The Business of Government Hour

 

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The Business of Government Hour features a conversation about management with a government executive who is changing the way government does business. The executives discuss their careers and the management challenges facing their organizations. Past government executives include Administrators, Chief Financial Officers, Chief Information Officers, Chief Operating Officers, Commissioners, Controllers, Directors, and Undersecretaries.

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Anita Bizzotto interview

Friday, June 7th, 2002 - 20:00
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Anita Bizzotto
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Sat, 06/08/2002
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Anita Bizzotto
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Arlington, Virginia

Wednesday May 8, 2002

Mr. Lawrence: Welcome to The Business of Government Hour. I'm Paul Lawrence, a partner at PricewaterhouseCoopers, and the co-chair of The Endowment for the Business of Government.  We created The Endowment in 1998 to encourage discussion and research into new approaches to improving government effectiveness.  Find out about The Endowment and its programs by visiting us on the web at endowment.pwcglobal.com.

The Business of Government Hourfeatures a conversation about management with a government executive who is changing the way government does business.  Our conversation this morning is with Anita Bizzotto, chief marketing officer and senior vice president of the United States Postal Service.

Good morning, Anita.

Ms. Bizzotto: Good morning.

Mr. Lawrence: Joining us in our conversation is another PwC partner, Bob Reeve.

Good morning, Bob.

Mr. Reeve: Good morning, Paul.

Mr. Lawrence: Anita, your role as the chief marketing officer is somewhat unique within the federal government.  Could you describe the responsibilities of the CMO and how it fits into the mission and the activities of the Postal Service?

Ms. Bizzotto: I'd be happy to do that.  I guess it's interesting to think of my position as being unique in the federal government, I hadn't really thought about that before, but the Postal Service itself is really unique in terms of government; we have customers.  We deliver 207 billion pieces of mail to 138 million addresses 6 days a week, and we do that with virtually no taxpayer dollars.  So we have to have customers, and we have to build the revenue to fund maintaining that kind of infrastructure.

So the marketing group is all about establishing and maintaining relationships with our customers and growing the revenue to support the infrastructure that provides universal service.

We have to understand our customers' needs.  We sometimes have to understand what they're going to need in the future and anticipate those needs.  We have to develop the products and solutions to meet the customers' needs.  We have to price those products and services correctly.  And we have to make sure that folks know that they exist so that we can sell them.  So marketing in the Postal Service is very much like marketing in any business.  We have to acquire customers, retain customers, and look for new opportunities to generate revenue.

Mr. Lawrence: How many employees are engaged in marketing?

Ms. Bizzotto: In some ways, 800,000.  Every postal employee is an opportunity to touch the customer and to influence that customer's feelings about the Postal Service or their willingness to do business with us.  In the marketing group headquarters, we have just over 400 folks, and about a thousand or so folks in the field devoted to the marketing and sales activity outside of the headquarters area.  But virtually everybody in the Postal Service has a role in the marketing of our business.

Mr. Reeve: Anita, you've got several groups and VPs in charge of those groups that work for you, including service and market development, product development, pricing and classification, sales, advertising, and international business.  How do these groups function together to execute the mission of the marketing organization as well as the Postal Service?

Ms. Bizzotto: It's critical that they function very tightly together.  The key to what we do is all about the integration of all of the activities related to touching the customer.  Everybody has a role.  Our service and market development folks and our sales folks know the customers, they understand the customer needs.  They translate that back to the product folks who build the products to support those needs.  The pricing people and the classification people build the product lines through the classification work to deal in the regulatory environment.

The advertising folks go out and sell and make sure that folks are aware of the services.  So it really is an integrated activity, and every point in that process is an important one to ensuring success.

Mr. Reeve: You've held a number of different positions in the Postal Service.  Can you describe your career and how you got to where you are today?

Ms. Bizzotto: In 5 minutes or less?

Mr. Reeve: Right.

Ms. Bizzotto: I have 28 years this fall in the Postal Service, and I started out carrying mail around Christmastime, when I was in college.  I worked a summer also as an 89-day temporary summer replacement.

