It’s rare that a product in decline is still your most important product. But when you are the U.S. Postal Service and that product is First-Class Mail, it makes a little more sense.
First-Class Mail (FCM) is arguably the product most closely associated with the Postal Service’s mission to bind the nation together. At its peak in fiscal year (FY) 2001, FCM volume hit 104 billion pieces. Even with today’s volume down to 62 billion pieces, First-Class Mail still generates 40 percent of total revenue for USPS ($29 billion in FY 2016) and more than half of total contribution, or profit that goes to paying the Postal Service’s institutional costs.
It’s fair to say that FCM is essential to the Postal Service. Unfortunately, it has experienced a steady decline because of changing communications in the digital age. This is especially true for correspondence mail, or letters and cards sent to and from households, which reached its peak of 24 billion pieces in 2002 and dropped to 16 billion pieces in FY 2016.
Our latest white paper takes an in-depth look at First-Class correspondence mail volume trends and considers how interrelated factors like electronic diversion, demographic changes, the economy, pricing, and evolving security and privacy concerns have affected correspondence mail over the past 15 years. We also look at how these factors could affect First-Class Mail demand in the next 10 years.
The prognosis for a robust recovery does not look good given the pervasiveness of digital communications. Still, the Postal Service needs to continue its work in finding innovative ways to keep correspondence mail from further decline. Our paper highlights some of the Postal Service’s current efforts to reduce correspondence mail volume decline, such as integrating digital features into physical pieces, and suggests strategies it could pursue to shore up FCM. These include, for example, offering additional promotions, incentives, and engagement with companies that offer digital tools to create and send custom postcards and greeting cards.
Do you still see opportunities for growth in First-Class Mail correspondence? What other ways could USPS drive volume growth for it?