With extremely high probability, 2011 postage rates will be higher than 2010 postage rates.
Here's what's driving the increase in postage rates for 2011:
- Mail volume is projected to fall from 177 billion in 2009 to 150 billion in 2020. That represents a 37 percent decline in First-Class Mail alone. Revenue contributed by First-Class Mail will plummet from 51 percent today to about 35 percent in 2020.
- If the Postal Service takes no action, it will face a cumulative shortfall of $238 billion by 2020.
Based on these acute challenges, the Postal Service has publicly declared that "a modest exigent price increase will be proposed, effective in 2011."
According to USPS VP of pricing, Maura Robinson, a request for a "moderate" price increase in 2011 postage rates will soon be filed with the Postal Regulatory Commission, possibly as early as July. At that point, we will know more specifics about the postage rate increase for 2011, but it's fair to assume that postage rates will be raised in 2011.
This is a troublesome fact for businesses that rely extensively on U.S. mail service. For example, catalog mailers, magazine publishers, and direct marketers will be adversely impacted by higher postage rates.
While the expectation is that the average postage rate increase will be 5 percent, catalog companies and publishers should expect a 10 percent increase for Standard Mail Flats and Periodicals Mail.
Smart catalog companies are already planning on lowering mailing costs by substituting printed mail pieces with online direct marketing via email and social media. The beneficiaries of this will be the leading email marketing software companies, such as Alterian.
While it will be tough for many companies to absorb the 2011 postage increases, the key takeaway here is that companies should diversify their outreach tactics and take a well integrated, multichannel approach to marketing. In addition, companies will need to be smarter about their use of mailed marketing materials because mailing costs are only going up from here. To stay even, companies will need to get higher conversion rates or larger revenues per customer from each and every mailed piece.