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HOME --> Exclusive Follow-up on USPS Incentive Proposal: Key Questions Answered From Lindenmeyr & the ACMA

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Exclusive Follow-up on USPS Incentive Proposal: Key Questions Answered From Lindenmeyr & the ACMA

We’ve received a few questions following the announcement of the USPS proposal for a new mail volume incentive. Below you’ll find these questions answered. For reference, you can find the original announcement beneath it…

Question/Issue #1:
There’s a fair bit of flip-flopping between postal fiscal years and calendar years. Please clarify.

Answer:
In its announcement, the Postal Service referenced both USPS Fiscal Year 2023 (FY23) and a Calendar Year 2024 (CY24). Keep the following in mind…

  • USPS FY23, which covers Oct. 1, 2022 – Sept. 30, 2023, is used as the period to measure mailer volume to calculate the mailer baseline.
  • CY24, covering Jan. 1, 2024 – Dec. 31, 2024, is the mailing period that volume will be used to qualify for incentives.

Q2:
The USPS references annual volume, but credits are awarded before calendar year end. For example: If a company increases circulation vs prior year in the first nine months of the year, but decreases circulation in Q4 vs Q4 2022, are the credits still awarded based on the year-to-date year-over-year increase? How are the periodic credits calculated? Is the USPS comparing January 1st through September 30, 2023, to and then October 1st to December 31, 2022 to 2024? The USPS spoke to when they would be awarded, but not the math for each interval.

Also, is the plan to award credits based on the overall change in circulation from January to April, then May to August, then September to December? Is it possible that credits could be negative in September to December if overall circ for the calendar year did not increase vs the postal service fiscal year?

Answer:
There will be three credit disbursements in July, October, then a final January-February 2025. Volume will be measured for FY 2023 to create the baseline. Month-to-month will not be measured. So it won’t be nine months for 2024 compared to nine months of 2023. Rather, all of FY 2023 will be the base needed to pass before the credit.

The first credit distribution is July of 2024, using actual mailed volumes from January to June 2024. If you already surpassed your FY23 volume, you will get credit. Then all additional volume after is all going to be above your FY23 so you will see credit again in October and January-February (as long as you are still mailing).

It’s likely that most mailers will not see credit in July, because they probably will not hit the baseline until later in the year, at the October or most likely end of year with the Jan/Feb. This is because it is based on comparing the mail volume in CY24 to date at each disbursement period to all of USPS FY23; thus why mailers will most likely not receive credits until October or Jan/Feb, if at all.

The credits earned are equal to the average actual net per-piece price paid for all qualifying volumes, after other incentives and promotions, i.e., the total actual price paid for all qualifying pieces divided by the total volume of qualifying pieces.

Example:
Assume a mailer sends 5 million qualifying pieces in calendar year 2024 and sent 4.5 million qualifying pieces in fiscal year 2023. (Please reference the chart we showed yesterday – and below – using it as an example of Marketing Mail. The volume test is done at the mailing class level.)

  1. Say, product 1 is letters, product 2 is flats, and product 3 is Marketing Mail parcels (the last of these including only the market dominant MM commercial regular and nonprofit parcels and not Bound Printed Matter or other Competitive product parcels, such as UPS Mail Innovations):
  2. Total 5mm pieces at an average postage rate of $.639 (the specific amount used in USPS example below) after all promotions and incentives had been removed.
  3. This particular mailer mailed 4.5 mm in 2023, so it would receive credit for 30% of the average postage on 500,000 pieces (per the 500,000 x 0.639 x 0.30 = $95,850 example from the original announcement below).
  4. Credits will be issued in July, October of 2024 and in January or February of 2025, and can be used immediately once received but must be used by December 31, 2025.

Q3:
Say the last 500,000 units are mailed in November. So we will receive zero credits until Jan. 2025?

Answer:
Correct. The USPS will have three disbursement dates, planned as July, October, then last clean up Jan/Feb. So if a you are earning credits on a mailing in November, you should expect to receive those credits with the Jan/Feb disbursement.

Q4:
We will not hit above last year’s level until the end of the year. Does this mean we will only get paid (credited) in the period after the circ is more than the entirety of last year?

Answer:
Yes, you will not receive credits until you hit the baseline. This will not measure the first six months of last year to the first six months of this year and so on. This is using the full FY23 volume as base, and mailers need to hit that before expecting to receive a credit.

Q5:
The incentives don’t seem to apply to all Marketing Mail mailers. Can we push to make this better for all MM mailers? Some additional thoughts: Couldn’t the USPS lower the threshold for MM? Here follow a couple of hypotheticals for those whose prior 2023 volumes are less than 1 million pieces:

For example, simply lower the threshold to 100,000 pieces. This way, the USPS still wins while giving smaller businesses a chance to grow, too. Or another approach: those mailers must mail at least 30% more pieces to get the 30% discount on these pieces.

