Joe Phelan describes how this mail services provider is successfully navigating a massive integration project by staying focused on the customer.

Joe Phelan believes in author Stephen Covey’s fifth principle: seek to understand, then to be understood. And that’s just what Phelan, the former managing director of American Airlines’ European operations, has done since becoming president and CEO of DHL Global Mail in 2005.

The chief executive’s guiding principle has become a critical component of the Weston, Florida-based company’s business strategy and a differentiating factor in a highly competitive market. “What does the customer need, what are their requirements, and how do we design a solution around that?” Phelan said. “That’s what we seek to understand, and it’s helped to chart our direction in the market.”

In 2004, international mail services provider Global Mail, Inc., a division of DHL- and Postbank-parent company Deutsche Post World Net, acquired two US companies: SmartMail Services, a leading provider of transport and sorting for flat mail, and QuikPak, a leader in catalog fulfillment. Complemented by its existing DHL@home domestic parcel delivery service, Global Mail immediately established itself as a contender in the US domestic and international mail services market.

Joe Phelan

Shortly after, Phelan was hired to lead the integration, and the three companies were united under the DHL brand. From the start, the new CEO implemented the philosophy from Covey’s The Seven Habits of Highly Effective People, telling his team, “The most important thing for us to be successful is to understand what our customers’ needs are.”

Using data compiled from surveys, DHL Global Mail quickly developed a clear understanding of what customers don’t want: to be forced to fit their business into a basic set of cookie-cutter options. Phelan and his team then focused their attention on integrating the three companies into a single, cohesive unit—a one-stop shop capable of providing tailored solutions to meet all of a customer’s mailing needs.

External focus
The first leg of DHL Global Mail’s transformative journey began in Florida. There, the company relocated its headquarters, consolidating offices in Virginia, Indianapolis, and Atlanta. The move was a taxing one; roughly 50% of the company’s employees decided not to pull up stakes.

Phelan viewed the move as an opportunity to retool and hire the most qualified, experienced people in the industry. It also allowed the company to ensure its vision, direction, goals, and objectives became ingrained in staff members from their first day on the job. Simultaneously, the company lessened the load by outsourcing its mail handling operations to a specialized third party vendor. Once fully staffed, the organization began to focus on integrating its three companies onto a common platform for processes, pricing, and customer service.

To ensure DHL Global Mail continued to provide quality service throughout the integration, Phelan created dedicated, separate teams focused solely on the integration process. The cross-functional teams worked on different components of the integration to allow others in the company to focus on the day-to-day tasks of running the business.

“The tendency in any integration is to become internally focused,” Phelan said. “But when you’re integrating a business of this size, it’s extremely important to stay externally focused on the customer. The separate integration teams allowed us to do that without impacting customer service.”

DHL Global Mail’s efforts to meld billing systems illustrate the integration project’s degree of difficulty. It took roughly 18 months for a dedicated team to merge the three separate systems into one single billing platform. But Phelan said the project was well worth the effort. DHL Global Mail’s services are now more transparent to the customer, the company can generate a single invoice for all of its different products, and the organization is able to easily manage its financial performance across all product lines.

Overall, integration is roughly 80% complete, with one final hurdle for the company to negotiate: combine three operational systems to create a common platform across 21 distribution and sorting centers nationwide. The dedicated team is currently halfway through the redesign process, with final coding projected to begin in roughly six months. It’s safe to say DHL Global Mail’s competitors aren’t looking forward to the results.

“We’ll further enhance transparency for our customers and gain operational efficiency across all of the product lines,” Phelan said. “That efficiency will allow us to be more competitive in the marketplace and provide better service and pricing for all of our customers.”

First choice
As the dedicated teams work behind the scenes to integrate the three companies, DHL Global Mail is simultaneously focused on a lofty external goal: to become the supplier of choice in high-volume shipping services and grow revenue and profitability above industry rates.

To achieve that goal, the company embraced the old business axiom “you can’t manage what you don’t measure.” Metrics are in place in all key areas, providing the organization with the data it needs to identify areas for improvement, set benchmarks, and measure performance. And information from customer surveys is incorporated to help the company decide which areas to target for improvement first.

“We spend a lot of time and money to understand how our customers feel about our business, our products, and how we stack up in the market relative to the competition,” Phelan said. “Then we gear the entire organization around a handful of initiatives we think will really make a difference from a customer standpoint.”

One of the first areas DHL Global Mail targeted is also one of its most critical: pickups. When Phelan and his team first looked at the numbers, drivers were missing roughly 20 out of every 1,000 shipment pickups. Using Six Sigma as a process improvement technique, a dedicated, cross-functional team worked on pickups for nearly a year, and today, an average of two out of every 1,000 pickups are missed—a 99.8% accuracy rate.

The company also formed a team that includes vendors and customers to focus on the US Postal Service’s rate case. The goal is to ensure DHL Global Mail is best positioned in the market to help customers facing USPS’s largest ever rate case change, scheduled to take place on May 6. “Postage will increase significantly,” Phelan said. “We want to make sure we’re in a place where we can provide solutions that help our customers mitigate those costs. Whether it be new packaging, designing a different network, or new routing, we’re looking for ways we can improve efficiency for our customers.”

Being proactive to help customers before problems arise is just another example of how DHL Global Mail is becoming a truly customer-centric organization, seeking to understand, then to be understood. And thus far, consumers like what they see; customer retention, one of the most important statistics in the industry, has improved significantly over the past two years.

“As an organization, our focus is on continuous improvement,” Phelan said. “At some point, integration will be complete, but we’ll always be looking for ways to improve. The best way to do that is to understand our customers and respond to their needs. And that’s just what we’ll do.”