I came in career as a distribution window clerk, so I sorted mail, and I worked the window and sold stamps.  Then I started moving along.  I got a management trainee position.  From that, I was able to go out and do first-line supervision in mail processing.  I had experience doing delivery, working in delivery.  I was an acting postmaster for a while.  I spent a year or so working as a superintendent of postal operations in a medium-sized post office in the suburbs of Chicago.

Then I moved up into the regional office, where I was a revenue protection specialist in the finance group.  From that, I moved into the rights and classification service center.  I was promoted to the manager of that service center.  About 10 years ago, I moved to headquarters as the manager of business mail acceptance.  I moved from that position to the vice president of pricing and product design.  In September of last year, I moved into my present position.

So it's been a very long and interesting career.  I've done everything from sell stamps, to sort mail, to gas trucks when the carriers have come in after delivering their routes.  It's a fascinating business, and it's really been an interesting place to spend 28 years.

Mr. Lawrence: Is there any one experience or set of things that you just described in your career that best prepared you for your present position?

Ms. Bizzotto: I don't know if there's any one thing that best prepared me for my present position.  I really think that it's a combination of all of the experiences that I've had that best prepare me.  My time in the field was invaluable.  Working in positions where I directly interacted with the customer as our window clerks do today, as our carriers do today, certainly gives me an understanding of those activities and the opportunities that I wouldn't have had without that.

Working at various levels of supervision I think just provides insight into how the business is managed, how the business is run, what are the issues, what are the challenges facing people on a day-to-day basis.  Directly, the things I've done over the last 10 years working at headquarters with our large customers, understanding the customer base, understanding their needs, doing the pricing, working with the regulator, clearly are all key issues, key learnings related to what I'm doing right now.

But I think really, it's a combination of anything.  I couldn't pick out one particular experience and say that's the thing that best prepared me for where I am today.

Mr. Lawrence: Tell us about the key characteristics of the leaders you've been around in your career.

Ms. Bizzotto: I think all of them have done one thing and they've done it very well, and that's set the vision for where they want to go.  Some of them then just get out of the way and let the folks around them make that happen.  Some of them have stayed more engaged.  But it doesn't really matter what their style around that was.  What was important was they saw where they were going and were able to articulate that vision in a compelling way to the organization, in a way that inspired people to act because they knew where they were going and they knew why they were going there.

Good leaders know how to manage change.  They surround themselves with the right people.  They're not afraid to surround themselves with people that are better than they are in certain things. They fill their own gaps; they focus on a few things and make sure that they're done well.

Mr. Lawrence: The Postal Service is so big.  How does one communicate those ideas to so many people?

Ms. Bizzotto: That is an incredible challenge.  You really have to articulate the vision and then rely on the folks to cascade the vision down.  We have a number of ways in the Postal Service that we communicate to our employees, starting with newsletters, ending with our postal television network, where we do live broadcasts, we do training across that network.  So any opportunity to touch an employee is one that we try to capitalize on.

We provide stand-up talks to supervisors in the field so they can provide information to the employees that work for them.  So really, everybody has to get involved.  So that means that we have to articulate the vision in a way that it's easily translated all the way down the line.

Mr. Lawrence: You report directly to the Postmaster General.  What's it like having a working relationship with someone who, just like you say, is in charge of 800,000 people?  How much time do you spend with him? How does one do that?

Ms. Bizzotto: I think in some ways, despite the breadth of the organization, there are challenges associated with leading any organization, and in the management in the leadership group, it's important that they get together frequently. The executive committee meets at a minimum on a weekly basis to talk about what's going on in the organization and to set the direction.

But working with the Postmaster General, first of all, it's a delight. He is a delightful guy, very down to earth. He knows where we're going. He knows how to articulate the vision. So he's easy to work with. But it's like working with anybody who is your boss.

Mr. Lawrence: Tell us about the culture of the Postal Service. In particular, I'm interested in contrasting it between a private sector, for-profit organization and a large, traditional government bureaucracy. Where do you see it?

