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Rory Sutherland: Why mail? There’s obviously the defensive question about mail as a medium, but also there’s the question of where it can go next.
Adam Crozier: Mail has got some fantastic advantages. I mean I genuinely think of all the media, we’re the most efficient…
Rory Sutherland: Yeah.
Adam Crozier: …the most effective and the most engaging. And I think that one of the things that has really helped our industry over the last few years is the really growing, creative stance. Because having run an advertising agency, the one thing I do get is you can be as efficient as you can be in reaching your target audience in the best possible way, but if the piece of communication…
Rory: Is…
Adam: …doesn’t work, then it’s wasted effort.
So that’s why we recognise that we’re incredibly proud of our industry, but what we have to do is work with the industry to keep driving up the creative standards because in many ways that’s what will help us all to be successful in the future.
What has also changed is that people are beginning to realise that we are a fantastic media to use alongside other media.
Rory: Yes.
Adam: That actually it’s a very powerful tool alongside things like television and indeed the internet. A lot of people are using it very cleverly, now.
Rory: It tends to be the fact that mail quite often gets underestimated in its effectiveness because people look at the immediate transactional response and no other longer-term effect. Now if you tried to judge your television that way, you wouldn’t run a single commercial.
And yet that’s only one side of it. It’s very interesting, when we started using mail in conjunction with loyalty card data, what we realised is that if you actually track not coupon redemption, in fact coupon redemption was often down on target, but actually long-term purchase behavioural changes in the set you mail versus the set you don’t, and you’d use of course loyalty card data or indeed internet transactions to look at much, much longer-term effects, what you realise is that rather like an iceberg, the greater part of response is now actually invisible.
Adam: We all like to think we’re the experts and nobody can tell us anything. And one of the reasons we set up the Mail Media Centre was, of course, because we work with every company in the country…
Rory: Of course.
Adam: … we have a fantastic knowledge base of what works.
And one of the things we’ve done a lot of over the last couple of years, and increasingly doing more of, is actually spending time with clients and customers, even those whose actual business is direct marketing, and showing that there is, you can always learn more, you can always become more efficient. And we’ve saved a lot of our customers a heck of a lot of money, and you know, just by illustrating what other people have done, and what’s worked.
I used to use a fantastic quote, which bizarrely was from the Postmaster General. And it was from the night before commercial TV launched, and it’s a great quote because it said ‘from tomorrow no one will ever advertise in a newspaper or a magazine ever again’, which of course is rubbish.
Rory: Of course.
Adam: Because all these new things come along like the internet, like everything else, and they become part of the set of tools.
And our part of that is to really think about how we can drive, if you like, the importance and effectiveness of mail as a media, even though we’re not the only player in that market, because we are the leader.
Rory: One of the things that strikes me about Royal Mail is that it’s an extraordinarily potent brand, and one which actually has an extraordinary daily relationship with millions of people.
One of the things that has always concerned me about these USO things is that, what you tend to do, is you’re obliged to provide a base level of service to everybody, which is not necessarily, inherently a bad thing. But it tends to have a counter-balancing effect that less innovation…
Adam: Yeah
Rory: … and far less premiumisation goes on.
Adam: Well I’m not so sure actually.
Rory: Ok
Adam: I think we genuinely believe that universal service obligation is actually our greatest strength, rather than a weakness. The fact that we are everywhere, every day, gives us a fantastic base on which to do business. And, you know, the truth is the whole ecommerce part of the economy couldn’t work without that because if you lose the convenience of getting it delivered the next day, I’m not sure the internet side actually works.
Rory: Yes.
So we genuinely, passionately believe that that’s the right place to start for us. But what we’ve got to do on top of that is start building these more tailored products and services, you know to try and sort of improve the kind of service we give. And that is already beginning to come. We’re launching a new green product…
Rory: Tell me more…
Adam: … in March, which is all about, if do companies provide the mail in a sustainable way, you know, then we’ll give them a price advantage for doing that.
I think one of the biggest things we can do is provide a green and more environmentally good service to our customers, which will also help their carbon footprint.
Rory: Yes…
Adam: And it really bothers me this because there is so much
Rory: I know.
Adam: … tosh out there about this media’s greener than that media. And I don’t think anyone has really studied that properly. I’m not actually convinced that the internet, for example, is any greener than the mail media at all. And, in fact, I suspect it probably isn’t if you followed the entire footprint of the…
Rory: No, the huge server farms are invisible.
Adam: Absolutely.
Rory: Equally you have the issue, of course, where notionally direct mail is occasionally seen as a pollutant.
