Hello, and welcome to the 2012 Postal Customer Council Day. One of the most important things about the PCC's is that you and your business can benefit from learning about important industry trends. PCC has provided great opportunity to share information about trends, new technologies and business practices, and it’s important to continue the discussion when you get back to your business.
It’s especially important with all the opportunities that are being driven by changes in the digital technology. We’ve got to stay on top of these changes to make sure that we benefit from them, and we’re going to be talking about these changes and some of the opportunities and challenges that we face as an industry.
We’re also going to review what the Postal Service is doing in some of these key areas. We’re going to talk about spurring growth and increasing the value of mail, new products and services, leveraging data in the potential of Intelligent Mail, and creating our future network.
Now let me start with a few thoughts about the state of our industry. Our industry is fundamentally strong today and we have a very strong future. Mail retains just as much value as it ever did and will continue to be a highly effective communications and marketing channel, and despite some of the headlines we see occasionally, mail remains an incredibly effective and important part of marketing America’s products and services.
And it’s also one of the most effective ways of acquiring and communicating with customers. And mail is only going to be that much more effective in the future. Changes in technology are enabling greater opportunities for integrated marketing, and the real power comes when mail is combined with other channels for reaching customers, especially integrated with digital channels. That’s the part of our industry that’s changing and creating big opportunities.
Better use of data and technology is going to transform the value of mail, and it’s already starting to happen in a big way. You know we’ve seen a very quick adoption of QR codes and that’s great, but QR codes don’t even scratch the surface in terms of potential convergence with digital tools and mobile technology, and we really need to get up to speed with this convergence. This is a great opportunity that we have as an industry to shape the future of mail. I think it’s exciting, and as an industry we need to convey that excitement to American business.
We need to start describing what the future of mail looks like and build some anticipation. We also need to correct some misperceptions about our industry. One of the biggest concerns I have over the past couple of years has to do with misperceptions and bad information.
The first big misperception relates to the fact that people question whether the Postal Service is going to exist in the future. This is one of the craziest ideas out there. We are a 65 billion dollar business inside an 800 billion dollar industry. We’re going to be here for a long time.
Now here are the facts. The laws that govern the Postal Service are very restrictive. These laws impose mandates and prevent the Postal Service from adapting to the marketplace and making changes that any of you would do in your business, and as a result the Postal Service has been recording major financial losses. It’s important to understand that the Postal Service could be profitable today with the right legal framework, and so we can’t let businesses that work with our industry make the mistake of assuming that financial problems in the Postal Service have anything to do with the value of mail or the future of our mailing industry. It all comes down to laws that govern the Postal Service.
Unfortunately, until Congress acts and passes Postal reform legislation, this industry is going to have to deal with the negative news. In the meantime we will do what we need to do to protect the industry. Is the Postal Service going be around in the future? Absolutely. Will we continue to deliver mail without disruption? Absolutely. The Postal Service and this Industry are far too important to the entire economy for mail to ever be disrupted. It’s not enough for me to say these things. Our industry has to attack these misperceptions.
One of the biggest misperceptions is the idea that somehow mail is losing value in a digital world. This is simply not true. Here’s an interesting statistic. We asked some people if they agree with this statement, “I do not value the mail that I receive.” Almost two-thirds of consumers say that they disagree with this statement. That’s a great number. That means that almost two-thirds of consumers value the mail that they receive.
So what about businesses? We asked them how consumers would’ve answered that question, and we got a very interesting answer. Businesses think that only one-third of consumers value marketing mail. The correct answer is two-thirds do, so businesses are wildly underestimating whether people value the mail that they send. Now that is a perception problem, and we as an industry need to get American businesses to understand that people value what they receive in the mail. We need to bump that up from one-third to two-thirds and even higher, and that’s why it’s so important to promote the mail. We’ve got to communicate with American businesses about the power of mail, and we have to speak with one voice as an industry.
Our First-Class single-piece mail volume is declining because people want to pay their bills online. Fair enough, because you can’t be free. On the opposite side though for the past year, mail volumes for Commercial First-Class, that’s bills and statements, have held steady, and that tells me that people are resisting the idea of conducting all of their business online. Businesses are finding it’s difficult to get people to accept digital statements. People want their paper statements because they actually read them and file them away, and there is a level of control and comfort and security that mail provides, and people want that tangible hard copy. As an industry we have got to communicate this. Improving customer service is a top priority for the Postal Service. Providing a great customer experience is critical to recruiting and retaining customers. To improve the customer experience, we have to provide greater simplicity. By simplifying products and processes, mail can be made easier to use as a marketing channel.
