MEMO TO MAILERS - APRIL 2005(text)
UNITED STATES POSTAL SERVICE
VOLUME 40 NUMBER 4
APRIL 2005

WHAT'S INSIDE
POTTER AT NPF
PLAN WITH CONFIDENCE
REMITTANCE MAIL
KEEPING POSTED
POSTAL NEWS BRIEFS

MAIL: IT'S A COMPETITIVE ADVANTAGE
The state of the Postal Service and the industry today and for the near term is excellent, Postmaster General John E. Potter told more than 6,000 members of the mailing industry at the National Postal Forum (NPF) in Nashville, TN.

“We’ve all been doing a lot of things right,” he said. “And with a strong, growing economy, I believe Americans will continue to turn to the mail to learn, to buy and to communicate.”

Small businesses using the mail for the first time are getting results, Potter told mailers. So are major financial institutions that depend on mail to get new customers and continue relationships with existing ones.

Mail offers a competitive advantage, Potter said. “Who would have thought that a small company like Netflix would become a major success story by relying on the mail?”

He also cited Dell Computers and eBay as major business successes that rely on mailed catalogs to give them a competitive advantage. “And look at Direct Mail catalogers who at one time thought they could rely on the Internet exclusively to reach customers. Now, they’ve found the marriage of mail and the Internet has doubled customer sales.”

Given an improved revenue picture and aggressive cost reductions over the past three years, Potter said the Postal Service likely would have broken even in 2006. However, legislation also is part of the picture, he said, and current Civil Service Retirement System legislation calls for the Postal Service to establish an escrow account of $3.1 billion beginning in 2006.

“We could have put off a rate increase until 2007,” Potter said. “Unfortunately, unless there’s a change in the law, that won’t happen. Were we able to use these funds for operating expenses, there would be no rate increase until 2007,” Potter explained. “In the meantime, we have no choice but to file a rate case to cover the amount of the escrow fund.”

Postal Service management is recommending that the Board of Governors file for an across-the-board rate increase of between 5 percent and 6 percent in order to fund the escrow requirement. That would raise the cost of a First-Class Mail postage stamp by 2 cents. Potter said USPS has been discussing the rate case proposal with industry leaders for several weeks, “since we believe it’s in everyone’s interest to reach a settlement and avoid the 10-month litigation period that traditionally occurs in rate filings.”

However, Potter assured mailers that “our filing is also tied to the outcome of any legislation. When and if legislation is enacted that mitigates the $3.1 billion escrow requirement we will modify our filing.” Potter said that Congress simply ran out of time to act on reform legislation in 2004 and he is optimistic that reform will happen this session.

Potter acknowledged the Postal Service’s achievements under the Transformation Plan introduced in 2002, and said the customer will be the focus as the plan is extended into Transformation Plan 2006 – 2010. “We must continue to motivate our entire organization — 700,000 strong — to focus on the customer, driving customer satisfaction to new heights.”

“This is not just about the Postal Service. It’s about our customers. That means everyone in this industry must step up to the plate and let their needs and voices be heard,” he said.

Potter challenged mailers to stay engaged in postal transformation, asking them to comment on the next phase of the Transformation Plan and to contact the Postal Service with concerns, suggestions and ideas.

He said the plan will stay focused on ways to add value and stimulate growth by making it easier for customers to do business with the Postal Service, including making customers aware of the services available online at usps.com.

MAILING INDUSTRY TASK FORCE
The Mailing Industry Task Force (MITF), a coalition of mailing industry and Postal Service leaders, released a progress report at the National Postal Forum heralding the coming of information-rich barcodes. The task force also honored its retiring co-chairman, Deputy Postmaster General John Nolan, saying he “set a new standard for partnership” between the industry and the Postal Service.

“John Nolan has been a special leader, a true partner and the results he’s enabled us to achieve have been presented here every year,” said MITF co-chair Michael J. Critelli, Chief Executive Officer of Pitney Bowes.

Nolan will retire from the Postal Service in May.

The task force’s 2005 progress report highlights the successful application of the next generation of barcoding — adding speed, accuracy and rapid feedback services to mail processing. Testing of INTELLIGENT MAIL codes, technology enabled by use of the four-state Customer Barcode (4-CB), will be conducted this summer in select U.S. Postal Service facilities.

The new 4-CB can track mailings, request address-quality services (including updated address-change information) and return-mail service. The task force supported the development of the OneCode Vision in which a suite of services could be requested by printing a single barcode.

The report also noted the Postal Service’s planned Premium Forwarding Service (PFS), which would give customers another option for forwarding their mail when they are temporarily away from home.

In November, USPS requested a recommended decision from the Postal Rate Commission for a two-year experiment. This proposal is still under consideration. PFS would reship all mail by Priority Mail once a week for customers who enroll for this service.

