New PMG Brings a Refreshing Change to the USPS

Apr 01, 2011 9:30 PM  By

JACK POTTER RETIRED AS POSTMASTER GENERAL (PMG) OF THE U.S. POSTAL SERVICE ON DEC. 3, 2010. That same day, his deputy, Patrick Donahoe, became the head of the second biggest government employer in the U.S. Seeing that Donahoe was a lifelong career postal employee, pundits did not expect to see any radical shifts in strategy as a result.

They could not have been more wrong.

There is a new sheriff in town, and he is already making a noticeable difference at the old USPS. Who wudda thunk it?

In this new world according to Donahoe, customer is king and priorities are shifting. The approach to dealing with mailers has changed totally and is beginning to percolate down.

New language is permeating through the postal ranks, such as “be collaborative,” “partner,” “change the game on how we do business,” and my personal favorite: “drive customer value.”

As every mailer knows, the Postal Service needs revenue. What is different now is the means to accomplish this: “Figure out why people are giving us money, then find out how we could create more value so they give us more money.”

It’s not a new concept for those in business, but a wholly new tactic for a former monopoly only now truly grappling with today’s competitive reality. As Donahoe sees it, technology has done what Congress would not: broken the postal monopoly.

Marketers have lots of choices as to where to spend their dollars. The Postal Service aims to get more than its fair share.

In more than a half-dozen meetings with the new PMG since he took the helm, I’ve witnessed consistency of theme: Simplify everything, remove barriers to doing business with the USPS, and become far more customer-centric. At the same time, he’s picking up where he left off in his former role as deputy PMG and chief operating officer: the relentless drive to take costs out.

It’s more than mere lip service. We are already starting to see results. Gone is the hammer for Intelligent Mail Barcode (IMB) implementation. “We are going to make full-service Intelligent Mail so valuable that everyone wants to use it, not create penalties that force adoption,” said one vice president at the Mailers Technical Advisory Committee (MTAC) meetings in February. This isn’t the old way of doing business at the Postal Service.

The IMB, formerly known as the 4-State Customer Barcode, is the next generation of USPS barcode technology used to sort and track letters and flats. IMB technology, among other things, combines the capabilities of the POSTNET barcode and the PLANET Code barcode into one unique barcode.

Until recently, mailers had been forced to adopt this by May 2011 or face the loss of automation discounts — which, of course, was a huge penalty. Yet barriers to adoption were large and the payback meager in previously announced plans. This changed in January with the indefinite postponement of the May deadline.

The vision is good too. Smart people make things simple. The USPS’s new chief information officer, Ellis Burgoyne, said at the recent MTAC, “We are going to make revolutionary changes to payment systems to make it less inconvenient. Why do you have to open a new permit just because you want to mail from a different location?”

MORE WORK TO BE DONE While there’s plenty to get excited about, catalogers must remain diligent about postal matters. The Postal Regulatory Commission on Feb. 16 approved a modest postage increase, effective April 17.

The PRC also signaled that it is running out of patience with “underwater flats,” meaning that the Commissioners remain convinced (perhaps erroneously so, as we have contended in recent PRC filings) that catalogs are a money-losing proposition for the USPS. This must be addressed or catalogs could be hit with another massive round of postage increases.

Fortunately, the positive, “let’s get it done” team at postal headquarters is planning to leverage IMB to get actual “engineered” costs on mail flow to find new opportunities to reduce costs. Given the fresh attitude from the USPS and the granular data we expect to become available from the IMB, it just may be possible to restore the Postal Service to a pattern of growth and profitability.

That is, of course, if mailers embrace this new approach and other constituencies like labor and Congress don’t block such progress.

It’s time for all mailing interests to get involved and use the opportunities this openness creates to lower costs, improve value, and ensure that mail remains a viable and useful part of the marketing mix going forward.

HAMILTON DAVISON (hdavison@catalogmailers.org) is president/executive director of the industry group American Catalog Mailers Association.