The stories reminded me that, for the last 21 years of my Pitney Bowes career, I dealt continuously with the encroachment of state capitalism in the postal sector.  In the late 1980’s and throughout the 1990’s, we successfully fought a series of battles with the U.S. Postal Service to keep it from becoming another entity with all the powers and privileges of the federal government, but with none of the regulatory constraints associated with federal government agencies.  Several senior postal officials aspired to create a power base similar to many government-owned entities, such as the Tennessee Valley Authority (which Marvin Runyon, the Postmaster General from 1992 to 1998, had led) or the New York-New Jersey Port Authority.

Fortunately, we defeated efforts by the Postal Service to regulate the mailing industry and compete unfairly with it at the same time.  The Postal Service leadership teams succeeding Runyon and members of his senior team generally tried to operate within the boundaries set by Congress. We had a very collaborative, and mutually respectful, relationship with the Postal Service during most of my tenure as CEO.

The story was very different outside the United States.  While we had similarly respectful and collaborative relationships with the postal officials in the UK, Canada, Spain, Denmark, and Norway, we had a variety of challenges with postal authorities in many other countries.

We saw three distinct challenges:

• Some postal operators, which had appeared to become privatized, acted in very anti-competitive ways in their own nations, and also secured rights and privileges from their national governments that stacked the deck against partners and competitors.  The most extreme example was Germany, during the leadership of Deutsche Post by Klaus Zumwinkel, who resigned in early 2008 for reasons unrelated to his work-related performance.  Throughout Zumwinkel’s 18-year tenure as CEO, Deutsche Post acquired companies all over the world, including a disastrous acquisition of Airborne, a major package shipper, and the worldwide operations of DHL.

In Germany, where Deutsche Post realized most of its profits, postal rates were exceptionally high (well above $.60 per piece), service was not exceptional, but competition was ruthlessly suppressed.  At the end of 2007, a few weeks before Germany had committed to open its market to full competition from within the EU, Zumwinkel successfully prevailed on German legislators to pass a law that created a minimum wage for postal sector employees only, a wage pegged at Deutsche Post’s minimum pay grade.  The immediate result was to destroy its two largest mailing competitors, since neither could secure labor cost advantages over Deutsche Post.

In Italy, Poste Italiane took advantage of complex and onerous labor laws to fend off competition, since these laws made part-time and temporary workers prohibitively expensive.

• In many countries, postal operators expanded into businesses in which the marketplace was amply served by the private sector, but in which the postal operators would immediately have a competitive advantage, because of the implicit protection from national governments.  Australia, Belgium, Ireland, China and New Zealand all started retail banks.  Japan had always had a sizable postal banking system which paid almost no interest to depositors, but which became a huge source of loans to projects favored by politicians.  Prime Minister Koizumi staked his political career on an initiative to privatize the Japan Post, not because there was ferocious opposition to privatizing the mail or package business, but because the heavy governmental control of the flow of bank loans would be jeopardized. He barely avoided receiving a vote of no confidence because his initiative upset the way government favors had been delivered for generations.

Postal operators have played heavily in the money transfer business (competing with Western Union), in retail government services, in the sale of greeting cards and stationery, and in the sale of gift items often transmitted through the mail.  Postal operators like Australia, China, Finland, and Sweden moved seamlessly into mail services businesses. In countries with a strong tradition of state capitalism, these postal operators were able to operate freely in more businesses in which they competed unfairly with the private sector.

• The postal operators often carried mandates and missions inconsistent with a business focused on cost-effective customer service.  France and Canada were prime examples of this problem, as were Japan, Spain, and Portugal. In these countries, postal operators were saddled with explicit and implicit requirements that they keep a minimum number of people employed, even if the demands of the business would not justify such employment.  For Pitney Bowes, the government employment mandates made many of our productivity enhancement tools unusable by these postal operators.  They could not improve their productivity, even if they wanted to, because they were fulfilling social mandates.  Postal ratepayers paid more, in the form of a disguised tax, to create a welfare system for workers who probably could not have secured employment at comparable wage and salary rates.

I was able to experience the ugly underside of state capitalism for over two decades.  It made me realize that the United States should think long and hard about migrating down the path these other countries have followed.  It also is a cautionary tale for large multinational corporations that aspire to compete fairly in major markets in which one or more of the competitors are state-owned or state-controlled enterprises, or in which the state considers a particular industry strategically important.