PLAN WITH CONFIDENCE
When you have questions about the design of your mailpiece or the rate for which it qualifies, who do you call? If you are a national mailer that enters mail in multiple U.S. Postal Service locations, the National Customer Rulings staff can provide certainty and consistency so you can plan your mailing campaign with confidence.

This new division is part of the Postal Service’s Pricing and Classification Service Center (PCSC) in New York City. USPS last year consolidated its regional rates and classification service centers into one location to enhance the quality and consistency of decisions and customer assistance.

The PCSC provides guidance on the interpretation of Domestic Mail Manual standards, handles customer requests for exceptions, processes Periodicals and nonprofit applications and other activities.

As part of the PCSC, the new National Customer Rulings division will provide customers who sign up for this program with decisions on mailpiece design, preparation and rate eligibility. It will issue classification decisions on a customer’s proposed mailings before deposit at the business mail entry unit.

“These decisions will provide our customers with increased confidence in planning and budgeting for future mailings and certainty at acceptance points,” says Stephen Kearney, vice president of Pricing and Classification for the Postal Service.

The PCSC will work with each national customer to customize the procedures for its participation in the voluntary program.

This program is ideally suited for mailers, such as financial services and publishers, who generate multiple types of mailpieces and enter mail at multiple locations nationwide. Customers who mail in a single location and who have an established relationship with local Business Mail Acceptance offices should continue to submit inquiries to their local Business Mail Acceptance contacts.

“We have taken many steps to help clarify our mailing standards and make it easier for mailers to apply them correctly,” says Greg Hall, manager of this new division. “For those times when a national customer is uncertain about the application of a standard, the PCSC will provide a single point of contact for answers, instead of having to work with multiple business mailing entry units. Decisions from National Customer Rulings will eliminate questions at acceptance and ensure consistency in the application of rates.”

Interested parties should provide general information regarding their mailings (e.g., types, classes, volumes and locations) and their contact information to:

GREG HALL
MANAGER, NATIONAL CUSTOMER RULINGS
PRICING AND CLASSIFICATION SERVICE CENTER
1250 BROADWAY 14TH FLOOR
NEW YORK NY 10095-9599
e-mail: gregory.a.hall@usps.gov

Smooth mailing for you!

HOW DOES NATIONAL CUSTOMER RULINGS PROCESS WORK?
Prior to a planned mailing, the customer submits a proposed mailpiece design and requested rate to the PCSC, in electronic or hard-copy format, along with information concerning volumes, locations and dates of mailing.

The PCSC reviews the piece against USPS mailing standards and will request additional information if needed.

If the mailpiece design is approved for the rate requested, the PCSC will issue a preapproved national decision that may be presented with the mailing at any USPS acceptance unit where the mailer is authorized to enter that mail. The PCSC will communicate decisions by e-mail to the customer and its mailing locations, and follow up in writing.

If the piece is not approved for the rate requested, the PCSC will provide the reason and the mailer may modify the mailpiece and re-submit.

REMITTANCE: THE NEXT GENERATION
The U.S. Postal Service has appointed 14 industry experts to the new Remittance Mail Advisory Committee, which will help the Postal Service improve its business and operational alignment with the remittance industry.

During the next year, the group will recommend solutions for end-to-end remittance processing improvements, as well as strategies for innovation.

“Bill and payment mail represents nearly one-half of First-Class Mail volume,” says Nicholas Barranca, vice president of Product Development. “Recent developments in technology and the changing behavior of bill payers are forcing the industry to reevaluate long-term strategies, address change and adapt to the new environment that will emerge over the coming years.”

Each committee member has expertise in remittance processing and operations, as well as knowledge of broader industry trends, and was chosen to represent key segments of the remittance industry. Committee chairman Charles Kelly, wholesale remittance manager for Wausau Financial Systems in Mosinee, WI, will lead the group in developing a set of recommendations for this key Postal Service business area.

“We recognize a need for better collaboration among industry players if we all are to effectively transition into the next-generation payments environment,” said Barranca. “The advisory committee is one of several initiatives that will assist us in successfully making that change.”

Committee members include:
Kitty Turner, Division Manager of Remittance Mail, Allstate Insurance, Hudson, OH.
Cliff Whittle, Director of Billing and Payment Services, American Express, Weston, FL.
Les Young, Vice President, Bank of America, San Francisco, CA.
Don Gagne, Director of Remittance Processing, Discover Financial, Riverwoods, IL.
Steve Nugent, Vice President of Remittance Operations, Mellon Global Financial, Pittsburgh, PA.
Mark Stevens, CEO, OPEX Corporation, Moorestown, NJ.
Charles Gunn, Manager of Remittance Operations, PECO Energy, Philadelphia, PA.
Loretta Rosso, Director of Payment Processing, Comcast Cable, Philadelphia, PA.
Lex Litton, Vice President, Phoenix Hecht, Research Triangle Park, NC.
Robert Craig, Senior Vice President, REMITCO, Wilmington, DE.
Dana Gould, Vice President, Association for Work Processing Improvement, Boston, MA.
Joan Argentino, Remittance Manager, Verizon, Cockeysville, MD.
Lynn McBride, Remittance Operations Manager, Wells Fargo Home Mortgage, Minneapolis, MN.

