In the early 1970’s at the age of 13, I went on my first international holiday. It was a school trip to Paris. I still remember aspects of it with great fondness – I say ‘aspects of it’ because I have forgotten a lot of what we did. The most memorable part, without a doubt, was going off and playing on the Metro one afternoon. We had been due to go to some pre-arranged activity, but a friend and I didn’t want to go – we wanted to see how many Metro stations we could visit in one afternoon (although I think our story was that we wanted to go to Pere Lachaise Cemetery as my Grandma had asked me to get some post cards of it).

Looking back on it now, I am a little surprised that the teachers allowed us to disappear off around Paris for half a day, not knowing where we were going (and obviously pre-mobile phones!) – but we were young, excited and gave no thought to whatever dangers a 1970s Paris may hold for two 13 year old lads …

Anyway, we had a great time – but we were doing it on a budget. A budget that required us to buy as few Metro tickets as possible.  We soon discovered that it was possible to insert the same small yellow Metro ticket into the entry machines more than once and still gain access. The machine punched a small round hole in the ticket to show that it had been used, but it was apparent that the machine was unable to detect whether or not a ticket already had a hole in it.

We got to the point where we were playing with the machines to see how many holes we could get in a ticket before it rejected the ticket. I recall that I got to 26 holes … I still have the ticket somewhere, but not sure exactly where.

I have been back to Paris since then and, as you may be aware, the ticket machines are far more sophisticated now. Whilst there may well be some very elaborate frauds available to those keen enough to spend a lot of time on such matters, a couple of 13 year old boys are unlikely to be able to use a ticket more than once.

It is understandable why they sorted it out – in terms of funding operations, tube fares really are the Metro’s lifeline. Whilst the Metro will have other revenue streams such as refreshment kiosks and advertising, their primary funding stream is the passenger. All fairly straight forward?

I would say so, but it appears not to be for the UK’s Post Office and Royal Mail.

The Post Office’s ‘raison d’etre’ is to deliver letters. Selling cards, holiday insurance and travel money must surely be ‘add-ons’ – particularly when there are apparently around 60 million letters posted each day (based on a six day week).

So if this is the main funding stream, it needs to be managed effectively – but it is not. I never cease to be amazed at the number of letters that I receive where the stamps have not been franked (i.e. had an ink date stamped across the stamps). The picture at the top of the page are ones I have received in the past month where the stamps are as fresh and clean as they day they were bought. The total value of those stamps is £5.98.

At the risk of appearing very sad, for the past three year I have monitored this issue around Christmas time and have found that around 15% of letters I receive with stamps on are not franked. What does this add up to in financial terms?

Let’s say the average cost to send a letter is 65 pence. If half of these use stamps (as opposed to other forms of paying postage) this equates to 180 million being sent a week at a cost of £117m per week (180m letters x 65p).

Over the year, this equates to £6.1b. A significant sum. 15% of this figure is £912m – that’s the value of stamps that are not being marked as ‘used’. If customers were to re-use 50% of those stamps (which I am not advocating) it equates to an annual loss of around £456m. A significant loss.

How can a company afford to lose that amount of money on something which is their core business? Machines that frank letters effectively can’t be too difficult to create, can they?  And even if they are, a quick memo along the following lines from employer to employee could start to eradicate the problem:

Dear postal worker, when delivering letters where the stamps have not been franked, please put a pen stroke across the stamps. Thank you.

Potential saving – almost £0.5b.

If the Post Office is so inefficient, no wonder it is being sold off. Did it lose its focus? Did it take its eye off the ball.

Whatever the size of your business or operation, it is always worth taking some time out every now and then to check you have your priorities right. As Richard Branson said, “To me, business isn’t about wearing suits or pleasing stockholders. It’s about being true to yourself and focusing on the essentials”.

Paul