Increasing the value of mail – Postmaster General at National Postal Forum

As it continues to redesign internal activities to meet its four business strategies, the Postal Service also will focus on perfecting its core function of delivering — to make sure the value that businesses get from using the mail is strengthened and improved, PMG Pat Donahoe vowed yesterday at the National Postal Forum (NPF).

“Our goal is to focus on what we do best: delivering — to help you grow your business,” said Donahoe, speaking to mailing industry representatives attending the opening session of NPF. “This is a focus that is especially important to how we serve this industry. We provide a platform for your commerce. The better the platform, the better we can meet your needs.”

Despite the ever-expanding channels of electronic communications, Donahoe said he believes mail will remain a powerful tool that businesses can use to reach their customers. This is especially true when mail is used in conjunction with other media. USPS will make it easier and more convenient for businesses to work with USPS to simplify how they can use using mail as part of their marketing strategies.

Confident that Americans still value the delivery of printed communications and advertising, the PMG announced USPS later this year will develop a major advertising campaign to support the mail and to work with mailers to strengthen the entire industry.

“You will see a lot from us in the coming year that reflects on this focus,” Donahoe assured customers. “That extends to innovation, the way we approach the marketplace, strengthening our systems and processes, and removing barriers to growth.”

source: USPS News Link – May 3, 2011.

PMG’s prepared remarks for National Postal Forum.:

Good morning! Welcome to the 2011 National Postal Forum!

Thanks for attending the Forum. It’s so great to see everyone. Thanks, too, for your business and your trust.

It means so much to all of us at the Postal Service and it keeps us motivated to do a great job for you each and every day.

I like that video that was playing just a moment ago. I Want My Mail.

That kind of sums up why we are all here: people want their mail. They rely on their mail. They value their mail.

Now that I have been the Postmaster General for the past five months, I find myself thinking more than ever about those 300 million people who come back from the mailbox with mail in their hands.

They’re taking time to interact with physical mail.

It’s a part of their day.

It’s a way of interacting with the world.

It happens constantly and it’s powerful.

The people in this room make it happen.

The Postal Service provides the delivery platform and you drive an incredible exchange of creativity, information, and economic activity.

We have to keep thinking about those people out there who want their mail.

And, to make sure that they get it.

Those of you who know me, you know that I get excited about challenges.

All of us here have a big challenge: and that is to continue to grow this industry.

This morning and over the next several days, we’re going to talk about what the Postal Service is doing to grow this industry and to grow use of the mail.

We’re also going to talk about some of things that you’re doing out there to increase the value of the mail.

Every year I look forward to coming to the National Postal Forum.

I’ve always learned something important. And, I have always benefitted from a good exchange of ideas.

The Forum is important because it enables us in the Postal Service to understand your approach to the marketplace and what your needs of us are.

And when it comes to growing the industry, and creating opportunities for growth, we all have to be on the same side of the equation.

We have to have a shared approach to growing the mailing industry. We also need to speak with one voice, as an industry.

This applies to the way we approach the marketplace, the way we innovate, and the way we address the issues that affect all of us.

We are going to discuss a lot of these topics today and over the next few days. Before we start, let’s take some time for some more thank you’s.

Let me just take a second to thank the Board of the National Postal Forum, and Susan LaChance and her team, for pulling together a great event. They do a great job and this year’s Forum is especially strong.

So thanks to all who helped organize this year’s Forum. Let’s give them a hand.

Plenty of sessions on many topics. Let’s thank the people who worked to put them together and will be conducting them over the next 3 days.

And, our Exhibit hall vendors – tough work on your feet for so many hours. Please stop by and visit.

I would also like to thank and recognize two members of the Postal Regulatory Commission who are here today…Chairman Ruth Goldway, and Vice Chairman Mark Acton. Ruth and Mark….thank you for joining us.

You know, it’s been almost five months to the day since I took over as the Postmaster General.

They say that when a new CEO comes into the job, it changes all of your perspectives and that you spend a lot of time learning the job – even if you thought you knew it pretty well.

That is absolutely true.

And that’s okay because I really like challenges and I like change.

This organization needs to accomplish a lot and we’re really pushing hard. And, we’re already seeing a lot of beneficial impacts. One impact isn’t so great.

They take my picture every year in advance of the Forum and someone couldn’t resist pointing out the difference…from one of my earlier Forum pictures…to now…since becoming the Postmaster General.

And I’ll look forward to next year’s Forum.