You know we run the best delivery system in the world. We also have to provide outstanding customer service to every one of our customers. Our goal is for every transaction to be simple and to exceed your expectations. It doesn’t matter if you are a small business or large mailer or a residential customer. Outstanding customer service must be our north star guiding our employees to go the extra mile. Working closely with our PCC’s, our commitment is to provide our customers with better products and better service than any of our competitors.
The Postal Service is focused on innovating to create new opportunities for growth in the mailing industry. In an increasingly digital world, this means finding new ways of increasing the value of mail for both senders and receivers. We’ve got to get people to sit up and say wow there’s a lot going on with the mail these days. And we try to do this by creating really effective products and promotions and by speeding the pace of innovation.
Well you know the great thing about direct mail is people do a lot more opening of mail than they do of other things, so you really need to look at direct mail compared to its alternatives. How often do you actually turn the radio station when it goes to an ad? How often do you opt out of receiving an e-mail? If you add all of those things up, you find that actually it’s not that great an alternative when you look at some of these alternatives to mail. When you look at mail on the other hand, most people at least look at the envelope to see what they got, and many people actually open that envelope, and that is the defining difference with direct mail, something that we should believe in.
One of the things we do to attract people to our public seminars is we’re a big supporter of direct mail. I mean it’s been great for us. At our last seminar we mailed out over 33,000 pieces of direct mail. And I know that sounds like a lot, but it actually isn’t when you know how to keep your cost down. And what happens is the more you get out there, the more stays around, the more gets passed around. So we use direct mail for two reasons. One is direct registration for our public seminar, but also here’s a cool thing that a lot of folks don’t use direct mail for. It’s to drive people to the Internet, to check you out on the Internet, so we use it for those two mechanisms and it worked very well for us.
I’m not saying you should only be using direct mail, but you need to look at it as a wheel, as spokes on a wheel. You have the center, the core of the wheel, and then you have these spokes shooting out. Well each spoke on a wheel should be a different way that you market. So you have social media. You have Internet, e-mails, websites, but you have to have direct mail as one of your spokes. A lot of people remove that spoke, and what I say is you want them all working for you, all shapes and sizes. You want every single mechanism of marketing working for you.
Direct mail is an integral part of a marketing strategy. In fact, if you think about our own plan for 2013, what you’ll find is direct mail will probably be between 15 and 20 percent of all of our marketing dollars. So if you look at the direct mail component that it is today, we probably spend less than five percent of our advertising dollars on direct mail and we’re going to turn around and make that almost 20 percent next year.
In everything we do, we want to be a catalyst for growth. When we create a new product or a new offering, we do it to meet the business needs of our customers. We know the big question is always what’s my return on investment? What kind of results can I expect from my mailing whether it’s Marketing Mail or First-Class Mail? Business wants to know that it’s reaching its customers. They want to know that the customers are spending time with their message and they’re acting upon that message.
We clean shirts. We clean t-shirts. We clean jerseys, sweatshirts. We do wedding dresses saying in by 9 out by 5. We were looking at how we could market the store effectively especially being a new store that the customers didn’t know where we were actually located.
We have found that Every Door Direct Mail is the best way to go for new stores as well as existing stores. Getting the coupons going out and bringing in new customers.
You really can control where it goes, the zip codes, what routes within that zip code, so you can really market to the customer that you think will be best for your business.
Well we had a comforter special go out. Normally it’s $19.99. If you mentioned the ad or brought the coupon in, we gave it to you for $14.99.
We had more than 100 people come in with their mailings, so we grew very quickly for a new store opening.
With Every Door Direct Mail is definitely the way to go, and I recommend it to any business, especially those starting out.
We’ll get rid of the stains. We’ll press your garments. We’ll have you looking great. Zip, zip, zip. We’re doing it, we’re doing it. In by 9 and out by 5. Zip, zip, zip. We’re doing it.
