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Pittsburgh’s Postal Customer Council’s National PCC Day

Pittsburgh’s Postal Customer Council’s National PCC Day. David Robinson, Pitney Bowes Postal Relations. Postal Update Agenda. Financial picture Revenue and Volumes Thinking outside the box Mail sale Summer Sale; Saturation Mail First Class Mail Incentive Winter Sale? MTAC 125 and 126

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Pittsburgh’s Postal Customer Council’s National PCC Day

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  1. Pittsburgh’s Postal Customer Council’sNational PCC Day David Robinson, Pitney Bowes Postal Relations

  2. Postal UpdateAgenda • Financial picture • Revenue and Volumes • Thinking outside the box • Mail sale • Summer Sale; Saturation Mail • First Class Mail Incentive • Winter Sale? • MTAC 125 and 126 • 5 Day Delivery • Misc. ideas • Technology • IM™BC • CASS™ Cycle M, N and Beyond • FSS • Move Update

  3. USPS® Financial Overview • Revenue • July 09 ($863M), YTD: ($5.5B) • YTD (Q3) Mail Volume down 12.6% overall • Standard (19.6%), FCM (9.7%) and Periodical Mail (9.2%) • YTD (Q3) Mail Weight • Standard (14.7%), FCM (16.6%) and Periodical Mail (20.0%) • 2009 Volume Expectations • Jan 08 = 205B est. 2009 volume • Apr 09 = Revised to 180B • Jul 09 = Revised to 175B • Estimated loss for 2009 - assuming ~$6.2B in cost reductions • $7.1B

  4. Thinking outside the box

  5. Mail Sale and Incentive • Standard Mail® (letters and flats) Only • Ran 7/1/09 through 9/30/09 • Must have mailed >1M pieces from 10/1/07 - 3/31/08 • Discount of 30 percent (applied credit) • First-Class Mail® Incentive Program • Runs 10/1/09 through 12/31/09 • Must have mailed >500k pieces from 10/1/07 - 12/31/07 and 10/1/08 – 12/31/08 • Discount of 20 percent (applied credit)

  6. Saturation Mail® • Standard Mail® • Runs 5/11/09 through 5/10/10 • Volume base year - 5/11/08 to 05/10/09 • Must have history for eligibility • Offers per-piece credit in two saturation mail volume incentive categories: • Total Market • Market Specific – Saturation Enhanced Carrier Route mail destinating in specific USPS Sectional Center Facility(ies) (SCF)

  7. MTAC (Mailers’ Technical Advisory Committee) • MTAC 125 • First-Class Dropship / Workshare discount (transport to destined facilities) • Discount/Rebate For Courtesy Reply Volume • First-Class Mail Lite • Bulk Acceptance of Certified Mail • Vote-by-Mail Product for Ballots • Reply Card Scanning • MTAC 126 • Peak/off-peak rates • Volume incentives • Reduce/minimize mail piece design restrictions • Eliminate unnecessary make up & entry rules • Bundled media offer

  8. Additional Considerations • 5 Day Delivery • Monday through Friday • Could save an est. $3.0B • Studies suggest mail preference on weekdays • Remittance mail pickup and Post Offices would remain open 6 days/week

  9. Miscellaneous Ideas • Advertising on the mailbox • Trialed in upstate NY • Niagara Falls • 30th anniversary of Star Wars • Leverage retail presence • Additional services at retail locations • Processing state-issued ID Cards • Expanding Kiosk use • Selling greeting cards

  10. Intelligent Mail® Barcode • Update • Release 1 completed May 18 • Release 2 planned for November 18 • Full-Service Discounts • Receive and Process e-doc • Support Miscellaneous Mail.XML messages • Co-Palletization • Quality Reporting

  11. Intelligent Mail® Barcode • Update • Release 3 planned for March, 2010 • Replace hardcopy Postage Statements • Service Performance Measurements • Miscellaneous SOX Compliance Issues • NDC Consolidation • MID/CRID Management • Performance Based Verification to Support SOX • Full Service Compliance Consequences • Mixed-Class Co-mail • Priority Mail Open and Distribute • Mail.dat and Mail.XML Support • ACS™ Charges • For more information, visit http://ribbs.usps.gov/ or pbpostalinfo.com

  12. Mailers in TEM and Production as of 8/6 Intelligent Mail® Barcode Implementation • More than 60 mailers have begun testing Full-Service job submissions using Mail.dat® 9-1 in the Test Environment for Mailers (TEM).  • 15 mailers approved for Production • 9 Mailers submitting in Production • 143 Full Service Postage Statements processed • 32,912,023 Total Piece Volume As of 8/6/09

