Eight out of ten business mailers expect the competitive market to reduce prices, improve choice and improve the quality of Royal Mail’s own service. They also believe the postal market should be opened to full competition as soon as possible.
Postcomm’s 2005 Business Customer Survey, published today, also reveals that all businesses contacted expect sustained growth in mail volumes over the next five years.
Of 300 business mailers, ranging from companies spending annually £500,000 or more to small firms with an annual mail bill of £5000 - £10,000, more than 80% favoured competition. A large majority of these felt that the speed at which competition was being introduced by Postcomm was either appropriate or too slow. More than half (52%) expected competition to reduce prices, 75% expected it to improve choice and 66% expected Royal Mail’s service to improve in the competitive market.
Despite their support for competition -- and although awareness has improved since our 2004 survey -- potential customers still seem to be poorly informed about it. A separate survey of 1,200 businesses in the same categories showed that most lacked knowledge of the liberalisation process and could not identify 1 January 2006 as the date on which the postal market will be fully open to competition. With the exception of companies in the top segment, most could not identify alternative suppliers of postal services.
“It is heartening to see that businesses appreciate the advantages of a fully competitive mail market and expect mail volumes to grow,” said Nigel Stapleton, chairman of Postcomm. “However, the lack of knowledge -- particularly among smaller firms -- is disappointing, and something we are addressing along with Postwatch, the consumer group, to raise awareness across the UK.”
The survey showed business customers were cautious about switching from Royal Mail. Only 7.6% of respondents reported using a supplier other than Royal Mail. Half of those who have not switched say they are happy with Royal Mail. However, many would reconsider if offered a relatively small discount. Assuming equivalent service quality, if offered a 5% discount, almost three quarters (72%) said they would switch some or all of their mail to an alternative supplier (subject to appropriate services being available to them).
Eighty two per cent of respondents rated Royal Mail’s integrated service more highly than an access-based service or end-to-end service provided by an alternative supplier. And yet price and service quality scores for alternative suppliers reported by those who have switched are similar to those reported by Royal Mail. Of those who have switched only some of their mail away from Royal Mail, around 25% plan to switch more, while 12% plan to move business back to Royal Mail.
Pricing in proportion – Royal Mail’s realignment of mail prices to make allowance for the size as well as the weight of mail items – may spur more customers to consider using alternative providers, the survey says. Nearly 20% of all respondents expected the advent of PiP next September to increase their use of other operators.
Business customer survey - appendices.
