Business Outlook 2003
"We cannot ignore the fact that the USPS continues to operate with a fundamentally flawed business model," Potter declared, referring to a 32-year-old law that requires the USPS to operate on a break-even basis without taxpayer subsidy.
The challenge of being competitive in the marketplace presents the most hardships for the USPS and mailers in the years to come, says Experian Marketing Services' Minnick.
"It is not a competitive service. The monolith that is the USPS, as created in 1970, is an instrument for the masses," Minnick affirms. "It does not recognize direct mailers individually."
But technically, says Minnick, the USPS has found success in the things it knows best. It is making phenomenal dealings in transportation contracting, namely with Federal Express.
The USPS also has taken other measures to eke out of the black hole it has been submerged in prior to September 11. One example is the negotiated service agreement (NSA) established with Capital One, the largest producer of First-Class mail for the USPS. NSAs, Minnick says, provide variable pricing incentives that encourage greater volume and reward mailers.
"The first of what I hope to be several NSAs surfaced recently. NSAs transform—key word here—the opportunity for mailers to interface with USPS as a true vendor of service in the absence of postal reform," says Minnick. "The breakthrough is that the USPS will save $8.2 million in the first year of the agreement, and Capital One will save $6 million."
In regard to the seemingly perennial postal rate increases, the group was confidant mailers would be spared in 2003, since the USPS has promised not to file a rate case anytime soon.
But postal hike or not, there is no reason to abandon direct mail, says The Horah Group's Goldsmith. He reminds marketers that the country is growing, and there are millions of new addresses to mail.
- San Francisco