Answer:
If mailing under 1 million pieces in FY23, your calendar ’23 baseline is 1 million. The USPS projections and calculations are structured based on that. “We need to weigh the value of commenting looking for changes to this,” says ACMA Postal Committee Chair Deborah Damore of Enru. “As it is written, while not the best solution for all it is a win for many.”

ACMA representatives will be meeting with top USPS officials in a few weeks in Washington to discuss this among other issues; however, while this incentive is not perfect we want to remain positive supporters, so we may tread lightly here.

Q6:
Interesting announcement after the massive flats volume drop the USPS just reported. Is there any chance PMG DeJoy will slow down the rate hikes? Catalogers are budgeting now for 2024 and I’m seeing more circulation drops; prospecting is almost zero.

Answer:
Unfortunately, no. The USPS believes that even with the rate increases, this growth incentive will result in 17% MM growth (a figure several ACMA merchant members believe to be grossly overstated). On the positive side, Friday’s announcement of a negotiated service agreement (NSA) with Publishers Clearing House (PCH) represents an encouraging directional change. While PCH is not a catalog mailer, this is a Marketing Mail prospecting rate NSA for market dominant mail, the first of its kind in several years. So we’re hoping it is successful and creates a framework for others to follow.

Q7:
Why is this a “one and done” offer? It is difficult to invest in something like this if for only a single year. Why not make it multi-year?

Answer:
We have noted these points to USPS officials previously. They have resisted making this a two-year offering as catalog mailers had asked because they need to see the results and get some confidence that the approach is working. ACMA has also noted that annual piece volume growth, in this environment of massive rate hikes forcing many marketers to curtail volumes, makes it very hard for many companies to grow. But that has fallen on deaf ears.

Q8:
For mailers with multiple Mailer Identifiers (MIDs) and Customer Registration IDs (CRIDs), is the 1.0 million and the 2024 volume growth at the MID, CRID or corporate level?

Answer:
The volume will be measured at the CRID corporate level. The USPS is aware that there are some companies that mail under more than one CRID and they are working through the process flow and validation of mail owners at the CRID level to consolidate those volumes for measurement. The technical details have yet to be shared.

 

A Final Note:
ACMA’s August 4th postal strategy zoom meeting covered these issues and more. If you missed that, some of this may not be readily apparent. But you can click here to tune into a replay – use pass code umJ.f1&G .

 

———–

 

(Our Aug. 14th Announcement)

On Friday August 11th, the U.S. Postal Service filed with the Postal Regulatory Commission (PRC) a request to create a new incentive for Marketing Mail (MM) and First-Class (FC) Mail. If approved, here’s how it will work and potentially impact your catalog mailings:

  • The incentive will use a mail owner Fiscal Year 2023 (Oct 1st, 2022 – Sept 30th, 2023) volume to determine a base line.
  • A minimum of 1 million pieces within each category of MM, or FC will be required to qualify for a MM or FC incentive.
  • For mailers who exceed 1 million in 2024, but did not mail 1 million in 2023, they will have their incremental volume start at 1 million pieces, not their FY 2023 volume.
  • The incentive amount is proposed at 30% of the average postage rate paid on qualifying pieces mailing in calendar year 2024 that exceed the FY23 baseline of each MM and FC. (See link to charts for more details.)

The mailer’s pay out will come in the form of three credits that can be used on future mailings beginning in July 2024 and must be used by the end of calendar year 2025. Distributions are expected in July 2024, October 2024 and either January or February of 2025. All credits may only be used for postage spend on mailings of the same class of mail in which the credits were earned.

  • Mailers will be able to register their Customer Registration Identifiers (CRID) beginning in November 2023, registration will remain open until June 2024.

Eligible Marketing Mail
All commercial (including Nonprofit) flats, letters Carrier Route Flats, and Marketing Mail Packages. Retail Every Door Direct Mail (EDDM) is not included.

Eligible First Class Mail
All commercial letters, postcards and flats, but excludes single piece First-Class and First-Class Parcels.

ACMA Postal Committee Chair Deborah Damore of Enru has been kind enough to add some more pertinent details:

How the Credits Work
The credits earned are equal to the average actual per-piece price paid for all qualifying volumes, after other incentives and promotions, i.e., the total actual price paid for all qualifying pieces divided by the total volume of qualifying pieces.

Consider this example:

  • Assume a mailer sends 5 million qualifying pieces in calendar year 2024 and sent 4.5 million qualifying pieces in fiscal year 2023.
  • In the chart below, assume product 1 is letters, product 2 is flats, and product 3 is Marketing Mail parcels. Total 5mm pieces at an average postage rate of $.639 after all promotions and incentives had been removed. This particular mailer mailed 4.5 mm in 2023, so it would receive credit for 30% of the average postage on 500,000 pieces. (500,000 x 0.639 x 0.30 = $95,850)
  • Credits will be issued in July and October of 2024 and in January or February of 2025.
  • Credits can be used immediately once they are received but must be used by end of calendar 2025.

