Transforming the United States Postal Service into a marketing power, Azeez Jaffer unleashes direct mail, kids’ programs, events, cause campaigns, even Elvis and the Beatles. His all-consuming motivation: Get people to buy stamps but not use them.
It once was an astoundingly profitable side business for a multi-billion-dollar organization. Using little or no advertising or promotion, it boasted more than seven million habitual and enthusiastic customers. In the late 1960s, in fact, one in four American children were regular contributors to what the United States Postal Service calls its “retention revenue,” money spent by collectors for stamps that are rarely mailed.
Last year, the Postal Service took in $60 billion performing the service of moving envelopes and packages from one place to another, but it spent $58 billion to pay for the massive workforce and transportation fleet needed to do the job. That’s why Postmasters General have a soft spot for the oddly termed philatelist, who pays face value for a service he’ll never use. To the Post Office, it’s like free gas money, falling sweetly and directly to the bottom of the bureacratic pocket.
In the final quarter of the 20th century, however, philately has flagged. By 1993, only one in 75 kids were collecting stamps. The serious collector base had dwindled to about 250,000 – essentially the survivors of the seven-million-strong throng of the ’50s and ’60s. “The average age of the stamp collector is around 63 years old,” says Wayne Youngblood, editor and publisher of Stamp Collector, a twice-monthly hobbyist publication. “It’s a demographic that’s never really changed.”
Enter Elvis and Azeez.
Azeezaly S. Jaffer hardly seemed the candidate to lift the USPS’s Stamp Services unit into the era of modern marketing. An ethnic Indian-Pakistani who was born and raised in Kenya (where his father was in the hotel business), Jaffer emigrated to the U.S. in 1967 as a 13-year-old who’d never eaten a hamburger or seen a flip-top can. A bright student, he was selected out of USC for a Washington internship championed by then- President Jimmy Carter and went to work for NASA, where he remained as a public affairs officer until joining the corporate relations department of the Postal Service in 1986. He was appointed executive director of Stamp Services in ’94.
It was during ’91 and ’92, when Jaffer was working on Olympic programs tied to the USPS’s sponsorship, that the longtime bureaucrat found himself immersed in marketing and recognized its awesome potential for moving the masses. “I knew that if we listened to the American people, we could find ways to get them excited about stamps,” he says.
Then chief marketing officer (and now Postmaster General) William Henderson heard Jaffer out and put him in charge of a unified Stamp Services department. Lending more than a little credence to the notion that marketing ain’t brain surgery, the promo-novice’s first campaign was a smash hit that h ad the whole nation talking and the Postal Service’s retention revenue rocking.
The Vote for the Elvis Stamp campaign launched by Jaffer and his staff in 1993 was both revolutionary and exploitative, in the best marketing sense of the word. Want to get the American public juiced up? Go right to the sideburned visage and gyrating hips that launched a zillion collectable plates and velvet paintings. The real genius was inviting Americans to vote on whether the stamp would feature the young, studly King or the older, rhinestone-studded version. Millions of people cast their ballots, the media jumped all over it, and when the unveiling did come (young Elvis won), it drew a coast-to-coast pause. Non-collectors flocked to post offices to get their Elvis stamps, and a direct-mail appeal drew a 16-percent response, average purchase $60. “Fifty-eight million dollars fell right to the bottom line,” says Jaffer.
“Bringing the U.S. population in to give its mandate as to what stamp to use was a phenomenal marketing move,” says Sandy Moltz, chief creative officer of Chicago-based DraftWorldwide, Stamp Services’ lead agency for promotions, direct response, and advertising. “It was a defining moment in how the American people view the post office.”
>From the grave, Elvis floated the bulk of that year’s retention revenue of >about $70 million, and the Postal Service’s keen use of pop-culture images >and interactive consumer promotions has continued apace ever since. This >year, Stamp Services expects to crack the $300 million mark, and copped >four Reggie Awards in the process – more than any single packaged goods, >credit card, apparel, or video game company. The USPS’s 1999 promotion >grand slam:
Stampin’ the Future Worldwide Design Contest. Getting kids into stamp collecting is a No. 1 priority for USPS, whose Stampers program uses stamps to tell history lessons in some 300,000 American classrooms. With Stampers as the primary conduit, backed by P-O-P in 40,000 post offices, the Postal Service invited kids to submit drawings that expressed their dreams and hopes for the future. More than 120,000 kids entered, and four drawings were picked to appear on official U.S. stamps.