Moreover, their fee structures would kill individuals and small businesses.  For example, UPS and FedEx charge over $10 for improperly addressed letters and packages.  This is a profitable source of revenue for both organizations.  They also have residential delivery surcharges, especially for more remote residential areas.  If they are to take on the responsibility for more mail delivery currently done by the Postal Service, they cannot use their current fee structure to do so.

How can the U.S. Postal Service take costs down?

Use self-service retail more aggressively

The Postal Service is far behind the banking industry, as well as the travel industry, in employing self-service kiosks, as well as online retail purchase systems.  You can do virtually all your banking at self-service kiosks, but the Postal Service has nowhere near the deployment of self-service kiosks it can and should have.

Share bricks-and-mortar retail with other retailers

There is no earthly need for dedicated bricks-and-mortar post offices anywhere in the United States.  Postal retail operations should be inside major grocery retail operations, rail stations, airports, gas stations, general stores in rural areas, and major shopping malls.

Reduce street collection boxes and replace them with shared mail collection systems

The letter carriers can collect a significant part of the mail currently going to collection boxes, when the letter carrier is still doing residential delivery to the doorstep or dedicated mailbox.  However, there should be collection boxes at the self-service kiosks, similar to what banks do with ATMs that collect deposits as well as dispensing withdrawals.

The Pitney Bowes shipping kiosks at Staples and Office Depot are paired with package collection systems at both stores.  The retail outlets that sell greeting cards should also have kiosks and mail collection boxes for people that want to write and send an individual card.  The types of mail used today need to be analyzed to determine the most efficient mail collection systems to reduce the number of mail collection vehicles and employees.

The mail processing functions should be completely outsourced to the private sector, with rate discounts that enable them to be profitable.

Pitney Bowes became a leading provider of mail sortation and processing services, and delivered mail into the Postal System faster, less expensively and more reliably than the Postal Service could have done with the same mail.

To be fair, Pitney Bowes and other companies offering presorting worked with more standardized and easy-to-process letter mail, as opposed to the bulkier and less standardized mail the U.S. Postal Service workers have to handle.  However, the biggest issue with the mail processing centers is not the non-standardized part of the mail, but the inflexible, high cost labor rules under which the Postal Service operates.  Mail volumes vary by day, week, month, and time of year.  Labor staffing needs to be flexible and part-time.  Over time, facilities need to be built, moved, and either reduced or increased in size.  Because the Postal Service is government-owned, its ability to react quickly to changes in mailing patterns is non-existent.  It takes years to build and move a post office, and it is virtually impossible to close a post office.  It is even extremely difficult to remodel a postal facility that remains in the same place.

Change delivery economics to increase the use of clustered boxes

When I co-chaired the Mailing Industry Task Force with John Nolan, then the Deputy Postmaster General, one of the dumbest rate comparisons with which the Postal Service was stuck by its universal service mandate was that it was required to deliver mail free of charge every day to the bottom of the Grand Canyon, but was required to charge a mail recipient who could save it money for a post office box rental.

The economics of mail delivery need to be reversed.  Those who give up expensive residential delivery should be rewarded.  Those who secure a conveniently located delivery mailbox should get that service without charge.  Over time, the mail delivery should gravitate toward moving the mail to where people spend their waking hours, not where they live or do business.  We are a more mobile society than ever, and the Postal Service delivery system should recognize this.

Other observations

I have not discussed pricing for mail products because this is an infinitely more complex subject. Cost-based pricing has some perverse effects, such as increasing the cost of mailing for those direct marketers who are more selective in mailing to prospects in a ZIP code.  It is cheaper to deliver to every address than to honor “Do not mail” requests and cull out certain addresses for discontinued mailing, but we should encourage the Postal Service and direct marketers to stop mailing to people who no longer want to receive marketing mail. Rate structures should encourage, not discourage, more selective mailing and higher direct mail response rates.

The discounts given to not-for-profit mailers, and for certain classes of mail, such as books and other educational materials, have broader societal purposes.  Mail addressed to and from elected representatives and other government officials needs to stay at low rates, especially for people living in remote areas.

