Chapter 2: Our Customers

Shape-based pricing was extended to First-Class Mail International. Implementation of the annual prices occurred smoothly, supported by online and print communication to the public and employees.

First-Class Mail

First-Class Mail includes business and personal correspondence, bills, invoices, remittances, financial statements, and advertising. Any matter eligible for mailing weighing up to 13 ounces may be mailed as First-Class Mail. Matter containing personal information, partially or wholly handwritten or typewritten matter, or bills or statements of account must be mailed as First-Class Mail, unless mailed as Express Mail or Priority Mail, or otherwise exempted by the Postal Service. First-Class Mail is sealed against postal inspection and cannot be opened except as authorized. First-Class Mail that is undeliverable-as-addressed (UAA) is entitled to be returned to the sender or forwarded without additional charge.

First-Class Mail revenue in 2008 was $38.2 billion, with a volume of 91.7 billion pieces. First-Class Mail revenue decreased 0.6 percent and volume decreased 4.8 percent. The volume decline continued a downward trend starting in 2002. This volume decline can be attributed to electronic diversion of bills and statements, alternate payment methods, and the absence of sufficient new hardcopy applications.

The Postal Service continues to make important service improvements with First-Class Mail. On-time performance for the delivery of single-piece First-Class Mail climbed to record levels in 2008 for mail meeting overnight, 2-day, and 3-day service commitments.

Bills and statements still represent about half the volume of First-Class Mail that is presorted and, along with payments, represent nearly half of total First-Class Mail volume. The Postal Service has made significant service and process improvements to help stem the decline of this mail segment. According to the July 2008 biannual Phoenix-Hecht Survey, which measures the time in hours that it takes for remittance mail to travel from originating cities to 31 major remittance cities, “despite economic turbulence, there appears to be no short-term indicators of anything but continued strong performance for advantaged remittance mail.” Phoenix-Hecht, an independent research firm, has tracked remittance mail processing times at cities that handle major remittance volumes for more than 10 years. Technology, transportation, and mail processing enhancements have resulted in improvements in nationwide processing times by more than 8 hours since 1996.

The May 12 pricing changes for First-Class Mail improved relationships between various price categories and fostered a long-term pricing strategy that promotes automation, maintains price relationships within automation letters, aligns additional ounce prices for all presorted letters, increases nonmachinable letters prices, and introduces shape-based pricing in First-Class Mail International.

Customers and the Postal Service continue to find new applications for First-Class Mail. One opportunity exists with Election Mail, including voter registration materials and absentee ballots. Twenty-eight states currently allow “no excuse” absentee voting. The Postal Service has worked closely with election officials nationwide to provide assistance with their efforts. Election Mail was promoted extensively through expanded outreach and new support materials, including an action plan, handbooks, Web pages, and a new container tag to flag trays and sacks containing ballots.

Standard Mail

Standard Mail is bulk-entered mail that weighs less than 16 ounces. Any mailable matter may be sent as Standard Mail except matter required to be sent as First-Class Mail or copies of publications authorized to be entered at qualifying Periodicals rates. Standard Mail items typically include advertising letters, circulars, catalogs, fundraising appeals, and lightweight parcels. Standard Mail receives deferred handling. Regular Standard Mail generally includes targeted advertising or other messages based on recipient demographics such as income, previous purchases, or other characteristics. Enhanced Carrier Route Standard Mail, with pricing based on the geographic density of the mailing, is often used to target customers within specific neighborhoods or defined geographic locations.

Nonprofit Standard Mail prices are available to certain categories of qualified nonprofit organizations and to political committees and state or local voting registration officials, if those organizations, committees, or officials are authorized by the Postal Service.

Standard Mail revenue in 2008 was $20.6 billion, with 99.1 billion pieces. Standard Mail revenue decreased 0.9 percent and volume decreased 4.3 percent. The revenue decline is due to reductions in advertising spending because of overall economic conditions, especially in the financial sector.

Direct mail has been a major contributor to overall revenue growth. Total Standard Mail revenue increased 13.6 percent between 2004 and 2008, with a 3.7 percent growth in volume for the same 5-year period. Since 2005, Standard Mail volume has exceeded First-Class Mail volume. This change has implications for Postal Service finances since it currently takes 2.5 pieces of Standard Mail on average to achieve the same contribution provided by one piece of First-Class Mail.

Long-term Standard Mail volume growth has been aided considerably by the increasing strength of direct marketing channels. Direct mail allows marketers to precisely target specific customers and accurately measure their return on investment while complementing multichannel efforts.