Exigent Surcharge Removal…Coming Soon!

As we leave the last of the wintery months behind, the second Sunday in April (with some luck) will bring the much anticipated spring sunshine. But regardless of Mother Nature’s plans for April 10, direct mail marketers can expect brighter days ahead, as we bid farewell to exigency! Effective April 10, 2016, the Postal Service will drop its 4.3% exigent surcharge, just over two years after it instated the added rates to recoup the considerable losses from the Great Recession. While the USPS is certainly still feeling those losses, the Postal Regulatory Commission (PRC) set a cap to the dollar amount of extra revenue collected from the surcharge at $4.6 billion, which they believe will ultimately be reached by the designated date in April. Over the past few years, the environment for mailers has been one of consistently climbing costs, making budget decisions more challenging and overall volume on the downswing. But this new reality may open the door for significant opportunities for direct mail marketers, and it’s time to start thinking about them now.

What is the change?

The change on April 10th reflects just the third time in history that postal rates have dropped, so it has certainly caught our attention. For companies across industries, from nonprofit to retail, this is a chance to boost the mail channel. With the 4.3% decrease, first class rates will drop from $0.49 to approximately $0.47 per piece. Automated 3-digit scheme postage, which currently runs at about $0.25-$0.27 per piece for a letter, will drop to about $0.23 per piece with the exigent rollback. While the dollar amount doesn’t appear initially impactful, in large volumes, it could reap substantial savings for organizations with hefty mail programs. As we recently explored, direct mail is still an extremely viable channel for brands seeking to complement their digital approach and engage meaningfully through highly personalized mail content.

In tandem with the surcharge drop, the USPS is also offering an ongoing 4”x6” postcard program in which marketers can pay standard postage rates for first class speeds – this ultimately means that a piece that typically reaches your customers in 7-10 days from the drop date would reach them in just 2-4, all at lower costs. If speed to market is your priority, or if you have a timely offer or promotion, this option could be highly cost-effective.

How can brands leverage this?

The immediate reaction to the surcharge removal for many brands and organizations will likely be to up their mail volume. If you’re planning a mass mailing in the near future, it may be beneficial to wait until the new prices go into effect on April 10th. But more than just increasing volume, this change brings an important opportunity to think more strategically about direct mail campaigns. Have you identified a new customer segment to mail, but haven’t yet had the budget to do so? Thinking about enhancing the creative elements of your campaign? Have you had your eye on an entirely new, innovative market? With more dollars flowing back into the budget, this is the time to analyze the big-picture initiatives that will drive revenue for your business. With an understanding of the impact direct mail has on other channels of engagement, you’ll be in a favorable position to decide what strategic move will offer the best results. And if you work in mail exclusively, this is a chance to expand into other formats that your budget may not have covered in the past.

Use your data

Dumping additional dollars into any one campaign or strategy solely because you have the budget likely won’t turn the results you’re looking for. Instead, leverage data to your advantage, and let it guide you to new, more impactful territories. Even more importantly, test! Whether it’s a new format, different creative or a new customer or donor segment, testing is crucial to understanding how to optimize campaigns for success. Learn what works and what doesn’t before spending significant amounts on any one thing.

Don’t let the opportunity pass you by!

As far as we know, the surcharge removal is happening. With this being the case, now is the time to act! Having a good handle on the ways you want to spend this additional budget before April 10th hits will let you stay ahead of the curve. And we all know how challenging that is in today’s constantly changing marketing environment!

Our teams will be monitoring any further announcements from the USPS, and will guide clients accordingly! Stay tuned!

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