Last week I participated in my first Federal Government Town Hall. I prepared a speech, officially started it like I learned in grade school… “Honourable Members of Parliament, members of the public…” and shared my two cents’ worth about the future of Canada Post. For the record, my entire business depends upon it; similarly, my staff, vendors, competitors and about 800,000 workers in Canada, according to NAMMU, are directly related to mail creation and delivery. This includes graphic designers and printers, IT professionals, data miners, financial companies and marketing strategists, to name just a few.
Backing up a step, you may remember that during the last federal election, the Liberals promised to stop the 5-point Action Plan that Canada Post had begun. The sticking point was the CMBs (Community Mail Boxes). Much political hay was made by all sides about the importance of Canadians having a say in how their mail is delivered. The elderly, the young digital natives and the parcel lovers who buy online all had to be given their chance to share their opinion. The Liberals won, the Action Plan was put on hold, Canada Post was told to wait for marching orders as a year-long Task Force would consult with Canadians about what they saw as the future of postal service.
To further complicate the landscape, the collective agreement for CUPW ran out during this time and we don’t have a contract with the good people who work for “our” Corporation; a possible disruption in mail processing is hanging over our heads. Oh, and did you notice that Parliament is not in session, so federal decisions are a bit slow at the moment?
Now back to the Task Force on the Future of Canada Post. They have a website and a Facebook page and they are asking Canadians to weigh in. The Town Hall in Newmarket was attended by two or three business representatives, a few dozen citizens and an equal number of unionized Canada Post employees. The usual issues were raised: slippery, icy, CMB’s, the dislike of advertising mail, the elderly having to walk to get their mail and the closing of post office locations.
I left feeling unsettled and it struck me that the Task Force was largely focusing on collecting the opinions of the “recipients of mail”, voting members of the public. It’s asking the shareholders, Canadians who own the Crown Corporation, about the future and present service instead of the real customers. And that is completely the wrong approach.
Canadians may “own” the Crown Corporation but we are not its clients.
We don’t pay for it. We don’t subsidize it with our taxes and we are not really its customer. If not us, then who is? The customers are the ones who pay to buy the service. Customers pay $6.3 billion to use the postal system and “customer-focused”, should be the mantra of all good business owners. So I’m suggesting that the Task Force should be asking our best customers about what they need in the future. Without their buy-in, there may not be a future. But who are those customers?
95% of all revenue comes from business, not individuals
In other words, citizens don’t pay for delivery to our homes; businesses pick up the tab and they should have the biggest say in what the future holds. I checked the Canada Post annual reports for the last few years to confirm my thoughts on this.
In 2015, 50% of the $6.3 billion in revenue came from bills and statements — our banks, telco’s, insurance companies, credit card companies, and charities (tax receipts) are the biggest customers of “our” Corporation. They know what their customers require for satisfaction and what they can afford to spend to reach them via mail. And it is an ever-changing mix of paper mail and digital statements. In fact, Ryerson professor Joanne McNeish found that 90% of Canadians prefer paper bills. My takeaway was that business statements and bills pay for 50% of all the revenue at Canada Post… likely because we’ve told businesses we want paper copies.
The next biggest source of revenue for “our” Corporation is parcels. 26% of revenue in 2015 was from parcels and it is the fastest-growing area, thanks to our love of having things we buy delivered to us instead of visiting stores. Our economy is barely growing, but parcel volume grew nearly 10% last year. This revenue is helping to replace lost bills and statement revenue. The Task Force Powerpoint showed a very deceiving graph illustrating number of items in each category of mail. It made parcels seem irrelevant. Parcels, by volume is small but by revenue it’s a quarter of all sources. That’s because each parcel ships for $10-15 or so and a stamp is $0.85
Advertisers are a great customer of our Corporation
Finally, 19% of revenue comes from advertising mail. Promoting dentists, home improvement businesses, real estate (the biggest driver of the Canadian economy, now that oil is stagnant), pizza, retail outlets, charity fundraising and myriad ventures that employee Canadians, is a key part of the revenue model for our postal business. Would it be too much to give advertising mail a bit of quiet gratitude instead of the usual “junk mail” disdain. They are a great customer of “our” Corporation after all.
Advertisers represent 19% of the revenue for Canada Post
In advertisers we have an important customer that is worth 19% of our revenue. We should pay attention to how their present and future needs will affect the bottom line of our business and be grateful and welcoming to their revenue source. For the record, some of the best innovation in the mail is in this sector of the business. Better targeting, data from mapping and demographics and more efficient and predictable delivery means this is a highly valuable revenue stream that advertisers prize for its effectiveness and measurable results.
It is frustrating to hear people grumble about promotions in their mailbox. They don’t appreciate that it pays for a fifth of the postal system and builds the economy around them, where they, their friends and family work for these promoted businesses. What would a stamp for a Christmas card cost without bills and statements, parcels and promotional mail? It’s hard to imagine.
We want our Corporation to make money and operate without subsidy
A quick aside about the contentious issue of the profitability of Canada Post. Since it is “our” Corporation, we certainly want it to make money and operate without subsidy. It provided billions in profits to us and over 50,000 jobs over the past few decades and struggled recently with a weak economy, employee benefit obligations and the encroachment of digital mail delivery. But this year they posted a $63 million profit on $6.3 billion in revenue, or 1 percent. That’s not sustainable. It sounds like big numbers, but it is the equivalent of a $600,000 retail business making $6,000 profit after a year of hard selling. No business owner is going to keep doing that for long.
My suggestion to the Task Force is to put the customer first
My suggestion to the Task Force on the Future of Canada Post is to put the customer first and the citizen-shareholder second. My prediction is that the satisfaction of the first party will lead to the satisfaction of the second party. The tail should not wag the dog.
Currently, the business customers are not very happy. Unresolved contract negotiations and an unsettled future of dependable daily delivery make them hesitant to invest and rightly curious about other options. Opportunity knocks for digital options, Fedex, UPS and even other countries’ postal systems as they line up, daily, to steal our customers while we sit undecided.
The competition is not wasting much time asking homeowners (the recipients) how they want their parcels delivered. They are responding to the party that pays the bills and their expressed need for dependable, affordable delivery. And while the Task Force consults the wrong people, whoosh…You can almost hear the the flow of revenue slipping away from “our” Corporation. That’s a disheartening way to watch our investment erode. Dear Task Force, Federal Members of Parliament, CUPW and leaders of the Corporation, listen to the major customer — Canadian businesses — hear what they need, profit from it and then let’s get this settled — and fast, please.
Steve Falk is president of Prime Data, a marketing technology firm who regularly writes on issues related to Canada Post, fundraising and marketing.
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