  13. CASS™ / MASS™ Cycles • Cycle M - Implemented August 1, 2009 • SuiteLinkTM (for vendors) • DPV Validation of Address with Secondary Value of “0” • Preferred Alias; DPV® Tie breaker; Firm Matching; 30 Character Abbreviation; 13 Character City Abbreviation; Unique Zip Code; Vacant Table; No Stat Table • Cycle N - Implementation August 1, 2011 • SuiteLinkTM (for mailers) • Anticipated to be the last CASS™ / MASS™ Cycle on record • USPS® will continue to work with vendorsof address hygiene tools and mailers that use these tools for DPV ® assignment of every address in the US

  14. FSS (Flats Sequence Sorting) • Sequencing on 3 FSS’ • 37 Delivery Units • 1103 Routes • Overall 2009 flats volume down 14% • Redirection Planning Completed • Careful analysis to ensure permanent locations, redeploying as appropriate • Overall, program going extremely well

  15. Move Update – Topic Agenda Requirements Why Move Update Matters To The USPS Methods Of Move Update Compliance And Their Pros and Cons Enforcement During Mail Acceptance (PBV) Post-Acceptance Investigations And Appeals Move Update Compliance Best Practices Q&A

  16. Move Update Requirement Since November 2008, all addresses on mailings that receive discounted rates for First-Class Mail® or Standard Mail® must receive address correction using a USPS-approved method. Address correction must occur within at least 95 days prior to the mailing. Requirement applies to letters, flats, parcels and Not-Flat Machinable mailpieces.

  17. Why Does The USPS® Require Move Update?People and Businesses Move Each year, ~15% of Americans move or change their mailing address 1 out of every 6 families moves each year Approximately 19% of all businesses move USPS® processed 48 million permanent Change of Address (COA) in 2008 The USPS® adds ~1.8 million new delivery points each year

  18. Address Quality Pyramid Tools TM ACS TM ANKLink Update TM NCOALink TM AEC / AEC II DPV TM TM LACSLink TM CASS-Certified Software Validate Standardize

  19. Cost Impact Of Undeliverable-as-Addressed (UAA)

  20. USPS® -Approved Move Update Methods Pre-mailing Methods NCOALink®: national COA database In-house Solutions Third Party Services FASTforward® Multi-line Optical Character Reader (MLOCR) processes Traditional FASTforward® FASTforward® Continuation Strategy FFMUN 18 month dataset

  21. USPS® -Approved Move Update Methods Post-mailing Methods Full-Service ACS®: Intelligent Mail® Barcode (Full-Service) OneCode ACS®: Intelligent Mail® Barcode (Basic) Traditional ACS™: Address Change Service Ancillary service endorsements (ASE) Address Service Requested, Return Service Requested, Change Service Requested Change Service Requested only valid with First-Class Mail if using ACS or OneCode ACS Alternative Methods (First-Class Only) 99% Rule Legal Restraint

  22. Pros And Cons Of Popular Methods Pre-Mailing solution (NCOALink®) at or near the time of the mailing Actions defined for all possible results Effectiveness depends on implementation of changes FASTforward® Traditional FASTforward® avoids need to ensure implementation of changes. Effectiveness of FFMUN depends on implementation of changes. Post-Mailing solution (ACSTM) Return Mail processes Effectiveness depends on implementation of changes

  23. Who’s Responsible For Compliance? Revised Postage Statements Whoever signs postage statement may be liable for Move Update compliance and penalties USPS has withdrawn Form 6014, but service providers and mail owners can allocate responsibility by contract

  24. How the USPS® enforces Move Update compliance Analysis of mailing during acceptance (PBV) Post-acceptance review, which can be triggered by: Volume of returned UAA mail Local USPS employee Mailer employee

  25. Enforcement During Mail Acceptance: Performance Based Verification (PBV) Evaluates mailers use of change-of-address information Uses live samples from mailings Streamlines mail acceptance, improves customer service Provides mailers with Move Update reports giving electronic feedback on address quality. Move Update reports are available on PostalOne! For mailers whose mailings are processed on MERLIN® (Mail Evaluation Readability Lookup Instrument) at sites that have the PBV process. Continuous Mailers will have to get hardcopy until May National deployment of the PBV system March 31, 2009

  26. PBV Process At business mail acceptance: A sample is selected from the mailing (sample size and frequency determined by PostalOne!) MERLIN® captures barcode, name and address information into a data file and electronically transmits the NCSC NCSC processes using NCOALink® based logic and returns results to PostalOne! which presents a Move Update report This process is completed before the postage statement is finalized in PostalOne! so the report can be discussed with the mailer If additional fees are required, they may be paid from the permit account used for the mailing or, at the mailer’s discretion, another of the mailers permit accounts

  27. Sample PBV Report

  28. Extra Charges If Mailing Fails PBV Beginning January 4, 2010, for First-Class® and Standard Mail® A mailing will be pass Move Update verification if: Move Update error rate < 30% ≤ 5 failures, no fees assessed If ≥ 6 failures, all pieces count towards total First-Class® and Standard Mail® : $.07 per piece – on failed percentage