This summer we created a promotion called Mobile Commerce and Personalization. It encouraged use of mobile barcodes that linked to mobile optimized purchasing sites or personalized URLs. This was an offer that generated 620 million mail pieces in just the first two weeks. One of our most compelling offers is second ounce free. We created a permanent price change that allows business mailers to send up to two ounces of commercial pre-sort First-Class mail at the one-ounce postage pricing. Second ounce free gives businesses a very affordable channel to reach their customers with a message that will be opened and read. It’s a game changer and it’s incredibly effective.
We Know Mail, LLC has grown with the mailing industry for decades since the 1980s. We got into mailing as a printer who couldn’t find quality, reliable, fast-turnaround mailing services, so we developed our own. The diversity of our customers is almost unlimited. We service all classes of mail, all types of mail pieces. Commercial mailers and their customers are witnessing an unprecedented level of cooperation between the Postal Service and the mailing industry. We’re really glad to see this second ounce free product. It’s free postage. Our customers’ reaction to second ounce free is gratitude and astonishment. And when you tell them that the postage is the one-ounce rate for a two-ounce piece, they’re elated. The post office is continually pushing the boundaries on new products and innovating in a way that we have never seen prior so that their competition is fierce and they need to boost revenue and it looks like they’re on track.
The picture permit offer encourages commercial mailers to use corporate logos or other brand images in the permit indicia space. It can be used on automation first class in standard mail letters and cards.
Send Out Cards was created so that you could easily send a greeting card out when you’re having a feeling to say thank you to somebody. You go online, create a greeting card, and say thank you and send it out that day, and we wanted it to be quick and easy to use and something that could be affordable to anybody. So we go through peak days at 700,000 or 800,000 cards in a single day. This year we’re planning to make it a million. Our goal this year again is to break over 50 million greeting cards, and we’ll do more than five million of that in December alone. So we actually have been a full-rate first-class mailer with the Post Office for eight years. Until this year, we’ve actually sent everything with a full-rate first-class postage stamp. Now what we did is we developed a picture permit that looks similar to something you’d see on the mail right now when it has a stamp in it, a town circle on it.
One simple way that we’re working with right now with the Post Office and with our manufacturers on our equipment is how can we take and customize the outside of the envelope to match the theme of the card on the inside. So if you’re sending a birthday card, the outside may have some birthday images on it, and the picture permit would be a birthday-related image also. Really kind of personalize the entire card and the envelope to match. It was important to us that it looked like it was a personal letter delivered and it has your signature, it has your font. It wouldn’t have a pre-sort blaring indicia on the front. The transition over to picture permit has been great and really working with both local Post Office and we actually worked with some of the people out of Washington, D.C. It’s been good.
Looking ahead to 2013, we’re seeking to offer a wide range of new promotions. Some of these include designing coupons with mobile integration and creating click-to-call applications for businesses. We’re also providing a holiday mobile shopping promotion in November. This promotion further integrates mail with mobile shopping. We’re working closely with our customers to innovate and create products that will drive growth. Technology is changing quickly, and there are great opportunities to enhance the value of mail for both the sender and receiver. It’s a dynamic environment for marketers and an exciting time to be using mail.
One of the most important aspects of our efforts to innovate relates to the way that we use data and technology. The Intelligent Mail barcode is the key to harnessing the data in our network. Full-Service IMb is really important for customers because it provides great visibility into the effectiveness of mailings. It also provides clarity in calculating return on investment. We’re creating a very smart network so that our customers can be very smart in a way that they use the mail.
I think the biggest misconception about Intelligent Mail is that it’s just about tracking; that couldn’t be further from the truth. It’s about information to manage our business collaboratively for all of us, the whole supply chain. Its information that helps us understand where things are and where they’re going and it certainly helps us drive performance. But it also helps us understand more about mailings, and that’s important to the industry. We’re building systems that’ll better provision data to our customers; manage that information moving down the path to real-time scanning. We want to be able to tell you exactly when mail went in the mailbox. The thing about being a cataloguer, we’re telling you at 10:30 in the morning that the catalogue has been put in the mailbox so you could send a text message to that same customer saying when they get home from work the catalogue is in the mailbox, and you can send them an offer saying if you buy today it’s ten percent off or free shipping. Now you’re starting to really approach that whole multichannel communication with customers.
