PostCom Runs Numbers For Summer Postage Discount Program

Never mind the woodchucks: How much mail would a mailer have to mail for proposed summer postage discounts to take effect?

The USPS is mulling temporary postage discounts for high-volume mailers who schedule drops between June 15 and Sept. 15. But mailers would have to reach certain thresholds based on previous activity in order to qualify, and only the pieces above the thresholds would be mailed at the discount rate, according to one proposal.

Details such as which mailers will qualify have yet to be hammered out. According to the Direct Marketing Association, only the 4,000 largest standard mail users will qualify for the discounts, which could amount to 20%-30% for mail volumes above thresholds established for each marketer. But the U.S.P.S. itself has said nothing definite about the program– including whether it will happen at all.

The Postal Service has, however, released one formula which might be used to calculate thresholds. PostCom.org, the Association for Postal Commerce, has plugged hypothetical numbers into the formula. Pencils ready?

1. Mailers first determine their mail volume between Oct. 2007 and March 2008. For its example, PostCom’s sets this at 10 million pieces.

2. Mailers then determine their mail volume between October 2008 and March 2009. PostCom assumed a drop in volume, to 9 million pieces, during this period.

3. PostCom then calculates the variance. This is done by subtracting the Oct. 2007-March 2008 volume from the Oct. 2008-March 2009 mail volume. Nine million minus 10 million equals negative one million – one million fewer pieces mailed.

4. That negative one million is then divided by the Oct. 2007-March 2008 volume, which was set at 10 million pieces. This yields negative 10%. The variance is a 10% drop.

5 Next, marketers calculate the volume of mail sent between July 2008 through Sept. 2008. PostCom set this at 8 million pieces. This is multiplied by the negative 10% variance. The result is a variance figure of negative 800,000.

6. Marketers then take the variance figure – negative 800,000 – and add it to the July 2008-Sept. 2008 volume of 8 million. The result is 7.2 million, which is the volume threshold a mailer would have to reach in order to qualify for discounts, according to the proposal.

What happens if a marketer increased mail volume, instead of decreasing it? The variance would be positive, meaning that the threshold to qualify under the proposed summer program would be increased.

The formula comes with numerous caveats. Nothing, absolutely nothing, about the proposed temporary rate rollback for large standard mailers has been set in stone. In fact, PostCom’s Web site lists a number of questions about the program, including:

How ready is the USPS to move on the proposal?

How quickly will the Postal Regulatory Commission move on the proposal?

Who, if anyone, might rise up in opposition to the proposal? (This could include mailers who feel discriminated against.)

Will the big mailers be able to add on additional volume quickly enough, either through increasing the volume of scheduled mailings or adding on a follow-up campaign?

Does the USPS intend this to be a one-off effort, or does it have the stick-to-itiveness to learn from this very quickly conceived first effort and try it again with a bit more planning and better timing?

PostCom president Gene Del Polito lauded the Postal Service for creative thinking regarding generating volume and revenue, and he added that it could be a boon for list brokers and database analysts, who would be scrambling to come up with additional viable targets.

But Del Polito added a cautionary note. “We hope [the Postal Regulatory Committee] fully appreciates that the time limits associated with this program may not be the miraculous outcome that they might have hoped for.”

All that said, several industry observers peg the likelihood of the test program’s implementation at significantly better than even.