For Canada Post's direct mail advertising service, should we focus on improving targeting capabilities or maintaining lower prices for business customers?

Introduction

The trade-off we're examining today is whether Canada Post's direct mail advertising service should focus on improving targeting capabilities or maintaining lower prices for business customers. This scenario involves balancing the potential for increased effectiveness through better targeting against the appeal of cost-effectiveness for our business clients. I'll approach this analysis by first asking clarifying questions, then diving into the product details, metrics, and experimentation before providing a final recommendation.

Step 1

Clarifying Questions (3 minutes)

• Based on the current market trends, I'm thinking that digital advertising might be putting pressure on direct mail services. Could you provide some context on how Canada Post's direct mail advertising service is performing in terms of market share and revenue growth?

Why it matters: Helps understand the urgency of the decision and the competitive landscape. Expected answer: Slight decline in market share, stable revenue. Impact on approach: Would influence whether we need a more aggressive strategy for differentiation.

• Considering our business model, I'm assuming direct mail advertising is a significant revenue stream for Canada Post. Can you confirm the percentage of overall revenue it represents and its strategic importance to the company?

Why it matters: Determines the level of resources and attention this decision deserves. Expected answer: 15-20% of revenue, strategically important for diversification. Impact on approach: Higher importance would justify more investment in capabilities.

• Looking at our user segments, I'm thinking we might have a mix of large enterprises and small businesses. Can you break down our customer base and their relative importance?

Why it matters: Different segments may have different price sensitivities and targeting needs. Expected answer: 60% SMBs, 40% large enterprises by number, but reversed in terms of revenue. Impact on approach: Would influence whether we prioritize sophisticated targeting or cost-effectiveness.

• From a technical standpoint, I'm curious about our current targeting capabilities. What data sources and technologies are we currently using, and what are the main limitations?

Why it matters: Helps assess the feasibility and potential impact of improving targeting. Expected answer: Basic demographic and geographic data, limited behavioral insights. Impact on approach: Would determine the scope and difficulty of enhancing targeting capabilities.

• Regarding our timeline and resources, is there a specific budget or timeframe we're working with for this initiative?

Why it matters: Influences the scale and speed of potential changes. Expected answer: 6-month implementation window, moderate budget allocation. Impact on approach: Would shape the ambition and phasing of our strategy.