New Canada Post Vision Must Find Right Balance

Earlier this year, the federal government put forth some admirable concepts around Canada Post:

  • A new vision focused on serving Canadians;
  • Concrete actions in five areas that provide a new foundation for renewal; and
  • Priorities for implementing renewal.

The government review identified various areas of opportunity and has asked Canada Post to undertake the following measures:

  • Consider the applicability in Canada of best practices and successful innovations in other countries, particularly various models of alternate day delivery;
  • Examine options for innovative parcel delivery models, including expanded use of parcel lockers and weekend delivery; and
  • Explore partnership opportunities with other federal departments and agencies, other jurisdictions and communities to improve public services to Canadians, especially in rural and remote areas by leveraging Canada Post’s extensive retail network and presence across Canada.

This new vision is that of a renewed Canada Post that will provide high-quality service at a reasonable price to Canadians, no matter where they live.

Canada Post’s leadership and its employees will work in partnership to adapt, meet challenges and take advantage of opportunities created by, among other things, new technologies and the evolving expectations of its customers and the communities it serves.

What fundamental value does Canada Post offer?

Before we can conclude whether the proposed measures will achieve the new vision, let’s take a look at the fundamental value that Canada Post offers.

Canada Post allows a mailer to send a communication across the country for a standard price. In today’s world, the cost-benefit of this is unparalleled. Yes, you can e-mail or send a social media message, but this will be received in a cluster of other messages. A written letter is often times more trusted and perceived as being more valuable than electronic media. I still make a point of hand-writing letters or notes for what I think are important situations, as I believe they carry more weight.

However, the world is changing and communication through mail is in decline at the hands of electronic communications. It is no secret that social media and e-mail are growing at a steady pace. Despite the hurdles and setbacks surrounding these channels, they will continue to grow.

According to my clients, the driving factors for electronic communications are cost and, to a lesser degree, expediency. A campaign’s format, creative and strategy can certainly make a difference, but at the end of the day, clients tell me that the outlay for an e-mail or social media campaign versus a physical mail campaign are night and day: particularly when the cost of printing is considered.

(Interestingly, purveyors of social media marketing have told me “it’s free” while charging me $1,000/month for their services but I digress).

My point is that while the return on investment (ROI) of mail remains valid, the price of admission to mail is quite high compared to electronic channels and it continues to grow every year.

Balancing voices

There are many voices to be considered in developing policy for Canada Post, most notably businesses, employees and individual Canadians who rely on postal services for many of their communications needs. Finding the balance among these voices is not an easy task.

While much has been written about the perspectives of other parties, I would like to focus on the voice of business.

Why is the voice of business so important? Every astute company puts the needs of its customers at the centre of any decision.

Through many decades, the primary customers of Canada Post were individual Canadians. But over time, this has shifted significantly. Today, businesses are critically important customers of Canada Post. It is business customers that are sustaining Canada Post through the costs of major mail campaigns, legislated mail communications and courier charges. And this is increasingly so under a mandate that Canada Post become self-sustaining.

In 2013 Canada Post contracted with the Conference Board of Canada to prepare a report and plan for the future of Canada Post. The Conference Board examined trends and costs and developed a “Five-Point Action Plan”.

The intent of the Five-Point Action Plan was to reduce costs that would allow Canada Post to become financially self-sustaining. Overall, the Plan targeted $700 to $900 million in savings by 2023.

The five points identified in the plan were:

  1. Convert five million urban Canadian households to less costly community mailboxes.
  2. Introduce tiered pricing for stamps and postage of mail pieces.
  3. Strengthen the retail network by opening more franchise postal outlets that cost less to operate.
  4. Streamline operations to leverage investments in automation.
  5. Address the cost of labour through attrition and collective bargaining.

In 2016, subsequent to the last postal labour dispute, I was privileged to have the opportunity to participate, as part of a delegation from the Canadian Marketing Association (CMA), in consultations conducted by a four-member panel set up by Canada Post to review its operations. Our delegation represented marketers and, to a lesser degree, the industry that services those marketers. We focused on the need to listen to the industry, and to mailers in particular, given that they are major clients of Canada Post.

Unfortunately, these perspectives are not significantly reflected in the most recent report. For example, the report concludes that direct mail is an irritant and will be less accepted by Canadians over time. This feedback is anecdotal and does not consider the reason that companies still utilize mail, which is that it generates response and revenues.

Alternate day delivery is a viable option to consider saving money. Some companies have expressed concern that alternative day delivery may make it more difficult to target messaging and more challenging to set delivery dates. Planning would be much more complex and there would be a risk of delivering before or after a special sale/promotion date, possibly leading to situations in which a product is not available. Careful planning and coordination will be critical in this environment. As Canada Post continues to improve accuracy (as it is doing every day) in relation to projecting and delivering machineable mail, this might be an area that can be overcome.

Will the new vision succeed?

A recent Toronto Star opinion article by business columnist David Olive (“Latest results show Canada Post can deliver – Canada Post beats the U.S. Postal Service”, May 7, 2018) notes that the efforts put forth over the last few years have begun to yield some benefits and that Canada Post has turned another quarterly profit. This is great news and should give us room for optimism, but not complacency. Businesses are the major source of revenue and, as costs increase, the ROI for businesses will decrease. This would, in turn, significantly raise the costs to individual Canadians and impede Canada Post’s goal of becoming financially self-sustaining.

I am hopeful that the new team at Canada Post appreciates that if the revenue stream is squeezed too tightly, it will decline faster than adjustments can be made and the objectives will all be in jeopardy as mailers seek out less costly alternatives.

Canada Post has a difficult job. As with so many things this situation requires a delicate balance. Solutions will arrive from a collaborative effort by all the parties, with every one of them coming to the table with concessions to get near those goals: Canada Post, the union, the public and industry. I, along with many esteemed colleagues in the industry are at the ready for consultation and dialogue on the subject.

John Leonard is vice president sales and marketing, Cover-All. John has an extensive background developing, acquiring, on-boarding and servicing clients in data-driven environments. He also has a long history of involvement on education, having authored books and developed and administered seminars on mail for the Canadian Marketing Association (CMA); he has also served on the CMA’s Postal Relations Committee.

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