Breast Cancer Research Semipostal Stamp. In mid-1998, the USPS launched into cause marketing by issuing its first fundraising stamp. The price of the so-called semipostal stamp was set at 40 cents, at the time eight cents higher than a regular stamp, with the bulk of the extra proceeds going to aid breast cancer research. One year after issue, 104 million of the stamps have been sold, raising nearly $8 million for the charity.
Celebrate the Century. The largest integrated marketing program ever fielded by USPS got Americans back to the voting box to pick the events, trends, and personalities that would appear on a two-year-long series of stamps celebrating each decade of the 20th century. With ballots available through Stampers, direct mail, and at all post offices, some 75 million individual votes were cast and stamp sales topped $40 million.
Mail Connects with Customers. This direct-response, business-to-business campaign targeted banking executives, who were urged to make better use of the mail to keep in front of their customers. Response exceeded four percent.
Jaffer’s modern marketing fervor would do a McDonald’s promotion manager proud. Last year, Stamp Services issued a Looney Tunes series led off by Bugs Bunny, who quickly proved himself to have a wider public following than Elvis. The Postal Service received 250,000 orders for the Bugs issue, and a single $3.40 sheet of Bugs Bunny stamps now fetches up to $250 on the open market. The Daffy Duck stamp was introduced last April at a star-studded event at Mann’s Chinese Theatre in Hollywood. Back East, Daffy presented himself on a Times Square billboard.
Behind all the dazzle and flash is a solid foundation of retail merchandising. Stamp Services worked out a promotion with Wal-Mart that put Daffy stamps and other merchandise in postal boutiques at 2,644 stores. And, like QSRs, the Postal Service has its own densely scattered retail chain – the 40,000 post offices that themselves are slowly metamorphosing into “postal stores” (see box on page 65).
When it comes to cross-promotions, Stamp Services has proved itself as agile as a letter carrier eluding a rottweiler. In a nifty little show of reverse merchandising, the unit sent a direct-mailer to comics collectors offering, for $7.95, a reprint of Action Comics No. 1 featuring the debut of Superman. “Free” with each purchase came a first-day-of-issue, cancelled Superman stamp, part of the Celebrate the Century series. The big idea: Get known collectors of other stuff into collecting stamps. Oh, and force-feed a big chunk of retention revenue into Postal Service coffers at the same time.
And why shouldn’t the Postal Service hop onto the 20th century licensing train? Jaffer sees his unit as a competitor in the $4 billion collectibles market, doing battle not with Federal Express and Airborne, but with Beanie Babies and baseball cards. And anyway, it’s free. One of the great things about being the only legal dispenser of postage in America is that major celebrities and entertainment properties view being pictured on a stamp as a great honor. (O.K., not everyone. One huge entertainment conglomerate threatened to sic its lawyers on the Postal Service if it tried to issue a stamp of its squeaky-voiced rodent mascot.)
But Stamp Services’ promotion-fueled, pop-culture-tinged lunge after young collectors carries with it one big risk: turning off old-guard philatelists, its ardent, core market.
“The Postal Service is doing innovative work, a lot of it quite properly aimed at new collectors. But it’s offensive to old collectors,” says Stamp Collector’s Youngblood. “Most of them see the new issues as trivializing the U.S. stamp program. They’re lovers of research and history and classic design styles. They see presidents lost in favor of Daffy Duck.”
Jaffer is sensitive to their feelings, but he feels as committed to serving the public at large as he is serious about his role as a civil servant. “We’re a government agency, bound by the limitations of the Constitution, and I say that as long as I sit in this chair you will never see the commercialization of stamps,” says Jaffer, a stern look of duty washing the customary sparkle from his eyes. “Every stamp that comes from this office is reflective of the wishes of the American people. It’s our job to honor the people and events they think are historic. And, anyway, it’s the only way to ensure stamps will remain collectable.”
No matter how market-savvy Stamp Services becomes, no matter that the 1998 Comprehensive Statement on Postal Operations states as one of its goals: “Become a 21st century growth company,” the Postal Service is still a bureaucracy. Jaffer and his staff don’t go shopping for properties in Hollywood or at Toy Fair and then hump out a stamp in time for some new movie release. It takes two years minimum to get a commemorative stamp approved, and the Postmaster General has veto power over any new issue.
