Listen to all the Customers
Competition brings with it the prospect of lower prices and improved services.
The experience of the utilities industry and telecoms is that prices in real terms reduced by up to 44% in the domestic markets and up to 52% to business users. In addition service levels reached the highest standard ever achieved.
The first licence in the Postal Services industry was issued on 26th March almost two months ago.
Is this Royal Mail taking advantage of the temporary continuity of its monopoly? Prices were increased last year on spurious grounds. We were told that the ten year pension fund holiday was coming to an end and that £50 m per annum for 10 years had to be injected into the funds to meet future obligations. It transpires, that the funds were very conservatively valued, the pension holiday has continued and no money has been put into the pension schemes. Yet the price increase was imposed regardless.
This year’s increase is founded upon the need for additional finance to upgrade mail centres and to introduce automation. This will be an interesting test. During the last five years the Post Office capital expenditure programme has reached a total of £ 2 ½ billion. What has been the benefit of this investment to the business and the consumer? What rate of return has been achieved through the investment of this huge amount of money? How was the money spent?
The quality of service has reduced to its lowest level for years and customers are paying more for a poorer service.
Two years ago the Post office made a profit of £400m. We are now told that in three year’s time it will be £300 m. So over a five year period profits will not reach the 1998 level. It therefore appears that the only way the management can deliver profit is by asking the customer to pay more and more at a time when Royal Mail is delivering less and less on time. Generally in business terms this is regarded as a disastrous formula. Volumes are still growing but so are the costs.
Whatever the result of recent history the future is what counts and the industry is poised to take advantage of the new circumstances and to change.
This change will be affected by the regulatory regime but it must always be driven by the consumer. The vested interests of the various groups must never be allowed to interfere with or reduce the clarity of the messages being sent by the customers. High levels of service at competitive prices are the route to profits. Declining standards of service and increasing prices are the path to failure.
The industry has at the moment and probably for some time to come one dominant player. The continuity and success of Consignia is fundamental to the future of the industry. That success will not be achieved by hiding behind the text of the licence nor by invoking the defensive clauses to protect their market share unnaturally
Success will flow from listening to all of the customers and delivering the required product at the right price. If they don’t they will join M & S in the recovery room.
