The Desperate Post Office

I’ve always liked the Post Office. Even when I was a kid in the 1970s I used to enjoy going to the Post Office. The excitement of putting a letter in the mail box, the postal scales, the familiar musty smell. All good stuff.

But the Post Service is getting long in the tooth, and they’re bleeding out. They ended their Fiscal Year 2011 with a $5.1 billion loss. Whoa. That’s some serious coin.

The United States Postal Service is desperate

I know it’s easy to arm chair quarterback. But they totally missed the boat on email. They could have been, in my opinion, the definitive source of federated “First-Class Email.” Instead of everyone having a personal email address with Yahoo!, or Gmail, whatever, we could all have personal “official” usps.com email addresses. The Postal Service could have been the world’s largest data center for managing email, combating spam, hiring engineers to come up with innovative new ways to deliver information to customers.

Who knows? The Postal Service could have been leading the charge on mobile. So much for that pipe dream.

The Tipping Point

The tipping point was in 2006. That’s when the amount of email whizzed past the amount of First-Class Mail being sent. Given the Postal Service’s reliance on First-Class Mail as 49% of its revenues, this is a grave situation.

What do you do when you can’t increase revenues? You cut costs. And that’s exactly what the Postal Service is doing. They’re trimming wherever they can. And it’s not pretty, because the number of addresses to which they’re delivering is increasing. Simultaneously, the Postal Service is pulling back on the number of hours it works, and closing down large Post Offices. They’re trying to stop the bleeding.

In order for the Postal Service to become profitable again (perhaps another pipe dream), it needs to cut tens of billions of dollars in annual costs. That’s no easy feat. It would require aggressive slashing of $20 billion in costs over four years to achieve profitability.

Sorry to be cynical. I just don’t know if they can do it.

Direct Mail

The Postal Service is struggling to keep up with the surge of online advertising and marketing that is eating them alive, byte by byte. Meanwhile, the Postal Service is encouraging direct mail campaigns. Why? Because direct mail is growing and it’s effective. In 2010, American advertisers spent $44.9 billion on direct mail, representing a 2.3 percent increase over the previous year. Direct mail is forecasted to grow 3.6 percent annually through 2014.

• Catalogs: 4.92% response rate
• Postcards: 3.99% response rate
• Letter-sized direct mail: 3.42% response rate

Even though direct mail is effective, and the Postal Service is justified in spending resources to encourage direct mail, some would claim they’re only rearranging deck chairs on the Titanic.

My 2 Cents

I say continue to use snail mail as part of your marketing mix. It’s still effective to send a creative direct mail piece. Innovate, and use direct mail as a complement to your larger, more effective digital marketing efforts, like email marketing.

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