IS USPS A BUSINESS?
REVENUE GENERATION – A MATTER OF SURVIVAL

The Postal Service is among a small number of federal agencies — the U.S. Mint is another — that relies on revenue from the sale of its products and services to fund its operating expenses. USPS receives no tax dollars for operations. For the Postal Service, revenue generation is a matter of survival.

USPS has spared no effort to increase revenue within the boundaries of the laws that govern it. It has aggressively applied the pricing flexibility provided by the Postal Act of 2006, adding value to its services. Pricing innovations include lower prices for customers who pay online and — for the first time in its history — the use of incentives to spur volume.

Employees — many of whom see their customers each day — have become a powerful resource for generating revenue. Letter carriers, Postmasters, rural carriers and other employees have participated in customer engagement programs in record numbers, helping generate new sales worth millions of dollars. Customer Connect — the lead generation program for letter carriers — has produced more than $1 billion in revenue since its launch in 2004 (Link, 7/22).

In 2003, the Postal Service introduced Priority Mail Flat Rate Envelopes. Building on the success of these products, USPS has introduced a comprehensive lineup of flat-rate shipping options, including the addition of flat-rate boxes. “If it fits, it ships, for one low price” has become a successful marketing and sales tagline. Following a focused, integrated and well-received advertising campaign, Priority Mail Flat Rate Box year-over-year revenue in 2010 is up 82 percent.

Internationally, alliances with postal administrations in Europe and Asia have improved service performance and simplified the process of mailing letters and parcels between countries. These collaborations also have produced a number of new co-branded package products that have generated revenue growth of more than $1 billion in the foreign package business over the last 5 years.

USPS will continue to expand its reach in the international market. Meanwhile, the Postal Service is changing the way it relates to its customers in the communities it serves, and online.