’s precarious financial condition,” added Brennan.

At this time, the congress and court actions that the USPS was hoping for are not looking too promising, so you can probably start planning on seeing some extra dollars in your marketing budgets before long. You might consider using those extra funds to create more mail pieces, buy better lists, improve creative capabilities, or even upgrade your production options.

The Table below shows how First-Class Mail prices will be adjusted once the surcharge is removed.

Here are some tips for taking advantage of the reduction:

• Understand the mailing products that are affected by this reduction. They include First-Class Letters, First-Class Large, Envelopes (Flats), First-Class Postcards, Presorted (First-Class & Standard), and Non-Profit.
• Some customers may need to change their meter settings to print postage to three decimal places. Metered First-Class 1-Ounce Letters will decrease two cents from $0.485 to $0.465, retaining their 1% discount over retail stamp prices.
• Follow the USPS Postal Explorer for confirmed rates and other spring 2016 rollback pricing files at http://pe.usps.com. You can also visit USPS Service Alerts to subscribe to near-real-time announcements regarding disruptions or suspensions to domestic and/or international mail due to weather emergencies, natural disasters, and other events.

As direct mailers and marketers, you already know that every penny counts. Based on this expected rollback in spring postage rates for most envelopes, it turns out that every two pennies counts.

Selecting the right mailing list is the key to a successful direct mail campaign. Getting an offer or a call-to-action delivered to the right audience is critical to the success of a direct mail communication. Unfortunately, the most common mistake marketers make in direct mail campaigns is not selecting the right mailing list.

Budget dollars are wasted on producing and sending out mail if it never reaches its intended target. An attractively designed direct mail piece with a great offer means nothing if it is sent to people that have no interest in the offer. Picking the right list starts with understanding the types of available lists.

They all basically fall into two general categories:

• A house list is an organization’s internal list of active and former customers, members, or employees.
• Purchased lists are available from many sources and can be rented or owned. These lists are customized to fit characteristics of the target audience. There are several different types of purchased lists ranging in cost and appropriateness for reaching an audience, but key types include:
  • A specialty list targeting a select audience (e.g. new parents, health enthusiasts, accountants, IT professionals, Fortune 1000 companies)
  • A custom mailing list based on select customer criteria
  • A cloned list that finds customers similar to an organization’s best customers

The quality of a list is of paramount importance. The correct mailing list will contain your most valuable prospects. The more careful you are in analyzing and selecting direct mailing lists, the better your chances for success.

A good mailing list has a few important characteristics:

• It is updated on a regular basis. Lists need to be cleaned or “scrubbed” to remove duplicate entries, undeliverable addresses, or names on do-not-mail lists. They must be kept up to date, and this means adding, updating, and deleting entries on an ongoing basis.
• It focuses on the market segments and or geographic coverage that you need.
• It is formatted to comply with the latest postal regulations, and comes in a form you can use.

Let’s put the importance of maintaining list quality into perspective with an example. Each year, over 40 million Americans change their addresses. Updating mailing lists reduces the volume of undeliverable mail. The United States Postal Service (USPS) formally calls this type of mail Undeliverable-as-Addressed (UAA) and has mechanisms in place to reduce it. Not updating lists can result in the forfeit of postal discounts.

Here is list of questions to ask when evaluating a mailing list.

• What sources are being used to create the list—where do the names come from?
• Are new names continually added? How often is the list updated? And when was it last updated?
• What demographic selections are available?
• Have other mailers used the list recently? If so, what for?
• Will the provider suppress your client database against their list? (You don’t want to purchase list full of your existing clients.)
• What are the terms and costs for one-time use and multiple uses?

There are four main sources for purchasing or renting mailing lists. A good provider will work with you to identify your target market and select the lists best aligned with your strategies and goals. Here is a description of list providers:

• A list broker’s primary role is to rent lists from other companies. Usually, a list broker researches what lists and segments will work best for what you’re trying to accomplish.
• List managers supervise and promote the rental of specific mailing lists that they manage. Before giving approval to rent the list, they typically ask the prospective list renter to provide a copy of their direct mail piece for review. The list manager may decline renting the list if the piece is too competitive with the list owner’s own offer, or it might offend the list owner’s customers.
• List compilers manage lists that they’ve assembled using multiple sources, such as warranty cards, government records, corporate reports, telephone directories, Yellow Pages, credit bureaus, etc.
• A list manager/broker is typically the most versatile source for renting lists because they offer their own lists and those created by others.

Your mailing list can make or break your direct mail campaign. It’s important to invest the time upfront to select the best list. Mailing to quality prospects leads to higher conversion rates and more revenue for your company.