Does the industry maximise its potential at this time of year?
For many businesses, Christmas is a critical time of year, and can represent 75% of sales volume and an even bigger proportion of profits. Such businesses look at maximising the profitability of Christmas as a key management task. But what about postal companies? Volumes are typically double or more normal daily volumes. Operators spend a lot of time and expertise planning the operation both before, and just after. Christmas. But the unit cost of Christmas does not end up a factor of two or more times better than every day operations and operators have insufficient incentive to adapt and flex based on customer need e.g. making full use of Saturdays and Sundays in the run-up to Christmas.
Do Sales and Marketing teams get involved at all? Outside places like Guernsey, there are very few volume related incentives (or even price increases). There is little attempt to stimulate or exploit the Christmas delivery market and there are few if any dedicated Christmas delivery products. All of this seems sometimes to be in the name of trying to make sure the operation is not overstretched! You can’t imagine Tesco’s trying to dampen demand in their stores in the run up to Christmas in case queuing times at check outs get too long. Equally there is very little monitoring of sales performance at Christmas, maybe attempting to stimulate (or even dampen) demand to fit operational capacity. When demand falls in January, what is the equivalent of the New Year sale for a delivery company?
As for margin or profit, how many delivery operations even understand let alone target profitability at Christmas – where is the strategy in postal planning to maximise business profitability at Christmas? Do delivery or logistics companies know the pricing strategy, and operational configuration, that maximises margin?
So why is this? Probably the root cause is because the Christmas operation, particularly by the USO providers, is primarily regarded as a service, and the key objective is to ensure that the service doesn’t fail customers at this highly sensitive time of the year. Now that is perfectly sensible but it is also a key objective of all service orientated businesses where Christmas is a high volume sales opportunity. However those businesses also target profitability, and in an era where the USO provider has lost or is losing their monopoly, every opportunity to make sure the business is sensibly profitable needs to be exploited.
So what sort of check list might be suggested to Senior Business leaders of postal operations around Christmas? It might include:
- Is Christmas sales/marketing led rather than operator led in your business?
- Is there a dedicated product manager tasked with maximising the value of the Christmas and the New Year period?
- Do you understand the profitability of Christmas and how it varies with volume, price and operational configuration?
- Are Christmas operations designed around customer need and business opportunity, rather than ‘avoiding problems’?
- Are special products introduced to cater for the different customer needs at Christmas
- Is there a pricing strategy for Christmas? (Incidentally very different strategies might be appropriate, ranging from price high at times of peak demand to normal pricing to price discounts for volume)
- Do you monitor Christmas sales daily and use marketing to flex demand
Or, in short, are you treating Christmas not only as a period where your brand reputation can be made or lost, but also as a vital business opportunity, that, if managed properly, could make a disproportionate contribution to the bottom-line and to securing customer loyalty and demand 365 days in the year?
CEO PLCWW Ltd
Postal and logistics Consulting Worldwide is a company of postal, parcel and logistics professionals delivering business strategies and operational success for mailers, regulators and postal operators worldwide. Email us at [email protected]