However, within existing rate structures and subsidies, there are potential improvements.  For example, there should be a discount for mailers who use self-service kiosks and get bar codes printed on single pieces of mail, such as greeting cards.  There should be a discount for mailers who drop mail at post offices or bulk pick-up services, as opposed to those who continue to use dispersed street collection boxes.  There should be discounts for those who use pre-printed envelopes to pay bills, versus those who create a hand-written envelope to do so. Finally, there needs to be a discount for metered, versus stamped, mail, which is happening in many countries in the world.

Final thoughts

I have seen no business succeed in the long run by saving money through causing its service and brand to deteriorate.  We need to prevent the Postal Service from following the path taken by Amtrak, which has become marginalized over a long period of time and required repeated government subsidies because of its deteriorating services and declining revenues.

Finally, let’s eliminate the inflexibility with which the Postal Service has to manage its medical benefits.  Years ago, in conversations with one of the Postal Service labor union leaders, I learned that there was an opportunity to save hundreds of millions of dollars a year by taking postal employees out of the federal health benefits system.  The Postal Service did not believe it had the freedom to withdraw from the federal system, even though it receives no taxpayer subsidies and it is an off-budget agency. That has to change.

Traditional mail volumes will decline further, but there are many opportunities, including those I have not described in this blog, for the Postal Service to be economically viable.  We need a better model, one with considerably less political interference, with which the Postal Service can operate.

• The near-term insolvency of the Postal Service was created by a Congressional action in the 2006 Postal Reform legislation which required the Postal Service to prefund all its retiree benefit obligations over the first 10 years after the legislation passed.  Why?  Since the Postal Service is off-budget, and it was getting its overpayments into the federal pension system returned to it, the artificially fast prepayment was a budget-balancing gimmick.  The Congress should have made the Postal Service prefund the retiree benefit obligations the way any private sector company would do so: over the expected 30-40 year life of the obligations.
• The longer-term problems of the Postal Service are driven by rapid and deep declines in mail volumes.  The Postal Service needs to reduce its cost structure much faster.  There are many good ideas that have been proposed for years, but that have not been adopted, such as the relocation of retail postal functions into convenience stores and supermarkets.  However, the Congress and the White House have to step aside and let the Postal Service take some of these steps.
• The Postal Service wants to reduce mail deliveries from 6 to 5 days.  I am not convinced that this step can be taken without damaging the growth potential of certain categories of mail.  What the Postal Service needs to consider is whether it needs to do 6-day-a-week to every address.  Sweden has variable frequency delivery, with 5 days in urban areas, three days in remote mainland rural areas, and two days to remote islands.  The Postal Services needs to begin delineating differences between profitable urban delivery routes and unprofitable rural delivery routes.
• On the flip side, the Congress and the Postal Service need to consider whether pricing for mail originating or being delivered to remote areas should be priced the same as mail traveling a few city blocks.  Uniform pricing has always been seen as a core feature of a communication system on which Americans have depended for political discourse, educational content management, charitable purposes, and other important social causes.  The broad penetration of the Internet makes many of the needs for uniform pricing less compelling.  However, to the degree that we continue uniform pricing, it can be for certain categories of mail, with others starting to move toward distance and cost based pricing.

There are some opportunities for cost reduction or revenue enhancement Leonard did not discuss.  Also, his comments about European and other international postal services reflect a lack of understanding of the degree to which governments supported unprofitable non-core services undertaken by their national postal services.  DuetschePost, for example, entered many non-core businesses and lost money in most of them, including disastrous acquisitions of DHL and Airborne.  The U.S. government cannot afford to bail out the Postal Service as it dabbles in non-core businesses, loses money, and exits those businesses.

There are still many revenue opportunities in the core business which, although no one of them will address the insolvency issue, collectively can help the Postal Service dig out of the deep hole in which it finds itself:

