More than 60% of Posts worldwide have some form of privatized post offices with varying degrees of viability. Post office franchises, located in privately owned businesses increase citizen access to postal and other services because they offer longer hours in more locations. They also have a lower cost-to-sell (10-20%) versus a corporate post office (50-60%).

Canada Post postal franchise located within a Shoppers Drug Mart (pharmacy)

Postal Administrations in developed economies all face the question of how to provide customers with continued postal services at a lower operating cost.

More than 60% of Posts have transitioned or privatized part of their post offices to contract or non-post owned facilities, small businesses or large national chains; however profitability levels of these models differ greatly. Forty percent of Posts in industrialized countries have yet to seriously privatize their post offices.

Franchised post offices provide better customer access with longer hours, parking and convenience – all at generally half the cost of a corporately owned and operated post office.

In today’s economy, Posts are trying to find innovative ways to be more effective and efficient in controlling upwardly spiralling costs. However, the traditional strategies of cost cutting – route restructuring, mail sequencing, downsizing and consolidating plants will not rebuild the organization. Nor can you address the real issues by the traditional strategy of capturing incremental retail revenue from existing foot traffic and leveraging the corporately-owned and operated bricks-and-mortar by offering customers a myriad of more products and services.

Posts must primarily restructure their retail operations and lower their cost-to-sell, decide what role they will play in an increasingly social-media society, develop a fully integrated multichannel (bricks-and-clicks) customer experience and  define what products and services will work in their particular environment.

The need to become more customer centric is a given. Time-starved consumers want from Posts more services and more convenient locations that save them time. Today it’s all about servicing customers in the way they want and where they want. It’s about hours, parking and convenience. Urban consumers are time-starved and if they can do their shopping and postal business in the same place – it’s a bonus.

It is also not enough to just privatize; a Post needs an efficient and effective Retail model that generates the maximum for the Post and is fair for the Franchisee. However, with many Post retail models, either the Post is leaving money on the table OR the model is not viable for the Franchisee in that the model does not cover at least his operating costs and he can’t even break even…and just quits.

The optimum and cost-effective, privatized post-office model is a break-even model where the franchisee’s ROI is no more than 6 months and operationally he simply covers his costs and makes enough money on the incremental sales from high traffic generated by the post office.

With the economic pressures on Posts, how can they not franchise when the operational cost of a franchise is generally less than half that of a corporately owned post office. That about a 20% cost of sales versus a 50-60% cost of sales. That’s a significant lower cost-to-sell and increased customer access.

You can transform your Post Office network into a profitable Retail business by:

  • First defining the optimum network; and then
  • Using optimization analytics to address the high-cost of managing corporate post offices – matching the number of staff to the level of work, reducing the operating costs to the required efficiency level and still give service to the public.

Then, you can turn your attention to developing a complete Franchise System that maximizes your return:

  • With post offices residing within strong-branded, large-chain, host businesses profiting from their retail ability, management oversight and more. In addition, any large national retailer attracts new customers to the Post.
  • Creating even-lower cost-to-sell, small foot print, self-serve franchise models; and
  • Supporting them with a network of automated parcel lockers and / or local parcel shops for quick-and-easy customer pick up of their parcels.

Leapfrog Business Consulting specializes in postal franchises and microfranchises.

Leapfrog Business Consulting can address topics such as: features of potential models, developing a value proposition, franchisee remuneration, developing a franchisee profitability model including the high value of foot traffic, key clauses of a postal franchise agreement, developing a transparent awarding process, implementation strategies in a union environment, mitagating legal challenges by the union, training of field territory managers (retail, franchisee relations, sales/business growth, coaching), risk mitigation, KPI’s and audits, etc.

Franchising is a formidable vehicle for maximizing your revenue; if the model is well designed. Leapfrog Business Consulting can help you evaluate and improve your postal franchise model.

We help Posts analyze profitability models, recognize and evaluate the value of customer traffic, optimize their franchise system and develop a plan to reclaim the money left on the table.

Leapfrog Business Consulting has expertise in the following areas:

  • Franchise System strategy development;
  • Building a Franchise Model;
  • Franchise Agreement;
  • Building a Value Proposition;
  • Defining an Implementation Strategy;
  • Franchise Agreement;
  • Adherence to Standards;
  • Operations management and support;
  • Sales growth strategies;
  • Development of key performance indicators;
  • Development of operations manuals and training programs;
  • Territory management training;
  • Site selection strategies;
  • Marketing and expansion strategies;
  • Risk Mitigation; and
  • Franchisee relations and crisis management.

We also help upgrade the skills of territory managers and franchisees in understanding the drivers of success; executing best practices; tracking results; achieving system alignment; people training; local marketing and advertising; sales growth coaching; and conducting franchisee performance reviews.

Please click here to contact us for a free, no-commitment discussion.