Just Not on Weekends

March 9, 2010 – 11:42 am by Al DiGuido

You know that slogan that has hung in USPS offices and depots around our country: “Neither rain nor sleet, nor gloom of night, nor hail shall keep the postman from their appointed rounds.” Well, it seems to be headed for the scrap heap.

Just this past week, the Postmaster General, John Potter, reported to a Washington meeting of congressional staffers a bevy of bad news. Seems that unless the congress acts quickly… the USPS is estimating that they will lose $238 billion dollars over the next 10 years. Yes, BILLIONS of dollars in LOSSES in the coming decade.

What is going on here?

Potter claims that in just the past year, the USPS has seen a drop in its signature product; first class mail down 26 billion pieces and, as such, that the agency has lost $3.8 billion during that period. The forecast is, according to the Postal Service, that the decline in first class mail volume will only grow steeper in the coming years. The agency finally admits that is it “unlikely” that mail volume will “ever” return to pre-recession levels. Potter does believe that he can turn things around with the help of lawmakers… who basically will allow him to change the game in terms of customer service and delivery. This includes an end to Saturday delivery… more layoffs … more postal office closings around the country, etc.

If there is any humor in all of this… it is the fact that the Postmaster General enlisted the help of Boston Consulting Group and McKinsey, spending $4.8 million for research to create “50 options” for turning the dire conditions at the Postal Service around. I don’t delight in the fact that taxpayer money is being used to overanalyze the current market conditions. Once again, there are groups of individuals in our economy that continue to act as if the digital age is a passing fancy, and govern as if there has not been a fundamental and irreversible shift in human communications. As much as some of us want to opine and reminisce about the nostalgia of yesteryear…the I ongoing belief system that communications of all kind, whether interpersonal or commercial ,will revert back to the 1980’s is foolhardy at best….dangerous in the most extreme.

The fundamental problem with the US postal service is that people just like you and I are joined with the majority of consumers who are paying most of our bills online. I can’t remember the last time I put a 42 cent stamp on an envelope and paid a bill. Technology has devastated the core of first class mail which has always been bill presentment and payment. The ease and security built into linking your checking account with online bill pay is not debatable. It is fact. If anyone believes that the generations to come are going to return to the old method of paying bills….it’s just not factually accurate. I know… I know… there will always be people who will challenge this view by saying “not everyone” uses an EZ Pass when paying bridge and tunnel tolls. Not everyone who smokes dies of cancer. Not everyone that eats too many calories gets fat, etc. However, I would believe that my friends over at Boston Consulting and McKinsey wouldn’t need to spend a lot of consulting time proving out that this trend away from print and postage is only gaining steam as we move forward into this decade.

The fact is, email and social media have had a profound impact on the postal service. Think about the number of emails that you send to friends and colleagues during the average day. It’s incredible. All of that traffic on Twitter and Facebook and other locations on the blogosphere that used to be postcards, greeting cards and letters from home that carried postage. Just think of the fortune it would cost you today to put a stamp on every communication you have with a friend, colleague and family member. ALL of those communications used to go thru the postal service. Now… communication is real-time…. 24/7 and accountable. No need to wonder whether the recipient received the message. Everything in the interactive age is instantly trackable.

Marketers are getting it as well. As costs of print and postage rise… and the data that documents the acceptance and preference for digital versions of catalogs and direct mail pieces mounts…a perfect storm has been created. In a challenging economy, and with tightening margins, marketers continue to work on innovative and cost efficient means to acquire, retain and build the lifetime value of their customers. With each passing year… their target customer becomes more of an interactive consumer. Yes, there are still folks who prefer printed catalogs and direct mail pieces. However these print vehicles delivered by the postal service are no longer the primary commerce connection. Direct marketers can simply not afford to continue to spend the money they do as their audience shifts away from this medium. Sending more into the postal service mail box has not proven to be cost-effective. Rising costs on postage and printing versus shrinking margins and a highly competitive marketplace mean cost cutting and more efficient media mix is in order…. now.

Sadly, I cannot offer any real solutions to the Postmaster General and the USPS. I believe that the best that they can do is right size their organization for the market reality. The discussions around closing down post office real estate around the country can do much to lower costs. Shifting the post office facility inside of supermarkets and other retail chains makes a lot of sense. Anything that can be done to make the services…more “self serve” would be a step in the right direction. I would accelerate those moves to save as much cost as can be. Arming more businesses with their own postal meters and machines makes a lot of sense. And while it might seem like heresy… I believe that with all of that cost cutting, the USPS needs to bring down the cost of first class postage as an incentive for a new breed of communicators to explore new ways to leverage this service in new ways. The USPS needs to join forces with the DMA to promote case studies on the power of postal delivery.

Do I think that any of this will work for the long term? I don’t. I believe that the paradigm shift in human communications that we are living in…is profound and irreversible. Yes… there will always be outliers to changes in behavior… but as marketers and business people, we need to store our Pollyanna memories of days gone by in the closet and confront the new reality. We need to lean in on the interactive tools that will allow us to build the businesses of the future in new and exciting ways. Instead of denying and bailing out… we need to go back to work in creating and innovating new ways for displaced employees and business models to remake themselves in the new world.

The end of Saturday delivery is only the beginning. It’s time that those in denial woke up… and started confronting the real issues of life after the postal service.

Al D