And we’ve made some real strides. We’re sitting at almost half of all commercial mailers in Full Service, so if you’re not in Full Service you need to get on board, because we’re really moving fast. We want to simplify mailings, we want to simplify your ability to give us mail, enter mail into our system. You want to do it because of the value it’s going to deliver for you. So Intelligent Mail adds value to mail, and what we’re trying to do is develop that value proposition. So its business intelligence that helps the Postal Service manage their processes more efficiently and that same business intelligence allowing mailers to manage their processes in the whole supply chain more efficiently.
The tracking data that we collect through IMb is only going to become more powerful in the future. It’s at the heart of the smart network that we’re creating. It’s also an important part of creating new offerings that can improve the way that mail integrates with digital communication. It’s all about creating a very smart, efficient network that can sustain the mailing industry in American commerce for decades to come.
We’re making a lot of changes in our network, and it’s an important part of our effort to reduce cost, but it’s also about having a very lean, very efficient logistical model to keep mail affordable and support customer needs. Our mail processing operations, delivery operations, retail operations, and our transportation network are all interconnected, and we’re making great progress in each of these areas.
Our mail processing, delivery, and retail operations combine to create the world’s largest and most powerful end-to-end logistical platform. It’s also the world’s most efficient and technologically advanced postal delivery system. It enables us to deliver more than 40 percent of the world’s mail on any given day, and we’ve designed tomorrow’s network to be even more robust. The postal service is creating a much leaner operational model. It’s based on a footprint of roughly 232 mail processing locations. That’s over 200 less facilities than we operate today, and it’s not just about eliminating excess capacity. The efficiency benefits are enormous. Streamline transportation, better use of people and equipment, and more reliable and more predictable workflows. We will achieve annual cost reductions of more than 1.2 billion dollars by this time next year.
In July and August of this year, we began the first phase of consolidating mail processing operations to create our new network. In essence, we moved mail processing operations from 46 smaller facilities into larger facilities, and this process went smoothly and was largely transparent to our customers. This fall we are taking a hiatus. We won’t consolidate mail processing operations during the election mail season, which is currently underway, nor will we consolidate facilities during the holiday mailing season. When we resume consolidating activities in February and March, we will consolidate approximately 90 facilities, and we will continue to work closely with our customers so that there are no surprises.
As our network becomes more streamlined, many of our customers will also reap benefits from more efficient transportation and logistics. We’ve designed our network to be more flexible and efficient to better match future mail volume. We’ve put the revised service standards in place this summer, and we’ve seen very little impact in terms of the way our customers and businesses in the mailing industry are using the mail. And that’s a testament to the education and dialogue that is ongoing. Our strong working relationship with the PCC’s ensures we are constantly sharing ideas and information. We welcome hearing from customers about our operational plans. We listen and we do react. Communication is incredibly valuable for us. It enables us to improve the way we serve our customers and adapt to an ever-changing marketplace. We are committed to creating a highly efficient delivery platform that will last for decades, and we are going to do it while maintaining consistent reliable service. It’s a commitment we affirm constantly. We’re well on our way toward a much more powerful and efficient delivery network. We’re shaping the future of the Postal Service and the mailing industry it serves.
In the past year, the Postal Service advanced a major business plan to return to long-term financial stability. We’re moving forward with parts of the plan that we can control. Securing comprehensive legislation allows us to implement the rest of this plan. The plan will maintain the long-term affordability of mail and allow for major investment in the future, and there’s nothing that will have a bigger impact on the health and future of the mailing industry than resolving the legislative issues. This industry needs to focus on the future. We have great opportunities in front of us, and that’s where our focus needs to be. By working closely together, we can shape a strong future based on growth and leveraging new technologies.
Let me conclude by thanking you for being a PCC member and for being a customer of the Postal Service. The PCC network is incredibly important. Your engagement helps keep this industry moving forward. We talk a lot about how important it is for the mailing industry to speak with one voice. You can help to amplify that voice by taking what you’ve learned today and start a discussion back at your company. We need strong advocates in our industry. I hope you have a great PCC day, and thanks for all that you do to help keep the mailing industry vibrant, creative, and competitive. We look forward to working with you all throughout this year. Thanks for joining us and have a great day.
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