By: Jodie Sangster, CEO, ADMA
Less than a year after dramatically hiking the price of postage and direct mail, Australia Post again announced last week that it intends to increase prices further on nearly all categories of mail, giving businesses less than six weeks’ notice of the intended hike.
Although it’s clear price rises are inevitable if we want to ensure the postal business remains viable, the approach taken by Australia Post is unacceptable and becoming more and more difficult to defend.
Firstly, despite numerous requests for lead-time, Australia Post continues to make decisions that come into effect six weeks later. That is to say, the price rise announced on Tuesday will come into effect on 3 January 2017. And yes, we do have a Christmas holiday in between.
Secondly, despite acknowledging that a price rise midway through a financial year will have a big impact on marketers, little effort has been made to accommodate this with Australia Post only making a token effort to assuage industry. Yes – barcoded Promo Post is not subject to a price increase (this time and un-barcoded will increase up to 5.8%) but marketers using every other category of mail are affected and even charity mail is subject to increase.
Mid-year, marketing budgets have already been set and plans finalised, so surely it would show some customer empathy to delay the increase until a new financial year. That doesn’t mean a price rise can’t be announced – of course it can. But delaying the implementation until the new financial year would give organisations a chance to plan and budget for the change.
It would be more understandable, if the price increase would actually lead to increased revenue for Australia Post. But let’s face it, budgets are not suddenly going to be increased with six weeks’ notice. Instead marketers will reduce volume – thereby not generating any additional revenue for Australia Post at all.
My last concern with this whole process is the closed way that consultation is undertaken. Each company is approached one-by-one on a ‘commercial in confidence’ basis. Even with ADMA members, we can invite members to attend a commercial-in-confidence meeting with Australia Post, but not allowed to publicise intended price increases to the broader membership or marketing community. This prevents any broad industry feedback, open discussion or conversation about broader impact. It also prevents any possibility of industry assisting with innovation – something this situation sorely needs.
Marketers appear to have resigned themselves to continual price rises – and many abandoned the channel all together. This is a real shame, as direct mail still works - and works well.
If Australia Post wants to have a viable direct mail business, it needs to understand that price increases alone are not going to solve the problem. It also needs to consider that disenfranchising your loyal customers is probably not going to help.