Direct Mail Outlook : Education, Tools Remain KeyDecember 2010 By Erik Cagle
Good news was difficult to find in 2010 for the printers of direct mail, not to mention the direct marketing community. Even the United States Postal Service (USPS) struggled in its continuing efforts to offset dwindling volume and out-of-control costs, having seen its request for an exigent price increase denied in late September by the Postal Regulatory Commission.
Failure to reap an increase in excess of the rate of inflation—which the USPS claims would have generated $2.3 billion in much-needed revenue—is something of a blessing for the mailing community (the USPS is appealing). The Postal Service is exploring other avenues and using other tools to bridge the gap to its fiscal obligations, which for the time being still include a $5.5 billion payment to pre-fund its retiree health benefits.
The USPS remains in a state of flux. It's shed 100,000 jobs the last three years alone, reaping cost savings of more than $10 billion. But it lost $8.5 billion in its latest fiscal year ending Sept. 30, and has incurred net losses in 14 of the last 16 fiscal quarters There were 700 million fewer pieces in the mail stream during Q3 compared to the previous year, and overall volume is down a whopping 20 percent since 2007.
Legislation has been proposed to help the USPS, and a healthy, sustainable Mr. ZIP is in the best interests of the mailing community. But, truth be told, the mailing community has its own challenges, independent of mailing rates, and those companies that specialize in printing direct mail pieces have an even greater onus in their quest to deliver products and services that enable clients to best optimize their marketing initiatives.
Suffice to say, it ain't easy.
Depressed pricing was a significant challenge during the course of 2010 as weaker companies struggled to stay afloat in the slowly recovering market environment, notes Jim Andersen, president and CEO of Chanhassen, MN-based IWCO Direct. Schedule volatility was a factor as customers adjusted their plans according to market changes and opportunities.
Staying in Tune
"We expanded our digital printing capabilities and brought new solutions to emerging direct mail markets to generate new revenue streams," he reveals. "In addition, the acquisition of Transcontinental Direct's U.S. assets included Mail-Gard, a critical communications recovery company whose client base includes leading direct marketers."
IWCO Direct has long been known for taking aggressive steps to ensure it is in tune with the needs of customers. Earlier in the year, the company hired a third-party firm to conduct a comprehensive customer satisfaction and needs assessment survey with its top 40 clients. Performance evaluation aside, Andersen feels it is critical and equally important to confirm the variables that add value to the customer—and to channel resources and energy to that end.