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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; they vary sales and marketing strategy both
according to general economic conditions and customer needs, as
well as on the basis of daily monitoring of sales performance.
But
what about postal companies? Volumes are typically double or more
normal daily volumes. And as a proportion of social mail the
figures are even more striking e.g. in Sweden half of all social
mail is posted in December. Operators within postal companies
spend a lot of time and expertise planning the operation both
before, and like retailers, 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, unlike for other
Christmas-focussed businesses where the economy of scale of the
operation contributes heavily to the bottom line. Also operators
have arguably 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.
And the Sales and Marketing teams do not
seem to get involved at all! Outside places like Guernsey, there
are very few volume related incentives (or even price increases)
to either personal customers (Christmas cards) or suppliers
(packets/parcels); there is little attempt to stimulate or exploit
the Christmas delivery market; 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. In
addition, when demand falls in January, what is the equivalent of
the New Year sale for a delivery company? There doesn t seem to be
one.
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? I
fear they don t give this more than passing consideration.
So
why is this? Probably the root cause is because the Christmas
operation, particularly by the USO provider of postal or parcel
services, 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 and proper as one key objective for the holiday period.
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 period
to your business?
Do you understand the profitability of
Christmas?
Do you understand how that profitability varies with
volume and price and operational configuration?
Are your
Christmas operations designed around customer need and business
opportunity, rather than avoiding problems ?
Do you introduce
special products to cater for the different customer needs at
Christmas
Do you have 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 adjust your approach on a continuous basis, albeit
within a clear overall strategy?
Do you have a similar set of
strategies to the period immediately following Christmas? Is there
a need for a postal equivalent to the New Year sale to stimulate
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?
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