The fact is that the past six months have been very hectic and we have been working hard to accomplish a lot of things quickly.

One of the first things we did was set four key business strategies.

If you’ve heard me speak since I became the Postmaster General, you’ve heard me talking about these.

Let me first put them into context. Last March we announced our Comprehensive Strategic Plan.

And we are still working very hard to accomplish what we set out to do with that plan. Namely, Legislative change.

More than half of what we needed to accomplish with that plan though was in the our control and I didn’t feel that we had spelled our internal activities out as clearly as we should, so we set out these four business strategies:

* Strengthening the Business to Consumer Channel
* Improving Customer Experience
* Competing for Package Business
* Continuing to become a Leaner, Faster and Smarter organization

These are incredibly important strategies for the Postal Service.

For us to get back to profitability and thrive as a market-responsive organization, we need to be successful in each of these areas.

In fact, last December, we used these strategies when we reorganized the Postal Service.

We’ve been realigning business groups and functions to execute these strategies.

We also went through a process of streamlining our senior ranks.

We will ultimately reduce our managerial complement by 7,500 people – which will produce an annual savings of approximately 750 million dollars annually.

While this was going on, we were able to conclude an important tentative agreement for the labor contract with the American Postal Workers Union.

If ratified in the coming weeks, this tentative agreement will give us some immediate cost savings, greater flexibility, and some long-term structural change.

I’ve got my fingers crossed that it will be ratified, because it really is a big step forward for the Postal Service, our employees and ultimately for the industry and the American public.

We have made big strides on a number of important growth, efficiency and visibility initiatives as well, and we will be talking about some of those today and tomorrow.

I would like to talk for a moment about where I see the Postal Service heading as an organization, and how it supports the mailing industry.

Since the 1970’s we have been turning away from being a federal agency and all that entails – such as the idea of being the face of the federal government in every community – to being more like a business.

That’s a big transition to make, and it’s a beneficial transition.

In my 36 years in the Postal Service, I’ve seen incredible improvements in every aspect of everything that we do. We are far more efficient than we have ever been, and far more market responsive than we have ever been. But we’re still not even scratching the surface of what the Postal Service can become.

We are evolving as an organization from one that is mostly oriented toward public service, to one that is mostly oriented toward competing for customers.

We’ve been on this journey for a long time. And in today’s world, this is a transition that we have to accelerate. We started a process a while ago to define our core function.

We asked some basic questions: What value does the organization bring to our customers; to the industry; to the communities we serve; to the nation? What is our role in the economy?

The heart of what we do, ultimately, is delivering.

We connect senders and receivers through the physical delivery of mail and packages. This concept – that the core function of the Postal Service is delivering – is powerful.

It’s a concept that has a lot of important implications for our future.

In the past couple of years, there have been calls for the Postal Service to get into banking or selling cellular phones as a way of raising revenue. To be honest, those ideas never made any sense to me.

Our focus has to be on perfecting our core function of delivering. This notion will guide us as a business. It will be a filter for the way we approach the marketplace and the way we support the industry.

Are we still the face of the federal government in every community? Most would say yes. Is that what will make us successful? It don’t think so.

Does having a retail network of 38,000 Post Offices advance our core function of delivering?

We are not really a retail business and in today’s world, there are many other, more convenient—and less costly—ways to provide access to our products and services.

We are excellent at delivering. We have the most efficient network in the world.

We deliver almost 50 percent of the world’s mail and we do it at a lower cost than any comparable post in the world.

And so, as we shape the future of the organization, it starts with our network and the function of delivering.

This is a focus that is especially important to how we serve this industry. We provide a platform for your commerce. The better the platform, the better we can meet your needs.

This is an idea that we are going to be driving through the organization and in the way we interact in the marketplace. I’d like to share a video that I think captures some of what I’m talking about.

Is delivering relevant? Absolutely; and it always will be. If we are relentless in perfecting the way we deliver; If we create products and services that are simple, and secure, and valued; If we engage the marketplace in compelling and personal ways then we can be a powerful engine to grow this industry.

That’s our goal – to focus on what we do best: delivering – to help you grow your business. So that’s where we see the Postal Service heading.

Let’s get a little more specific about how we are actually going to get there.

I said earlier that we have four key business strategies. I’d like to walk you through some of the things we are doing for each of those strategies.

Let’s start with “Strengthening the Business to Consumer Channel.”

This channel is our mainstay. It accounts for almost 70 percent of the revenue of the Postal Service and almost 80 percent of our mail volume.

