Monthly Archives: October 2022

We’re excited to share Part II of our conversation with Tom VanWestrienen of Eliezer Consulting. In follow up to last week’s conversation, we wanted Tom’s perspective on how to handle these USPS updates. For example, are there any opportunities that these changes could present? How can brands adjust to these changes in a positive way? Here’s Tom’s take:

Q: Since it will affect the above formats, how can brands prepare / update their DM strategies accordingly?

Consider changing to a different format. Updating the physical make-up of a piece can move it to another, less expensive rate class. At this juncture, creative thinking while partnering with your vendors on strategy would provide the best overall outcome (we’re talking response rate and cost-efficiency!).

Q: What are some other opportunities that these increases present?

Are you fully utilizing opportunities offered by your printer? Processes such as co-mail or co-bind can reduce postage by improving sortation levels and increasing discounts. Additionally, the USPS offers several promotional discounts which can reduce postage by 2-4%/piece (See 2022 promotional calendar here). The USPS is also continuing the promotional discounts in 2023 with discounts up to 5%.

Q: What are some tips for preparing for the all-important holiday season?

Make sure that every customer is using cooperative mailing programs to minimize postage costs. Co-mailing for flats & periodicals and commingling for letters are cooperative mailing programs that should be used whenever possible. Also, the USPS offers mailing incentives that are too good to pass up. Today, the USPS offers a 4% immediate postal reduction if a direct mailer is using their Informed Delivery program. This program started August 1^st and runs through December 31^st. The USPS offers other incentives throughout the year and for minimal effort, these savings really add up. We can help you utilize and manage this!

Q: Do you think that we expect any leniency / decreases in early 2023?

Unfortunately, we do not anticipate postage reductions in the future. Postmaster General Louis DeJoy is operating the USPS as a business, and as outlined in the Delivering for America plan, he is focused on achieving financial stability and service excellence at the USPS. 

Q: Tom, can you describe today’s catalog and direct mail market in one word?

Challenging – but there are solutions that help navigate increased postal costs! Let’s have a conversation. Don’t hesitate to reach out!

We hope you enjoyed the first of our quarterly USPS updates from Tom! Each quarter, he’s going to describe the catalog and direct mail market in one word… we’ll see where we net out around this time next year! We’re excited about what the future holds for offline marketing and look forward to partnering with you. For now, that’s what Tom has to say!

Would you have ever thought the USPS would be such a hot topic? We didn’t! However, the last few years have proven to be challenging when it comes to postal rate increases and how they affect brands’ catalog and direct mail strategies. That said, with challenge, often comes opportunity and reward.

We sat down with Tom VanWestrienen of Eliezer Consulting to get his take on the latest hikes. Not only are the changes daunting, but they can be difficult to understand. Tom is here to tackle some of the tough questions, and hopefully help future-proof your offline strategy. He’s seen it all in his 35 years working with catalogs and direct mail.

Q: What are the latest USPS rate increases for catalogs and direct mail?

The industry saw two significant postal changes in 2021 resulting in double-digit increases for catalogs (Marketing Mail flats) and near double-digit increases for Direct Mail (Marketing Mail letters). On July 10, 2022, the USPS again increased postal rates on average by 8.5% for flats and 6.5% for letters. While these are averages across each class of mail, one really needs to understand the changes on each postal sortation level to fully comprehend how the postage increases impact a customer’s mailing.

A few examples of this are in the August 2021 increase: Larger catalog mailers who consistently achieve high density and saturation sortation levels saw increases in these categories in the range of 11% – 14%, but the USPS impact the Marketing Mail flats class was published at 8.5%. On the latest July 2022 increase, non-profit flats saw significant increases in the range of 11% – 18%. Also, heavier catalogs approaching 16 ounces saw much smaller increases in the range of 2% – 4% with the latest postal increase.

The USPS has also recently announced their next increase, which will take place on January 22, 2023.  Marketing Mail letters can expect an increase of 3.3% while Marketing Mail flats should expect an increase around 6.3%, but just like the 2021 increase, the USPS is hitting high density and basic carrier-route sortation levels more significantly. This results in surges much higher than the announced flat increases for direct mailers who regularly achieve these sortation levels.

Q: Why are there increases for catalogs and direct mail?

To achieve financial sustainability, the USPS is now allowed to pass along two increases annually, one in late January and the other in early July. 

The USPS now determines postal increases based on four factors:

• – Consumer Price Index (CPI) impact
• – Address density impact
• – Retirement funding for its workers
• – Underwater products in compensatory classes

Current underwater products include Marketing Mail Flats, Marketing Mail Carrier-Route Flats & First Class Flats, which is why their rates are being increased.

Each increase will include some or all the components depending on specific rules around when or how they can be applied to postal increases. We expect that in the next couple of years, the USPS will annually pass along one large increase and one lower increase as they work to become more financially sustainable. Past increases based solely on a CPI factor are no longer in place. Underwater classes will see at least a 2% surcharge on postage to normalize pricing to cover costs.

Q: How will this affect print production and circulation planning?

While costs continue to escalate, direct mailers have been hit especially hard these past few years. One would think that there will be circulation and/or page reductions to help minimize these escalations. We would also expect direct mailers to change the formats of their programs. While overall catalog costs have elevated significantly in the last three years, letter mailing may still be an attractive alternative for direct mailers. “Slim Jim” and letter sized all-inline formats should become more popular because the cost to mail these types of products are much more affordable.

Stay tuned for Part II of our conversation next week! In our follow-up conversation with Tom, we discuss how brands can prepare for the all-important holiday season and update their DM strategies for 2023 based on the upcoming USPS changes. Be sure to check in next week!