• on Jun 22nd, 2015 in Mail Processing & Transportation | 7 comments

    Undeliverable as addressed (UAA) mail is a clunky name for a big problem: Mail not reaching its intended recipient because the address is incorrect, incomplete, or illegible. UAA mail is costly to both the Postal Service and its customers – about $1.5 billion a year for the Postal Service and $20 billion for the mailing industry, according to a report we issued last month.

    But the costs of UAA go beyond just returning, destroying, or forwarding undeliverable mail. For mailers, there are direct costs, such as printing and postage, and indirect costs, such as lost opportunities. A direct mailer has no chance for a sale if the piece never reaches the customer. And an undeliverable invoice either slows down cash flow or, if the piece never reaches its intended recipient, results in no payment at all, as Pitney Bowes notes in a white paper. Furthermore, a company’s customer service costs can jump if irate customers call after getting a late fee for a bill delayed by an incorrect or incomplete address.

    Then there is what some mailers call a customer relationship management (CRM) cost. Address software provider Melissa Data explains, “CRM costs reflect the damage to customer relationships that result from failed communication.” The CRM cost of UAA mail can be calculated a few ways, but the simplest might be to determine the customer’s annual value (say he or she spends $600 a year on a cable bill) and divide it by the customer’s expected response rate (for this cable company let’s say 5 percent). In this case, the CRM cost of a UAA mailpiece is $30.

    Despite concerted efforts by the Postal Service and mailers to reduce UAA mail, it actually increased by 2.1 percent to a total of 6.6 billion pieces from fiscal years 2011 to 2014, our report notes. We found the Postal Service’s strategies to reduce UAA have been ineffective because of how complex the address verification process is and because mailers have to abide by conflicting laws and regulations. For example, companies in the financial and insurance industries are legally required to send mail to the last known address even if Postal Service systems indicate a change of address has been submitted.

    Still, we expect certain Postal Service programs to help. The Postal Service has made it easier for recipients to change addresses online. And on the business mailer side, the Seamless Acceptance program, which relies on electronic documentation, should help by providing greater visibility into data associated with each mailpiece. The data will let the Postal Service associate UAA mail with the sender and provide opportunities to craft entirely new solutions to ensure address standards are met.

    How does UAA mail affect your operations? What other ways could the Postal Service and industry reduce UAA mail? How do you price the lost opportunity of undeliverable mail?

  • on Jun 15th, 2015 in Ideas Worth Exploring | 0 comments

    Talk about getting inside the customer’s head. That’s what we did – quite literally – in our most recent research and resulting white paper, Enhancing the Value of Mail: The Human Response. The insights should help companies better understand the effectiveness of physical advertising mail, particularly as compared to digital ad mail.

    We partnered with Temple University’s Center for Neural Decision Making to study people’s responses to physical and digital media in the consumer buying process, including memory of products advertised and intent to purchase. But instead of just using surveys, which rely on people’s stated or conscious preferences, we also monitored people’s bodies and brains to understand their subconscious response. Known as neuromarketing, this rigorous scientific method uses technologies like eye tracking, heart-rate measurement, and MRIs to measure a person’s subconscious responses to various stimuli, often revealing preferences people don’t even know they have.

    The results could help companies improve their marketing strategies and also help the U.S. Postal Service better understand the effectiveness of ad mail, one of its most profitable products. Ad mail accounted for over $20 billion — or 31 percent of total revenue — in fiscal year 2014.

    Our study builds on work done by the U.K.’s Royal Mail that showed physical media generates greater activity in certain parts of the brain than digital media. Our study revealed some distinct neurological and physiological responses to digital and physical media, including:

    • People have a stronger emotional response to physical ads and remember them quicker.
    • People process digital ad content quicker, suggesting digital ads can deliver a message more efficiently.
    • Physical ads take longer to get one’s attention at first, but have a longer lasting impact for easy recall when making a decision to buy.

    Each medium has advantages that advertisers could tap for different campaigns. But we see this as the beginning of possible additional neuromarketing research into how companies should use digital and physical advertising together.

    Do you think you respond differently to digital ads than you do to physical ads? How can companies improve marketing strategies given how consumers respond to ads in different media formats? What lessons might there be in all this information for the Postal Service?

  • on Jun 8th, 2015 in OIG | 1 comment

    Sometimes it can be confusing to keep track of who does what in this postal world. The U.S. Postal Service has a wide range of stakeholders, including a few entities with oversight responsibilities. We, the Office of Inspector General (OIG), are one of those entities.

    The OIG, an independent agency within the Postal Service, maintains the integrity and accountability of America’s postal service, its revenue and assets, and its employees. Our mission is to help maintain confidence in the postal system and improve the Postal Service’s bottom line through independent audits, investigations, and research. Audits of postal programs and operations help to determine whether they are efficient and cost effective. Investigations help prevent and detect fraud, theft, and misconduct, and deter postal crimes. The OIG also conducts research to keep Postal Service Governors, Congress, Postal Service management, and other stakeholders informed of challenges and opportunities.

    Every 6 months, as required by Congress, we publish a report of our work and activities for that period. We recently published our spring Semiannual Report to Congress, or the SARC as we affectionately call it. Our efforts focused on identifying ways to make the Postal Service more efficient, reduce its strategic and financial risk, and lower its cost of doing business. Among the reports featured in this semiannual report are audits on revenue protection and Sunday delivery of parcels; a management advisory on city carrier compensation costs; and white papers on a wide range of topics, including the Postal Service’s universal service obligation.

    During this period, we issued 74 audit reports, management advisories, and white papers. We completed 1,955 investigations that led to 370 arrests and nearly $1.4 billion in fines, restitutions, and recoveries, $10.7 million of which was turned over to the Postal Service.

    The report also carries extensive appendices chronicling our work in detail. We encourage you to review the report and get to know us better. We welcome your input as well.

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