Ms. Bizzotto: I really think that we are more like a large for-profit organization than we are like a government agency. We have customers, we have revenue goals, we have challenges that I think some of the other agencies don't have. On the other hand, we're not answering to our investors as some private concerns are. But my experience with folks in the private industry and discussions with friends that work for large private organizations leads me to believe that we are much more like a large private organization than we are like a government agency.

Mr. Lawrence: That's a good stopping point. Come back with us after the break as we continue our conversation about management with Anita Bizzotto of the U.S. Postal Service.

The Postal Service's website is usps.com, not .gov. We'll ask Anita why this is when The Business of Government Hour returns.

(Intermission)

Mr. Lawrence: Welcome back to The Business of Government Hour. I'm Paul Lawrence, a partner at PricewaterhouseCoopers, and this morning's conversation is with Anita Bizzotto, chief marketing officer and senior vice president of the United States Postal Service.

Joining us in our conversation is another PwC partner, Bob Reeve.

Anita, we've recently heard about revenue shortfalls at the Postal Service. How has this affected postal marketing?

Ms. Bizzotto: Before we talk about how it's affected postal marketing, I think we should talk a little bit about how the recent impact of the revenue and volume shortfalls are impacting the Postal Service in general, and potentially impacting our ability to serve our customers. Remember, we serve all of our customers 6 days a week. As I mentioned earlier in the program, we deliver to 138 million addresses every day, 6 days a week. The volume and revenue that we bring in is critical to our being able to maintain that universal service to every American at an affordable rate. So everyone in the Postal Service, not just the marketing group, is concerned about the revenue shortfall.

Clearly, we are tasked with looking for ways to grow the business, and we've been working very hard at identifying opportunities to bring more volume, more customers into the system, as well as reduce our costs of serving those customers so that we can continue to provide service to the American public.

Mr. Reeve: Technology has had a big impact on the Postal Service and contributes to some of that volume and how you handle it. What are some of the new developments in technology that you think are going to help the Postal Service, and how has it changed the way you interact with customers?

Ms. Bizzotto: That's a great question, because we're looking to technology as a way to add value to the mail and make mail more valuable to potential users of the mail. Essentially, we want to make the mail smarter, and technology allows us to create intelligent mail. For example, each mail piece has a unique identifier. That's very valuable to customers who are sending out the mail. New services such as confirm, in which a special bar code is placed on the mail piece, allows customers to track that individual mail piece from point of entry to point of delivery. That allows business customers to get a better handle on when mail will be delivered, or when mail is being returned to them. It helps them with their logistics; it helps them with their inventory planning.

So technology provides us opportunity to make the mail smarter and to add value to mail pieces, which we hope will drive additional volume and new customers.

Mr. Lawrence: Many people have seen Lance Armstrong, the Tour de France winner, for the past 3 years on postal trucks and advertisements. Could you tell us how the Postal Service got involved with sponsoring the U.S. Cycling Team?

Ms. Bizzotto: It's really exciting, isn't it? I just love seeing Lance up there, arms raised in victory. It's really an inspiring thing.

We've had a relationship with the U.S. Postal Service's pro cycling team since 1995. Lance came to the team in 1998. Our research shows that the Postal Service and Lance actually share attributes that makes him a really good spokesperson fro the Postal Service. He's seen as being determined, he's seen as working very hard, he's being seen as someone who works to get the job done. Those are a lot of the same attributes that research shows folks think about when they think about Postal Service employees. So we think it's an incredible match.

So we use Lance internally for inspiration, particularly around teamwork, but we think he's a great image for the Postal Service and we're really excited about the team, and we're looking forward to him wearing his fourth yellow jersey this July.

Mr. Lawrence: Hindsight is pretty good, and the fact that he turned out to be so successful makes it look like a great idea, but I'm just curious about the origination of the idea and how it came to be. Sponsoring somebody was a pretty big step out.