8bd2c815222c2a8a345b854816a5c137The Postal Service is estimating that approximately 17% of Marketing Mail volume will earn credits during the incentive period, and projects that the incentive will spur between $544 and $907 million in growth revenue at a cost of $163 to $272 million in credits and create a net contribution of $17 to $28 million.

Watch for future updates with technical requirements on the USPS’s PostalPro website. Deborah and the ACMA will keep members posted on other developments impacting your business.

 

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Lynn Noble

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Lynn Noble is ACMA’s Vice President, Industry Relations, having joined the ACMA in May 2015, following an extensive direct marketing career in private industry as well as the US Postal Service. He is responsible for leading the membership development efforts for the ACMA through new member acquisitions and providing enhanced member value.

Throughout his career, Lynn has held key marketing & sales positions with several leading direct marketers, as well as several high-level management positions with the US Postal Service.

In 2009, at the request of the ACMA, the US Postal Service initiated a new position of Catalog Manager to lead the Service’s efforts to stabilize and grow the catalog industry. Lynn returned to the USPS to lead those efforts and was instrumental to developing a stronger industry partnership between the Postal Service and the catalog industry. Serving as the product manager for catalogs, Lynn helped to raise the awareness of catalog-specific business challenges within the executive ranks of the USPS. During his tenure, the ACMA and catalog companies enjoyed a collaborative and progressive environment that produced more stabilized rates and inclusion in key USPS promotional opportunities.

Just prior to joining the ACMA Lynn was the USPS’s Manager, Strategic Account Operations, leading a team of senior sales professionals who focused exclusively in the Catalog, Mail Order, and E-commerce arena. In addition to his Postal positions, Lynn previously held key positions with leading direct marketing companies, including Cox Target Media, Market Logic, Catalina Marketing, Freesamples.com, and Advantage Direct.

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Named Vice President & Deputy Director in January 2010, Miller came to the ACMA following a lengthy career of more than two decades following the catalog/multichannel/e-commerce/retail businesses. Reporting to ACMA president & executive director Hamilton Davison, Miller oversees marketing and communications, membership development, and organizes and oversees ACMA’s National Catalog Forum, while working with Davison on most of ACMA’s postal-related efforts.

Miller started his career as a reporter with Catalog Showroom Business, following a form of retailing that was led by the likes of the Service Merchandise and Best Products retail chains.

After several years of editor/reporter roles with business magazines that followed the toy and gift industries, Miller was named associate editor of Catalog Age magazine (now Multichannel Merchant) in 1986. He rose up the ranks at Catalog Age over the next 18 years to be the magazine’s senior news editor.

Beginning in the late ’80s, Miller became Catalog Age’s postal beat reporter, where he’d follow key postal events and pull out the key catalog mail-related issues for readers. During that time, he attended many Mailers Technical Advisory Committee (MTAC) meetings and National Postal forums.

After leaving Catalog Age in 2004, Miller consulted with several catalogers and multichannel suppliers for a time, he was named news/website editor at Commercial Property News. Less than a year later, he was asked to take the reigns at Catalog Success (now All About ROI) where he served as editor-in- chief from 2006 till the end of 2009.

 

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ACMA appointed Michael K. Plunkett as its President and Executive Director in January 2024, succeeding founder Hamilton Davison. Mr. Davison moved on to own and run a company. Mr. Plunkett brings years of executive leadership experience having been the President and CEO of the Association for Postal Commerce (PostCom) since 2017.  In the newly-formed dual role, he will continue his current role with PostCom and the two organizations will operate separately.

During his tenure, PostCom has continued to lead the mailing and shipping industry on policy and regulatory matters and to work with Government agency partners to advance issues of importance to members. Mr. Plunkett is also President of the Delivery Technology Advocacy Council, a nonprofit launched in 2020 to concentrate on delivery and logistics technologies.

Prior to PostCom, Mr. Plunkett accumulated more than 25 years Postal experience with the United States Postal Service in numerous executive roles in operations, marketing, product development and pricing.  As a leader within the Postal Service’s management team, Mr. Plunkett developed a well-earned reputation for innovation by leading efforts to develop pricing agreements for domestic services and in the development of the forever stamp and the priority mail flat rate box.

Mr. Plunkett has testified on pricing and policy issues before the Postal Regulatory Commission and Congressional subcommittees.  He has authored and presented papers on postal policies, economics, and operations for National and International conferences.

Mr. Plunkett holds Masters Degrees in Business from the Wharton School at the University of Pennsylvania and the Massachusetts Institute of Technology, where he was a Sloan Fellow. He earned a Bachelor Degrees in Economics and Finance from the Pennsylvania State University.