At SPC’s quarterly informative sessions, you hear directly from industry experts and get your questions answered. On Tuesday, November 14th, we focused on the outlook of the United States Postal Services. Tom Foti, USPS Vice President, Product Solutions, shared upcoming initiatives for 2024, updates to current USPS promotions, and introduced their biggest incentive to date. We summarized the key takeaways in case you missed it.
One of the USPS’s big priorities is a more synchronized network. The organization is revamping its network to be more efficient and streamlined. Foti listed key action items to accomplish this goal:
- Optimizing Transportation
- Relying on 60 Regional Processing Centers across the country and then local processing centers below that.
- Utilize truck capacity in a more efficient manner.
- More consolidation resulting in fewer trips due to fewer facilities and fuller trucks.
- Investing in facilities and infrastructure
- Investments in future big plants and delivery units.
- Roll out new carrier fleet including electric vehicles.
- Upgrading Technology
- Streamline operations with emphasis on the support systems that drive the network.
Foti stated the expectation heading into the new year is 95% on-time rates against their standards for all mail and package products. He acknowledged the USPS fights the growing perception that mail is “old school”, but he’s confident that brands still know the value of mail and the ability it offers for highly personalized and targeted messages. This year, US brands will invest nearly $40 billion in direct mail. Ranking it 5th among advertising and marketing channels.
More flexibility for USPS Promotions
The USPS offers six 6 promotions throughout the year; Tactile Sensory & Incentive, Personalized Color Transpromo, Emerging Technology & Mobile Shopping, Reply Mail, Informed Delivery, and Retarget Value. For more details about each promotion, visit the SPC USPS Promotions Page for more information about each USPS promotion.
Heading into 2024, the six promotions above will stay the same with one enhancement. Traditionally, each promotion has a defined period of when you can participate. The USPS is building more flexibility for marketers by allowing them to choose their own 6-month window of opportunity for the Emerging and Advanced Technology Promotion. For example, if you wish to utilize this promotion starting January 1st, the promotion would be active through the end of June. Or you can start May 1st through the end of October. The clock will start whenever your first mailing occurs.
The policy still stands that you cannot qualify for more than one promotion at a time on a single mailing.
Registration for Emerging Tech and Mobile Shopping is expected to start soon after Thanksgiving.
2024 Mail Growth Incentives
Performance Period: 01/01/2024 – 12/30/2024
For existing mail marketers, the USPS has great news for you. Foti unveiled the biggest incentive to date: A credit of up to 30% on incremental postal volume above this year’s activity.
Both First-Class Mail and Marketing Mail Growth Incentives will provide eligible mailers a credit on additional mail volume more than their baseline volumes. Nonprofit mailers are also eligible to participate.
Your baseline is determined from the USPS fiscal year, year period from 10/1/2022 – 9/30/2023. To qualify, mailers must have a minimum volume of 1 million pieces and grow mail volume above their baseline during the performance period (Jan-Dec 2024)
For example, let’s say a customer mailed 5 million pieces during the time of 10/1/22-9/30/23. If they mail 6 million pieces during the performance period (Calendar year 2024), they will get a 30% discount on the incremental 1 million pieces.
Once you exceed your annual threshold, the postage credit can be applied to mailing statements immediately after they are agreed to and issued to a permit. Postage credits will be issued after June 2024, September 2024, and December 2024. Apply the credit to the account you identify, and you can utilize the credits as part of future mailings. When you claim those credits, you can also claim a promotional discount on the same statement.
Any Mail Growth incentive postage credits earned will expire after December 31st, 2025.
Future postings from SPC will address registration and enrollment. Contact SPC for more details.
Future Rate Increases: January and July 2024
Foti confirmed the 1.3% rate increase in January for most mail classes. He also spoke of a possible more significant increase in July. It could possibly be as much as 5%-7%. The USPS is closely watching inflation and other key metrics to determine how much an increase is justified.
Forward Guidance
Special thank you to Tom Foti for joining SPC’s session. As we heard, the USPS has a focused plan to be a more efficient, standardized, and competitive shipping provider. It’s making big investments to accomplish this goal. Unfortunately, rate increases continue to be on the horizon to help fund these improvements. SPC strongly encourages our clients to take advantage of the USPS promotions and new incentives to help offset these scheduled rate increases.
Be on the lookout for a more in-depth blog on Mail Growth Incentive and how you can incorporate it into your marketing plans. SPC will keep you updated on new opportunities within USPS programs.
