I couldn’t stop it. Bart Simpson’s trademark excuse, “You didn’t see me do it! You can’t prove anything,” started ringing in my ears as soon as I heard about the U.S. Postal Service’s latest D’oh: Producing 1 billion commemorative Simpsons stamps . . . but selling only 318 million of them.
As you may have already heard, the USPS recently posted a loss of $5.2 billion in its third quarter and said it may lose $15 billion in the year ending Sept. 30. “¡Ay, caramba!” Clearly, the Simpsons stamp debacle is symptomatic of a much larger problem, but marketers can learn important lessons from this one particular incident. Let’s take a look.
Photo from BBC News
The Simpsons stamps sold in 2009 and 2010, commemorating the 20th anniversary of the cartoon’s run on Fox network. The stamps featured Homer and Marge, along with their illustrious offspring Bart, Lisa and baby Maggie, and the series was one of about 20 commemorative stamp designs produced annually based on the recommendations from a citizen’s advisory board.
Much later, however, the US Inspector General criticized the methodology used to forecast the demand for the Simpsons stamps. In fact, in a 17-page report, the IG reveals overproduction of Homer et al. wasted some $1.2 million in printing costs. Likewise, numerous other stamps were also undersold (or overproduced?) during these years, including lunar new year, historic U.S. flags, civil rights figures, Zion National Park and Supreme Court justices. (Anyone want a William J. Brennan, Jr., stamp?)
The Inspector General singled out the imprecise process the service uses to decide how many stamps to produce: “This process depends on manual procedures and the experience of one individual, which increases the risk for costly miscalculations,” the report said. “Further, such errors may be detected if an independent review and assessment of production estimates were performed.”
What else can the Simpsons stamp debacle teach us? The answers are in the recommendations from the IG report:
“We recommended the Postal Service improve controls over stamp manufacturing, including documentation of procedures to determine stamp stock requirements, and an enhanced review and approval process.” Take home message: Take control of your operations. Your end product or service probably isn’t stamps, but still, adding transparency and taking control of your resources, your messaging, demand generation, etc. improves productivity, mitigates risk and enhances efficiencies. Tear down internal silos so you can collaborate, streamline workflows and integrate multi-channel campaigns.
“This occurred because the Postal Service did not develop and document an objective forecasting methodology.” Take home message: Understand consumer demand. Appropriate forecasting models are vital to help you identify consumer wants and needs. More specifically, big data analytics can help with demand forecasting, which considers both an item’s seasonality and its rate of sales (sales trend) to generate an accurate forecast. Today’s sophisticated models can be fine-tuned to compare historical data to current demand, then automatically select the most accurate forecast method.
“If the Postal Service improves forecasting and inventory management processes, we estimate it could save about $2 million annually.” Take home message: Updated processes lead to stronger profits. By improving forecasting, you can do more than “guesstimate” a product’s true potential. Couple this with a data-driven inventory management system, and you’ll improve bottom line performance.
“We also recommended the Postal Service…develop and implement a strategy to maximize sales through unique promotional opportunities.” Take home message: Drive sales through innovative, compelling promotions. Social media provides new opportunities to engage both customers and prospects. Fill the sales tunnel by creating quality content to increase inbound activity and generate leads. Integrated efforts across both on- and off-line channels increase customer engagement/awareness and broaden appeal. Measure and track your results so you know where/how to devote resources effectively.
Will the USPS learn from the Simpsons stamp example and improve its processes going forward? Federal agencies are notoriously slow to change, so I suppose only time will tell. But, odds are, you can beef-up your organization’s performance by adapting these lessons now. If you do, you’ll be able to acknowledge your competition with another favorite Bart-ism: “Eat my shorts!”