Royal Mail’s biggest challenge is internal marketing

Despite years of losses and portentous writing on the wall editorials predicting the end is nigh for Royal Mail, the centuries old business is currently in relatively rude health with billions in revenue and profit on the up.  

Russell Parsons

Less tangible but equally as important, the love for the Royal Mail brand is currently stronger than ever. YouGov’s BrandIndex index rating – a net average of measures such as impression, quality, value, reputation, satisfaction and recommendation – puts Royal Mail second only to the Post Office in a list of the UK’s utilities and services.

No doubt these things were front of mind when the decision was made last week to float Royal Mail on the stock exchange, a process that is expected to be complete by the end of October.

About 41 per cent of shares will be sold to private investors valuing the Royal Mail at about £3bn depending on market conditions and investor demand, analysts say.

To support the share sale, the Government has just launched the first stage of a low-key campaign to drum up interest among potential investors.

The campaign will be nowhere near the scale of the ‘Tell Sid’ campaign to promote the sale of shares in British Gas in 1986 but it need not be. The performance of the company under the stewardship of chief executive Moya Greene is testament in itself to Royal Mail’s returns potential.

In terms of campaigns, it is internal not external activity that will be the deciding factor when we are determining whether Royal Mail proved to be a good investment.

It is thought the flotation could come at the same time as a strike by postal workers over pay, pensions and post-privatisation conditions of work. A quite remarkable and damaging start to the Royal Mail’s debut as a part-privatised company.

At present the Communication Worker’s Union is winning the internal marketing war with the Government and Royal Mail hands down. Numerous reports suggest postal workers are 80-90 per cent opposed to privatisation.

There are clearly concerns over what the new-look organisation will look like and rhetoric such as that uttered by CWU general secretary Billy Hayes – “this isn’t about what is best for the Royal Mail , it’s about the vested interests of Government ministers’ mates in the City” – feed those concerns.

The message that the universal service obligation is guaranteed, that privatisation will allow Royal Mail to compete in a very competitive delivery market, that staff (10 per cent of shares will be offered to postal workers) will have a chance to own a stake in their employer is being lost amid the noise coming from the CWU.

The direct mail industry will benefit from privatisation, investment is likely to be made in DM services and prices. But this will not matter if the Royal Mail fails to reset its employee relations.       

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