DOES YOUR BUSINESS REPLY MAIL QUALIFY FOR WEIGHT AVERAGING?
Nonletter-size Business Reply Mail (BRM) can be bulk-weight averaged through sampling software used by the Postal Service. If your volume of BRM flats or small parcels under 5 pounds is over 100,000 pieces per year, you can save in postage fees.

To participate in the program, you pay a monthly maintenance fee of $750. Once enrolled, the per-piece BRM fee is reduced from 10 cents to 1 cent. The mail will be periodically sampled to determine average postage due per pound and average piece count per pound factors.

These factors are used to rate the daily BRM in bulk by its total net weight. This saves the Postal Service workhours and that savings is shared with customers by reduction of the per-piece BRM fee. Since mailpieces no longer need to be individually weighed and rated, the process is quicker and mail can be available for pickup or delivery sooner.

The program is outlined in the Domestic Mail Manual (DMM 507.8.12). Contact your local postmaster for an application and agreement or contact the BRM program office for more information by sending an e-mail to ronald.saatjian@usps.gov. Please put “WA-BRM” in the subject line of your message.

FYI
The Postal Service generated net income of $1.8 billion in the Oct. 1 to Feb. 28 period, nearly $1.1 billion over budget. Revenue totaled $30 billion, $800 million better than planned, and up 1.8 percent from the same period last year. Expenses of $28.2 billion were $250 million under plan, and increased 3.5 percent from a year ago. “We were able to hold down expenses through our continuing efforts to control costs and increase productivity by absorbing workload,” said Chief Financial Officer Richard Strasser.

KEEPING POSTED
NEWS FROM AND FOR POSTAL CUSTOMER COUNCILS

POTTER TALKS TRANSFORMATION AT PCC MEETINGS
Less than a month after his keynote address at the National Postal Forum, Postmaster General John E. Potter will take his message of partnership to achieve transformational change to Postal Customer Councils (PCCs) across the country.

The Postmaster General, who used the Nashville platform to announce plans for the second phase of postal transformation, will emphasize that message — as well as address the ongoing challenges associated with postal reform efforts — at four important regional customer meetings in Texas, Michigan, New York and Virginia.

The four PCC meetings are:
Houston PCC Mailer’s Conference and Expo, April 14.
Washington Metropolitan PCC General Membership Meeting, April 21.
Mid-Michigan PCC Vendor Show, May 5.
Long Island PCC Annual Mailing Conference, May 12.

In conjunction with Potter’s appearances, the Postal Service will continue to encourage members of the PCC Network to use its communications channels to offer feedback on the next phase of the USPS Transformation Plan, and what strategies should be included that will help focus its objectives and initiatives on the customer.

The Transformation Plan feedback can be e-mailed to transform@usps.gov.

NPF 2005 Partnership for Progress Award

Robert Krohn
Chairman and CEO, PSI Group Incorporated

Thomas Ridge
Former Secretary of Department of Homeland Security

BEST IN CLASS
At each National Postal Forum (NPF), a select group of postal customers are acknowledged and recognized with appreciation by the United States Postal Service for their contributions to the continued success of the mailing industry.

At the Nashville NPF, there were three Best in Class award categories.

Out of the Box Award
These award winners were creative in finding new ways to use the mail to help them meet their companies’ business objectives.

American Quarter Horse Association
Jody Stoddard
Director, Operation and Distribution Service

Catherine’s Stores
Glenn Irelan
Executive Vice President

CMS/Complete Management Services Inc.
Kristen Kardovich
Chief Operating Officer

Direct Holding Worldwide
Alison Lantz
Director, Transportation

Federated (The FACS Group)
Mark Allen
Vice President, Media Services

Fingerhut Direct Marketing Inc.
Don Krippner
Director of Logistics

Ford Motor Credit Company/Ford Motor Company
Cecilia Ann Michalik
Senior Vice President, Quality, Customer Satisfaction and Process Management

Nestlé, USA
Donna Ballard
Manager of Corporate Services

New York State Department of Taxation and Finance
Harry Van Wormer
Deputy Commissioner of Administration

Innovation Award
This group of award winners implemented new technologies and best practices in their mail operations to increase productivity and meet the increasing demands from their customers.

