Few things are more challenging than trying to run a profitable business involving the delivery of atoms to 325 million customers in an era dominated by bits. To increase the degree of difficulty even more, what if the approval of Congress and a regulatory commission were required before you made significant changes to your pricing or operations?
That context describes the United States Postal Service in 2018. The USPS lost $2.7 billion last year, much of it because people sent 5 billion (yes, billion) fewer first-class letters and cards in 2017. A rare bright spot was the growth of package delivery, thanks to e-commerce: it was up 11.8 percent in 2017.
So there’s plenty of need for innovation at the USPS, an organization originally formed in 1775 and initially overseen by Benjamin Franklin. In 2012, the USPS formed a new group called New Products and Innovation. It is led by Vice President Gary Reblin, who reports up to James Cochrane, the Chief Customer and Marketing Officer.
“My group exists to understand what’s going on,” Reblin says, “to try to develop new products that align with people’s behaviors today. When you think that the core of our product is paper, and the move to digital…the landscape of the Postal Service – every aspect of it, from shipping to bill payment to advertising, is all changing in the US.” Reblin oversees about 60 employees who work at USPS headquarters in Washington, D.C.
In particular, the growth of online advertising has hurt direct mail advertising, which represents the majority of the USPS’ delivery volume. Also, Reblin explains, as thousands of retail stores close their doors, “when a location closes, we lose the marketing mail within a 20-mile radius of that store. If we don’t bring in the retailers, and compete against digital advertising, which is growing at 16.5 percent [in 2017], we’re going to be in trouble.”
So much of what Reblin’s team has been focusing on are ways to link paper mail with the digital world — whether that is augmented reality, QR codes, or ways to view your mail online before you see it in your mailbox.
Discounts and Augmented Reality
One example is a set of discounts available for direct mail campaigns that “allow the recipient to engage in innovative digital experiences triggered from their mailpiece,” for instance, a QR code that enables you to see a video on your phone. The goal is to help marketers get a better response than they might get from just print or just digital alone, Reblin explains. “We’ve worked to try and promote the use of technology with the hard copy, to show that response rates will go up if you link the hard copy to the web,” he says. “About 20 percent of [direct] mail now takes advantage of these promotions, and uses different technology to engage the recipient.” (Incidentally, response rates to direct mail have been trending up in recent years, according to the Direct Marketing Association.)
USPS also launched its own augmented reality app in 2016, as a way to bring its Priority Boxes to life with holiday-themed animations. Senders can choose from a melting snowman, dancing gingerbread characters, or earmuff-wearing animals in front of an igloo, and when the recipient uses the app to scan the box, the animation comes to life. USPS has also been encouraging direct mailers to use augmented reality to add a digital “layer” onto their own printed items. (See demo below.)
To encourage marketers to be more experimental in how they design direct mail campaigns and integrate new technologies like video, virtual reality, and advanced analytics, USPS also runs an annual awards program called the Irresistible Mail Awards.
Another program developed by Reblin’s team, Informed Delivery, targets people who don’t regularly look at their mail. Reblin admits he is one of them.
“When we surveyed people, 41 percent responded that they never or infrequently looked at the mail,” he says. “I was one of those people. My wife looked at the mail, and she’d set aside what she thought I needed to pay. But there was so much of the mail that I wasn’t seeing.”
nce an individual signs up for Informed Delivery online, they receive by e-mail a morning digest of all the mail they will receive later that day, including black-and-white scans of the front of each envelope. But marketers can opt to replace the black-and-white image with a color one, create links from the e-mail to a website, or offer time-based discounts, Reblin explains. “You might say, ‘Buy within the next 24 hours, and get an additional 5 percent off. We’re creating the ability to go from viewing your mail, directly to shopping online.”
Informed Delivery started in 2016 with pilots in Washington, D.C. and New York before going national in March 2017. Reblin says that there are now 6.6 million people signed up for it. “The people who are signing up for it are people who before didn’t have visibility into the mail,” Reblin says. (Reblin shared the slides below, which offer an overview of Informed Delivery.)
Culture and Communication
While Reblin’s group focuses on tracking trends in marketing and communications, and building products in response, he says that product development work and cultural change are intertwined. “You can’t do new products unless you’re trying to change the culture,” he says. “The postal service for years was a very operational culture. We acted almost as a monopoly business for decades. We’ve got to change with the times. We’re not a monopoly today. You look at Blockbuster and Kodak; they both had large market share, but they went away because they weren’t trying to change with the times.”
At the largely-unionized USPS, communicating the need for innovation to the employee base is an essential task. “How you message is important,” Reblin says. “You need to discuss why things are changing, and how we’re going to compete. It’s not all about cutting costs.” That communication takes place at employee meetings, webinars, an internal television network, and the annual National Postal Forum. “Every year, we speak in front of tens of thousands of our own people,” as well as the customers of USPS, he says.
“You don’t get people to buy in to the product,” Reblin says, “unless you’re also working on changing the culture so that people want to work with you.”