It’s the core of this industry, and there is no doubt that it will endure.

Even though use of First Class Mail is declining, it won’t decline to zero, not even close.

There will always be a mix of Standard Mail and First Class Mail that businesses use to communicate with the consumer.

The goal of the Postal Service is to make sure that we strengthen and improve the value that businesses get from using the mail.

We know it’s all about the Return on Investment, and we also know we live in a competitive environment and there are marketing options.

We also know that we live on a two–way street. Businesses will gain greater value from their investment in the mail – if consumers value what they receive. We have to work both ends of that exchange.

I think a lot about the ways people are using new technologies to communicate. There are amazing advances happening on-line and they are happening very rapidly.

The fact is that as much as people are getting information digitally; they still value the physical delivery of content; they still spend a lot of time looking at their mail, and they still use mail to make purchasing decisions.

They get ideas from what they receive and they act on what they receive.

The future of mail is likely going to evolve in some interesting ways. But, in its simplest construction, mail is going to be the high-touch complement to the high-tech world.

Will tablet computers create very compelling marketing opportunities? It’s already happening.

Will smart-phones drive location-based offerings and exchanges of information? It’s already happening.

Will people spend less time looking over their catalogues and direct mail offerings? It hasn’t happened so far. And I don’t think it will.

People only have so much time in their day and we are a part of it. Interesting, creative mail gets read and internalized.

Your piece of mail really isn’t competing with a million Web sites, it’s only competing with several other pieces of mail in their mailbox on any given day. That’s an important concept for this industry.

Another idea is that it’s the integrated marketing strategy that will prevail: One that combines traditional print and electronic advertising, digital offerings, and the physical delivery of compelling content.

So, what can the Postal Service do to improve the value that you derive from the mail?

What are the strategies that strengthen the channel? The answer isn’t so complicated.

* The first is simply to promote the mail – we have to do a better job as an industry in demonstrating the value of mail to America’s businesses. Mail is a powerful way for businesses to reach their customers, especially when it’s used with other media. Mail engages customers and it is very effective in influencing buying behavior.
* Next strategy: Making it easier and more convenient to work with us – that means providing simpler tools and products, and lowering the barriers that stand in the way of businesses that could be using mail as part of their marketing strategies. We have to make it easier for businesses to get started.

And, for all of our customers, we have to make it easier to measure return on investment.

That’s what will keep businesses in the mail – because we know it’s a strong comparative return.

There are so many businesses that could start using the mail or use the mail more often if we simply told them about the value of the mail and lowered some of the barriers to implementing their marketing strategies.

Three quarters of America’s businesses are not using the mail as a marketing channel.

That represents a huge opportunity if we make it easier for businesses to get started and stay in the mail, and easier to measure return on investment.

* Improving tracking and visibility within our network – IMB and scanning remain vital initiatives. We are working hard to get those systems where they need to be.
* Innovating. We want our innovation to spur your growth. We want our new product to be your new reason to go visit America’s businesses to get them into the mail or use the mail more often.
* And finally, there’s a long-term industry strategy that we all have to think about, and that relates to creativity. We are seeing very large investments in creativity in the digital space.

The mailing industry has to be just as creative and compelling in the way we use our channel.

The people who make marketing decisions in America’s businesses have to get just as excited about the creativity of a mail piece as they do about a digital offering, or a television or radio advertisement.

Creativity and energy sells, and it’s a way of revitalizing our channel.

Paul Vogel, our Chief Marketing Officer, is going to talk about a number of these strategies tomorrow, but I want to steal a little bit of his thunder to talk about an important commitment we are making about promoting the mail.

We have been very successful in the past year or so with our marketing and advertising for our priority Flat Rate Shipping product.

We have seen revenues grow by almost 150 percent in the category versus two years ago.

We took a disciplined approach to developing that campaign. We let the research guide us and we’ve learned quite a bit.

And now, I’d like to make an announcement.

We are ready to apply the lessons from our package marketing and develop a major advertising campaign to support mail. This is significant for a lot of reasons.

First of all, the Postal Service hasn’t focused on promoting mail through significant advertising in many years. It’s fair to say we haven’t seen a great deal of industry marketing to support the value of mail either.

So, we have a blank slate to work with.

Second, this won’t just be a Postal Service campaign.

We are committed to making this campaign serve two purposes: to generate Postal revenues and to grow the entire mailing industry. We’re going to do something that is a little unusual, but it could be very powerful.

We would like to share some aspects of our advertising campaign as we develop it.

