NAMMU establishes new working groups with Canada Post

NAMMU and Canada Post have established three ongoing working czommittees. The goal is to improve the competitiveness of the mail channel by focusing on product and process. Initially the committees will be focused on identifying friction points in the mail streams and developing solutions to eliminate them.

The three committees are;

  1. Product & Electronic Shipping Tools (EST), lead by Julie Northrup of Lowe Martin
  2. Order Acceptance & Surcharges, lead by Jennifer Davey, Bassett Direct
  3. Data & Postal Code Targeting (PCT) lead by Melwyn Pinto, Transcontinental

A kick off meeting for all three groups took place at the Gateway plant on May 12. In that session the group defined the scope, the process and expected outcomes. Two of the groups have held additional sessions, identified issues and setting priorities. Each group is scheduled to provide an update at the NAMMU Chapter meeting to be held at Canada Post’s South Central Plant as well as in future update meetings. To get involved in one of the committees or to provide input please contact admin@nammu.ca.

Postal Code Targeting: New prospecting product

Members of NAMMU continue to work closely with Canada Post on the stabilization of Postal Code Targeting (PCT). PCT is the first new mail delivery product to be introduced by Canada Post in over 30 years. The product allows marketers to target customers down the postal code level which is on average 20 addresses. NAMMU is working with Canada Post to improve the products and process while developing best practices and new tools to simplify the process and reduce risk of failure.

Some customers are taking advantage of targeting provided by Canada Post’s data team. One of our members is having great success using a customer’s current customer list. They identify postal codes of their best customers. They then work with Canada Post to identify other addresses in these postal codes, remove current customers and then mail the other addresses. Our member suggested that customers begin with smaller mailings in the range of 10,000 to 20,000 pieces. Customers are experiencing a good response with this approach.

Canada Post Annual Report: Pivotal year for the Canadian mailing industry

On May 2, Canada Post released its 2016 Annual Report, reporting a profit of $55 million and, with the labour uncertainty last summer, it was somewhat of a surprising result. The report estimated that labour uncertainty reduced profit by $110 million. Lettermail volume declined by 7.8%, or a $256 million impact, while direct marketing declined by 5.2% after it grew slightly in 2015. Many mailers cancelled mailings planned for last summer.

Canada Post reported that Transformational Initiatives delivered $440 million in value in 2016. Transformational Initiatives are those that were outlined in the five-point plan, which included Community Mail Boxes installed before the moratorium was imposed by the new Liberal Government in the fall of 2015. Deepak Chopra, president & CEO, states that Canada Post has transferred itself from a letter-centric business to an e-commerce powerhouse, becoming the number one parcel company in Canada. Despite the strides in parcels, it represents only 28% of Canada Post revenue with a contribution of 29% versus Mailing Products with 68% of revenue and contribution of 46%.

Uncertainties on the horizon

As we look forward, there are series of uncertainties facing that mailing industry and Canada Post. We are still awaiting the Federal Government’s response to the Canada Post Review which is due the spring of 2016. The Government commissioned a Postal Review Task Force and a Parliamentary Committee to deliver reports. Their Task Force report confirmed the business model challenges faced by Canada Post and identified a number of opportunities to address the challenges. The greatest opportunities lay on the cost side with the continuation of the Community Mail Box program being the most significant opportunity. The Parliamentary Committee Report was less certain about the financial challenges facing Canada Post and called the for the continuation of the moratorium on CMBs. It is uncertain which direction the Government will take. When the Government does set the mandate for Canada Post, it will be a busy time for the industry and NAMMU as we identify the impact on the industry.

The other significant challenge facing the industry is all Canada Post labour agreements are expiring in the next seven months with CUPW expiring in January 2018. Canada Post is still looking for labour concessions to align its costs more closely with its competitors. All stakeholders must find away to reach an early conclusion to these negotiations to minimize the uncertainty in the industry. With labour uncertainty in 2016, lettermail’s decline accelerated while direct marketing declined by over five per cent after being flat in 2015.

 This article originally appeared in the June 2017 issue of Direct Marketing.

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Sarah O'Connor

Sarah O'Connor is the editor of Direct Marketing magazine.

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