The USPS receives some 60,000 suggestions a year for commemorative stamps, and every one is considered by the Citizens Stamp Advisory Committee (CSAC, pronounced “C-sack”). The group of 13 people from various walks of life (actor Karl Malden and TV basketball analyst Digger Phelps are among the members) meets four times a year to review potential stamps and pass them along to the Postmaster General.
“CSAC must consider three distinct audiences in making its selections – the serious collector, kids, and the American consumer,” says Jaffer. “That hasn’t changed, but what we’ve done is to ask the committee to look at a potential stamp and see how we could best package it to reach the market. We didn’t change the product, we enhanced it.”
The Looney Tunes and Celebrate the Century series are cases in point. Philately meets ferro-equinology in a new series called All Aboard, featuring depictions of five classic American locomotive engines.And the Postal Service takes stamp sheet design to new levels of packaging artistry with the Nature of America series, in which 10 distinct stamps combine to form a landscape mural.
It is fitting that the creative partner of the man who sold millions of Elvis stamps is a guy who’s sold millions of Elvis plates. DraftWorldwide creative honcho Sandy Moltz spent a good part of his career creating direct-mail pieces for collectibles, and his mark can be found on the raft of highly professional mailers touting every one of the Postal Service’s new issues. “There won’t be another offer like this for another 100 years,” reads the heading on the envelope offering the Celebrate the Century series. Inside, a picture of an older man poring over stamp sheets with his grandson evokes the family-activity appeal of collecting and, at the same time, Stamp Services’ mission to reclaim a lost generation. A two-page appeal from Jaffer himself rounds out a direct-mail package that would do the Franklin Mint proud.
But Moltz dares not dig too deep into his bag of marketing tricks. “The Postal Service is a very different kind of client,” he says. “While regular marketers can separate consumers out into identifiable clumps and communicate with them individually, the Postal Service has to appeal to all people in a similar fashion.
“Also, there’s certain things, like putting `Act Now!’ in a direct-mail piece, that you’d never do in a million years with the Postal Service. We must be honest marketers, absolutely above reproach, and that’s completely invigorating in a direct marketing world in which it’s very easy to become jaded. It infuses creative thought.”
Draft’s work for the Postal Service is not limited to direct response. It helps coordinate events throughout the network of post offices, manages consumer promotions such as the Celebrate the Century voting, and creates advertising. TV spots done by Draft and touting the Century series are now airing on the major networks and cable channels.
Jaffer gives credit to Draft for executing all of Stamp Services’ ambitious plans: “Sandy has his finger on the pulse of the American people. He knows how to sell without the hard sell.”
The United States Postal Service brand shone brightly on the global stage this past summer, thanks to the valiant efforts of Lance Armstrong, who licked cancer and then overcame the world’s top cyclists to win the Tour de France. The Postal Service is the lead sponsor of the U.S. cycling team, and its eagle logo glared proudly from Armstrong’s yellow leader’s jersey during the closing days of the race.
Jaffer, who was part of the relationship with the team from day one, feels that the Postal Service had an advantage over corporate America with this particular sponsorship. “As a general rule, companies look at sponsorships and say, `What is the market value of it? What do we get from it?’ And in this case, all the sponsors abandoned Lance except us,” he says. “But he won, and it turned out to be a diamond in the rough. All of a sudden, people can look at Lance and relate to the Postal Service, to the letter carriers.”
The summer also had Stamp Services pushing the envelope, as it were, in reaching out to consumers both here and abroad. Trying out its own version of the whistle-stop tour, it launched the Celebrate the Century Express, a traveling stamp museum in four train cars visiting small markets across America over 18 months. Post offices received field kits to help them plan local events around the train’s arrival, educational kits were sent to schools to prepare kids for tours, and a Web site was established to track the Express’s progress. So far, it looks to be one powerful marketing locomotive. “In Dunmore, California, 13,000 people went through the train in a day and a half. There aren’t 13,000 people within 500 miles of Dunmore,” marvels Jaffer.
