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Package Deal

The U.S. Postal Service's new marketing strategy may pay off for small business.

In the face of competition from e-mail, faxes and who-knows-what future form of mail, the U.S. Postal Service is looking for love in new places. One of its most ardent emerging courtships is with small business, particularly local retailers and service providers, be they franchisees or independent operators. The USPS wants to be seen as their low-cost marketing ally.

Toward that end, the USPS plans to test a new service called "neighborhood mail" early this year. It is also pursuing major postal rate concessions for saturation mailers as part of an effort that began last March to reclassify postal rates. The concessions would help those mailers that provide low-cost "shared" mail advertising such as "shoppers" and coupon packages.

The neighborhood mail proposal-which was greeted harshly by mail preparation companies, some large saturation mailers and the newspaper industry-would allow small business to send solo advertising (which is much more valuable than shared mail) to potential neighborhood customers without having to put that customer's name and address on the envelope. And the pizza shop, florist or plumber would no longer have to go to mail preparation house to get mailing lists for surrounding neighborhoods. (Mailers currently pay extra costs for this information on top of solo saturation mail rates of 11.7 to 15 cents per piece.)

According to Frank Brennan of the U.S. Postal Service, the new rate would be between 11.7 and 12 cents per piece, depending on the weight. All the mailer would have to do is prepare a minimum of 250 mail pieces for one mail carrier's route and drop them off at the local post office.

"Neighborhood mail was conceived for mom and pop stores that have never used direct mail before and might want to send out five, six or seven hundred pieces." explains Brennan.

Brennan declines to discuss neighborhood mail further, nor has the USPS published any details. Its reticence stems from the loud opposition of shared saturation mailers who believe neighborhood mail will cost them customers. That accounted for the outcry from groups like the Advertising Mail Marketing Association and Direct Marketing Association.

Brennan says the USPS expects to begin neighborhood mail test in New Orleans; Sacramento, California; and Rochester, New York, early this year. This will give major mailers a chance to provide Postmaster General Marvin Runyon with some ideas about how to improve the neighborhood proposal.

"I think the Postal Service is making a genuine effort to serve a market they have not been serving," says Donna Hanbery, executive director of the Alliance of Independent Store Owners and Professions (AISOP). "It is trying to listen to its small-business customer."

Hanbery believes saturation mailers, who number several hundred in the AISOP, are judging the USPS proposal too harshly. "I think the mailers are doing themselves a dis-service by reacting so negatively to the neighborhood mail proposal," she says. "After all, it's only a test."

Stephen Barlas is a freelance business reporter who write monthly Washington columns for 15 magazines.

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This article was originally published in the January 1996 print edition of Entrepreneur with the headline: Package Deal.

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