The easy road to obtaining postage discounts began to get rocky in 1997 with the advent of the U.S. Postal Service’s introduction of Classification Reform/Move Update regulation.
Move Update, as it is commonly referred to, requires First-Class mailers to perform regular updates and maintenance on the entire name and address fields. Since then, this requirement and other required procedures have become routine in the trek to lower postage expense. These collaborative processes, which yield cost savings to the USPS, are identified as “work share.”
The mailing industry is about to experience new requirements for obtaining and holding onto work share discounts. Two sweeping programs are on the horizon and, surprisingly, with little fanfare. That, too, will change.
Move Update expansion. What’s good for First-Class mailers must be good for Periodicals and Standard mailers, right? Well, agree or not, this planned expansion of the regulation will require all affected mailers to perform acceptable Move Update procedures every 90 days to their mail files. The expansion of Move Update is intended to take effect at the end of next year.
This work share requirement is long overdue. The unacceptable and unnecessary cost of wasted postage and materials caused by not performing routine name/address hygiene is outrageous.
The USPS estimates that every year 5 billion mail pieces are undeliverable as addressed (termed UAA mail). This equates to a $1.5 billion cost to the USPS but easily two to three times that to mailers when the total cost of postage, materials and data entry of correct information is calculated (not to mention the postage and materials cost to re-mail the corrected piece).
Probably the reaction to the expansion of Move Update by small mailers, service providers and others will be to claim it unfair and detrimental to the future of the medium. That would be ironic because UAA mail is the true problem with the medium. UAA mail originates mostly from nonusers of Move Update services. The sad irony is that nonusers pay a terrible price in terms of excess mail expense and low response rates. Numerous case histories show extraordinary savings and return on investment for the use of pre-mail address hygiene services.
However, while the advent of an expanded Move Update regulation is more than a year out, another development is being readied nationwide. This USPS initiative is called Revenue Assurance, and initial employment in parts of Florida has brought major concern if not outright fear to First-Class mailers.
Revenue Assurance. This program is operated and managed by the finance sectors of USPS local district offices. Their mission is to verify that work share postage discounts have been awarded only to mailers who have been in compliance with the strictures of the Move Update regulation.
Revenue Assurance was introduced to selected areas of Florida earlier this year and quickly became controversial. The controversy has centered on two points:
o District accounting departments’ lack of familiarity with mail preparation procedures.
o Arbitrary assessment of penalties.
It’s important to remember that Revenue Assurance applies only to First-Class mail at this point.
At least in one district the business services department worked closely with the accounting department to better familiarize them as to the way mail is prepared and enters the mail stream. Prior to that, penalty assessments were made with less than adequate dialogue or understanding.
Another communications problem still needs to be addressed. It appears major mailers with multiple mailing sites will be required to address Revenue Assurance challenges from all districts. This imposes an unusual burden on the largest business revenue generators to the USPS. One has to think this will be ironed out before too far into the rollout phase.
The term penalty is used by mailers whereas the postal service prefers pay back, or something that connotes work share discounts given in good faith were found not to have been earned and, therefore, must be returned. On the matter of payback, fault found in one mailing may be assessed over all mailings since the last Move Update process, up to six months back.
This can be an onerous penalty. For example, if 1 million pieces were mailed monthly at a work share discount of 6 cents per piece and the penalty is applied to all 6 million pieces, the cost for non-compliance is $360,000. The financial burden potential of Revenue Assurance demands far better communications than experienced to date. Working through the Postal Customer Councils, industry association meetings and the Fall Postal Forum are among the venues USPS needs to use sooner rather than later.
The USPS is using a true carrot-and-stick option: Clean up your mail files or pay the piper. It sounds harsh but so was being forced to eat broccoli. In the long run it was good for you, and so are these evolving conditions. Accurate mail files result in reduced mail expense and improved response rates.
