PRC’s Rate Hike Ruling Has Positive Implications for Direct Mailers

Good news for direct mailers: thanks to the Postal Regulation Committee’s (PRC) recent rate increase ruling, direct mailers can continue to be aggressive with their mailing plans and strategy through Spring 2011. The upcoming holiday and spring seasons represent prime opportunities for direct mailers to do more prospecting and reactivations through postal mail.

It is likely, however, that there will be a postage increase in May 2011, when the USPS typically submits their rate requests. Chances are that the rate request will specify that some classes of mail should be greater than the rate of inflation because of the ‘banked authority’ the USPS has from previous years.

Direct mailers can continue to be aggressive with their mailing plans and strategy through Spring 2011.

A few other aspects of the PRC ruling worth noting include:

  • The USPS can re-file the case. However, this is not likely to happen given the testimony the USPS witnesses gave in the first case, along with the PRC’s unanimous decision to decline the first request.
  • The USPS can file an appeal to the ruling. While this remains a possibility, it is highly unlikely the USPS would win an appeal given the way the PRC usually handles its decisions. Very few (if any) appeals have ever been won against a PRC ruling in the past.
  • The USPS can file a CPI PAEA based increase at the class level. This is allowed under current law and is the most likely scenario to occur. We can expect between a 2.5% and 3.4% request based upon CPI trends and unused CPI banking authority from previous rate increases.
  • The reclassification of products that were embedded in the USPS exigent request are not going to happen either — the ruling kills those as well.
  • Some products and categories of Standard Mail could see significant rate increases (and in excess of the 3.4% maximum increase forecasted).

Again, the news is good for now. The ruling allows direct mailers to execute their campaigns as planned without the concern of increased costs coming to forefront.

For more tips on direct mail strategies, view our recent webinar on Direct Mail Strategies for the 2010 Holiday Season, or contact the Experian Data Management Services.