As Customer Behavior Changes, So Does the USPS

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LAKE BUENA VISTA, FL--Imagine Richard Rudez's job. He has overall responsibility for 38,000 branches with 85,183 associates each day serving 7 million customers nationwide.


Rudez is manager of retail operations for the U.S. Postal Service. He has his work cut out. The USPS' traditional transaction mix is in flux. For example, there was a $432 million reduction in stamp sales last year, with a $380 million decrease forecasted for this year. Also, more than 1 billion fewer First-Class mail pieces were sent last year primarily because of a diversion to alternate communication channels.


"We're shifting [sales] to the Internet, which one year ago was our demise and now is our partner," Rudez told delegates at yesterday's 2005 Annual Teradata Partners User Group Conference and Expo.


Adding to the USPS' woes is cannibalization of its retail base from other channels as well as increased competition in its parcel business from carriers like FedEx and United Parcel Service.


So what can an executive like Rudez do? As the retail point person for the USPS -- a Teradata customer -- he is turning to data to drive changes in behavior.


First, the postal service is using data to change management's behavior and using that to drive performance. The organization is producing performance and productivity reports that pinpoint the key areas for improvement.


Next, it is using data to change the sales associates' behavior and how they do business day in, day out. Scorecards help associates know where they stand to motivate change and improve performance. Finally, the USPS is using data to meet the customer's changing behavior. It is relying on post office transactional data and alternate channel -- the Internet, automated postal centers, kiosks and stamps sold by grocery stores, telephone, fax and via consignment -- information to evolve with its customers.


"We're looking at adjusting our business model to better meet the customer's needs," Rudez said. "The 7 [a.m.] to 9 [a.m.] customer base has gone away."


Delivering the right information drives success, as the USPS leadership is realizing. The postal service is sending exception-based reports to time-starved managers of post offices nationwide. This way, the operating personnel can see where they stand. Praise, motivation and education also are possible with access to such actionable data.


Rudez said the USPS' focus is on moving traditional window transactions to alternate revenue channels. This will help lower business and labor costs. It will make the postal service more accessible to changing consumer shopping patterns and lead to higher service levels to ongoing window customers.


"Alternate channel revenue has increased 61 percent over the past three years," Rudez said.


Moreover, the percentage of retail revenue that alternate channel sales represents has jumped more than 50 percent in the prior three years. In fact, close to 20 percent of the USPS' retail revenue is done away from the post office window.


Take its 2,500 automated postal centers. As of Sept. 16, they generated $301 million in their first year of existence. They have decreased waiting time, lowered labor costs and service delivery expenses and have become a viable alternative for less complicated transactions. Now, the USPS is analyzing individual post office activity to see where the best opportunities lie and where to deploy these automated postal centers. Even the signage is being reconsidered.


"Customers are walking right past the machines, so we're thinking of changing the signage," Rudez said.


Push reports also are being used to increase walk-in revenue, average revenue per customer visit and customer satisfaction. Data is being crunched to make sure associates upgrade customers who walk in to mail parcels or letters.


Also, information is being used to adjust post office labor hours in line with business activity and earned hour performance analysis for staffing levels. Post office managers prefer to receive data like the calculated labor hour analysis in a chart instead of a dense 20- to 30-page report.


Rudez was particularly proud of what the data yielded in terms of waiting time in line for post offices nationwide. The average wait time in line per customer has dropped 24.3 percent in the past two years. It was 3:41 minutes in fiscal year 2003, 3:09 minutes in 2004 and 2:58 minutes in 2005.


The wait time during the holidays has fallen 27.2 percent in the same three years: 5:32 minutes in FY '03, 4:23 minutes in '04 and 4:04 minutes in '05. The USPS fiscal year runs Oct. 1 through Sept. 30.


Going forward, the USPS' plans for its retail business are to plan to implement role-based workbench/dashboard technology, expand opportunity-based reporting and put into use queuing theory analysis to cut the wait time in post office lobbies. It also wants to expand revenue protection analysis for fraud detection and introduce a scheduling tool using the earned hour analysis.


Rudez's takeaways were simple. What gets measured gets action. Gaining acceptance at every level of the organization is critical to driving a successful corporate program. And delivering the right information in the right media at the right time can improve quantifiable business value.


He certainly was gung-ho about USPS' retail performance. "This year we're growing $525 million over plan and $110 million over last year," he said. "[And] 20 percent of retail activity is in alternate access."


Mickey Alam Khan covers Internet marketing campaigns and e-commerce, agency news as well as circulation for DM News and DMNews.com. To keep up with the latest developments in these areas, subscribe to our daily and weekly e-mail newsletters by visiting www.dmnews.com/newsletters . Mickey Alam Khan is a guest of Teradata at the conference.


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