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Audit Reports

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Sep
28
2015
Report Number:
CP-AR-15-005
Report Type:
Audit Reports
Category: Retail, Sales & Marketing

U.S. Postal Service Promotions Program

Background

The U.S. Postal Service implemented its Promotions Program in 2011 to encourage mailers to integrate technology with the mail and build customer awareness of mail use beyond standard letter and package delivery. As a result, it promotes the value of mail and provides an opportunity for mail to remain competitive in an increasingly digital society. For example, one promotion used color messaging to create greater connection with and response from consumers and another used mobile barcodes on mailpieces that a mobile device can read.

In calendar years 2013 and 2014, the Postal Service offered 13 promotions involving about 2,600 mailers and provided over $87 million in postage discounts. Eight of these promotions and almost $5 million in postage discounts were for promotions that included some products which did not cover their direct costs. The Postal Service acknowledges that these discounts will not lead to cost coverage in the short term, but believes it can increase revenue in the long term by increasing the value of mail.

Our objective was to determine whether the Promotions Program is effectively managed. We also identified other potential promotion opportunities.

What The OIG Found

Opportunities exist to further strengthen the management of the Promotions Program. The Postal Service has made progress developing and implementing individual promotions, however, it has not developed a comprehensive strategic promotions plan. Since the program’s inception, more promotions have been introduced building customer awareness by integrating technology into the mail. The Postal Service has focused its efforts on individual promotions to retain and grow mail volume, integrate the use of new technology, and promote the value of mail to the digital community while building new uses for mail. Further, the Postal Service conducts analysis to determine individual promotion performance. However, there are no measureable targets for the program goals, so it is unknown how individual promotions contribute to the goals.

The Postal Service does not have a comprehensive strategic plan for the Promotions Program because each individual promotion focuses on different content and outcomes. For example, some promotions focus on mail retention. By contrast, other promotions focus on integrating digital technology with physical mailpieces. However, without a comprehensive strategic plan that addresses such areas as measurable targets, promotion period, technology used, and postage discount rates, it is not possible to determine whether the results of individual promotions will accomplish the Postal Service’s Promotions Program goals. We also found there may be opportunities to implement new promotions that add value and relevancy to mail.

What The OIG Recommended

We recommended management develop and implement reportable performance metrics to track program progress and measure the long-term value of promotional mail. We also recommended management develop and implement a strategy with well-defined documented processes to ensure major promotion program components are meeting the overall program goals by September 30, 2016.

Report Recommendations

# Recommendation Status Value Management Response OIG Response USPS Proposed Resolution
1

R - 1 --

Closed $0 Agree
2

R - 2 --

Closed $0 Agree