Revenue Plan and Sales Targets
Background
Each year the U.S. Postal Service establishes various financial projections. One key projection is the revenue plan, which reflects the expected revenue generated by the Postal Service from all sources and channels. The revenue plan was set at $67.7 billion in fiscal year (FY) 2014.
Our objective was to identify industry best practices and to evaluate the Postal Service’s revenue plan and sales targets, including how they are determined, distributed, and monitored.
What the OIG Found
Based on our review and research of best practices, the Postal Service can improve how it determines, distributes, and monitors its revenue plan and sales targets to drive greater revenue performance and promote a focus on revenue generation. Specifically:
■ The Postal Service revenue plan could be more aggressive to better promote growth and reflect increases in sales targets. While the FY 2014 revenue plan reflected higher revenue growth, the revenue plans for FYs 2012 and 2013 were below the prior year’s actual revenue. The Postal Service has aggressively cut expenses, but continuing to set bolder and more aggressive revenue plans could improve revenue performance.
■ Not all Postal Service employees have a specific revenue goal in their individual pay for performance measures. Leading organizations distribute revenue goals to all operational employees.
The Postal Service does not have a system to reconcile the estimated revenues recorded by the Sales organization with actual realized revenues. Best-in-class organizations have information systems that allow them to track revenue associated with customer accounts from initiation of the sales cycle to realization of revenue.
What the OIG Recommended
We recommended the Postal Service develop a strategy that emphasizes revenue generation throughout the organization by creating more aggressive revenue plans that integrate forecasted sales growth. We also recommended management establish individual revenue-related performance measure for operational employees covered by the pay for performance program. Finally, we recommended management develop strategies for determining and distributing customized sales targets as well as reconciling estimated sales revenue with actual realized revenue.