  29. [ ] Failed COAS Total COAs * 7 ¢ * (pieces in mailing) - 30 % Fee Assessment Policy Change • Only failed pieces above tolerance pay assessment • If 40% of COAs not-updated →Assessment applied to 10% (=40% - 30%) of mailing • Assessment = $0.07 per piece at acceptance • Both First-Class Mail® and Standard Mail®

  30. Policy Change Impact - First-Class Mail Current New Mailing Size 100,000 100,000 Postage, 5-D Auto ($0.335) $33,500 $33,500 Assessment $0.105 (= 0.44-0.335) $0.07 for each piece in mailing for failed percentage above tolerance Assessment if 40% of COAs not-updated Pieces paying assessment 100,000 (100%) 10,000 (10%=40-30) Assessment $10,500 $700 Percent of postage 31% 2.1% Assessment if 80% of COAs not-updated Pieces paying assessment 100,000 (100%) 50,000 (50%=80-30) Assessment $10,500 $3,500 Percent of postage 31 % 10.2%

  31. Policy Change Impact - Standard Mail Current New Mailing Size 100,000 100,000 Postage, 5-D Auto ($0.233) $23,300 $23,300 Assessment $0.070 $0.070 for each piece in mailing for failed percentage above tolerance Assessment if 40% of COAs not-updated Pieces paying assessment 100,000 (100%) 10,000 (10%=40-30) Assessment $7,000 $700 Percent of postage 30% 3.0% Assessment if 80% of COAs not-updated Pieces paying assessment 100,000 (100%) 50,000 (50%=80-30) Assessment $7,000 $3,500 Percent of postage 30.0% 15.0%

  32. Examples Of Issues Affecting Grading(mailers need to re-evaluate their processes) • MERLIN® uses Standard Matching logic • USPS® counts matches for MLNA, Closed PO Box, New Address, and Moved to Foreign Address • Timing of databases, updates, and processing • All matching programs are not equal • ASE’s rely a lot on the carrier

  33. PBV Driving Improvement First-Class Mail ®® 40% 40% April 2009 April 2009 July 2009 June 2009 39% 38% 62% 27% 27% 24% 20% 20% 18% Error Rate > Threshold 5.4% 21% Error Rate > Threshold 3.8% Error Rate > Tolerance 5.4% 11% Error Rate > Tolerance 3.8% 7% 3.2% 1.8% 1.5% 1.0% 0.6% 0.4% 0.5% 0.2% 0% 0% 0% 0 - 10- 20- 30- 40- 50- 70- 0% 0 - 10- 20- 30- 40- 50- 70- 10% 20% 30% 40% 50% 70% 100% 10% 20% 30% 40% 50% 70% 100%

  34. PBV Driving Improvement Standard Mail® April 2009 July 2009 Does not include “or Current Resident” mailings Does not include “or Current Resident” mailings June 2009 April 2009 70% 60% 60% 62% 40% 40% 20% 20% Error Rate > Threshold 5.8% Error Rate > Tolerance 5.1% Error Rate > Threshold 5.0% 21% Error Rate > Tolerance 6.3% 15% 3.1% 3.0% 3% 1.5% 8% 8% 2% 0.9% 0.9% 1.0% 0.5% 0.5% 0% 0% 0% 0 - 10- 20- 30- 40- 50- 70- 0% 0 - 10- 20- 30- 40- 50- 70- 10% 20% 30% 40% 50% 70% 100% 10% 20% 30% 40% 50% 70% 100%

  35. Appeal From PBV - Based Postage Assessment • Gather all supporting documentation • Enlist support from your Move Update solutions provider • Document that address list received timely processing with a USPS-approved method of Move Update compliance • Request second level review with USPS® acceptance personnel • If unable to resolve: • Appeal to your Mailpiece Design Analyst (MDA), Business Mail Entry supervisor, or other designated 2nd level USPS® employee • Insist the USPS provide documentation detailing its findings • If local efforts are exhausted, appeal to the next level: • Send a written appeal to the postmaster within 30-days • The appeal is forwarded to the Pricing and Classification Service Center for review and final decision (Domestic Mail Manual G020) • The PCSC will respond to the origin site with the findings

  36. Move Update Best Practices • Pre-Mailing solution (NCOALink®) at or near the time of the mailing • Post-Mailing solution (ACSTM) • Process Maps • Created and maintained (the world keeps changing) • Report Tracking • Proof of compliance • Detection of issues • Co-Alert • Concept is a USPS service that will grade an address file prior to induction. More details to follow.

  37. Summary • USPS® is focused on reducing UAA mail • The potential costs of non-compliance can be significant • Do not “think” you are in compliance - “Know” it! • Be “an educated consumer” on all options – partner with your vendor • Know how to navigate through an audit • The USPS® is transitioning from monitoring compliance, to grading results

  38. Thank You • Questions?

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