Ms. Bizzotto: As I said, that was done back in 1995. It was really an outgrowth of some strategies around advertising. Certainly, a lot of businesses use sports marketing, use event marketing, as ways to build their brand and to build brand recognition, and to situate themselves in the marketplace. We saw an opportunity to do the same thing. We thought that cycling was a great way of doing that. Again, the attributes around cycling, the need for teamwork, we think are very much like what the Postal Service is all about. So we decided to take the leap and sponsor the team.

Mr. Lawrence: Is there any quantitative feedback in terms of how you measure the success of this? It seems incredibly successful intuitively. I'm just wondering how you measure the success of this.

Ms. Bizzotto: We have information on how Lance and the team are recognized; we can look at the media value of Lance; we do have sales events around some of the team events, and we look at the revenue generated from those opportunities as well.

Mr. Reeve: Paul alluded to this earlier, but the USPS website is usps.com, versus .gov. Can you talk a little bit about how that came about, the rationale, and how you use that to leverage yourself?

Ms. Bizzotto: In fact, you can get to the Postal Service website using .com or .gov. A few years ago, we decided to go with .com, for a couple of reasons. The website was becoming more of a transactional website. When we first put up our website, like many folks, it was primarily informational in nature. We quickly saw that there were opportunities to move more transactional work to the web. In that way, we were looking more like a business, when folks could come buy stamps, pay bills, send mail, .com was the way most people thought of reaching someone on the web. So we thought it moved us towards a more businesslike model and actually made it easier for some customers to find us if they didn't know about the .gov extension.

Mr. Reeve: What other measures like that has the Postal Service undertaken to be more like a private sector company?

Ms. Bizzotto: I think you see that really in a lot of the activities that the marketing group is working on in terms of trying to build more business. We're looking at finding different ways to enable customers to send money, messages, and merchandise through our website. For example, pretty soon, customers will be able to print labels with postage on them from the website. We're going to continue to look for other opportunities for new marketplaces.

But within the confines of some of our legislative and regulatory restrictions, we are trying to push the envelope and act as much like a business to ensure a continued revenue stream, to ensure continued universal service. It's not just about generating revenue, it's about cutting costs. If you've taken a look at our transformation plan, you'll see that we're committed to cutting $5 billion worth of costs out of our system over the next 5 years. So we're working very hard to ensure the continued viability of the Postal Service for the American public.

Mr. Lawrence: I was interested to learn that also on the website you can do things like pay bills. I believe it's called eBillPay.

Ms. Bizzotto: Yes.

Mr. Lawrence: I'm curious to get your perspective on that, because it sounds like you'd like to have customers do that, but the way they might have done that is by writing a check and sending a letter. I'm wondering how you think about the revenue in that kind of situation.

Ms. Bizzotto: That's always kind of tricky, and there are other situations like that as well that we deal with, but the fact is, customers are going to a decision about how they to do business. And if a customer makes a decision that they want to do business with their supplier, with their biller, or with their recipient using electronic, they're going to make that decision on their own. We think it's best that we should position ourselves in a way that we can capture that business and continue to serve that customer as we have for a couple of hundred years.

Mr. Lawrence: The changes you talk about in terms of cutting costs, does that mean we'll see more use of the website for customer interaction?

Ms. Bizzotto: Absolutely, we are looking for ways to broaden customers' access to our products and services, and at the same time, lower the cost of providing that access and providing those services. The website is a great tool to do that. It's also in many cases a very well-kept secret. Many people don't know that you can go to the website to buy stamps; that you can go to the website to get ZIP code information; that you can go to the website to calculate how much it might cost to send a bulk mailing, or how much it might cost to send a priority mail piece from North Dakota to Florida.

There are a lot of ways that customers can do business with the Postal Service over the website. We'll be spending a lot of time over the next couple of years improving those abilities, building on those capabilities, and making sure that people know that they can come there to do business with us.

Mr. Reeve: Have there been any initiatives around the business customers, the larger businesses, or even small and medium businesses, around tailoring services to be provided through usps.com to those groups and target it in that way?

Ms. Bizzotto: Yes, we've talked about that. Our website is set up that there are really consumer services and business services, although we've not really broken out the business services to if you're a certain type of customer, this is where you go; if you're this type of customer, you go over here. We'll be looking to tailor those services more in the future.

