What is the real cost of strike action?
Share
As the dust settles on the piles of undelivered mail sitting in sorting offices nationwide following the first of what could be a series of national strikes last week, many have turned their attention to assessing the potential financial cost of the dispute.
The DMA this week estimated the cost to business of lost, postponed or cancelled direct mail campaigns could total £10m, while others have put the total bill at £1.5bn.
Direct marketers have also been queuing up to issue the Royal Mail with dire warnings about its future.
Advertiser body ISBA said companies could move their business away permanently and turn from direct mail to email as a consequence of strike action.
Robert Keitch, chief of membership and brand at the DMA recently warned that the strikes “will only serve to undermine the commercial value of post as a means of doing business”.
As cheerleader-in-chief for and a major producer of direct mail, the Royal Mail needs to be alert to warnings from such an informed sources.
Further food for thought came from shadow business secretary Kenneth Clarke, who, perhaps sensing a political opportunity to appear as a tough-talking decision maker, revealed the Tories would move quickly to privatise the service if elected next May. Indeed, to this end he said that “private, confidential meetings” had already been had with potential suitors.
So, has strike action irretrievably dented the long-term prospects of direct mail as a marketing channel, as some are suggesting? And has it hastened the fundamental change to the structure of UK mail services a sell-off would undoubtedly cause?
With regards to the former, the worst case scenario is far from being reached but even before the strike action, the new digital world meant the Royal Mail was already handling 10% less mail each year as the use of email and the internet grows. The strike action will only accelerate this shift.
And although Clarke’s hard-hitting words will be interpreted by some as political posturing timed to win over wavering voters, the frustration caused by the strikes could be well harden the Tories’ resolve to succeed where the Government failed in July and find a private investor.
Latest Jobs
Senior Account Manager
Ball & HoolahanEuropean Category Marketing Manager
FellowesMarketing Manager (FMCG Food)
MarsDomestic Marketing Consultant
Saudi AramcoJunior Account Director - Integrated - £35-42k - Surrey
Identica Recruitment
Job of the Week
Jobs Search
Top Jobs
Latest Jobs
Senior Account Manager
Ball & HoolahanEuropean Category Marketing Manager
FellowesMarketing Manager (FMCG Food)
MarsDomestic Marketing Consultant
Saudi AramcoJunior Account Director - Integrated - £35-42k - Surrey
Identica Recruitment
Readers' comments (2)
Paul Bates | Tue, 27 Oct 2009 12:52 pm
Business secretary Peter Mandelson says that the Royal Mail is in terminal decline, but this doesn’t have to be the case. The number of letters sent daily by the Royal Mail might have slipped from 84 million in 2005 to 75 million today, but these are not catastrophic figures. And email has not, in 25 years, managed to replace the post either.
Strike action will, however, force many UK firms to re-evaluate their postal strategy. Many documents, often of significant business value, are still well suited to the post. Some examples include contracts, negotiations and other such customer correspondence that can wait a day or two to reach their destination.
But strike action turns days into weeks and increases the risk of mail being lost in a mounting backlog. If the Royal Mail won’t deliver, then who will? There are a growing number of technologies, from secure online data rooms to encryption, which are clamoring to replace aspects of our trusted and, relatively, secure postal service. Invoices are a great example of a once traditionally posted document that has made a relatively easy transition to email.
UK firms have long adopted a natural balance in their mail strategies that leverages the benefits of each type of mail, hard and soft, to their advantage. The timing of strike action during such difficult economic times for most UK firms seems highly disingenuous and, sadly, Mandelson might well be proven right.
-Paul Bates, UK Managing Director, StrongMail Systems
Unsuitable or offensive? Report this comment
Anonymous | Wed, 28 Oct 2009 9:15 am
The idea that mail levels are down because a of the growth in online communication is a myth. The number of parcels being delivered as a result in the growth of internet shopping is up massively.
The statistics on mail volume have been heavily massaged by the Royal Mail as an excuse to employ fewer staff and offer a poorer service. They are worked out by an arbitrary figure set by the Royal Mail of 150 items per postbox. When trade unions ran a random sample of postboxes the figure came out at an average of 274 items.
Unsuitable or offensive? Report this comment