• The Postal Service has failed to educate its huge small business base on the e-Commerce opportunities available from marketing over a longer distance provides it.  Businesses often miss opportunities to market their services directly to consumers far removed from their local catchment area, simply because they do not know how to market their products and services remotely.
• The Postal Services has also failed to help businesses that normally do not use the mail start to grow their business through highly targeted direct mail marketing.  At Pitney Bowes, we showcased a New York Japanese restaurant in an annual report several years ago that used direct mail, instead of delivery of flyers by its delivery personnel, to reach out to occasional customers and to potential new customers to grow its business.  The restaurant not only grew its own business, but also became a direct marketer for other restaurants.
• The Postal Service and the mailing industry should be advocating a movement from face-to-face retail for both government services and voting to the delivery of services by mail.  Passports, licenses, and vital records should arrive by mail, so that labor-intensive and highly inconvenient retail operations can be shut down or scaled back.
• The Postal Service should promote voting by mail, rather than face-to-face voting.  Oregon does all its voting by mail, and Washington, California, and several other states do a majority of voting by mail.  In these states, ballots are sent in the mail and returned by the voters.  The Northeastern and Southeastern states are still laggards in allowing voting by mail, but this can add several hundred million dollars a year to mail revenues.
• Finally, the biggest need for product manufacturers is to build direct relationships with the people who use their products.  The retailer typically “owns” the customer and knows how the customer is.  However, there is nothing to stop manufacturers from building a parallel relationship with those who buy or use their products.  Kraft did these extremely effectively through a combination of Internet and mail-based systems years ago.

Crises can be disasters, or they can give rise to innovation that strengthens an organization.  For the sake of the American people, it is my fondest wish that the U.S. Postal Service not let this crisis go to waste, and that Congressional and White House decision makers give the Postal Service the support it needs to innovate.

Wooden won the NCAA championship with a very small, fast team in 1964 and 1965, with two dominant centers, Kareem Abdul-Jabbar (then called Lew Alcindor) and Bill Walton, between 1967 and 1973, and with a team of physically strong forwards and guards in 1970 and 1975.  He made his team the center of attention rather than himself.

What were his secrets?  Every successful college coach has to be a great recruiter, a great team builder, a great teacher, and a great game coach.  However, what struck me most about Wooden was a quote about him in the June 14, 2010, issue of Sports Illustrated, in an article by Alexander Wolff entitled “Remembering the Wizard, ” as well as a quote on a sign he posted on his office wall.

The quote about him was “His great strength was a knack for knowing when and what to change, and when to leave things be. He let sands shift, but only over bedrock.”  The quote on his office wall was “It’s what you learn after you know it all that counts.”  The combination of these two statements is the essence of a great human being: someone who continuously learns and tests his or her ideas, and, through continuous learning, discovers what changes, as well as what is unchangeable.

The stakes for continuous learning have been raised by the scientific research summarized by David Shenk in his book The Genius in All of Us. The research to which Shenk refers us makes it increasingly clear that what we thought were genetically-determined traits in ourselves and our children and grandchildren may very well be changeable, based on our behaviors and attitudes. Shenk’s point is that, by our actions to learn, grow, and become healthier, we can alter the genetically-expressed traits in future generations, especially for future offspring or for children still under our environmental control.

In this stage of my life, I have transformed myself from a secure corporate executive to a person who is engaged in a number of entrepreneurial pursuits.  Although my life is at a more frantic pace than ever before, I feel more energized and healthier than ever.  I am making mistakes left and right in my new pursuits, which include investments in health care companies, charity service providers, a reality TV incubator, and even two full-length feature films, one of which is fully produced and is Fog Warning, and the other of which is at the pre-production stage through a newly-formed production company called Gyre Entertainment.

The words describing John Wooden ring true to me because virtually every transformational success that occurred in my life happened because I broke the rules and followed a path different from those who seemed to have mastered conventional paths to success that were no longer working predictably.  I am particularly finding that today in the film industry.  No one in their right mind would say that anyone in the film industry has a working formula for success.  Most films fail, andmost investors never get their money back.

The most successful film industry people with whom I have spoken are respected because they have a less poor record than others, and, perhaps, had a single blockbuster hit or a single Academy Award nomination that validates them.  There is an old (and, as expressed, politically incorrect) statement that “In the land of the blind, the one-eyed person is king.” However, I aspire to be consistently successful, not to get a hit 1 in 10 times, so I know that I need to use a radically different approach to making and distributing a movie.  Similarly, the person who is successful 10% of the time is a failure in my book.

The movie industry reminds me of the direct mail business, in which direct mailers celebrate a 1% response rate as an exceptional success in an industry in which the average response rate is .25%. To me, a 1% response rate is an abysmal failure. It means that 99% of the people threw the mail into the wastebasket without responding.

What do these two industries have in common and how is John Wooden’s wisdom relevant to both?  What they have in common are a lot of relatively successful and wealthy people who depart from Wooden’s maxim that it’s what you learn after you think you know it all that matters.  These industries are dominated by people who stop learning after they “know it all” because they achieve a certain level of success.