Certainly, small-business customers can come to the web to get services that a large customer just simply doesn't need because they have the internal capability and all of the technology to do that. So we're trying to see how we can serve both their needs in a unique way through the web and through other means.

Mr. Lawrence: That's a good stopping point. Rejoin us in a few minutes as we continue our conversation about management with Anita Bizzotto with the U.S. Postal Service.

With such a large organization and such a huge number of customers, how does the Postal Service stay customer-focused? We'll ask Anita when The Business of Government Hour returns.

(Intermission)

Mr. Lawrence: Welcome back to The Business of Government Hour. I'm Paul Lawrence, a partner at PricewaterhouseCoopers, and today's conversation is with Anita Bizzotto, chief marketing officer and senior vice president of the United States Postal Service.

Joining us in our conversation is another PwC partner, Bob Reeve.

Anita, can you describe the restructuring that occurred at the Postal Service last fall?

Ms. Bizzotto: Yes. Last fall, the Postmaster General thought that there was a need to further streamline and focus the organization, and one of the things that he did was to restructure some of our organization. About 20 percent of the executive positions were eliminated, two area offices were closed. Some of the biggest changes actually occurred in marketing. There had been organizations outside of the marketing department that were brought back in, so that going back to what I mentioned earlier about the need for integration across all the marketing and sales activity, all of those activities were brought into one department in order to integrate them more fully and to build a more efficient organization to move forward.

Mr. Reeve: It sounds like that created some management challenges for you as you moved into your role as CMO. Can you describe some of those?

Ms. Bizzotto: Yes. Let's talk about some of the management challenges as I moved into my role as CMO. The restructuring and the new appointments were announced on Friday, September 7th, so my first day in the new job was Monday, September 10th. So the restructuring itself, while a challenge, proved to be a very small one when compared with the events of September 11th and the anthrax attacks that followed soon after.

So there were some real initial challenges around dealing with those issues, making sure our customers were well-informed, making sure that consumers didn't lose confidence in the mail as a way of receiving and sending information. So we were trying to do a number of things all at once to deal with those challenges, and I think we've come out of there pretty well given the magnitude of the issues that we were dealing with at the time. But working together and hunkering down, you can make amazing things happen, and I think we were able to do that.

Mr. Reeve: Being customer-focused and getting the Postal Service really focused on customer needs I know is high on your priority list. How does a small organization, relatively small in the Postal Service, like marketing, shift the culture, change the operations-driven focus? What are your strategies for going after that?

Ms. Bizzotto: The key is not to feel like you have to do it all on your own, because we don't. We are the focal point, but we work closely with the rest of the organization to ensure that we can provide customers the services that they need and the products that they need. Our counterparts in the mail processing and operations group help us solve issues around service or different product offering opportunities. The finance folks help us develop solutions around payment and things like that. And our information services group is critical to the use of technology to help fuel growth.

So, first of all, you can't do it on your own. It doesn't matter how small or big of an organization we are, the fact is we provide services to our customers and we need to work with the organizations that actually own those services to ensure that we can be successful.

Mr. Lawrence: How does the Postal Service think about customers? There are so many with so many different -- geographically spread; is there a framework that you use to think about who they are and their interests and preferences?

Ms. Bizzotto: Absolutely. We've actually sorted our customer base down into four very, very broad segments. At the top, well, I don't want to say top or bottom because it implies some sort of judgment, but we have a pyramid that we use internally to describe to ourselves our customer base.

We have national accounts, a couple of hundred of those, who are the largest mailers in the United States. They are geographically dispersed all over the states. Our next segment of customers we call our premier accounts; there are close to 15,000 of those. Our premier and our national accounts are what we call managed accounts. These are folks that are salespeople who are assigned to these accounts and they work these accounts.

We also have consumers who are not only receivers of mail, but senders of mail. Then in between the customer segment and our premier segment, we have the small- and mid-market customer, which is where we actually think a lot of the opportunity lies for the Postal Service in terms of future growth, and we'll be spending a lot of time understanding more about that segment, understanding more about their needs, and understanding about how we can build products and services to satisfy those needs.

