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Accenture’s sixth study explains how high-performing postal organizations are exploring new ways to stimulate mail volumes and retain existing customers.
Our 2013 research shows that while an improving economic picture may have slowed the decline of mail volumes, it has not created the volume increases that will “save the day” for postal organizations. While mail continues its descent, however, the recovery has produced a growing wave of parcel business fueled by eCommerce. This parcel volume growth, coupled with product and service diversification, has shown that postal organizations can indeed thrive in a new world.
The apparently indisputable universal service obligation is also beginning to show signs of wear and tear as strategies to lower costs begin to affect longstanding regulatory demands. Competition from private players seems to be damaging postal organizations’ core business, too, while the steady march of parcels’ prominence continues to fuel growth for the majority of postal players. Finally, postal organizations must innovate to meet the increased competitive climate head on and be prepared to seize new international opportunities.
In summary, the 2013 research found that high-performing postal organizations:
Use product innovation and pricing levers to improve mail profitability.
Embrace the diversification of services.
Maximize the opportunity in parcels and taking full advantage of eCommerce trends.
Deliver value to the consumer and develop solutions that increase flexibility and control for the recipient.
Applying the Accenture High Performance Business Methodology, our research uses a quantitative model to assess financial performance and a qualitative model to determine the drivers of high performance. This qualitative model assesses three views of a postal organization; the “building blocks” of high performance—market strategy, distinctive capabilities and performance anatomy.
Indeed, while strength in one dimension is good, strength across all dimensions is the strongest indicator of high performance. High-performance businesses outperform their industry peers over the long term: over economic cycles, over industry cycles and over generations of leadership.
Using this methodology, our research has shown that postal organizations and integrators that have applied different strategies have realized different results. For the purposes of all our research studies we categorized these strategies into four main groups and assigned them the category names: global players, regional diversifiers, service providers and traditionalists.
Service providers are extending their lead. Service providers continue to dominate the high performers with 60 percent of high performers coming from this category. As a group, they improved their overall performance, continuing year over year to consistently improve their performance against the other strategies, with strong capital and employee spread coupled with consistent revenue growth.
Global players are still performing well. Global players have historically performed well because they are focused on parcels and logistics and are globally diversified, often in high-growth countries. Global players are well positioned to take advantage of the continued growth trends in parcels and Accenture predicts they will produce solid results in the next few years as economies return to growth.
Regional diversifiers fall into the middle of the pack. While regional diversifiers also improved their performance as a group, this year their revenue growth lagged in all other strategic categories. These players have focused on investments and acquisitions in nearby markets and they have struggled to generate synergies or value from this expansion.
Traditionalists are lagging further behind. Traditionalists are most vulnerable to mail volume declines and, as such, continue to struggle. Nearly every traditionalist in our study slipped in the rankings. While there are bright spots, with one traditionalist in the top 10 performers, for the most part traditionalists are failing to deliver revenue growth and are negatively affected by tighter regulations and employee spread.
As our previous research has identified and our high performer activities endorse, there are many fundamental aspects of postal operations which are changing the face of the industry. In particular we found:
Digital mail is yet to be fully exploited. To date, no postal operator has seen material value creation from digital mail. And while many postal organizations now have solutions in the market, none have created a compelling value proposition that incentivizes broad adoption or replaces the revenue lost from cannibalizing mail volumes.
Private postal operators present a serious alternative. Some private players are succeeding in gaining a competitive foothold—creating more competitive pressure on mail volumes and emphasizing the need to operate efficiently.
In summary, our 2013 research shows that postal organizations are addressing the monopolistic ghosts that may have bound them to the past and driving growth through innovation. Indeed, as our ongoing assessment of the postal industry has shown, the choice of strategic approach is a key determinant of performance, with our high performers almost entirely consistent year on year.
Now, postal organizations must be aware of the global demands on their industry. With the accent on customer-facing offerings, operational excellence and embracing the latest technologies, postal players must seek out new capabilities to deliver the postal service for the future.
March 12, 2013
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This summary of the 2013 global Accenture postal research focuses on postal strategies developed by high performers.
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