Chapter 2 Our Customers
PRODUCT RESEARCH
Mail provides an efficient and effective channel for commercial organizations to reach households. Commercial organizations send 91 percent of all mail, with 70 percent of this amount sent to households. To evaluate and respond to changing customer needs, the Postal Service conducted the following studies:
• Multi-Channel Advertising: this study quantified and analyzed the increased traffic and sales generated on Web sites when hard copy communications formed part of a marketing campaign. A key insight from this study showed that catalogs and direct mail, combined with e-mail communications, contribute significantly to gaining sales from new customers and adding sales from existing customers.
• Delivery Preference: this study indicated that consumers reward retailers who provide options for receiving packages from online purchases. Online buyers tend to seek convenient and affordable delivery and will buy more from retailers who provide choices.
• First-Class Mail Branding: this study confirmed that consumers respond much more positively to direct mail that is personally relevant. In addition, mailpiece design is used by consumers to determine whether to keep, open, and read direct mail. The study reported that consumers expect the envelope to provide useful and correct information.
• 2006 Household Diary Study: published in March 2007, this study measured the mail sent and received by U.S. households in 2006, tracked household mail trends, and compared mail use among different household types. The report examined trends in the context of changes and developments in the wider markets for communications and package delivery. Households received 155.5 billion pieces of mail in 2006 and sent 19.4 billion.
PRICING
New Postal Pricing
On May 14, the Postal Service introduced new pricing that reflects changes in operations and the marketplace, offers customers more choices, and promotes a more cost-effective, efficient mail system. These changes included shape-based pricing for First-Class Mail, new pricing for all products including Priority Mail and Express Mail, simplified international services, and the introduction of the Forever Stamp. Concurrent with the changes to domestic mail, international product and pricing adjustments, were also were implemented.
On July 15, the Postal Service introduced new Periodicals prices to improve efficiency, offer more choices, and provide accurate cost coverage for all types of Periodicals mail. Periodicals mailers have more incentives to use efficient containers and bundles, while incentives for publishers to combine mailings or use co-palletization became permanent.
Negotiated Service Agreements
A negotiated service agreement (NSA) is a mutually beneficial customized agreement between the Postal Service and a business customer that is designed to increase mail volume, enhance mail preparation and reduce Postal Service costs when possible. Two active agreements in 2007 with Discover Financial Services and Bookspan increased volume and made new contributions totaling $1.7 million, with $1.0 million in discounts. Two new agreements with The Bradford Group and Life Line Screening are under litigation before the PRC. The Bank of America agreement was returned by the PRC and was approved by the Postal Service Board of Governors.
