Putting Postage on Sale
The only thing Doc likes better than a sale is a sale that works both ways, not only does it save me money, but it works out for the merchant as well. That's why I was so interested in a recent report on the success (or failure) of last summer's postage sale for big mailers put on by the United States Postal Service.
The sale (which is running again this summer) gave large mailers a 30% credit for additional volume mailed over a specific threshold. I was really rooting for the USPS and hoping the results would show that lowering postage costs is a better idea than raising them. So how did the program work?
Well, it appears no one is exactly sure. Seems the accounting and measuring systems in place at the Post Office were unable to accurately collect the data needed to reach any firm conclusions, but it doesn't appear to be a rousing success.
These problems, Doc is quick to point out, are issues with the USPS, not with the marketplace. The post office talks a lot about the intangible results of such a sale, such as goodwill and a minimizing of the possible decrease of mail volume during the same period had the price not dropped. There has to be a way to measure all those things and come up with a conclusion.
Doc hopes this summer the process is in better shape and the USPS has addressed the concerns of the Inspector General, who deemed last summer's results inconclusive. The private sector has many processes in place to measure the success of pricing – the USPS should be able to get this together and reach a conclusion.
Doc still believes one answer to the decrease in direct mail is to lower the cost per piece and, hopefully, increase the volume. It's up to good management at the USPS to translate that increase into actual profits and not just an additional loss. If we're so inefficient that an increase in volume results in lower profits, then we have some pretty big problems to solve. Doc has more hope than to think that.
For more information on the USPS summer sale, see this excellent blog entry where you can also download a PDF of the Inspector General report on the results.