But you're right, with a broad customer base, we have to spend a lot of time understanding them in ways that provide avenues for action as opposed to just pieces of information, and we've segmented our customers into those four broad segments. We have folks assigned to understanding those segments and their needs and then translating those needs to the rest of the marketing and the operations organizations so we can service the customer.

Mr. Reeve: As you are focused on the customers and understanding their needs and how you can configure solutions, developing new products and services, how do you compete with private sector service delivery folks in that regard?

Ms. Bizzotto: This is where some of our discussion around we're a lot like a business gets trickier, because in many ways, we stop being much like a private concern when you start talking about going to market quickly with products or services, pricing our products in a way that we can react quickly to the marketplace. Our regulatory environment doesn't allow us to move as quickly certainly as the private sector would when there's an opportunity to introduce a new product or service or there's a need to change a price because of cost increases or because of opportunities to draw new business.

Our rate-making process is a very complex and lengthy one. We have over four thousand rates. Anytime we want to change any one or all of those rates, we have to go to the Postal Rate Commission. We generally do them all at once because it's a very lengthy process. It takes about 16 to 18 months, start to finish for that whole process to complete its cycle, and sometimes the rates that we propose are the ones that we end up implementing and sometimes not.

Anyone who has any interest at all in the price that we are proposing to charge has an opportunity to come to the Postal Rate Commission and argue or provide their opinion on whether or not the rate that we're proposing is the right one and to offer their own solutions to the prices that we've proposed. So it's a very unique environment, where some of our competitors, for example, could make decisions to essentially change a price overnight without anybody being able to challenge or ask questions or really do anything about the fact that they've made that decision, and we live in an environment where everyone who is interested has an opportunity to influence the entire process.

So particularly when we're talking about introducing new products to meet a market need, it's difficult to do that quickly; if we've got a new product with a new price, we have to through the rate commission. We've been very successful with the commission with smaller cases, experimental products. We've been able to shrink the timeline. We had a very successful introduction of a new rate for priority mail. It was 9 weeks, start to finish at the commission. But generally, when we are changing our rates, it's a 10-month process.

Mr. Lawrence: Let me ask you about a management decision-making thing. You described a very interesting scenario where, as the chief marketing officer, you might be charged with we need more revenue, so you introduce new things, and someone somewhere claims this is something I do in the private sector. How does that get worked out? Because it would seem your charge is clear, and yet you're not a private organization, and as a result, this probably gets some attention that needs to be dealt with.

Ms. Bizzotto: It does get worked out one way or the other, and sometimes we choose to continue moving forward with the product offering, and sometimes for any number of reasons we decide that it's not appropriate at that time for us to either enter that market or to offer that product or service, and there's really no one answer. It's dependent on the situation. Invariably, anything we try to offer that's new, someone will have an issue with it, and it's a delicate balance working our way through all of the interested parties to get to an end that is satisfying to everyone.

Our business customers, we spend a lot of time working with them through various task groups. We have a mailer's technical advisory committee that meets quarterly with the Postal Service. There are a number of other working groups, the mailing industry task force, where we work very closely with our business customers. But they're not our only constituents and they're not the only interested parties in what we do, and sometimes we have to deal with those issues and make the appropriate decisions.

Mr. Reeve: I know you recently had the rate increase approved by the Postal Rate Commission.

Ms. Bizzotto: Yes.

Mr. Reeve: That was an interesting process in itself. This time, I think you had a lot of interaction with the mailers and with the other stakeholders. Can you tell a little bit about that and how the customers are reacting to the rate increase?

Ms. Bizzotto: Nobody likes a rate increase. Let's not pretend that they do. But the fact is, we've had very few negative comments on this particular case. For the first time ever, we settled, came to an agreement with all the interested parties on a rate case well within the 10-month time frame. That was partially because we filed the case in September. Because of the unique issues that arose as a result of September 11th and the anthrax incident, the Postal Rate Commission, all of the interested parties in the case, and the Postal Service came together and reached an unprecedented agreement on the rates that we had proposed, and as a result, we will be implementing the rates this coming June.