For instance, as we develop the research, we are going to share it.

As we gain certain insights about what business and residential customers respond to, we are going to share it. When we have rough cuts of some of our advertising, we are going to share it.

When I spoke earlier about having the industry speak with one voice, this is an example of that.

If our industry aligns around the same marketing insights about mail, the potential exists to multiply that advertising effect.

And, last year we met with customer groups to collect ideas about innovation. Promoting the mail in a big way was one of the ideas that we heard clearly from you.

What I’m going to show you now is a short conceptual television advertisement that provides an idea of what this campaign might look like.

What you just saw is a rough concept for one of several potential advertisements, and we still have a lot of work to do to test and refine these concepts.

We are committed to launching national television advertising in September.

We would encourage that you take a serious look at what we are doing, and consider whether your marketing goals align with ours, and whether there is a multiplier effect to be gained through your own marketing.

This could be a great opportunity for this industry, and I think it’s a good example of how the Postal Service can provide a platform for a common approach to the marketplace.

Okay, now let’s talk about my favorite subject: a positive customer experience.

One of the most important things we are working on throughout the Postal Service is improving the experience our customers have with us.

I have set out an internal challenge that every customer experience is a positive experience.

We do a lot of things extremely well on a daily basis. Unfortunately, we know that we do not meet that expectation of a positive experience…every time.

Frankly, it’s a growth strategy for us. If we provide a great experience, we are more likely to gain business. That means easier transactions, helpful solutions, and friendly exchanges.It means effective follow-up to customer concerns.

Good experiences with the Postal Service will bring more businesses into use of the mail. It’s an important way for us to grow this industry.

There are two big themes that guide our thinking in providing a positive customer experience: Convenience and simplicity.

Let me start with convenience.

People and businesses want access to our products and our delivery network on-line.

They want to buy stamps or send a package without having to make a special trip to a Post Office. They want a transaction and an interaction that is easy and fits their schedule.

* That’s why we’ve been working with retailers like Office Depot to offer Postal products and services.
* That’s why we’re investing in kiosks in shopping malls and other high traffic areas. It’s a quick stop on a regular shopping trip.
* Our products and services are on-line and we are updating USPS.com to be more convenient and easy to use.
* We are also developing some great apps to help customers find our Post Offices, Kiosks, and Blue Mail Boxes.

The big theme in all of this is that in addition to coming to your door or your mailbox everyday, we want to be where you are so that using mail couldn’t be easier.

Convenience also relates to some of our largest customers. How do we improve our processes to better integrate with yours? How do we make it easier for a major user of the mail to leverage the full value of our network?

We have a lot of our own ideas, but we also asked some of you…

* We are working to simplify the mailing experience so that customers will not have to open separate accounts for each location that they mail from.
* We are modernizing our cost structure. IMB is a part of that and will help us deliver better costing quicker.
* We are striving to improve network visibility.
* We are addressing all of these issues and we know they’re important.

I am trying to knock down our internal barriers so that we are more flexible in the way we accept mail and better able to align our systems to work well with yours.

This is a top priority.

Let me talk for a moment about simplicity.

One of the most important things we are doing from a management perspective is to apply a very simple filter to our decision-making. It’s a straight-forward question: How can we make things simpler?

We are looking at our products and services, our customer interaction, our internal processes and asking: How do we make it simpler?

Consider our flat rate shipping campaign. If it fits, it ships. It couldn’t be simpler for the customer.

It’s one of the most successful products we’ve had.

Making all stamps forever stamps is a great example of a simple concept, a simple product.

We eliminated the standard speech the clerk was required to give whenever a customer came to the desk. We simplified the customer experience in the Post Office. And sped up the line.

Our Every Door Direct Mail product is a good example of making things simpler for the small business.

It basically allows a small business to pick the streets on which they want their mail to be to be delivered, rather than specific addresses.

It’s simpler for the business, and we think it may bring more businesses into the mail.

It certainly creates an opportunity for this industry to visit businesses and present a simple product.

We know that making something simple can be one of the hardest things for an organization to do, but it is what every customer desires and rewards.

We are committed to constantly looking at everything we do and, bit by bit, making working with us simpler for you to do.

Okay, so let me make an announcement.

This is based on your input about simplicity: We are going to make our changes to mail preparation rules and assessments much simpler and more predictable for you.

Beginning next January, we will issue only two major software releases a year.

This will cover the structure of postage statements and electronic documentation.

We have also established a regular schedule of minor software releases and facility profile updates.

