Best practices in postal business development

Fighting for relevancy…

Notes on this presentation This presentation was prepared by Bryan Cassady

for a speech at the Triangle Mail conference. At this time he was managing Postal-Solutions. A consulting company focused on business development in the Postal Sector. Bryan Cassady is now the managing director of Fast Bridge Consulting

He has done long term projects for the following postal services. ▫ The Belgian Post▫ The US Post▫ Canada Post▫ TPG (The Dutch Post)▫ The Royal Mail (UK Post)

As has done short-term projects with 14 other national postal services

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The good news

•USPS vs. top US companies•The Forbes 100 1917 to 1987

▫ 61 Dead▫ 21 survived but fell off the

list▫ 18 still part of the top 100▫ 2 outperformed the market

GE 7.8 % CGAR Kodak: 7.6% CGAR

•USPS during the same period▫ 1917: 290 million▫ 1987: 29.6 billionCGAR: 6.7%

That’s not bad !

CompanyGeneral Electric 7.8Eastman Kodak 7.7Dupont 6.9Exxon 6.9General Motors 6.9Ford Motors 6.9Sears 6.9USPS 6.7Procter & Gamble 6.7Amoco 6.5Westinghouse Electric 6Chevron 5.9Mobil 4.8Texaco 4.7Pacific Gas & Electric 4.2Citibank 3.9Southern California Edison 3.3AT&T 2.8USX 2.1

21 companies growth < 2.1%61 companies out of business

Growth Rates: 1917 - 1987

The perils of good managementGood management is the most powerful reason [these firms] failed to stay atop their industries…

[because] … they carefully studied market trends and systematically allocated capital to innovations that promised the best returns they lost their positions of leadership… Clayton ChristensenThe Innovators Dilemma

They were too risk adverse.. They didn’t make a new future for themselves I believe the Posts need to find a new future

Back to the Postal worldA decline in volume/share growth rates

•USPS Growth rates

100%

120%

140%

160%

180%

200%

220%

1975$4.1B

1980$7.6B

1985$15.6B

1990$23.4B

1995$32.9B

2000$44.6B

2005 est.$52.5 B

Estimated

Direct and Advertising spending 1975-2005 (est)

YearDirect

Mail Mil $5 Year Growth

Trend

Total Advert. Mil. $

Direct Mail

Share1975 4,124 149% 27,900 14.8%1980 7,596 184% 53,730 14.1%1985 15,550 205% 94,900 16.4%1990 23,370 150% 129,590 18.0%1995 32,866 141% 162,930 20.2%2000 44,591 136% 247,472 18.0%2005 52,500 118% 261,500 20.1%

Sources: DMA factbook 2003, WARC (note Total ad spending different than DMA estimates !)

Relevancy is a real issueFor Consumers And Advertisers (Response rates)

• In a 1982 Gallup poll consumers were asked: "what is the event you most look forward to your daily life?"63% said getting and reading the daily mail.

• Today 39% of consumers believe their next bundle of mail will have no value• People not opening advertising mail has doubled since 1987 (18% 2003 vs. 9% in 1987)• Mail volumes continue to increase and the percentage of interesting mail continues to fall. This has led to dramatic

declines in response rates in many categories

Average Credit Card MailingResponse rates by year

Sources: DMA factbook 2003

Doing what you do well better.. will not be enough• At the turn of the century, streets were lighted with gas lamps,

when electricity came they innovated… cut costs by up to 50%, but they died anyways !

• We’re moving from a world where uncertainty can be managed to a world of ambiguity▫ Uncertainty: Is about predicting and planning/ Expected

returns/ forecasting. Eg. how can we manage expected labor cost increases and reduce headcounts

▫ Ambiguity: Who will be using mail in 10 years and why, will we still be delivering it, who really cares except for us

Uncertainty AmbiguityYou know something We don’t know enoughBut not everything to know if we are even Change can be managed asking the right questions !

The world is moving quicker

“If you don’t like change you are going to like irrelevance even less”Eric Shinseki (US Army)

What are best practices ?•A focus on direct mail (where companies

have a choice)•My Criteria: delivering relevancy

▫Services companies are excited about and willing to pay for

▫Ideas / services that make the media more relevant

•Today▫3 examples of best practices▫3 challenges to deliver relevancy▫What will be best practices in the future

Selling Direct Mail: Royal Mail• The issue

▫Direct mail was growing, but not keepingpace with other media

▫Lack of support for the media• The Solution

▫Taking responsibility for promoting direct mail

▫Creation of the Media Marketing Division Advertising to change consumer

and advertiser perceptions. A new media centre was set up to

promote and sell direct mail Regular training and industry events Other investment in the growth of

DM

media growth

mail growth

Ireland 165% 116%Spain 139% 104%Italy 153% 116%Belgium 143% 111%Switzerland 132% 104%France 126% 103%Netherlands 128% 107%Norway 120% 101%Austria 146% 126%Portugal 176% 153%Germany 124% 110%Finland 128% 116%Sweden 132% 124%Denmark 103% 103%Great Britain 126% 138%Average 136% 116%

Growth Rates: 1999 – 2004(Estimates)

Working with customers: Tagespost Germany

• The issue as expressed by customers▫ We can’t afford to do as much direct mail▫ Rates too high▫ We need better ways to target consumers

• Talking together they found▫ The groups that advertisers need to reach

are the people that are receiving mail already. (Mail active consumers)

• Tagespost▫ A new system reaching consumers already

receiving mail Lowest price 50€/1000 vs. 80€ thousand

▫ Better mail out results▫ Savings for Deutsche Post

Identified by leading direct mailers as the best way to attract new clients after member gets member activities

Costs

Response Rates

Profitability

Starting where clients startUK, Denmark, Australia

• What is the first question advertisers ask when deciding how many mailings they will send

How many addresses do we have ?

