Every business is a service business.

We apply the tools that make service businesses stronger through better strategy, innovation, marketing and day-to-day management.

Thank you for joining the conversation.

Tuesday, March 2, 2010

The Postal Service accelerates its demise.

The United States Postal Service, like many service organizations facing reduced demand in a downturn, is trying to cut costs.

Like the masses of unimaginative service businesses, their “best idea” for cost reductions is to reduce service levels. In this case, they’re considering shifting to a 5-day delivery service from the current 6-day operation, eliminating Saturday deliveries.

It’s a bad idea.

Three major service components differentiate USPS from its primary competitors, UPS and FedEx:

They’re inexpensive. Though it now known as “snail mail”, USPS is very reliable, given what are usually substantial price differences between its offering and that of the parcel carriers.

They serve outlying areas. UPS and FedEx place enormous charges on deliveries beyond their core service areas, because they lose money delivering to places without density of stops.

They deliver Saturdays. Before the recession forced the elimination of shifts, an increasing number businesses were conducting Saturday operations. With the growth of ecommerce, Saturday is looked on by many companies as needed fulfillment day.

By eliminating Saturday deliveries, USPS eliminates a key reason businesses use them. Add in that they’re considering reducing service to rural areas and increasing the prices on parcel sized shipments, and they may actually be in the process of killing all three of their service differentiators at once.

It has been suggested that the USPS should be run more like a standalone business. Some go so far as to say it should be privatized. While that idea may or may not have merit, changing core elements of the service to replicate their closest competitors – ones much more nimble and far less bureaucratic in decision making than they are – is exactly the wrong sort of service model change.


Membership Jedi said...

So true. Snail mail will slowly evolve into FAIL mail (if they have not already). Nothing better than waiting in long lines to finally make one's way up the exuberant, enthused and happy to serve civil servants behind the counters at the Post Office. Having your number to be served called at the Post Office is akin to having your dentist walk out and say "it's your turn for your root canal".

Great post.

Chris Reaburn said...

Hey, thanks for the comment.

I actually think that if the USPS could take advantage of what they have - the largest delivery market that, if it isn't impossible to build, would be so cost prohibittive that no other company would try and the most tenured (and capable) set of operations employees in the business - they could be a VERY serious competitor in the delivery market.

It is their decisions around corporate startegy and service orientation that prevent them from competiting against companies they hold a tangible advantage over.