Our calendar of releases scheduled for 2012 is now posted on RIBBS, and this gives everyone at least 6 months lead time for major releases.

And now, I’d like to talk about what we are doing to compete for package business.

This is a growth area for the Postal Service. What we’ve done in packages over the past several years is also a model for how we are starting to approach mail. As you have all seen, we have been very effective with our advertising campaign to support priority Flat Rate Shipping.

If It Fits, It Ships. That’s a great slogan and a great concept. It’s also a great marriage of innovation and marketing. That’s where we want to go with mail as well: a great marriage of innovation and marketing.

For packages, the big story is growing the pie for all of us. On-line shopping is a major trend that is only going to grow. People are getting used to the idea of physical delivery as an outcome of an on-line shopping experience. It’s highly complementary.

A great example of where this trend is going is the jump in returns business. People are getting used to the idea of ordering several kinds of apparel, for instance, trying them on, picking one item and sending the rest back.

It’s sort of recreating the dressing room in your own home.

Physical delivery makes that happen, and the on-line experience makes that happen.

If we can make that transaction even simpler and more seamless for the residential customer, you’ll see that trend in orders by mail and returns grow in a big way.

We know we can help speed up some of these package trends by providing better visibility and tracking – and this also provides a better total value in packages.

We’re going to continue to innovate in the package space. I’d like to get some help to tell you about some of the new things we plan to do with our package offerings.

He (the letter carrier who appears in all Postal Service commercials) does a great job of exemplifying the role we want to play in helping businesses: a friendly, helpful resourceful person who makes things simpler.

We just launched our newest flat rate shipping innovation – Prepaid Forever Priority Mail Flat Rate Packaging.

It’s the same concept as our Forever stamps. Buy them now and you can ship at today’s prices forever.

That’s a big step in making the product simpler, and we think that small businesses and residential customers are really going to like it. I suspect as well, that many larger businesses can incorporate this product into some of their offerings as well.

We’ve done well in packages and we expect to continue to grow this part of the market.

Our fourth key business strategy is to continue to get leaner, faster and smarter as an organization.

In the past four years we have reduced the size of our work force by almost 130,000 people.

We did this while keeping our service performance standards at consistently high levels.

We are aggressively consolidating our network, reducing our footprint and extracting efficiencies out of every aspect of our business. We are committed to pushing as hard as we possibly can to control costs without sacrificing service.

We know that our ability to get back to profitability and to keep our prices low depends upon getting the absolute maximum out of the resources we have.

I spoke earlier about making things simpler. That goes for our own processes.

We are reducing rules and rethinking every aspect of what we do. That will translate into a more nimble and responsive organization.

And here’s another announcement.

I am pleased to announce that we have simplified the full service requirements for drop-shipments and customer supplier agreements. As part of this, we are going to use container scans to confirm the shipments your mail is arriving on to start the clock.

We are also working to give you better information regarding your Full Service mailings.

In January will provide you with increased visibility about your Full Service mailings.

We will give you better reports and better data. We’ll collect information on mail and containers as they flow through the system.

This will provide you with better information and more robust tools, and, enable better decision-making. Greater visibility in our network provides greater value throughout the mail channel.

As our systems get smarter, you can get smarter about the way you use the mail.

Megan Brennan, our Chief Operating Officer, and Ellis Burgoyne, new Chief Information Officer, are working hard on these initiatives and will fill you in tomorrow.

So let’s wrap up.

When I pull these four business strategies together, they create a platform for growth.

That’s growth for the Postal Service and, more importantly, that’s growth for the mailing industry.

We are trying to spur your growth. We want to give you compelling reasons to grow your business through the use of the mail. We want you to talk about using the mail in new ways.

We want you to talk about a channel that is vital and engaging in ways that other channels can’t match.

This industry has a great story to tell, and a great product to sell to America’s businesses.

We are going to start promoting mail this fall for the first time in a longtime, and we want you to go-to-market based on the insights we share. We can have a big effect if we do this together.

I spoke about sharpening the focus of the Postal Service on our core function of delivering.

You will see a lot from us in the coming year that reflects this focus.

That extends to innovation, the way we approach the marketplace, strengthening our systems and processes, and removing barriers to growth.

Our role is to deliver what you create. And, as an industry, we need to challenge ourselves to bring more creativity and energy into the mail.

So let’s get creative and energized over the next few days and get the industry growing again!

I’m excited about this industry, and I’m looking forward to working with you to shape our future and create opportunities for our long-term growth.

Thank you.