I am not wired that way.  I strive to succeed all of the time, although I know that is impossible, simply because I know that striving for continuous success means that I will approach a problem radically different from the mainstream people in an industry.  I also know that many of them will ridicule me, and tell me that what I am trying to do will not succeed.  Their deep skepticism often is grounded less in logic or facts, but in a deep-seated need to believe that their approach is unassailable, even if it fail 90% of the time (as it does in entertainment) or 99.75% (as it does in direct mail).

How do we distinguish between what must change and what is foundational, something John Wooden understood in the context of basketball coaching and educating?  First, anyone who tells me that they have a consistent playbook or formula for success that has worked for several decades is automatically suspect.  Similarly, anyone who tells me that all the rules that have governed the past no longer apply is also suspect.  The current and future environments will always be a mix of the new and the time-tested.

Second, I am immediately suspicious of someone who tells me that a product or service that depends for its success on the stupidity and irrationality of the public is also suspect.  As Abraham Lincoln once said: “You can fool some of the people some of the time, all of the people some of the time, and some of the people all of the time, but you can’t fool all of the people all of the time.”

Third, I get suspicious of anyone who tells me success is totally random or totally formulaic and predictable.  Fourth, I get suspicious of anyone unreceptive to my ideas because I am new to a field. Someone who judges me based on my track record rather than the strength of my ideas will undervalue what I am saying or proposing. Finally, I value entrepreneurs or thinkers who continually test out their thinking and adapt, based on what they learn. Transformative thinkers are highly secure people who are not scared to admit they might have been wrong.

John Wooden has left this earth, but, fortunately, his example and his teaching will stay with us and be available to inspire and teach us forever.

• Mail is a relatively minor source of carbon footprint compared with common personal and household activities, such as taking a two-minute shower, which has the same carbon footprint as receiving 40 pieces of letter mail.
• Electronic communications, on the whole, have a carbon footprint similar to paper-based communications
• As noted on pages 21 and 22, the ultimate question is not whether mail or paper-based communications have an environmental impact that could be reduced. No one questions the need to reduce the carbon footprint of mail or paper-based communications, and the paper talks about sustainability initiatives.

There are two questions:

• Is what would replace mail better for the environment? If someone drives a few miles to a retail store, Table 9 shows that the two types of automobiles identified, the medium-sized car and the SUV produce the equivalent carbon footprint of 40 pieces of mail for between 1.8 miles of driving (for the SUV) and 3.3 miles of driving for a medium-sized car. If ads are placed on TV, we know than an hour of TV watching is equivalent 2.8 pieces of letter mail. As noted, substituting advertising dollars for a paid search engine on the Internet has its own carbon footprint.
• Among all activities, is focusing on unsolicited marketing mail a good use of scarce resources in combating increased CO2 emissions, especially given the negative economic, social, and cultural impact the reduction in mail volumes would cause? These tables would suggest that we would get far more benefit from focusing on other activities that have less economic, social, and cultural value first.

This study is not the final answer on environmental issues, but it is an important step.

I have been concerned that if some of those individuals who stop receiving unsolicited mail get into their automobiles and buy an item at a retail store that they would ordered through a direct mail solicitation, the environment is worse off. Until I attended the recent Center for Research on Regulated Industries Conference, I did not have data to support my point. Now I do.

What I learned is that the carbon footprint of an automobile using an internal combustion engine in city or suburban driving going to and from a retail store is roughly 450 grams of carbon dioxide for every mile traveled. Preparing, transporting, and delivering a piece of direct marketing mail, including the work of converting trees to paper, results in approximately 70 grams of carbon dioxide. Therefore, if we were to eliminate 100 pieces of unsolicited marketing mail, and assume no substitute form of advertising that would generate carbon dioxide emissions, the result would be the elimination of 7000 grams of carbon dioxide. There is a small amount of carbon dioxide emission from the shipping out of the item by the postal service or a common carrier, but that carbon footprint is relatively small. This data was obtained from an economist who spoke at the conference, Larry Buc, in response to a question I asked.

