One of the most significant upcoming changes that will impact operations for marketers and printers is the USPS postal rate increase set to take effect July 14, 2024. For businesses that rely heavily on direct mail, especially catalog marketing, these increases pose significant financial challenges.
Catalog marketing has long been a powerful tool in engaging customers, driving sales, and building brand loyalty. The tactile experience of flipping through a beautifully designed catalog cannot be replicated by digital means alone. In fact, studies show that catalogs still deliver the highest ROI among marketing channels!
Despite the clear advantages of catalog marketing, rising postal rates threaten to erode these benefits by increasing distribution costs. This is where strategic solutions, such as Enru’s High-Density Co-Mail Optimization Program, come into play. By consolidating mail from various sources, Enru helps businesses significantly reduce postage costs, ensuring that your catalogs reach customers without breaking your budget.
Peak season for 2024 is fast approaching, so now is the time to make the decisions that will help your business see the biggest results this year!
Understanding the July 2024 Postal Rate Increase
Historically, postal rate changes have predictably occurred once annually, based on inflation. However, the landscape has changed significantly with the implementation of the Delivering for America Plan. Under this initiative, the USPS now raises postal rates more frequently to cover rising operational costs and compensate for revenue shortfalls.
Since the plan’s inception, the biggest shifts come from new rate factors authorized to the USPS along with now twice-annual rate increases. The result is a more volatile pricing environment for businesses reliant on direct mail, making it essential for marketers and printers to stay informed and adapt to these changes swiftly.
July 2024 Postage Increases
The upcoming rate hike, effective July 14, 2024, will see notable increases across various mail categories. Here are some of the most significant changes:
Marketing Mail — which includes letters, flats, and parcels — will experience substantial rate increases. This category is particularly relevant for catalog marketers and direct mail advertisers. The overall increase for Marketing Mail will be 7.55%, but specific rate changes within this category vary:
- Letters: Increase 7.0%
- Flats: Increase 11.7% (catalog mailers impacted the most)
- Parcels: Increase 7.8%
- High-Density/Saturation Letters: Increase 7.3%
- High-Density/Saturation Flats & Parcels: Increase 7.9%
- Carrier Route: Increase 9.9%
Nonprofit organizations, which often rely on postal mail for fundraising and communication, will also face significant increases:
- Letter-Shaped: Increase 3.2%
- Flat-Shaped: Increase 16.2%
These increases underscore the importance of strategic planning and optimization in managing direct mail costs. For catalog marketers, the substantial rise in rates for Marketing Mail flats highlights the need to leverage cost-saving solutions.
How the July 2024 Postal Rate Increase Affects Marketers
The July 2024 postal rate increase presents significant challenges for marketers, particularly those who rely heavily on direct mail campaigns such as catalog mailings. The rising costs add up quickly, especially given the high volume of items being sent out, and each rate hike can substantially cut into profitability.
For marketers, the sheer volume of mail sent out is a critical factor in the overall cost of direct mail campaigns. Catalogs, promotional mailers, and other marketing materials are often mailed in large quantities to reach a wide audience. Even a modest increase in postal rates can lead to significant additional expenses when multiplied across thousands or millions of pieces.
For instance, a rate increase of just a few cents per piece can translate into tens or hundreds of thousands of dollars in additional costs annually for a high-volume mailer. This cumulative effect makes managing postal costs a vital component of a marketer’s budget strategy.
Every increase in postal rates directly affects the bottom line. When the cost to send each piece of mail rises, the profitability of direct mail campaigns diminishes unless adjustments are made elsewhere, such as reducing print quality, cutting the number of recipients, or finding ways to offset the increased postage costs. These compromises, however, can negatively impact the effectiveness of the marketing campaign and lead to lower response rates and reduced ROI.
Some marketers have turned to alternative formats, such as Slim Jims that mail at a lower rate. This may seem like a solution, but the problem is that standard, full-sized catalogs significantly outperform mailings in the Slim Jim format. So what you save in postage, you may lose in reduced sales. This is not the answer.
Leveraging Enru’s High-Density Co-Mail Optimization Program
As postal rates continue to rise, marketers and businesses must find innovative ways to keep their direct mail campaigns cost-effective. One of the best solutions is leveraging Enru’s High-Density Co-Mail Optimization Program. This program helps mitigate the impact of rate hikes by optimizing mailing processes to achieve significant cost savings.
Enru’s Consolidation Process
High-density pools are a method of consolidating mail from various sources to achieve greater efficiencies in the postal delivery process. By pooling together catalogs from multiple businesses that are printed at the same time, Enru can sort these items by ZIP code, creating large, dense batches of mail destined for the same geographic areas.
Enru’s process begins by collecting mail from different clients and running it through sophisticated sorting machines. These machines categorize the mail by ZIP codes, down to the 25-digit level. This level of precision ensures that mail is grouped in the most efficient way possible for delivery.
Once sorted, the mail is placed into containers that are delivered as close as possible to the destination’s postal facility, often skipping several intermediate postal processing steps. By reducing the number of times mail needs to be handled by USPS employees, Enru can take advantage of significant workshare discounts.
The USPS workshare discount program rewards mailers who perform some of the postal processing work themselves. By pre-sorting and transporting mail closer to its final destination, Enru’s High-Density Co-Mail Optimization Program qualifies for these discounts.
Cost-Saving Potential
The cost-saving potential of Enru’s High-Density Co-Mail Optimization Program is substantial, especially in the context of the July 2024 rate increases. These savings allow businesses to allocate more of their budget toward other areas of their marketing strategy, such as improving the quality of their catalogs or increasing the frequency of their mailings.
Consider a catalog mailer who sends out 100,000 catalogs per month. With the rate increase, their postage costs could go up as much as 11%. That has a huge impact on profitability! But by leveraging Enru’s High-Density Co-Mail Optimization Program, printers and catalogers can qualify for a postage discount of 19% — enough to make up for the increase and keep the catalog program viable.
Thriving Amidst Postal Rate Hikes: Stay Informed and Strategic
Navigating the rising postal rates of recent years is a daunting task for any business, especially if you rely heavily on direct mail campaigns. As the July 2024 USPS postal rate increase approaches, it becomes increasingly important for marketers and printers to implement cost-saving strategies.
The frequent rate hikes in recent years present both challenges and opportunities. While the financial strain of higher postage costs can cut into profitability, there are strategic solutions available to maintain the effectiveness and ROI of your marketing efforts.
Enru’s High-Density Co-Mail Optimization Program stands out as a powerful tool in combating the rising costs associated with postal rate increases. Enru is committed to helping businesses like yours maintain high-impact and cost-effective direct mail programs. Our expertise with cooperative mailing can provide the strategic edge you need to overcome the challenges posed by rising postal rates.
Don’t let postal rate hikes derail your marketing efforts. Contact Enru today to learn more about how our High-Density Co-Mail Optimization Program can help you save on postage costs and keep your catalog programs thriving. Together, we can turn this challenge into an opportunity for growth and continued success.