Stamp Services’ quest for newer, hipper collectors took it to Liverpool in the closing days of August, where it unveiled a Beatles stamp (part of the Celebrate the Century Sixties sheet) at an event marking the 30th anniversary, and re-release, of the film Yellow Submarine. Now Jaffer is starting to sound less like a bureaucrat and more like a fast-food-chain dealmaker. “We’re tied in with the movie, we’re tied in with the album,” he ticks off, “We’re looking at taking a stamp sheet and packaging it for moviegoers in the theatres.”
These are heady days at this particular 21st century growth company, and nobody’s mailing it in – least of all, Jaffer hopes, the growing legion of collectors.
“Collectibles are a four-billion-dollar business, and we’ve got three hundred million,” states an unimpressed Jaffer. “That’s a small piece of the pie.”
The modern, brown-brick post office on a small side street in Arlington, VA, looks benign enough, but you approach with the usual sense of resigned apprehension that you may be about to lose a half-hour of your life buying a few stamps. You file through the alcove of post office boxes, open the door to the service area, and stop dead in your tracks.
Did you somehow take a wrong turn and end up in a Hallmark store? In and around the bright, white walls resides an obviously well-thought-out merchandising scheme. Immediately to your left and easily accessible are boxes and padded envelopes. (No more buying a box from a clerk first and then cutting back in line to mail it? What kind of government office is this?) Lining the walls are colorful sets of stamps – shrink-wrapped, pre-priced, and hanging on pegs. There are racks of sensible items such as stationery sets with pre-stamped envelopes. There are stamp-collecting guides and supplies, and novelties including stamp-design key chains and magnets. There are even gift options like nicely framed commemorative stamp sheets for $35. Most amazingly, there is a checkout counter manned by a postal worker. You can actually sashay in, pull your stamps off the wall, pay for them at the counter, and be on your way, just like in a real store.
Approaching the 21st century, the U.S. Postal Service has come to realize that the network of 40,000 post offices and service centers blanketing the nation is, in fact, a powerful retail chain. Postal Service managers got scientific about retail a few years ago, when they placed video cameras in various locations and studied the habits of customers. Not surprisingly, they found that 65 percent of people spent time on line at the clerk counter to obtain information and purchase core services. Only 15 percent dallied at the open merchandise centers, limiting the Postal Service’s ability to stimulate impulse purchases. The challenge: Rethink point-of-purchase materials to be more arresting and more communicative about products and services, and make merchandise zones more inviting and accessible.
“We looked at how other retailers did it,” says Kaye DeShields, manager of retail products and services for USPS. “How do we position signage to tell people what’s available here? What kinds of promotion materials do we use to motivate people to use all our services during drive periods like holidays and tax time? When you put the customer up-front, it’s all about access.”
The USPS’s paradigm of access is The Postal Store. The Arlington location is one of about 1,000 that are being phased in nationwide. Because post offices come in so many shapes and sizes, not all can be remolded in The Postal Store concept, but all locations benefit from color-coded merchandising plan-o-grams and pre-set promotion plans.
Postmasters receive a three-month retail calendar from DeShields’ department that alerts them to important events and initiatives. “Holiday P-O-P & product shipments arrive this week” is the legend across the week of October 26. November 1 reminds, “Holiday drive period begins. Make sure P-O-P is properly displayed.”
In the future, USPS looks to take the point-of-purchase responsibility out of the hands of postal workers. The post office may well be the first U.S. retailer to make extensive use of digital P-O-P, as it is now testing 10-foot-long displays with arresting color graphics that move and change at the whim of managers at postal headquarters in Washington, DC. Frankel & Co., Chicago, handles digital P-O-P and the merchant upgrade.
The USPS is also not limiting its view of the retail landscape to post offices. More than half of customers polled by the Postal Service said their No. 1 retail destination was the grocery store, so USPS is beginning to establish self-service postal kiosks in supermarkets. Similar setups have been tried in Wal-Mart locations, too. “Retailers love it,” says DeShields. “It’s a great traffic-builder.”
And if that’s not convenient enough, Americans can now buy postage through their computers or at their ATM machines. Just this summer, USPS introduced PC Postage, digitally encoded, two-dimensional bar codes that people can print directly onto envelopes. And stamps can be had along with greenbacks through an Easy Stamp program available in 15,000 ATMs.
“For some reason, we’ve always operated with the idea that all of this stuff should be under lock and key,” says DeShields. “That’s changing.”
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