What would happen to those 100 people not receiving the mail? Some would simply not shop at all for the item for which the direct mail solicitation was sent. Others would learn about it through the alternative form of advertising the marketer selected. Some would seek out a web site to shop for the item, such as a Google search effort, which, by the way, would have a substantial carbon dioxide emission resulting from the electricity consumed at the data centers containing the web site, at the routers transmitting the web site data to the shopper, and at the shopper’s own computer.

However, some would obtain the item at a retail store. If only one shopper of the 100 did a round trip in an automobile, the carbon dioxide emission would exceed the total for the 100 pieces of mail all by itself if the round trip exceeded 17 miles, i.e. 8.5 miles each way. When you add in the potential carbon footprint from the other potential choices, the only way in which eliminating 100 pieces of mail is a good environmental outcome is to assume that no one drives to a retail store and that most of the individuals do not otherwise attempt to acquire the item that was the subject of the solicitation.

More work has to be done to model out the impacts of eliminating unsolicited direct marketing mail, and, clearly, if someone has no intention of buying the item solicited from any source at any time, it makes sense for many reasons to eliminate sending the letter. Therefore, our goal should be to give mail recipients the ability to describe their choices and preferences in as much detail as possible as often as possible.

That is why the Direct Marketing Association Mail Preference Service is the best choice for people. It is the most sophisticated and granular consumer choice system in place, and, unlike the other systems, it recognizes the complexity and confusion that surrounds some consumer choices.

I am in the process of reviewing the increasingly robust research which suggests that electronic communication has substantial environmental hazards, in some cases, greater than physical mail-based communications. But the insight I want to share in this blog is that the boundary between physical and electronic communication is not clear, and is getting more muddied as time goes on.

As a Company which has its oldest products based in the technology for imprinting postage on physical mail envelopes or labels, Pitney Bowes would seem to be in a business dominated by physical mail. However, as we trace the lifecycle of letters, longer documents, and parcels, it is striking how intertwined physical communications are with electronic communication technologies.

Think about a single letter we print and mail. Today, that letter is increasingly likely to be generated on a word processing program on a computer. If we buy a greeting card or personalized stationery and write a handwritten note, the creation of the greeting card or stationery has likely been controlled by software and has been subject to a considerable influence by electronic communications processes.

In production mail communications, such as a billing or statement production run, the original files reside in an electronic system and are converted to printer-ready files by electronically-delivered instructions. They continue to reside in electronic form on the biller or statement originator’s system.

Similarly, when we send a parcel to someone, we are increasingly relying on a web-based interface with the postal service or carrier that we use to get it to the recipient. The time we or others spend on line has a carbon footprint additional to that generated by the movement of the package. In the blog entitled “Don’t Neglect Document Management and Output For Improving Your Organizations Carbon Footprint”, discusses the ways in which companies can begin to improve operations, making them more effective, efficient and environmentally friendly.

With respect to electronic communications, the May 24, 2008, issue of The Economist, in an article entitled “Computers and the Environment” and subtitled “Buy our stuff, save the planet” pointed out that the corollary of “cloud computing” is “more and bigger data centers on earth.” An example of this can be seen in usage of a thin client servers, or access points, found in devices such as smart phones, PDA’s, and laptops that enables users to connect to the cloud for resources when they need them. The authors note that globally, data centers account for “more carbon dioxide emissions per year than Argentina or the Netherlands.”

The answer to the environmental challenge is not to eliminate electronic communications, or to phase out paper, but to make every part of the communications activity chain as environmentally friendly as it can be. Many electronic components are hazardous and are not bio-degradable today. We must find newer, less hazardous materials, and make sure that we do not deposit electronic waste in landfills. I was very pleased to see that the U.S. Postal Service has a program for helping consumers and businesses send electronic wastes back to firms that can properly recycle or re-use them. The “Mail Back” Program makes it easier for customers to discard used or obsolete small electronics in an environmentally friendly way. By allowing customers to use free, postage paid envelopes found in 1,500 post offices.

Similarly, while opponents of paper-based communications are wildly off base on the environmental impact of cutting trees (which, in fact, are part of a harvesting process that results in a new tree that takes more carbon from the air than the cut tree) or mail ending up in landfills (less than 1% of total landfill waste), paper manufacturers could improve the environmental friendliness of the pulp and paper mills, which account for more than half of the carbon footprint of the paper lifecycle process.

Paper and electronic communications processes should be joined together in such a way that the total environmental impact is minimized and that, over time, is reduced further. The mailing industry needs to continue its efforts to engage with responsible environmentalists to make this happen.