Adam: I understand the issues that people raise around direct mail and receiving direct mail. I mean I guess I always give the same answer and I don’t view it as a defensive answer either, which is people use direct mail because it works.
Rory: It works, yes.
Adam: And it works because people respond to it; therefore, they must like it and value it. And I think that’s important.
The second thing is if everybody in the country believes that the USO is a vital part of the economy and communication marketplace and allows them to communicate, and local communities and rural communities to be joined, then, you know, direct mail very much supports the structure that allows that to be provided.
Rory: My radical suggestion is to make explicit the extent to which advertising pays for a postal service. It would be interesting to make, for consumers, a certain volume of second-class mail free to send.
Adam: Yeah.
Rory: So that, you know, rather as other media work, you know, content comes free in exchange for…
Adam: Yeah.
Rory: … agreeing to accept advertising, which is a standard trade-off…
Adam: Yeah, yeah.
Rory: … for the media.
Adam: I worry that’s a bit defensive, you see, because it kind of suggests that, you know, we have to apologise for sending direct mail whereas, as I say, I think it works and people value it and they respond to it. I think the trick that we can help people pull, and I’m sure you and everyone in the industry does, is the more efficient you make the targeting, the less waste…
Rory: Absolutely.
Adam: … the less that becomes an issue. And I think that is where the digital Mail Media Centre that we’re setting up in April comes in, is it’s making available online all the information to help agencies, and clients and customers improve the way they target and use direct mail.
You know, we ran our own advertising campaign recently and we did use direct marketing.
Rory: Yes.
Adam: And it’s all about growth, helping companies grow. And part of that, I think is a great way of using our industry, which is that companies get in touch with us through television and press, and other forms of advertising to say, ‘yes, I’d like to know how you can help me grow my business’. And then they get an incredibly targeted piece of mail back, not just to their industry but their business, and what they can do to improve their individual business. And I think that really is a great way of tying all those things together.
Well, it’s going to be a different industry, that’s clear given the changing way…
Rory: Yes.
Adam: … that people communicate. But I think it’s got the potential to be an even more successful industry, if we start to use it in different ways. Because I think we are the most targeted, the most efficient, the most effective and, we should never forget, the most engaging because, you know, when it matters, people don’t email and they don’t phone and they don’t text, they send you something in the post.
Rory: Your view on the Hooper report? You’re happy about the move to Ofcom from Postcomm?
Adam: Very much, because whether anyone likes it or not that’s the market
Rory: That’s the market you’re in.
Adam: … we’re in. And some of our frustration has been that we’re sort of stuck with being regulated versus another postal operator, and in the meantime someone on the internet or in TV or press might be dropping their prices…
Rory: Yes.
Adam: … we’re losing business over there. That’s not good for us, and it’s not good for our industry.
Rory: Yeah.
Adam: I think most client companies don’t start by saying, ‘am I going to use Royal Mail or TNT?’
Rory: Yeah, absolutely true.
Adam: They start by saying ‘what do I want to communicate? What’s the best media to use, or combination? Is it television, is it press?’ And just like on TV, eventually they get down to shall I use that Sky channel or that ITV channel or that channel…
Rory: The order of the decision tree.
Adam: … on the post.
Rory: Absolutely true.
Adam: By the time they get to which postal operator, all the main decisions are made.
Rory: Of course, it’s too late.
Adam: It’s too late. You’ve lost the business. So we have to be up here competing not down here competing. And that’s why I think it’s so important. It’s not against Postcomm or anything like that; it’s just reflecting the reality of the business that we’re in today.
Rory: What do you love most about your job?
Adam: Between the FA and here, I was very, I hated getting in a black cab because, you know, football really matters to people and I didn’t think I could ever see an industry that could equal that in terms of the importance that people place on it and their interest in it, and their feeling that, you know quite rightly, it’s theirs.
Rory: Yes.
Adam: And here we are…
Rory: Excellent parallel.
Adam: … in the Royal Mail and the Post Office, and it’s exactly the same, and at times even more heightened because people rely on it so much.
I think one of the luckiest things we have at the Royal Mail, and both the Royal Mail side and the Post Office side, is just a huge amount of public goodwill.
Rory: Yes.
Adam: People really want it to work.
Rory: There’s this massive wellspring of affection.
Adam: And not a lot of companies get that actually.
Rory: Yes, I know.
Adam: And we shouldn’t underestimate that, the power of that. And we shouldn’t take it for granted either.
Rory: No.
Adam: It’s a fantastic brand, a great icon, a company with some absolutely wonderful people who do an amazing job everywhere every day, and one that really makes a difference. Who wouldn’t want to work somewhere like that?