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Mailing rates: Brace for yet another price hike. (Postal).

The United States Postal Service (USPS) has proposed a $5.3 billion postal rate increase, one that would add salt to the already open wound from this year's two rate hikes of $3 billion.

The USPS wants to raise the nonprofit rate by 6.7 percent and the parcel post and periodical rates by 10 percent. The increase would not go into affect until September, 2002 at the earliest, therefore, giving nonprofits somewhat of warning so they can make budget preparations.

The independent Postal Rate Commission will conduct a 10-month review that is mandatory for any rate increase case. If the hike goes in to effect, direct mailers would incur an additional 7.3 percent in their Standard Mail (advertising) rate and the price of a First Class stamp would jump 8.2 percent to 37 cents.

Many of the movers and shakers in the direct mail field reacted to the proposal.

H. Robert Wientzen, president of The Direct Marketing Association in New York City said in a statement, "The Postal Service has already hit the mailing public with two rate increases this year that will take $3 billion out of the American consumers' wallets. Now they are seeking to take an additional $6.1 billion next year."

Neal Denton, executive director of the Alliance of Nonprofits Mailers in Washington, D.C., described the proposal as "ridiculous" and said that the new rates would force mailers to cut volumes during the holiday, and more importantly, the busiest mailing season of the year.

"I am livid that the USPS Board of Governors is jamming this down the throats (of mailers)," Denton said from The National Postal Forum in Denver. "The real concern is they are going to implement this during the busiest (mailing) time of the year."

Andrea Waters, vice president of creative and production services for Kansas City, Mo.-based Children International, said the sector has been dealing with multiple increases without warning for years and it's difficult to budget mailings when the USPS can, "do an end-run and raise your rates with two months notice."

"We call it an end-run.... The board of governors could unanimously decide we're going to raise postal rates without (asking nonprofits what they think)," she added.

The increase this past July forced Children International to scramble to the mailbox to send out several pieces before the new rate took affect. That, according to Waters, saved the organization thousands of dollars.

"But as far as the next one goes, yeah it's good to have that amount of time so that we can plan our mailings," she said.

Waters explained, "What we do, particularly in production services since we have our own in-plant, we just try to make things that much more efficient here. We analyze how much stuff we're outsourcing, how much stuff we keep internally, and make sure we have the best balance to keep that cost per down."

Children International mails in large quantities each year and has not cut back on the volume due to the two rate increases, yet has looked into strategic ways of keeping overhead down.

"We're going to take a harder look at what kind of lists we're using. We are going to go for things that are more selective demographically so we get tighter ZIP ranges, so we get better discounts," Waters said. "Some of our marginal mailings, like postcard reminders, we might be looking at those a little bit differently. We've asked some of our marketing analysts to look at those to see if those do really perform well or if we should cut those back; or to be more strategic in who we send them to."

David S. Williams, president and CEO of Merkle Direct Marketing, Inc. in Lanham, Md., said that maximizing how clients deal with the struggles of increasing postage rates really hasn't fundamentally changed over the years.

"People tend to focus on the same things, which is mostly regarding around hygiene and to. be sure that people are dealing with deliverable addresses," he explained. "All are very viable, but at the end of the day it doesn't necessarily yield the kind of impact that a lot of these nonprofits are up against."

There are three postal break discounts that Williams suggested for his nonprofit clients: sortation discounts for pre-sort and carry-route; automation discounts, which is bar code and point of entry discounts; and lastly destination, or point of entry discounts.

Another concept that can cut postage costs is called "Add A Name," explained Williams. The "Add A Name" concept is set to maximize sortation (or carrier) discounts. "It's all based upon density, it's all based upon the ability to meet certain density requirements to obtain a discount," he said.

Merkle conducts a statistical program across a clients mail file to determine the number of carrier routes that do not have adequate numbers in them to qualify for the carrier route discount, which is 10 pieces, Williams said.

What they're trying to do is find the carrier routes with eight or nine pieces in them and add a piece or two, therefore allowing the carrier route discount.

"We're adding a name that has been pre-selected, pre-qualified and primarily ... It has to be in that actual route," Williams said. The "Add A Name" system only works with flat mail, not in letter-sized mail.

In the past, many organizations would mail two pieces to the same address trying to cut the cost, but mailing two to the same address is a wasted mailing and that practice has decreased.

Children International's Waters said the content in their mailings hasn't changed but they are being more critical of who actually receives their solicitations.

"What we do is really look at the media mix that we - particularly on new sponsor or donor acquisitions - what's that media mix," Waters said. "Are we going to look at alternative media a little harder because the prices on direct mail are going up - things of that nature. So it's a mix of things that may change given how the postal increase affect our cost per."
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Article Details
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Author:Carpenter, Clint
Publication:The Non-profit Times
Article Type:Brief Article
Geographic Code:1USA
Date:Nov 1, 2001
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