The survey reveals that consumers greatly overestimate the environmental impact of direct mail. Eleanor and I discussed the implications of this survey and how the industry can implement new technology and other initiatives to reduce the environmental impact of mail. We also discussed how industry leaders can work to improve the public perception of mail, and grow the value of mail as a medium in the long-term.

Listen to the Podcast

The findings are quite interesting:

• To the degree that “Do Not Mail” proponents have cited environmental arguments, they have successfully left with the public a number of misimpressions about mail’s environmental impact, all of which grossly exaggerates mail’s negative environmental impact:

• While mail constitutes about 2% of solid waste in landfills, the public believes it constitutes over 33%.
• Similarly, the whole issue of the cutting of trees to produce pulp and paper has been wildly misunderstood. The practice of cutting and harvesting older trees and replacing them with new plantings, usually accounts for very little negative environmental impact.
• The public correctly understands that poorly addressed and poorly targeted mail is wasteful. As a Company, Pitney Bowes has been passionate about selling solutions to reduce the production and delivery of wasteful mail, so I could not agree more with this perception.

• The public wants more recycling of mail, as they should. Today, newspapers are recycled at a rate of about 77% of the newspapers bought and read by consumers, whereas mail is recycled at a rate of about 35%. This can be improved by having more robust recycling capability at the municipal level, as well as better waste mail collection systems.

• The public correctly understands what some would call “junk mail” is not only of low value to them, but of low value and offensive to society as a whole. For example, mail that contains content aggressively selling credit cards and home mortgages is now at the top of the list of the mail considered to be “junk” by approximately 90% of those surveyed. The public correctly understands that when vendors use high-pressure tactics to sell services or products to vulnerable populations, like people with poor credit histories, those vendors are demeaning not only the services and products they sell, but mail as a medium. Policing deceptive content or content that is inappropriate for a particular recipient, such as the prohibition of pornography being sent to children, are critical to staving off “Do not mail” legislation, because this is the kind of content that makes voters more likely to demand legislation which has a significant risk of being over-reaching.

Three other observations:

• Members of the public who support “Do Not Mail” registries do not understand that the consequences are not comparable to what happened with the “Do Not Call” registry regulation. “Do Not Call” registries had no noticeable effect on the cost of a telephone call because outbound telephone solicitations are a tiny part of the total telephone message stream. On the other hand, if we saw a significant part of the advertising mail stream disappear, the price of postage would skyrocket and have other bad consequences:

• Non-profits and businesses that depend on the mail for attracting donors or customers would see their costs skyrocket by 20-25%, and would lose some of their donor or customer base. Ted Grigg reviews how direct mail is still the core medium for fundraisers in his direct marketing blog.
• Many small businesses that depend on the mail either to attract customers or to ship packages would have great difficulty surviving.
• Many popular magazines would no longer be published.
• Libraries and bookstores that ship books to us would be paying a lot more to get them to us.

• There continues to be no public comprehension that, to the degree that mail substitutes for a trip in an automobile, it is environmentally positive. There are groups that want to reduce consumption and change our well-established consumption habits. I do not think they have much chance of succeeding. If we eliminate direct mail as a trigger for consumption, consumers will find another way to acquire what was presented to them through direct mail. What we most need to do is find ways of making mail as a communications, marketing, and delivery medium as environmentally friendly as it can be. This Print CEO blog post reviews how the printing and publishing industry is moving toward the use of recycled paper and other methods to reduce its environmental impact.

• Finally, no one thinks about the relative environmental merits of electronic communications media. I think that the public tends to ignore the negative environmental impacts of electronic communication either because they have never seen the data centers used to store and transfer electronic messages or mistakenly believe that additional electronic messages do not require additional computer hardware. The impact is highlighted in this TechRepublic blog post. Not surprisingly, companies dependent on electronic messaging are not regularly broadcasting the impact of data centers on the environment. We must do a better job of educating the public on this subject.

My fundamental observation is that many actions taken for environmental reasons end up having unintended negative environmental consequences, such as the substitution of electronic communications for mail.

At the same time, this survey indicates that, although the consumers responding to the survey may have gotten the environmental arguments wrong, their opinions about what is valuable about mail and what is inappropriate are right on target, and we ignore those opinions at our peril.

