1. 2009 Customer Summit Practical solutions that save time, money and the environment 1 National PCC Day 2009 1 Pittsburgh’s Postal Customer Council’s National PCC Day David Robinson, Pitney Bowes Postal Relations

2. 2 2009 DMT Kick Off January 13-16, 2009 2009 Customer Summit 2 National PCC Day 2009 2 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  5 Day Delivery  Misc. ideas  Technology  IM™BC  CASS™ Cycle M, N and Beyond  FSS  Move Update

3. 3 2009 DMT Kick Off January 13-16, 2009 2009 Customer Summit 3 National PCC Day 2009 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. 4 2009 DMT Kick Off January 13-16, 2009 2009 Customer Summit 4 National PCC Day 2009 4 Thinking outside the box

5. 5 2009 DMT Kick Off January 13-16, 2009 2009 Customer Summit 5 National PCC Day 2009 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. 6 2009 DMT Kick Off January 13-16, 2009 2009 Customer Summit 6 National PCC Day 2009 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. 7 2009 DMT Kick Off January 13-16, 2009 2009 Customer Summit 7 National PCC Day 2009 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. 8 2009 DMT Kick Off January 13-16, 2009 2009 Customer Summit 8 National PCC Day 2009 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. 9 2009 DMT Kick Off January 13-16, 2009 2009 Customer Summit 9 National PCC Day 2009 9 Miscellaneous Ideas Advertising on the mailbox  Trialed in upstate NY  Niagara Falls  30 th anniversary of Star Wars Leverage retail presence  Additional services at retail locations  Processing state-issued ID Cards  Expanding Kiosk use  Selling greeting cards

10. 10 2009 DMT Kick Off January 13-16, 2009 2009 Customer Summit 10 National PCC Day 2009 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. 11 2009 DMT Kick Off January 13-16, 2009 2009 Customer Summit 11 National PCC Day 2009 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.comhttp://ribbs.usps.gov/

12. 12 2009 DMT Kick Off January 13-16, 2009 2009 Customer Summit 12 National PCC Day 2009 12  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 Mailers in TEM and Production as of 8/6 Intelligent Mail ® Barcode Implementation

13. 13 2009 DMT Kick Off January 13-16, 2009 2009 Customer Summit 13 National PCC Day 2009 13 CASS™ / MASS™ Cycles Cycle M - Implemented August 1, 2009  SuiteLink TM (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  SuiteLink TM (for mailers)  Anticipated to be the last CASS™ / MASS™ Cycle on record USPS ® will continue to work with vendors of address hygiene tools and mailers that use these tools for DPV ® assignment of every address in the US

14. 14 2009 DMT Kick Off January 13-16, 2009 2009 Customer Summit 14 National PCC Day 2009 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. 15 2009 DMT Kick Off January 13-16, 2009 2009 Customer Summit 15 National PCC Day 2009 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. 16 2009 DMT Kick Off January 13-16, 2009 2009 Customer Summit 16 National PCC Day 2009 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. 17 2009 DMT Kick Off January 13-16, 2009 2009 Customer Summit 17 National PCC Day 2009 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. 18 2009 DMT Kick Off January 13-16, 2009 2009 Customer Summit 18 National PCC Day 2009 18 Address Quality Pyramid Tools StandardizeStandardize Validate Update CASS-Certified Software TM LACS Link TM DPV TM AEC / AEC II TM NCOA Link TM ANK Link TM ACS TM

19. 19 2009 DMT Kick Off January 13-16, 2009 2009 Customer Summit 19 National PCC Day 2009 19 FY04 FY08 Vol (Billions) Cost (Millions) Vol (Billions) Cost (Millions) Unit Cost Forwarding1.985$ 4221.789$ 326$.18 Return-To-Sender1.603$ 8221.436$ 727$.51 Waste6.135$ 2706.851$ 365$.05 Other$ 343$ 221 Total9.7$ 1,85610.1$ 1,639 Cost Impact Of Undeliverable-as-Addressed (UAA)

20. 20 2009 DMT Kick Off January 13-16, 2009 2009 Customer Summit 20 National PCC Day 2009 20 USPS ® -Approved Move Update Methods Pre-mailing Methods NCOA Link® : 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. 21 2009 DMT Kick Off January 13-16, 2009 2009 Customer Summit 21 National PCC Day 2009 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. 22 2009 DMT Kick Off January 13-16, 2009 2009 Customer Summit 22 National PCC Day 2009 22 Pros And Cons Of Popular Methods  Pre-Mailing solution (NCOA Link® ) 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 (ACS TM ) – Return Mail processes – Effectiveness depends on implementation of changes

