So, I was set to move on from legislation and news articles
to something new, and yet our industry continues to get hit with changes. As of today, there was a news release that
Canada Post is increasing the cost of lettermail from $0.63 to $0.85 as of
March 2014.
Here’s the article: https://www.canadapost.ca/cpo/mc/aboutus/news/pr/2013/2013_action_plan.jsf
Canada Post’s article also outlines a plan that carriers
will stop delivering mail to urban homes, switching to community mailboxes.
So, what does that mean for our industry? Well, a lot.
Lettermail is unfortunately a requirement for an initial collection
letter via mail in Ontario prior to a first call six days later. With a significant portion of the country’s
population in this province, it means a large increase to expenses for
agencies.
I believe that lettermail is a dying aspect of the industry,
and this new change will escalate the issue.
Not just because of the cost, but
also how our culture deals with letters.
Twenty years ago, letters were $0.20 and a phone call was a
dollar – now the letter is close to $1.00 and a phone call is virtually
free. Most creditors are moving to
electronic invoicing, but this lingering requirement for physical lettermail
will greatly affect third party operations.
Talking to a number of agency managers at a network event a few months
ago, we all compared notes on mailing costs and returns, and we had all come to
the same conclusion.
Imagine this – an agency mails out 1,000 letters, at a total
cost of $900 (postage, supplies, and manpower). If 5% of the letters respond
with an average payment of $100, and the agency receives a 20% contingency, the
agency will just break even. And 5% is a
high response rate. Now with the
increase in postage, this represents a net loss.
A letter used to have an impact on a consumer and solicit a
10-15% response rate, but it has steadily dropped as the mail became mainly a
deliver system for junk flyers and collection notices. A letter in the mail has less impact than a
telephone call, email or text. With
increased costs to the consumer to mail back a check, the low 5% response rate will take a further hit as
consumers understandably will want to pay by EFT or online.
As well, how we distribute letter notices is going to have
to change – consumers deserve the right to a notice in writing detailing their
account, but blasting out emails without regard to privacy is going to be an
issue. We need to tread carefully here
as we adapt to the demise of lettermail.
Things are changing, whether we want them to or not … the ‘cheque
in the mail’ just became a little more obsolete.
If you want to talk about payment methods, ways we can adapt
with electronic letter notices and payment methods, or share stories how things
used to be in the good old days, feel free to give me a call at Kingston Data
and Credit, at 226-946-1730.
Regards,
Blair DeMarco-Wettlaufer
Kingston Data and Credit
226-946-1730
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