Mr. Lawrence: We need to go to a break, but stick with us as we continue our conversation with Anita Bizzotto of the Postal Service.

What does the future hold for the Postal Service? We'll ask Anita for herthoughts when The Business of Government Hour returns.

(Intermission)

Mr. Lawrence: Welcome back to The Business of Government Hour. I'm Paul Lawrence, a partner at PricewaterhouseCoopers. Today's conversation is with Anita Bizzotto, chief marketing officer and senior vice president of the United States Postal Service.

Joining us in our conversation is another PwC partner, Bob Reeve.

Mr. Reeve: Anita, the Postal Service recently completed a transformation plan and presented it to Congress and to your customers. Can you talk to us a little bit about that plan, what it entails? You mentioned it before. What changes do you think that will bring in the near term?

Ms. Bizzotto: The transformation plan is all about ensuring the continued ability of the Postal Service to serve the American public, to provide universal mail service to every American regardless of where they live, what they do. It's all about ensuring that we can continue to delivery to everyone everywhere 6 days a week. We're the only service that does that.

But if we don't do something now, given our current financial situation and the way the world has changed since the Postal Service was created back in the early 70s, we're concerned about our ability to continue to provide that service and we're afraid that it would be in jeopardy. Today's model, which was built in the early 70s, we don't think it will continue to work in today's rapidly changing business environment. Mail growth is decreasing. For years, the Postal Service, frankly, relied on continued increases in mail volume to fuel the business, and we've seen that start to change over the last couple of years, for any number of reasons. At the same time that mail volumes are declining, every year we continue to add about 1.6 or 1.7 million new addresses to the network. So the infrastructure is growing, and yet the mail volume on which we rely on to support the continued growing infrastructure has started to slow. So we think that we need to look to another model for the Postal Service for the future, and that's really what the transformation plan is all about.

Mr. Reeve: Specifically, what changes do you envision in the marketing area to meet the challenges of that transformation?

Ms. Bizzotto: The marketing organization has a key role in terms of the transformation strategies around growth and continuing to find ways to add value to the mail; to turn from a world where we rely on volume to one where we rely on adding value to the mail as the fuel for additional revenue or additional volume.

A lot of those strategies around growth involve how customers access our products and services. We're looking to rethink our approach to our retail units and to look for different ways of making it easier for customers to access postal products and services. We're going to do a number of things. You'll see us expanding self-service opportunities and moving more transactions to the web, as I mentioned earlier. Using partners to help expand customers' access to our products and services.

Then we have to aggressively promote those options, because like the web, it's sometimes a

well-kept secret to customers that they don't have to come to a Postal Service window unit to buy stamps if that's all they want to do. You can often get stamps at our local grocery store, in your local ATM, on the web, by mail. There are lots of ways that customers can access our products and services. We're going to expand all of those options and we're going to make sure people know about them.

Our strategies also revolve around information-rich mail products. As I mentioned a littler earlier in the broadcast, we need to use technology to enhance our competitiveness to keep us uniquely positioned, keep mail uniquely positioned in the marketplace as a way for customers to do business with their customers. You'll see us moving away from a one-size-fits-all approach to our customer base. We have consumers, we have business customers. It's pretty clear that we treat consumers and business customers somewhat differently now. We have a separate rate structure for large customers and bulk business mailers. And yet we treat customers who mail 500 pieces a month at one time the same as we treat someone who enters a million pieces a day, and we think that we need to move towards more customization of products and services for customers to better meet their needs and as a way of bringing new volume and revenue into the system.

Clearly, from a marketing perspective, we're looking for a different kind of pricing model. We just need to move to a world where we can approach the whole rate setting and pricing process much differently than today. Customers have told us that they are interested in more predictable rates. Right now, there are questions about whether or not the current construct of the commission and the rules that we live by would even provide for phasing in of rates as opposed to a situation where you raise the rate and it lasts for a couple of years and then you raise the rates again.

