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Industry E-Newsletter:
From the American Catalog Mailers Association (ACMA)
April 18, 2008
Dear Members and Friends:
New membership commitments:
Cigars International, CMS Direct, Curtis Barry & Co, J.S. Eliezer
Associates, Lenser, Marketsmith, Shades of Light, Sporty’s and
Williams Sonoma. We welcome and thank these fine companies for their
support!
Decisions made at the top?
If you are a CEO, CMO or CFO reading this, you are in the position to
see the big picture
and
make the decision to allocate some precious resources in an area it
will pay back rich rewards. If you are on the fence, uncertain but
curious, please give me 15 minutes of your time. In that short time,
if I cannot convince you of the pressing need, then you will remain
with my gratitude for having listened. You may find that our work is
compelling for your company and support us. You may also determine
that it is not the necessary expense that must be made now. I will
take my chances. Give me a call 401-529-8183.
ACMA continues important work with the USPS:
Last month, we had another “top-to-top” meeting with the USPS. We met
with PMG Jack Potter and other top USPS executives who control our
future with the mail: CMO Anita Bizzoto, VP Pricing Steve Kearney, VP
Legislative Affairs Marie Therese Dominguez, and others including his
chief of staff. Due to a time limit on our meeting, I asked Monica
Smith, CEO of Marketsmith to join me. Monica’s firm works at a deep
level with a variety of catalog companies. She has intimate knowledge
of these companies’ financial performance and operating priorities.
Monica has personally reviewed over 200 cataloger P&Ls and her company
works with catalogers who sell less than $5 million to over $50
billion each year. Together, the two of us presented the state of
affairs in the catalog industry and what the future holds given the
trajectory we are on now.
Our message:
catalogers are moving as fast as they can to reduce their dependence
on mail. Once they build infrastructure and hone their business to
mail less, they will be harder to invite back into the mail. This
outcome is clearly not in the best interests of the USPS or even for
the broader mailing industry.
Catalogs deliver value in the mail:
Mr. Potter “gets” the value that catalogs play in the mail stream, the
content value to the mail recipient that makes mail more relevant for
all types of mail borne messages. He has seen the Postal Service’s own
studies that indicate Americans like their catalogs, and look forward
to receiving them. He understands that together as an industry,
catalogers contribute billions to USPS coffers and cover a significant
portion of the overhead cost of running this nation’s mail system. He
is familiar with the R2006-1 rate case and the huge rate increase it
created for our industry. He challenged me: postage is not the only
thing going up for catalogers. Why the pressure on the USPS? Aren’t
catalogers under pressure from paper, ink, freight, and other costs?
USPS understanding of cataloging:
The USPS did not clearly understand the magnitude. We responded that
marketing costs represent about 35% of sales for a B2C cataloger with
postage typically 50% of this cost or 17%+ of total sales. All these
other cost centers amount to less than this when taken together. Thus,
the impact last year’s postage increase is game changing. More, since
well run companies make 5% on sales, a 30% increase to a 15% cost
takes a well run company to breakeven. Unfortunately, the USPS has not
had the opportunity to become intimately knowledgeable about our mail
segment and did not understand how fundamental the impact of the last
postage rate increase has been.
Space does not permit me to detail all the items discussed. This
remains a work in process. We continue our dialog with USPS officials
about the range of acceptable alternatives to address this situation.
This was a very productive meeting on circumstances facing catalogers
and why it is so critical that we address the rate shock our industry
is in now.
USPS volumes:
In our meeting, we also explored how the USPS and catalog industry can
work together to grow volumes. We examined different approaches being
used by other industries and the incentives that might be considered
to encourage catalogers to not only mail more flats but also send more
packages their way. Recognizing that the USPS decision making process
is complex, I stressed the urgency that these issues be addressed.
Organizing around the customer:
I also asked the USPS to consider forming a catalog team charged with
growing volumes across all our mail classes. As catalogers today, we
have to deal with a wide variety of USPS personnel for each of their
products. No one is a catalog specialist with deep understanding of
our industry and needs. We would like to see the USPS establish a
multidisciplinary team headed by a senior level person charged with
becoming expert in our businesses who can partner with us to solve
problems, grow volumes and address unmet needs. At the end of the
meeting, the PMG said the USPS would do an internal review of a
different structure.
Washington Catalog Forum:
Mr. Potter also committed to a USPS catalog summit in Washington where
we can expand the dialog between the catalog industry and the USPS.
This will be a wonderful opportunity to get our industry leadership in
front of key USPS decision makers to build on the dialog we have
established. Look for more information in the next few weeks.
Slim Jims to slim down?
A format that many are testing or adopting is under pressure of losing
its impact. We are communicating to the USPS that they can’t provide
an “option” to egregious cost increases on one hand then remove it
after many work so hard to adopt it. Most urgently: if you are now or
are considering using the “slim jim” format (folded catalog tabbed to
be a letter shape), then we need to hear from you right away. The USPS
is considering a major revamp to the slim jim format and the catalog
industry must comment to the extent this is an important format we
want to mail. The proposed rules may have a great deal to do with the
maximum number of pages per piece and response rates. Some of you see
this as a key part of your mail plan in the future. We hope those now
using or planning on slim jims in the future will get in touch right
away so we can consider your views in how we respond and follow this
matter.
ACMA was instrumental in getting more time to implement the
Intelligent Mail Barcode.
The implementation date has been pushed to May 2009 but don’t wait to
understand and react to the implications for your firm. New
regulations covering the IMB and
address placement
have recently been issued which are under review and study by ACMA’s
Technical Committee. Members will be receiving a Technical Bulletin
shortly detailing these.
“Do Not Mail” doesn’t go away:
Work continues on the Do Not Mail front. This is a highly complex
issue with numerous viewpoints driven by the variety of business
models and how address suppression affects individual mailers. ACMA’s
Do Not Mail Task Force continues to work on the issue and has expanded
the participation to include some others in our industry to better
sort out the right direction for catalogers. We will report on this as
appropriate going forward.
Our Challenge
- ACMA must grow to over a hundred catalogers for our work to be
sustainable. Given the pressure on P&Ls in the “possible recession,”
many of you indicate you are having a hard time coming up with the
price of admission. Let’s put the price of ACMA membership in
perspective;
at a quarter of a percent of what you spend on postage, as of next
month, your ACMA membership investment has paid you back in less than
90 days!
It’s really a faster payback since postage increases are cumulative,
your ACMA investment will continue to pay dividends for years
(the ongoing value of $150 million rate mitigation for catalogers).
Your support is critical now.
We have grown to 60 plus members in one year. This is an important
accomplishment. We need to grow to 100 or more in the next six months.
Those of you who have been involved in postal affairs over the years
have recognized the impact we have made in a short period of time.
Those of you who are new to the game and are participating have
expressed pride in our accomplishments.
Those of you who admire our progress but don’t join because you assume
others will carry the load are making a mistake. The Postal Regulatory
Commission and the USPS top management have told us they need us to
help them develop solutions to the problems we share. This commitment
is not a “nice to do,” IT’S A NEED TO DO. OUR VERY SURVIVAL IS AT
STAKE.
Please do your share or we can’t:
Postmaster General Potter specifically wanted to know how many
catalogers belonged to ACMA. We cannot be your advocate without you!
Help unite the industry for our own welfare. Please join us today.
Take control of your future now.
Sincerely,
American Catalog Mailers Assn.
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