The love/hate relationship marketers have with the U.S. Postal Service recently swung mightily toward hate, bordering on war of the legal kind. Last Tuesday, the agency filed with the Postal Rate Commission a proposal for rate hikes that greatly surpass the consumer price index cap imposed by the Postal Accountability and Enhancement Act of 2006. In its defense, the Postal Service claims to be facing exigent conditions, for which the Act allows the ceiling to be temporarily suspended. But the Affordable Mail Alliance, among other parties, challenges this assertion.
The Affordable Mail Alliance is a coalition of small and large marketers that use the direct mail channel for business, plus the trade associations that represent their interests, and its ranks have surged from 13 to 500 members in just two weeks, say Jerry Cerasale, the Direct Marketing Association's (DMA) senior vice president, government affairs and a spokesperson for the Alliance.
Cerasale, who's been close to all the postal reform action in the Capitol over the years, shared with Target Marketing his ground-level view on just how disastrous this proposed rate case could be for both the mailing community and the USPS.
Target Marketing: Why is the filing of this exigent rate case not the solution to the USPS' economic problem?
Jerry Cerasale: We'll leave aside the legal issue—let's just look at it first of all on the economic side. The Postal Service is losing volume. Volume is dropping and the solution for them is to raise rates, which will cause volumes to drop even more. And that will start what we think is a death spiral.
What will happen, this increase—which on average is 5.6 percent, but you have to understand that it's 10 times ... inflation—will force all mailers to look for other channels to try and reach customers or potential customers. And once that happens ... if I'm a cataloger and I get a new customer through the Internet; or I'm a magazine [publisher] and someone decides to use their Kindle or iPad to purchase a magazine [subscription] online as opposed to through the mail; or if I'm a credit card company and instead of mailing an invoice I give incentives to people to get the invoice by e-mail ... all of those things, once they happen, that mail will never come back.
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