So we're going to be working with the Postal Rate Commission. We're sponsoring a summit on how we approach what we call omnibus rate cases -- that's when we change all 4,000 rates at one time -- to see if there's a way we can work together to understand what is in fact doable under the current rules and see if we can move to a way of perhaps phasing in rates or doing things differently that better serves customer needs.

We're looking to perhaps provide customized pricing solutions for customers. Many people call these negotiated service agreements, which are not uncommon, certainly in the private sector, but looking for ways to work with individual customers and to price our products and services to meet their needs as well as to provide additional volume and revenue to the Postal Service. We'll clearly be looking -- we think there are a lot of opportunities in the package market, so we will be looking to expand our market share in the package business, looking to simplify the package product line, looking for additional payment options and things like that.

I think more importantly, you'll see us promoting mail as a key communication and customer relationship management tool. We need to continue to promote the strength of the mail. It's a way of targeting customers. It's a measurable medium. It has a great impact on folks when they get it. People like to get mail. And in this great mid-market customer segment, we think there are real opportunities to show businesses how the Postal Service and mail can help them acquire and retain their customers. If we can do that, we'll both be more successful.

Mr. Lawrence: Those are some pretty complicated ideas, and ones that many people for a long time have thought about and debated.

Ms. Bizzotto: Yes.

Mr. Lawrence: I'm just curious, what's the timing in the process going forward for the transformation plan?

Ms. Bizzotto: There are really a couple of different phases, although the activities are going on concurrently. What I'm talking about is the marketing strategy over the next 5 years, between now and 2006. But there will be certain things; we're going to get to certain points where the current construct will not allow us to go to the next step, and we'll be looking for legislative solutions and we'll be working on those sorts of solutions as we go and as we identify the need and the opportunity.

Ultimately, the transformation plan says we should move to an entirely new business model, and that is a longer undertaking that will require certainly the support and a lot of work on the part of not just the Postal Service, but all of the interested stakeholders in our business.

Mr. Lawrence: I'm just curious from a broader perspective, how do you measure success?

Ms. Bizzotto: It's a lot harder. It's not as simple as it was when I was supervising in mail processing when, at the end of the day, if the mail was gone, you were successful, and if there was still mail on the floor, you were not. Certainly, we look at things like our market share, we look at revenue and volume as measures of our success, and customer satisfaction. So there are a number of measures of success.

Frankly, some of the work that we're doing now with the new marketing organization, we're working with a number of folks to take what had been success measures in different parts of the organization and build a set of success measures strictly for the marketing organization, but in the end, it's all around is the volume coming in, is the revenue coming in, are the customers satisfied?

Mr. Reeve: Sounds like exciting times ahead for the Postal Service, Anita. What advice would you give to a young person considering a career with the Postal Service, or any public service agency?

Ms. Bizzotto: Go for it. I've had a wonderful career, and all of the folks around me have had wonderful careers. Government is a really interesting place to be, and I think that certainly, there are all the wonderful public policy reasons why it's great to work in government, but you can get experiences in government that many people don't realize.

I was surprised -- I'll never forget when I was a clerk, and the first time I found out that there were economists working for the Postal Service, lawyers working for the Postal Service, or marketing people working for the Postal Service. You tend not to think of government organizations as really having the same sort of opportunities as private businesses do. We have them, and we have all the public policy challenges layered on top of those opportunities. It's a great place to work. It's wonderfully challenging and interesting, and I'm still very excited about it even after 28 years.

Mr. Lawrence: I'm afraid we're out of time, Anita. Bob and I want to thank you for being with us this morning.

Ms. Bizzotto: Thank you.

Mr. Lawrence: This has been The Business of Government Hour featuring a conversation with Anita Bizzotto, chief marketing officer and senior vice president of the United States Postal Service.

Be sure and visit us on the Web at endowment.pwcglobal.com. There, you can learn more about our programs, and you can also get a transcript of today's conversation. Again, that's endowment.pwcglobal.com.

This is Paul Lawrence. See you next week.

Anita Bizzotto interview
06/08/2002
Anita Bizzotto

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