• The Solution: ▫ Asking consumers what mail they want

and don’t want for hundreds of advertisers at the same time.

• Results:▫ Mailing response rates up 40-400%▫ Consumer/ advertiser approval ratings

over 90%▫ Each address collected generating +/-

30-40 more mailings per yearFor perspective, in the UK this represents

Over 100 million extra mail pieces/year

United Kingdom

3 challenges for the future

Test Layout 13

Challenge 1: Investing in Relevancy•What is in the mail now ?

▫ Personal letters are becoming a thing of the past

▫ We’re left with bills and advertising mail

•Where is the value???I recently met a man on a plane. He set up internet billings, and then stopped his mail deliveries while he was in Europe. He didn’t miss it… and never went to get his mail. After 6 months his Post Office called and said he needed to pick it up.His reply : “ You can keep it”

How can you make the mail relevant to him ?

The solution is content management…•Content management is not about taking

the “junk out of direct mail.” If you only take out the junk, there will just be less junk

•Content management is about: Adding content that consumers will find interesting Increasing the percentage of mail relevant to consumer

interests Changing consumer experiences with the mail

Challenge 2: Getting ready for real change•Postal operators around the world are

operations driven•Huge progress has been made taking

inefficiency out of mail deliveries•However, the basics of the business haven’t

changed in years

Beware of the tyranny of making Small Changes to Small Things. Rather, make Big Changes to Big Things.” • Roger Enrico, former Chairman,

PepsiCo

Challenge 3: Making room for change…Some food for thought…

Ninety percent of what we call ‘management’ consists of making it difficult for people to get things done.” – Peter Drucker

“The Bottleneck is at the Top of the Bottle”“Where are you likely to find people with the least diversity of experience, the largest investment in the past, and the greatest reverence for industry dogma? At the top!” Gary Hamel/“Strategy or Revolution”/Harvard Business Review

Words for the future

The Past The FuturePlanning Doing

Investing in operations Investing in relevancyIncrementalism Big Ideas

Merging (Big is good) Spinning offPower Point Let’s Talk

5 Years plans 5 Week plansTop down Bottom up

▫Taking action▫Accepting failure is sometimes the price of

success▫Developing and selling real benefits▫Doing things that really matter to your

customers and consumers

Final words of Wisdom… Alan Leighton: (Royal Mail) If it is not good for consumers or customers you shouldn’t be doing it

That’s good advice…

The future is about relevancy …

Who is Fast Bridge

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1. Business start-ups 2. International expansion 3. And go to market for established companies

Over 200 independent consultants in 16 countries… helping companies move faster in 3 areas:

Who is Fast Bridge …

Introduction

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1. We work with more senior consultants2. A stronger focus on business execution3. Better value for money: 80% of fees go directly to consultants4. We are willing to link our payments directly to a client’s

business results

The bottom line: more results for your money

How we are different …

Introduction

Test Layout 23

Tools and solutions to fit your company, not your company fitting our solutions…

We measure our success by the results we help you achieve…

A simple philosophy…

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Getting started…

We believe in Tools and solutions to fit your company, not your company fitting our solutions…

With every client we follow a 4 step process

1. A discussion of objectives2. Clarification of objectives (do we understand what you

need)3. A formal proposal (Targets, Timings, Responsibilities,

Metrics)4. Building a team (internal and external to make it happen)

Who to contact ?Fast Bridge is a network of Academics, Entrepreneurs, and Business experts focused on helping companies move faster and reduce risks.

Based on partnerships with leading international companies we are able to offer the world class innovation solutions. With our local network of over 200 freelance consultants we offer go to market expertise in almost any industry.

Contact: Bryan Cassady Bryan@fast-bridge.com / +32 475-860-757

More information… More information is available on our site www.fast-bridge.com

Postal Presentations(Postal-Solutions)

▫ 7 keys to building mail profitable mail volumeshttps://dl.dropbox.com/u/704747/Brazil%20Post/7%20keys%20to%20building%20profitable%20mail%20volumes.ppt

▫ “Quality of Service & Opportunities for improvement across Europe▫ https://dl.dropbox.com/u/704747/Brazil%20Post/Postal_solutions_gettingtoyes.ppt▫ Working together to improve efficiency and success▫ https://dl.dropbox.com/u/704747/Brazil%20Post/QualityofserviceM_Ms.ppt

Some more thoughts on how we look at business innovation are available in these presentations

▫ The 7 myths of business innovationhttp://www.slideboom.com/presentations/716245/7-Myths-of-Business-Innovation

▫ The Fast Bridge Innovation Audithttp://www.slideboom.com/presentations/716238/Fast-Bridge-Innovation-Audit

Bryan Cassady’s CV is available at this linkhttps://www.dropbox.com/s/j5xf5urkqzeofxw/7_9_2012_Bryan%20Cassady%20CV.pdf

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