Post office delivers for marketers

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Shaken by the anthrax threat and a looming financial crisis, the U.S. Postal Service is faring surprisingly well when it comes to delivering b-to-b direct mail, a function critical not only to its own survival but also that of its business clients.

But the same marketers that are lauding the USPS’ current performance are expressing grave reservations that it can financially withstand another round of anthrax attacks. And some are chagrined at what they perceive to be the USPS’ heavy-handedness when dealing with them. They say this stems from a mindset that makes clashes with the private sector inevitable and running the agency as a profitable operation difficult.

No plans to scale back

A wide range of b-to-b direct marketers and other companies reliant on the USPS say the agency is doing a stellar job under extraordinary circumstances. No company contacted for this report said it was scaling back direct mailings, though most are considering increased e-marketing efforts.

"They [USPS] are doing a fine job in a difficult situation, supporting all the businesses that rely on the channel. I can’t think of anything else they can do right now," said Jason Brandt, exec VP-general manager of Deerfield, Ill.-based direct marketing agency Brann Worldwide, whose b-to-b clients include Fleet Boston Corp. "We haven’t seen a whole lot of latency in terms of mail being delivered, and that’s a good thing."

Lack of disruption

Overwhelmingly, direct marketers—even those in central New Jersey, the area most affected by anthrax incidents at post offices—spoke of a lack of disruption of b-to-b mailings.

Direct mailers said certain USPS efforts, including sending out anthrax safety videos to businesses and setting up temporary mail sorting venues, have gone a long way toward improving the organization’s reputation with this crucial market.

"They’ve done a terrific job," said Jeff Barnhart, CEO of Creative Marketing Alliance, Princeton Junction, N.J. The company, located a five-minute drive from one of the infected post offices, saw a five-day delay for incoming mail during the height of the anthrax scare in late October. There was, however, no delay in the company’s outbound b-to-b mailings, Barnhart said.

"It’s kind of amazing when you look at the events going on around the world today," Barnhart said. "Who would’ve thought the people handling the mail would be a target of biological warfare?"

The USPS’ strong performance perhaps explains why an immediate surge in b-to-b e-mail marketing—widely anticipated only last month—never materialized.

"We haven’t seen a great upsurge in e-mail business from clients," said Tom Beeby, VP-executive director of e-business marketing firm Modem Media Inc., Stamford, Conn. However, Modem is recommending that clients consider e-mail as part of an integrated strategy, especially in light of recent events. "We are aggressively pitching e-mail programs," Beeby said. "This seems like a good time to tell clients that e-mail is something you should be using throughout your value chain."

Financial straits

While marketers are impressed by the USPS’ recent delivery performance, they’re dismayed by its desperate financial woes.

The USPS, which seems to always be running in the red, estimates anthrax-related losses at $2 billion to $3 billion. It is currently seeking at least $2 billion, and as much as $5 billion, from a reluctant Congress. Key members, including Senate Majority Leader Tom Daschle (D-S.D.), have expressed early opposition to the request.

B-to-b direct marketing leaders, in a rare show of solidarity, are backing the USPS’ request. The Direct Marketing Association—an indispensable player, given that 40% of the USPS’ volume is direct mail—has taken the lobbying lead. The New York-based organization’s main worry is that if the request is denied, the USPS will try to rush its proposed new rate hike, something the DMA thinks could deal a crippling blow to many members.

The DMA recommends the USPS ask Congress for $6 billion, said H. Robert Wientzen, president-CEO of the DMA. "We’ve continued to support the idea that the postal service should be compensated not just for the direct costs of the terrorist attacks but for the business losses that have resulted," he said.

The DMA hopes the request is granted before Congress recesses for the holidays. There is speculation among Hill watchers, however, that action could wait until next year. To help speed up the process, the DMA earlier this month formed a task force to work on USPS-related issues. It is currently seeking CEOs of companies with significant mailing operations to join the task force.

USPS spokesman Larry Speakes said the organization is monitoring its funding request closely, and is keen on getting a share of the federal government’s Sept. 11-related recovery funds.

Meanwhile, the agency is trying to work with businesses on their problems and recently held a CEO summit of 30 mailers. "They were telling us what they needed, and it was surprisingly good," said Speakes, who served as press secretary for President Ronald Reagan.

Extensive woes

The USPS’ woes extend beyond finances. There are unconfirmed reports of many employees still not showing up for work, with absenteeism pegged as high as 30% in some East Coast areas.

The agency’s reputation among some b-to-b companies as being hard to work with and inefficient continues to haunt it—a critical situation at a time when public opinion could well determine its fate.

"They have a public sector mentality," said David Garfinkel, CEO of Overnight Marketing, a San Francisco-based e-marketing consultancy. "I’m not sure they are always as helpful as they could be. The issue I have with them is that they think their customers are the ones who receive the mail. A true business would see those that pay them as their customers."

For now, the USPS’ challenge—its greatest in its history—is to deftly pursue its funding request while maintaining relations with clients that will help it survive once any emergency funding runs out.

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