Research context

The case company on this research is Posti Group, which has operations on four business groups including postal services, parcel and logistic services, Itella Russia and OpusCapita.

The company is owned by the state of Finland and has already operated for almost 400 years. Posti Group’s turnover in 2015 amounted to 1.650M€, which represents a decrease of 11.2% compared to 2014. In more detail, postal services turnover in 2015 amounted to 752M€ (-3.5% compared to 2014) whereas parcel and logistic services turnover was 596M€

(-17.4% compared to 2014). Approximately 96% of Posti Group’s turnover comes from business customers including companies and associations. (Posti Group 2015, 1, 7) Even though the company is owned by the state, its operations are completely based on customer incomes. In the heart of Posti’s economic liability are transparency and profitableness, whereas the aim is to grow cost-effectively. Posti’s management principles are supported by risk-management policies, internal supervision and administration principles. (Posti Group 2015, 57)

Posti being not only the biggest logistics company in Finland by delivering more than 8 million postal items a day, but also the biggest private employer in Finland with 16.874 employees in 2015. (Posti Group 2015, 38, 56, 70) In 2015 Posti’s employee commitment index, meaning how dedicated employees are towards their job was 47% whereas the index was 48 % in 2014. Posti has had various employee co-operation negotiations that may have affected the results. According to Posti, the index is relatively low when comparing the result to logistics industry worldwide. Whereas the performance enabling index measures organizations commitment not only to provide excellent customer service together with high quality products and services but also to continuous improvements, was 58%. In addition,

many employees agreed that co-operation with the closest co-workers is at good level.

(Posti Group 2015, 69)

As this study is limited to Posti Group’s services that are offered to private customers, meaning that only postal (i.e. cards and letters) and parcel services are included to this study. Moreover, Posti Group’s business name for private customers is Posti, which is used in this study when referring to Posti Group’s services for private sector. Posti’s private customers consist of 2.8 million Finnish households to whom postal items are delivered five days a week as universal service obligation (USO) requires. In 2015 Posti handled 2894 inquiries related to daily mail, which is 0.00033 % of total mail volume. The company solved 967 inquires, 178 mails were stated to have disappeared and 1749 cases could not be solved at all. (Posti Group 2015, 38, 56)

Even though Posti delivered 33 million parcels in 2015 meaning 2% increase in volume compared to 2014 (Posti Group 2015, 125) the usage of postal services has declined. Due to digitalization consumers’ communication needs have clearly changed as the volume of daily mail delivered to private customers has an annual 10% decrease. Due to decreased volume of the mail delivery, by this rate Posti’s mail services will turn profitless by 2019 unless they discover new ways to operate more effectively together with new business ideas. (Posti Group 2015, 28; Posti Group 2016a)

The absence of these arrangements could result in too high prices for the customers which may require public funds for the services, thus finding new solutions is urgent. As Posti’s postal item services (i.e. letters and postcards) are under the USO, mail must be delivered five days a week, even though the average customer receives only 11 letters or postcards a year. Based on these facts, the solution is sought by preparing a new law to change the regulation of universal services in the Postal Act. One solution that The Ministry of Transport and Communications have presented is to change the provision which determines that postal items should be delivered not five but for example only three times a week. (Posti Group 2016a)

Posti has already innovated new solutions to compensate the decrease in mail volume. As Petri Kokkonen, the Head of Posti’s home services said: “Our aim is to offer high-quality home services along our mail delivery routes in Finland.” In May 2016 the company launched a lawn moving service, an idea that originated from Posti’s mail delivery employees. Choosing the day with the lowest mail delivery rate using statistics, the service

could be bought from Posti’s online store for every Tuesday in a package of one month. By autumn lawnmowers are swapped to rakes by offering a raking service introduced in 2016.

In addition, Posti has also developed other home services including partnership with South Karelia Social and Health Care District to assist their customers with food delivery services.

(Posti Group 2016b; Posti Group 2016c)

However, these new services had not been launched when the research took place thus home services are excluded from this study. Next Posti’s service process is presented together with the customer point of view in the context of mail delivery (Figure 20). The figure of the process has formulated as the result of semi-structured interviews with Posti’s personnel, meaning that the process presented is the researcher’s view on the subject.

Figure 20: Process map of mail delivery with possible triggers for service failures

The process map was created to understand where and why service failure occurs in the context of postal services. Next the process map is explained in more detail:

1. As chapter 2.1. has shown, service failure occurs when the customer’s expected and experienced quality do not match. In addition, also the image of the service provider affects the evaluation of the service. In other words, the customer has expectations towards Posti based for example on earlier experiences and WOM.

2. The customer has need to either send or receive mail, meaning that the person takes actions towards sending a postal item or is waiting for an item to arrive.

3. When sending items, the experience forms when the customer either goes to the post office or to a stand-alone mailbox. The customer evaluates also how polite or how professional the customer service is or if the stand-alone mailbox was emptied too early (process) and whether the item was successfully sent (outcome). When receiving postal items, the customer for example evaluates how mail delivery employee acts, how postal items are placed in the mail box (process) and whether they were delivered or not (outcome).

4. As Posti is a part of our everyday daily life, sometimes customers may see something in the process that caughts their attention including mistreating other customers or mail delivery employees not following common rules, which are the triggers for negative eWOM as service failure has emerged due to the failure in the process.

5. Failures may occur due to back office process which includes everything the customer does not see (e.g. production), for example missing postal items. According to Posti their production team not only ensures the quality of postal deliveries but also develops new services according to customer needs (Posti Group 2015, 38).

6. As Posti’s customers may also receive mail from business customers (e.g. magazines or online shop parcels), this aspect is an integral part of the process. If a service failure occurs here, the failure may be due to either Posti’s or business customer’s actions.

In addition, it should be noticed that sometimes service failure may be caused by the actions of the customer or external forces which should be taken into account when analyzing the culprit of the failure (Gonzalez et al. 2005, 59)