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Cause & Effect Newsletter July 2007
Dear Colleague,
I hope you will read this inaugural issue of our Cause & Effect e-newsletter and find it informative. I enjoy discussing these issues and invite your comments!
Regards,
Rick Powell
President, PMG
> It’s Not A Rate Change, But A Wake Up Call
> A Holistic Approach To Fundraising Survival
IT’S NOT A RATE CHANGE, BUT A WAKE UP CALL
May 14, 2007 . . . a day thought of as ’doomsday’ for nonprofit fundraisers. Or at least, that’s what some would have you believe about the date new postal rates went into effect. A letter from Direct Marketing Association President and CEO John A. Greco, Jr. spoke for many in describing, "how devastating this increase would be" and how much less mail volume (the industry) would send as a direct result.
What is not getting a lot of attention is the underlying message. The USPS is sending us a wake up call. Essentially, they want organizations that rely upon, and produce, large volumes of mail to participate more in the mailing process; to change the ways in which they interact with the Post Office. Accordingly, they have created financial incentives to motivate these large mailers.
It"s important to consider the forces driving these changes. The underlying issue is simple: the USPS is at its best delivering mail to final destinations but less efficient in grouping and handling billions of mail pieces before they hit the mailbox. The USPS "work-sharing program" clues us into this fundamental shift. From the beginning, the USPS work-sharing program rewarded mailers who prepared and delivered mail in a format that best fit the USPS delivery system. Through list hygiene, barcoding and presorting mail to managing logistics, the goal of the USPS has been to partner with mailers so that they effectively share in the workload. Organizations that take part in the logistical burden, thereby saving the Postal Service time and money, are rewarded with lower postage rates. Conversely, in circumstances where mail handling on the part of the Post Office becomes time intensive and/or
cumbersome, rates are bound to be higher.
SEEING THE BIG PICTURE
As mailers, we can no longer ignore the strategic direction of the USPS. We can be assured this was not just a rate increase, but rather a foreshadowing of more to come. In the latest rate case the Post Office has shifted the additional financial burden to the mailers who process less than standard formats. Understanding their motives, it"s likely that rates for non-standard mail, or simply anything that goes against the grain of what is "efficient" for the USPS, will continue to rise.
The silver lining is that while rates for unusual formats have risen exponentially, discounts for letter mail delivered by the mailer to the SCF and/or BMC have also increased. Depending on your mix of direct mail formats, you may find that the savings realized from the new discounts on letter mail could actually help offset the rate increase on formats that now fall into the Post Office"s "premium" rate structure - smart organizations are looking at their entire portfolio of mailings to do just this.
To find the deepest discounts on postage takes a fair amount of insider information and due diligence. This includes a detailed analysis of the physical properties of the piece itself, how it should enter the mail stream as well as the geographics that your mailing list represents.
The process has to start with a detailed analysis of your annual mailing portfolio. The rules that influence these new rates can get complicated pretty quickly. By taking a systematic approach and keeping an eye out for alternative formats and appropriate work-sharing options, many nonprofits can minimize or even eliminate the effect of the increase.
PMG is a direct mail production supplier to the industry"s top nonprofit fundraising professionals and agencies. Our clients value our seasoned expertise, dependability, bottom-line savings and dedication to only work with great people. We"re committed to your cause and our effect!