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Each issue of CMO Close-up features an interview with a CMO, as well as other marketing executives answering that issue's "Big Question."
This week's feature:
Close-up with Laura Howard, CMO, ECI Telecom
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Postal Service loses $677 million in May as volume declines
Christopher Hosford
Story posted: June 26, 2009 - 1:10 pm EDT
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Washington, D.C.—Reflecting the continuing shrinkage of direct mail marketing and the changing communication habits of the American public, the U.S. Postal Service reported a net loss of $677 million for May, bringing to $3.4 billion its total losses in the current fiscal year.
In addition, the USPS reported it processed 2.8 billion fewer pieces of mail in May, compared with the same month in 2008.
The USPS is on track to lose about $6 billion in its fiscal year, which ends Sept. 30.
To help stem the tide of losses, the USPS has launched a “summer sale” on postage for any increase in bulk Standard Mail volume, a form of seasonal pricing that the direct marketing industry has long requested. Mailers are being offered discounts of 20% to 30% through Sept. 15 for mail volume in excess of their past mailings.
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25 Comments
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Mike B
July 10, 2009 03:10 pm
First, I agree that the Post Office isn't going away in my life time. But then again I am older. However, the irony of this story is almost priceless. Can a government entity go bankrupt and be bailed out by the government? And we want the government to run the auto, banking, Amtrak, and possibly airline industry because?
Secondly, for those trusting souls that honestly think the Post Office will cut back to minimize their losses please think again. Can you name one government program that has been cut back to save money?
Calvin
USPS Mailhandler
July 3, 2009 02:49 am
The United States Postal Service is what it is today because of poor vision by it's Brass that began decades ago. In a trickle down effect the Ineffective leaders have produced an ineffective and unmotivated workforce. I think the worst think that ever happened to the USPS was the belief that we are a "government" entity, because of this those in charge feel as though they are Regal once "Ordained" and Lord over employees instead of strategizing to best serve our customer and get work done most efficiently. Im young (27) , and I've been working for the post office for 5 years and it is by far the worst work environment I have ever seen. The Postal service punishes thinkers and promotes lapdogs. Now for the Silver Lining , I am now back in school to finish up my Bachelors and get a REAL JOB :-)
i wonder why
July 5, 2009 01:23 pm
look for the usps to make any type of improvement the entire fleet that was intact when bush was in office must go. . .. the board of governors, jack potter, the entire corruption of management needs to be replaced. . . .they all must go
J Y
USPS
July 8, 2009 03:20 am
Fred-
That's some pretty good stuff. Its more than all the VP come up with in a year.
I don't know why they don't do tracking. All the infrastructure is in place.
There definitely is a lot of money to be saved on fuel. I don't know if one idea would work everywhere, but some places could save money by fueling delivery vehicles with natural gas and others buy going electric.
I would love to see the numbers on stamp vending machines. They have removed them nationwide, but I can't for the life of me understand why. If you can sell a pack of gum profitably, why not a stamp? If they had stamp machines selling individual stamps, I think they could sell nothing less than a book of 10 at the window. There really are people with nothing to do and they will wait in line every other day a buy just one stamp.
Cheers!
Mike
The Data Maids
July 8, 2009 07:37 pm
I don't ever see the USPS going away. It is the biggest employer in the US. Restructuring and rethinking their business model is a must. With new and less expensive channels for marketers (email, socail media, etc), commercail mail is becoming a less attractive option.
Shea
July 9, 2009 03:46 pm
These are all great insights and all very true. But who is telling the USPS big cheeses all of this. I know that if you work there you might not want to tell them, no need to stick your neck out, but all these suggestions/gripes are as completely wasted if they are left here.
Perhaps they should be collected and sent via FedEx and UPS to the USPS powers that be. It might get the point across.
Just a thought.
Ellen Sorstokke
Marketing Strategist
June 26, 2009 02:34 pm
There will never be "no need" for USPS — certainly not in my lifetime. But, USPS must rework its business model to fix current and predictable future problems NOW.
USPS needs to continue Saturday delivery. Reducing service is a very bad idea, especially when their competitors will pick up the slack in a heartbeat. Reducing service guarantees reducing business at an ever faster rate. Improving reliability of delivery and lowering cost, especially on commercial mail could keep more direct mailers using USPS. [As a direct mailer, nothing irritates me more than having a wide-open range of potential delivery dates on dated materials!]
As with a great many organizations, especially those with unions [which USPS has], no one planned ahead for downward changes in demand [or if they did, they didn't enforce necessary controls] for normal cycles and the obvious changes in the way people communicate. Both were ignored. The result is top to bottom bloat with no apparent plan for reduction.
