Escher Group VP Explains How Posts Can Secure The Youth Market
In 2020, millennial purchasing power will represent $1.4 trillion in annual spending. For posts, making the postal service part of this demographic’s daily routine is a business imperative. Today, posts are the dominant players in their domestic delivery markets. But a changing market, rising customer service expectations, and well-funded start-ups fuelled by private capital pose a threat to their position. Securing the youth market is a matter of enterprise-wide, digital transformation.
Kevin Seller, VP Sales EMEA for Escher, answers some of the most pressing questions facing Posts about using technology and service delivery innovation to win over not just Millennials, but Generation Z as well.
CEP-Research: Should posts be worried about securing the youth market? Postal systems have been a vital part of civilization for centuries. Can they really be so easily disrupted?
Kevin Seller: Yes, they can be disrupted, but they don’t have to be. And despite their current vulnerability, I 100% agree that Posts play a vital role today. Posts connect people and businesses to each other over vast distances.
Now, notice I haven’t said anything about letters. The unique value proposition of a postal service is not its ability to move paper – it’s the ability to connect people and let them share with each other, whether that refers to families sharing cards, businesses sharing goods, or governments sharing information.
Unfortunately, that value proposition – connecting and sharing – is no longer unique to Posts. We can thank the internet for that. E-substitution means that citizens, businesses, and governments no longer rely exclusively on the postal service to check in on relatives, pay their employees, or process tax returns. And there’s no going back.
But that doesn’t mean Posts no longer have value. They do. What’s even more interesting is that their value proposition is still the facilitation of connecting and sharing, but now they have to revisit what makes them unique.
The good news is that we already know the answer. Unlike the internet, which is great for fast, rapid sharing and connecting, postal services understand how to facilitate complex and physical connections. They know how to move physical goods. They know how to facilitate cross-border movements and deal with customs. This is incredibly valuable. And it’s also quite valuable to younger demographics, which we’ll talk about soon.
But on the point of whether posts need to worry about disruption, I would finish by saying absolutely. Posts are so well positioned to succeed if they want to. Right now, they’re already halfway there – they have the name recognition, trust, and expertise – they just need to acquire the tools and technology to harness their power for a 21st century world.
CEP-Research: So where do millennials enter the picture? How does “harnessing this power” help Posts win a younger demographic?
Kevin Seller: It’s a great question and an important one, too. We’ve already discussed that Posts understand how to move packages and the cross-border flow of goods. Let me explain how millennials and Generation Z enter the picture.
Online shopping is growing exponentially, and it’s only a matter of time before “clicks surpass bricks”. By 2022, e-retail revenues will rise to US$6.54 trillion. By that same year, 22 percent of physical e-commerce deliveries will travel across borders. A number of stakeholders will be navigating this global ecosystem. Chief among them will be shoppers overwhelmed by global shipping documentation requirements and frustrated by landing cost shocks.
And who makes up most of these customers?
Millennials and Generation Z.
In fact, Millennials and Generation Z account for more than 60 percent of online shoppers, and they have a customer profile that diverges from the profile Posts are used to. Younger people like a digital-first experience, because they don’t want to go all the way to the post office for something they can do at home. If they can’t do something exclusively online (for example, pick up or drop off a package) they want self-serve options, so they can help themselves. What’s more, younger consumers want to receive all the information upfront. Receiving a package with an unexpected invoice for $30 in taxes and duties disrupts the customer experience.
Pain points around global deliveries are where Posts can offer distinct value. They have the expertise. The problem is, not all make it easy for younger customers to engage with this expertise through excellent digital products.
CEP-Research: So how do Posts shift towards a digital-first strategy and capitalize on this opportunity to get young people using the post office?
Kevin Seller: First, posts have to accept that digital transformation is the only answer. And when Escher refers to digital transformation we’re not talking about a couple of apps here and a revamped website there. We’re talking about completely transforming enterprise systems and ensuring every system – directly or indirectly - serves the customer experience.
Posts can do this with a secure, stable, and scalable customer engagement platform. For instance, the Escher Riposte platform gives Posts multiple deployment options (cloud, on-premise, hybrid) and it’s built with an open architecture that makes it easy for posts to add services and applications down the road.
What kind of services and applications would Posts want to add to win a younger demographic? Well, mobile point of sale (POS) systems are one example. If you go to the Apple store, you’re not waiting in a massive line up. Sales representatives cash you out from a mobile phone. Posts can do the same. Rather than using one dedicated terminal, they can make the most of their workforce and empower customer service representatives to serve customers directly in line.
Another application Posts may want is the ability to manage and oversee cross-border deliveries easily. For instance, we have a partnership with Hurricane, the world leader in calculating duties and taxes as well as compliance screening for parcels. Thanks to this partnership, Posts now have the ability to receive near-accurate estimates of their taxes and duties, check product classifications, and screen for restricted products.
And these are just a few examples. Ultimately, the goal is for Posts to implement a digital-first, omni-channel experience.
CEP-Research: We’ve talked a bit about digital transformation. What about service delivery transformation? Is this an important part of a Post’s strategy to win younger customers, and if so, what does that look like?
Kevin Seller: Earlier I mentioned that digital transformation efforts should be motivated by enhancing the customer experience. If this happens, then service delivery innovations will inevitably follow. For example, Posts have a parcels opportunity and a parcels problem.
First, you’ve got the opportunity. This year alone, global parcels are expected to surpass the 100 billion mark, and our own research shows that 90 percent of posts believe their success over the next five years will be tied to parcels.
Then, you’ve got the challenges. On the operational side, an estimated 12 percent of parcel deliveries fail, costing Posts over a billion dollars a year in redelivery costs. Moreover, Posts can barely afford to keep operating on a fixed cost model, let alone keep absorbing the cost of redeliveries. They need to move to variable cost models.
On the customer side, Millennials and Generation Z don’t want to line up at the Post office on their lunch break. They’re used to rideshares picking them up outside the restaurant and hot food being delivered to their door. So Posts need to find a way to offer accessibility and availability, without taking on crushing long-term leases for additional branches.
The solutions are a blend of digital transformation and service delivery transformation. One option is to offer self-service kiosks in high-traffic locations like university student centers and train stations where customers can drop off their parcels. This requires the right technical tools, since Posts will need technology to keep packages secure and facilitate payments.
Another solution is establishing a network of third-party retailers who can facilitate pick up and drop off and many other transactions on behalf of Posts. These retail partners would be located in easily accessible neighbourhood sites with extended hours such as convenience stores and drug stores. Posts would get them set up on an easy-to-use platform and customers could easily pick up and drop off their packages. It’s also a win-win situation for both postal operators and retail partners. Posts move towards a variable cost model by only paying based on the number of packages processed and retail partners benefit from increased foot traffic to their stores.
And in the end, the postal service goes from being an institution that young people rarely interact with to a service that they regularly choose to use.
To learn more about Escher and how its Riposte platform can help your company execute on its digital transformation goals, visit https://eschergroup.com/