Every one of these parts of the mailstream has different future prospects. Paper-based consumer-originated personal correspondence has been declining for a long time. Transaction statements are a mixed bag. Some bills and statements are going electronic, such as bank and insurance statements. Others, like health care statements, are growing as we all spend more on health care. Mass circulation magazines and newspapers are declining, but a high-end publication like The Economist is growing nicely.

The Direct Marketing Association (DMA) has just launched a new mail preference service that will allow mail recipients to register to receive more of what they want and to eliminate or reduce what they do not want. The DMA has delivered a significantly enhanced service for mail recipients who want to have more control over what they receive.

But regardless of what happens to these categories of mail, there are some great growth opportunities in the remainder of the mailstream.

I have discussed remote commerce a lot in this Blog and in public speeches, so I will not elaborate on my view that when people receive something they need through the mailstream, rather than having to experience the inconvenience of driving somewhere and waiting to be served in a retail process, this is a great use of mail. For example, think about the difference between receiving your motor vehicle registration in the mail, as opposed to waiting in a long line to be served in a motor vehicle bureau.

But there is another potentially big opportunity, and it is described as the growth in businesses, non-profits and even governments having regular dialogues with their customers, some of which will go through the mailstream.

In the business world, retail establishments generally are remarkably poor in getting to know their customers, and communicating regularly with them. Most successful retailers understand that they need a great location for their store, the right products and services at the right prices, good presentation of the offerings inside the store, and, depending on the amount of assistance needed, the appropriate quality of in-store personnel.

However, they do not take advantage of what they can learn about a customer while he or she is in the store, and what they can communicate and learn when the customer is away from the store. In effect, they do not have an institutionalized knowledge base about the customer that helps them get to know customers as individuals. When I refer to an “institutionalized knowledge base,” I mean a usable computerized record of critical information about the customer.

The transaction history is a good place to start, but many retailers either retain a transactional framework that involves cash, debit cards, or credit cards, none of which are designed to give individual retailers a comprehensive transaction history about an individual customer.

There are three easy ways to get customer information:

• Granting credit and billing the customer through a retail account relationship;
• Creating a loyalty or reward points program; and/or
• Getting customer data through techniques as simple as soliciting business cards for a drawing or requesting that customers complete survey forms.

None of these approaches are expensive or complicated, but few retailers use them. The Customer Evangelism blog further reviews the advantages of implementing and maintaining a comprehensive customer database.

Non-profits also need to get to know donors better. Most still do “elephant hunting,” meaning that they go to big organizations like the United Way, large corporations, or large foundations to solicit funds. They need to get wealthy individuals to donate, but finding a wealthy donor is like finding the proverbial “needle in a haystack.” The easier way to get larger individual donations is to nurture those who have given small donations in the past, and to get them to increase their donations over time. In the Getting Attention blog, nonprofit marketing expert Nancy Schwartz reviews strategies nonprofits can use to enhance their marketing programs. In this post many of her recommendations are centered around improved communications and targeted messaging.

Personalized mail that conveys relevant and powerful information is an essential tool in both the business and the non-profit processes. Sometimes the mail is nothing more complicated than a thank-you note, a reminder, or a postcard suggesting a link to a web site. Sometimes, it is a newsletter or a survey. Sometimes, it is a seasonal greeting card that has a personal touch to it. But, whatever the technique used, it needs to be part of a regular dialogue to keep an organization connected to its customer. Yaro Starak discusses the need for more personalized contact in his blog Entrepreneur’s Journey. While the specific post I have cited focuses on email, the philosophy can be applied to all forms of communication.

Even government can improve its use of the mail. When it sends out its reminders on motor vehicle or drivers license registrations, it can include public service messages the citizens would find valuable. It can also send postcards to notify citizens about public hearings broadcast on the local cable TV channel. Where I live, Cablevision broadcasts state government meetings on Channel 84 and local government meetings on Channel 79.

The efficiency of mail is further debated in this Branding & Marketing blog post. The author feels that a combination of both online and offline communications is the most effective approach at establishing and building relationships with customers.

Customer, donor, and citizen engagement through the mail as one channel in a multi-channel relationship or conversation is a tremendous growth opportunity for those who sell mailing solutions. I always get tremendous satisfaction when one of our sales professionals breaks through with a customer to teach the customer how to use the mailstream in this very effective way of growing its business.