In my last post I discussed the problems of the USPS, their pension issues, and their overall solvency. These issues could lead to higher rates, or major cutbacks in services. Why is this happening? Like any business, and just like the rest of the whole communications arena, including all print media, and telephonic services – the model has changed. Without major changes the legacy media and the USPS will not survive.
How did this happen for the USPS? Over the last several decades US mail volume increased dramatically with the growth of advertising mail as a significant tool for marketers. The USPS begrudgingly adopted the model, after significant foot dragging through the 70’s and early 80’s, when they did everything they could to make it difficult for large scale ‘junk mailers.’ When they realized that more of their profits came from advertising mail than first class they adapted.
The adaptation they took was vastly expanded “automation” this included major investments on their part with huge investments in sorting equipment to reduce their costs while speeding the mail out to meet projected delivery schedules. They succeeded and continue to refine this process with more equipment and the cooperation of the mailing industry. This took the form of better mailing processes at the printers and mailers to ensure that all mail was automation ready. For this they offered postage discounts as incentives to mailers, a great bargain. This continued until today when we find ourselves in a whole new world.
In the late 90’s email began eating into the marketing arena, and in the later years first class mail saw declines as more people began paying their bills online, and that was followed by businesses supporting that habit with online billing. What was a two step process – bill out and remittance back – being dropped. This has been a big blow to the USPS.
Advertising mail volumes have dropped – mainly due to costs and a change in habit – social has taken their bite of the USPS apple. Mail is very effected, but relatively costly per piece. Online marketing is much less costly, and provides almost immediate feedback in both results and analytics which helps to quickly adapt programs to changing niches and markets.
We live in a different world today. The USPS adapted in the 70’s and 80’s with automation of physical mail with great results. Today that is not enough. Our new digital marketing tools and social marketing have totally changed the marketing pardigm. Legacy marketing – mail – will continue to be relevant, but will also continue to shrink in volume. The USPS which has made major investment in automation, but still has a large work force with government pensions, will need to shrink – both in size, and services. The Benjamin Franklin model of universal service at a uniform price might not work in today’s digital and social world. Get used to it. “The check is in the mail” will be dropped from our lexicon within a decade.
More to follow….