Task Team 24 Meeting 2 MSP

® Task Team 24 Meeting # 2 MSP Incentive for Growth Technical Workflow Proposed June 9, 2016

Agenda § Introductions § Review TT 24 Issue Statement and Desired Results § Business Case Development Discussion § Review Potential Gains for USPS § Review Challenges for USPS to implement and justify the business case for ELT and PRC § Review Challenges for MSP to implement and justify any investment risks § Next Meeting / Task Strategy Discussion 2

TT 24 Issue Statement § Task Team Title: MSP Incentive Implementation for Growth § Expected Date of Completion: June 30, 2016 § Task Team Issue Statement: In 2015, MTAC User Group 8 proposed the formation of a specific incentive to assist Mailing Service Providers (MSP) to encourage more mail volume and participation in future USPS promotion programs. These suggested MSP incentives would allow the USPS to leverage knowledgeable MSP Sales forces and their Operations teams to retain and grow the value of mail. 3

TT 24 Issue Statement (Cont’d) § This Task team will assist the USPS in exploring the User Group 8 proposal by defining certain methodologies and changes necessary in procedures, data, Mail. dat, and Mail. xml that will result in a PRC approved incentive specifically for MSPs. The Task Team will provide specific recommendations with a minimal amount of USPS/Industry changes regarding: reliable method to prove new promotion program participating volume (i. e. growth), credit and attribute earned incentive, and help build project plan for successful automated implementation of this supply chain based solution. 4

TT 24 Issue Statement (Cont’d) § § § Specific desired results include: USPS will have a solid implementation plan to ensure prompt PRC approval. Establishment of a clear development direction so that software vendors and MSPs could get prepared to leverage this opportunity immediately. A project plan that will enable rules and program details to be in place with adequate lead time to educate and train their respective sales forces. Assurance of a clear and successful process foundation, which the USPS and Industry can leverage in future years to help incent mail volume growth and improve overall mail value. 5 5

TT 24 Issue Statement (Cont’d) § Area of Focus: § The area of focus is how to implement this reliably and easily for both USPS and Industry members are more familiar with impacts that mailers will experience from the changes and how they will impact each individual USPS Department. § We will ensure that the solution can meet the requirements necessary to satisfy PRC concerns necessary to win approval. We also will refrain from adding complexity so that the program is easy enough to implement and gets widely adopted to augment the USPS efforts in growing and sustaining the value of mail. § The Task Team will make a point of looking to leverage any applicable USPS/industry precedents on use of data, technology, and procedures to minimize development for the solution. 6 6

Business Case Discussion § Background Information: § Environment is different now for justification with ELT and PRC Post-Exigency Roll-back § Need a good sound case for risk/reward for approval § USPS’ own data showed that Mail Owners who participated in promotions grew their volume by 15% the following year § Other? 7 7

Business Case Discussion (Cont’d) § Review Potential Gains for USPS § New Mail Owners and new volume participating in the promotions § More Mail Owners realizing more value from their postage spend § More profitable mail volume § Leverages Imb Full Service and e. Doc § Process adds another carrot to incent straggling Mail Owners and MSPs to adopt Imb Full Service § New participants lead to growth and mail volume retention § A successful program energizes and mobilizes both larger and smaller entrepreneurial MSPs and their respective sales force to innovate and sell USPS mail products § The incentive mechanism and platform created can be leveraged for other higher margin products such as Share. Mail 8 8

Business Case Discussion (Cont’d) § Review Potential Gains for MSPs: § Current State: § Current promotions set up’s primary attraction for Mail Owner is reduced postage § MSP/e. Doc Submitter that produces and mails the work on behalf of Mail Owner incurs the risk for system or data entry failures without any promise of a reward as postage is a “pass-through” cost. § For the above reasons, promotions are seldom promoted by MSPs due to risk and the potential to screw up a well honed production workflow. However, as the promotion support is a “given” expectation in the marketplace, all MSPs scramble to develop workarounds and manual solutions to retain their best customers wishing to save money on eligible promotion mailings. § As a result, the largest and most knowledgeable Mail Owners are participating in promotions as they are the 9 drivers. 9

Business Case Discussion (Cont’d) § § Review Potential Gains for MSPs: Future State: § MSP Sales Force with an incentive available will seize this as an opportunity and look at the incentive as a way to offset the risk for the time, effort , and support of the promotion involved. § MSPs will get creative on how to leverage a program incentive to motivate their Sale Force. Sales will innovate to aid the Mail Owner decision maker to test the waters and participate in the promotion. § MSPs will develop more comprehensive service products and marketing programs to help their Sales people educate their Mail Owner clients to leverage applicable USPS promotions. § Mail Owners will support this initiative as their savings remains unaffected as they know promotions create more work for MSPs. With incentives for the MSP, they will have more confidence that each MSP, they work with can and will be prepared to support their promotion eligible mailings. 10 10

Challenges for USPS § Review Challenges for USPS to implement and justify the business case for ELT and PRC § Data for a business case to support incentive justification § Identifying eligible mailings and Mail Owners § Proving growth § Establishing a new precedent to incent MSPs to help sell § Providing incentives at a time when financial picture is poor is an easy No § Technical mods and add-ons to an already strapped and behind development team and system architecture § Cashflow concerns: Payout to MSP is at the end of the Promotional period ( e. g. Earned Value Reply) and it is in the form of postage that can only be spent for mail with the USPS. 11 11

Challenges for MSPs § Review Challenges for MSP to implement and justify any investment risks § § There is already so much change going on in the mailing industry that this is one more; does each organization have the bandwidth to digest and implement? As this is primarily Sales and Marketing group, we feel it is very feasible. Lead time to know what incentive is, eligible promotions, and rules, so that they can get in front of clients while they are planning for next year Lead time for software industry and USPS IT to be ready to support necessary electronic documentation changes and PPO reporting needs. USPS Promotions Program Office being ready to support MSP Sales for eligibility or other approvals. 12 12

DRAFT- Proposed Workflow Changes 13

Potential e. Doc Solution 14

Status and Potential for CR for 17 -1 VV is already in 15_1 but it was primarily the description change in the CR for 16_1 to match how we might use it for the MSP incentive and likely some rules we might need to add as to eligible volume as to when VV could be populated. Also if applicable to only promotions then instructions to the industry as to what all could be found in CCR records within the same e. DOC submitted by the MSP such as VV and MI as a qualifying promotional mailing submitted by MSP for incentive. Neither of the values were officially approved, but there is still time to put them into the January 2017 Mail. dat 17 -1 and as an errata to 15 -1. 15

Next Meeting / Task Strategy § Next Meeting: § When ? § Completion Date Target: June 30, 2016 § Task Strategy: § Recommendations § Can USPS better define what help is needed beyond TT 24 recommendations? § Q & A 16 16