Management — any organization's management — must have a way to reduce overhead at will as needed. If that means doing whatever it takes to put union contracts, benefits, pay scales and overall employee numbers more in line with what the business actually needs [it does], get on the stick and get it done! Start carving overhead NOW. Develop, use and enforce new policies. Tie them to the size/needs of the business. The longer USPS waits, the worse the problem will be.
Some of USPS's more ridiculous problems could/should have been fixed a long time ago, starting with the benefits package [which is better than any company I ever worked for], the number of employees, etc. If usage is down, USPS doesn't need as many people to make it run [or shouldn't]. If current and planned automation that are supposed to reduce the number of humans needed [by reducing waste] actually work, then start reducing staff. If it doesn't work as planned, fix it. Either way, they need fewer bodies.
If they want to keep the expensive "old guard" on until they naturally retire [attrition], then newer employees need to be gone until the old guard actually leaves. This is a long term expensive way to do it. Big businesses usually try to get rid of their excess expensive people, usually by retiring them or paying them to leave [buying them out]. This is a shorter term expensive way to do it. Either way, the days of cradle to grave employment in any one job are [and should be] over forever — especially since retirement age really ought to be closer to 75 than 65 and I don't know many 75 year olds who are as physically able to do USPS's kinds of work as a person half that age.
Can USPS declare Chapter 11 bankruptcy to force change? I don't know, but they may need it — and the unions can't be allowed to come away with sweetheart deals or USPS will be right back in its current mess [or worse] in nothing flat.
Like I said, fix the problems.
Ellen Sorstokke
Marketing Strategist
June 26, 2009 02:34 pm
There will never be "no need" for USPS — certainly not in my lifetime. But, USPS must rework its business model to fix current and predictable future problems NOW.
USPS needs to continue Saturday delivery. Reducing service is a very bad idea, especially when their competitors will pick up the slack in a heartbeat. Reducing service guarantees reducing business at an ever faster rate. Improving reliability of delivery and lowering cost, especially on commercial mail could keep more direct mailers using USPS. [As a direct mailer, nothing irritates me more than having a wide-open range of potential delivery dates on dated materials!]
As with a great many organizations, especially those with unions [which USPS has], no one planned ahead for downward changes in demand [or if they did, they didn't enforce necessary controls] for normal cycles and the obvious changes in the way people communicate. Both were ignored. The result is top to bottom bloat with no apparent plan for reduction.
Management — any organization's management — must have a way to reduce overhead at will as needed. If that means doing whatever it takes to put union contracts, benefits, pay scales and overall employee numbers more in line with what the business actually needs [it does], get on the stick and get it done! Start carving overhead NOW. Develop, use and enforce new policies. Tie them to the size/needs of the business. The longer USPS waits, the worse the problem will be.
Some of USPS's more ridiculous problems could/should have been fixed a long time ago, starting with the benefits package [which is better than any company I ever worked for], the number of employees, etc. If usage is down, USPS doesn't need as many people to make it run [or shouldn't]. If current and planned automation that are supposed to reduce the number of humans needed [by reducing waste] actually work, then start reducing staff. If it doesn't work as planned, fix it. Either way, they need fewer bodies.
If they want to keep the expensive "old guard" on until they naturally retire [attrition], then newer employees need to be gone until the old guard actually leaves. This is a long term expensive way to do it. Big businesses usually try to get rid of their excess expensive people, usually by retiring them or paying them to leave [buying them out]. This is a shorter term expensive way to do it. Either way, the days of cradle to grave employment in any one job are [and should be] over forever — especially since retirement age really ought to be closer to 75 than 65 and I don't know many 75 year olds who are as physically able to do USPS's kinds of work as a person half that age.
Can USPS declare Chapter 11 bankruptcy to force change? I don't know, but they may need it — and the unions can't be allowed to come away with sweetheart deals or USPS will be right back in its current mess [or worse] in nothing flat.
Like I said, fix the problems.
Pat
June 26, 2009 02:36 pm
When we are getting mail returned to us on June 22, 2009 that was originally mailed on September 4, 2008, stating "forwarding time expired" it is no wonder USPS is losing money! I'm starting to wonder what exactly they are doing over there. My trust in the service of the USPS has gone from 100% to 5%
Pat
June 26, 2009 02:36 pm
When we are getting mail returned to us on June 22, 2009 that was originally mailed on September 4, 2008, stating "forwarding time expired" it is no wonder USPS is losing money! I'm starting to wonder what exactly they are doing over there. My trust in the service of the USPS has gone from 100% to 5%
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