23. 23 2009 DMT Kick Off January 13-16, 2009 2009 Customer Summit 23 National PCC Day 2009 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. 24 2009 DMT Kick Off January 13-16, 2009 2009 Customer Summit 24 National PCC Day 2009 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. 25 2009 DMT Kick Off January 13-16, 2009 2009 Customer Summit 25 National PCC Day 2009 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. 26 2009 DMT Kick Off January 13-16, 2009 2009 Customer Summit 26 National PCC Day 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. 27 2009 DMT Kick Off January 13-16, 2009 2009 Customer Summit 27 National PCC Day 2009 27 Sample PBV Report

28. 28 2009 DMT Kick Off January 13-16, 2009 2009 Customer Summit 28 National PCC Day 2009 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. 29 2009 DMT Kick Off January 13-16, 2009 2009 Customer Summit 29 National PCC Day 2009 29 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 ® [ Failed COAS Total COAs - 30 % ] * 7 ¢ * (pieces in mailing) Fee Assessment Policy Change

30. 30 2009 DMT Kick Off January 13-16, 2009 2009 Customer Summit 30 National PCC Day 2009 30 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% Policy Change Impact - First-Class Mail

31. 31 2009 DMT Kick Off January 13-16, 2009 2009 Customer Summit 31 National PCC Day 2009 31 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% Policy Change Impact - Standard Mail

32. 32 2009 DMT Kick Off January 13-16, 2009 2009 Customer Summit 32 National PCC Day 2009 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. 33 2009 DMT Kick Off January 13-16, 2009 2009 Customer Summit 33 National PCC Day 2009 33 62% 21% Error Rate > Threshold 5.4% April 2009 Error Rate > Threshold 3.8% June 2009 0.5% 0.2% 1.5% 39% 27% 18% 11% 3.2% 0% 20% 40% 0%0 - 10% 10- 20% 20- 30% 30- 40% 40- 50% 50- 70% 70- 100% 1.0% 0.6% 0.4% 38% 27% 24% 7% 1.8% 0% 20% 40% 0% 0 - 10% 10- 20% 20- 30% 30- 40% 40- 50% 50- 70% 70- 100% Error Rate > Tolerance 5.4% Error Rate > Tolerance 3.8% April 2009July 2009 PBV Driving Improvement First-Class Mail ® ®

34. 34 2009 DMT Kick Off January 13-16, 2009 2009 Customer Summit 34 National PCC Day 2009 34 PBV Driving Improvement Standard Mail ® April 2009 Error Rate > Threshold 5.8% Error Rate > Threshold 5.0% June 2009 3.0% 0.9% 21% 8% 62% 3% 1.5% 0% 20% 40% 60% 0% 0 - 10% 10- 20% 20- 30% 30- 40% 40- 50% 50- 70% 70- 100% 1.0% 0.5% 3.1% 2% 70% 8% 15% 0% 20% 40% 60% 0% 0 - 10% 10- 20% 20- 30% 30- 40% 40- 50% 50- 70% 70- 100% Error Rate > Tolerance 6.3% Error Rate > Tolerance 5.1% Does not include “or Current Resident” mailings Does not include “or Current Resident” mailings April 2009July 2009

35. 35 2009 DMT Kick Off January 13-16, 2009 2009 Customer Summit 35 National PCC Day 2009 35 Appeal From PBV - Based Postage Assessment 1. 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 2. Request second level review with USPS ® acceptance personnel 3. If unable to resolve: – Appeal to your Mailpiece Design Analyst (MDA), Business Mail Entry supervisor, or other designated 2 nd level USPS ® employee – Insist the USPS provide documentation detailing its findings 4. 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) 5. The PCSC will respond to the origin site with the findings

36. 36 2009 DMT Kick Off January 13-16, 2009 2009 Customer Summit 36 National PCC Day 2009 36 Move Update Best Practices  Pre-Mailing solution (NCOA Link® ) at or near the time of the mailing  Post-Mailing solution (ACS TM )  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. 37 2009 DMT Kick Off January 13-16, 2009 2009 Customer Summit 37 National PCC Day 2009 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. 38 2009 – Erie Summer Session Thank You Questions?