Mail Service Cuts Coming

May 1, 2009       Michele Donohue      

Easter Seals plans to mail 40 million pieces this year. The Chicago-based health organization tries to drop mail on Mondays because “if mail is moving at the rate it should be through the postal system, within 10 days it would be in-house,” said according to Jennifer Bielat, assistant vice president for direct marketing.

But now organizations might have to rethink mailing strategies as the United States Postal Service (USPS) considers cutting a mail delivery day to slash costs. And in a national survey by The NonProfit Times, cutting a weekday of service would hurt charities the worst.

In the survey, an overwhelming majority (87.5 percent) of the 729 charity executives who responded said cutting Saturdays would hurt the organizations least, followed by Wednesday (5.3 percent) and Tuesday (4 percent). Executives said cutting Monday delivery would hurt the most with 67.1 percent, followed by Friday (15.8 percent) and Tuesday (9.3 percent).

“I think any interruption in mail delivery is going to be problematic for businesses across all industries, not just nonprofit mailers. For us though, I think if they cut any delivery during what would be considered the business week — Monday through Friday — that would be a problem,” said Bielat.

Postmaster General John E. Potter said the postal service is “in acute financial crisis.”ÊTestifying before a U.S. Senate subcommittee, Potter said that mail volume decreased by more than 9 billion pieces, or 4.5 percent, during fiscal year 2008, which ended Sept. 30.

The USPS is trying to manage costs while tackling skyrocketing expenses, a decrease in mail volume and the statutory requirement to pre-fund health benefits for future retirees while still maintaining annual premiums for current retirees.

One cost-cutting option being discussed is dropping a day of delivery service. Net losses are expected to be $2.8 billion for last year. Potter testified that the six-day delivery schedule “may simply prove to be unaffordable.” He asked Congress to remove the annual appropriation bill rider that would require USPS to deliver mail six days a week.

USPS does not break down mail comparisons for each day, like mail volume for a Wednesday versus a Thursday, but estimates 667 million pieces are processed each day. Reducing to a five-day mailing delivery would cut fixed network costs by nearly 17 percent or $3.5 billion annually, according to Potter.

Approximately 203 billion mail pieces were processed during 2008 and the USPS estimates a drop to 180 billion pieces for 2009, according to Sue Brennan, a USPS spokeswoman. Even with a decrease in mail, the 180 billion pieces would be crammed into five delivery days instead of six.

“If the U.S. Postal Service reduced delivery from six days to five, regardless of the day, certainly there would be more mail pieces in each mail box each day. So there is a greater competition for not only getting the mail opened but a greater competition for mind-share,” said Michael Slanco, director of sponsor and donor services at Compassion International. “How much can an American consumer digest?,” he asked rhetorically.

Slanco estimated the Colorado Springs, Colo.-based organization sends 7 to 8 million mail pieces annually. Even though cutting a mail day has so far just been water cooler talk, Slanco said organizations would have to analyze how it would affect mailings, from delivery times to testing strategies for increased open rates.

“I think it just raises the bar and I think our initial expectation would be a smaller percentage [of mail] would actually be answered in each household,” said Slanco.

For Easter Seals, “Monday is our biggest day in terms of returns coming for our campaigns. But we see donations coming through five days a week,” said Bielat. “So any interruption there would disturb our cash flow into the organization and our ability to return dollars to support services for Easter Seals.”

Some organizations already base their mailing stream on a five-day schedule. “We don’t rely on Saturday as a mail drop day anyway,” said Megan Hawkes, development director for Campus Crusade for Christ International (CCCI) in Orlando, Fla. “That may be the day people are receiving, but it’s not a part of the mail stream process.” She said it would be “far more problematic” if a day were cut from the mid-week.

Slanco, on the other hand, thought that Saturday delivery is essential for the mailing schedule. “If they decided to stop delivery on Saturday there is a kind of greater element of concern for us because we think Saturday mail, in our opinion, probably gets a greater look,” he said. “People tend to have more time and we think that a lot of mail gets saved for the weekend and that Saturday mail tends to get a greater look. So if they discontinued that, we think that would also be an issue.”

Hawkes said what might be affected are organizations using the 4-4-5 calendar, which breaks down accounting periods into two, four-week periods followed by a five-week period. This system helps organizations make year-to-year comparisons, which would be thrown off if a mail day were eliminated. It would take 13 months for organizations to have measurable, comparable data from the prior year.

Bielat said cutting a mail day might lead to an increase in an organization’s operating costs. “If they interrupt service during Monday through Friday, we would still want the mail being processed on, say, a Saturday if that continues to be a delivery day,” she explained. “And that would in turn raise costs because you would have staff needing to be working on a Saturday and that’s a premium day. That’s an overtime day for most businesses.”

Mailing costs and the threat of a five-day mailing schedule could force nonprofits to further explore channel integration. Hawkes explained that mail continues to be critical for CCCI, even to spark an online donation. “Paper mail is not going away. It’s not going to be less important to who we are in the immediate future,” she said.

While mail might not be disappearing, Hawkes said online donations continue to grow. “We recognize that’s where our donors live and the most important thing that we can do is find our donors and be where they are in terms of communicating our mission.”

Easter Seals, too, needs to explore additional delivery channels. “I think strategically, organizations including Easter Seals, need to look at other channels,” said Bielat. “Not that I believe direct mail is in any way going away, but I do think because we are tied so tightly to a partner like the U.S. Postal Service, that’s in a position right now that is so vulnerable, it just makes good business sense to be spending time building strategy and programs that are integrated and are in other channels.”

Hawkes said even though a majority of donors arrive through snail mail, online giving has increased year-to-year. CCCI had more than 95,000 unique donors give more than $88.7 million online during the past four years. “We recognize that’s where our donors live and the most important thing that we can do is find our donors and be where they are in terms of communicating our mission,” she said.

Slanco said he thinks cutting a mail day might have a negative impact on USPS in the long run and hoped the postal service would consider all options before implementing such a measure. He explained that Compassion International would “make it work” if a day was cut, but smaller organizations might not have the resources to refine mailing techniques to increase open rates against steeper competition.

“I think they will see some of their smaller mailers, who don’t have as much energy and as much design capability to put in their mail, they would begin to fall away a bit because they would realize it’s just not a good mechanism for them to get good responses,” he said. “I’m concerned about the postal service’s ability to serve and that their volume may decrease as a result of their effort to cut back and save money.” NPT