American Express Company
Reena Panikar
Senior Vice President, Billing and Payment Services

DMS Mail Service
Robert Prevost
President/CEO

Hewlett-Packard Product Recycling
John Poterack
Project Manager

Intra-Mail Network
Michael Sanders
President

RBC Ministries
Jeff Holquist
Mailing Coordinator

Redcats USA
Robert Bergdoll
Director of Marketing, Chadwick’s

The Birmingham News
Carl Bates
Director, New Business Development

Washington Mutual
Doris Schimel
Vice President, Document Services

WellPoint, Inc.
Eileen Bowman
Senior Manager, National Production Print/Mail Services

Industry Star Award
These award winners are recognized for their business partnership with the Postal Service to enhance the value of services and products that USPS offers to all of its customers.

Bear Creek Corporation
Cathy Fultineer
Senior Vice President/General Manager, Harry and David Stores

Capital One Financial
Patrick Deck
Group Manager, Marketing Operations

Cosmetique
Aaron Horowikz
Vice President, Operations and General Counsel

DST Output
Jim Prevost
Vice President, Postal Relations

Imagitas, Inc.
Brett Matthews
Chairman and CEO

Internet Security Systems
Kimberly Baker
Vice President, Federal Operations

NIKE Direct
Partrick O’Neill
General Manager

SBC
Sharon Harrison
Senior Business Manager

Siemens Logistics and Assembly Systems, Inc.
Bill Worth
Director, Requirements Analysis

The Walt Disney Company
John Gong
Vice President, Marketing, Synergy and Events

POSTAL NEWS BRIEFS
INSPECTORS WARN OF SCAM
The Postal Inspection Service is warning the public about a fake postal money order scam.

Victims are contacted by e-mail or through online sites by a person claiming to need help cashing a postal money order. Victims are told they may keep some of the money as payment. When the fraudulent money order is cashed, the victim returns funds through a wire transfer, not realizing they have assisted in a federal crime.

If fraud is suspected, call the Fraud Complaint Hotline at 1-800-372-8347 or visit the U.S. Postal Inspection Service website at www.usps.com/postalinspectors.

NEED GIFT IDEAS?
More than a dozen retailers have you covered from head to toe with retail gift cards available from NetPost CardStore on usps.com. Send gifts and greetings right from your computer.

Available in various denominations, gift cards can be added to any original NetPost CardStore greeting card — for birthdays, anniversaries, Mother’s Day and Father’s Day, graduations or just to say, “Thinking of you.”

NEGOTIATED PRICING SOUGHT
The U.S. Postal Service has filed for a recommended decision on a fourth negotiated service agreement (NSA) from the Postal Rate Commission that extends the innovative product to the financial services company HSBC North America Holdings Inc.

The agreement with HSBC would be similar to three previous NSAs with other mailers.

“Providing price incentives for mailers to encourage more mail volume and best practices can help make it possible for us to keep rates affordable for everyone,” said Anita Bizzotto, senior vice president and chief marketing officer for the Postal Service.

HSBC is one of the largest banking and financial services organizations in the world, and one of the 10 largest originators of First-Class Mail in the United States.

The agreement has three main features: it provides incentives for HSBC to send additional First-Class Mail, ensures that the customer will maintain superior mail-quality practices and produces cost savings for the Postal Service from the customer agreeing to receive electronic information about undeliverable mail instead of having pieces physically returned.

A negotiated service agreement is a pricing instrument that gives the Postal Service a mechanism for customizing rates and services to accommodate the unique mailing needs of specialized business customers and to encourage cost-efficient mail preparationfor accurate sorting and distribution.

STAMPED FOR SPRING
Congratulations. Thank-you notes. Mother’s Day wishes. Expressions of love and friendship — anytime. Pre-stamped stationery from the Postal Service is easy to use. Just write a note, seal the stationery and drop it in the mail.

Thanks to a new product, you’ll be able to send greetings and flowers through the mail that guaranteed to arrive in perfect conditions. The flowers come in the form of Garden Bouquet Stamped Stationery. In a package of 12, each sheet features pink roses and white lilacs set against a soft green background.

The stationery highlights the 37-cent Garden Bouquet stamp image issued last year.

Find this and other pre-stamped stationery products, as well as stamps and other philatelic items online at The Postal Store at www.usps.com/shop or call 1-800-STAMP-24.

_________________________________

MEMO TO MAILERS
Volume 40 Number 4

Ilze Sella
Editorial Services

Frank Papandrea
Art Director

David Ostroff
Designer

Betty Shelton
Purchasing Specialist

Azeezaly S. Jaffer
Vice President, Public Affairs and Communications

John E. Potter
Postmaster General and CEO

Memo to Mailers
is published by U.S. Postal Service
Public Affairs and Communications.
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registered marks of the
United States Postal Service.

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