Talon Mailing & Marketing

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Welcome to the Talon Mailing & Marketing January 2011 Newsletter.

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A Bailout for the U.S. Postal Service?

by Angela Greiling Keane, Bloomberg Businessweek

As new Postmaster General Patrick Donahoe takes charge, the post office is in crisis mode.

Imagine a company that reported losses in 14 of the past 16 quarters, has too many retail outlets by its own admission, and relies heavily on revenue from its two biggest competitors for revenue. Any management consultant would recommend the obvious: Close unnecessary offices, lay off workers, expand into new lines of business, and raise prices.

But this is the U.S. Postal Service. It's expected to show a profit without a government subsidy, yet Congress, powerful labor unions, and even its own regulators are preventing it from making hard-nosed business decisions. The result could be a painful restructuring or a government bailout before the fiscal year ends next September 30th.

Patrick R. Donahoe is charged with fixing the mess. A 35-year postal veteran, he became Postmaster General on December 4th. Donahoe told bulk mail customers on Nov. 18 that the service's costs will exceed revenue by $2.7 billion, even after borrowing $3 billion from the U.S. Treasury, the annual legal limit. Total debt, now $12 billion, by law can't exceed $15 billion. Revenues in fiscal 2010 were $67 billion.

The USPS now faces the prospect of tougher scrutiny when Republicans take control of the House in January. Representative Jason Chaffetz (R-Utah), in line to chair the House subcommittee that oversees the service, could try to impose a restructuring by shutting some of the nation's 32,000 post offices. "We have too many post offices," he says. He suggests bypassing congressional opposition by using a federal commission, similar to the kind used to close military bases, to identify which post offices to shut.

The USPS's problems are well known: More customers are paying bills online and choosing FedEx (FDX) and United Parcel Service (UPS) to send overnight packages. Labor and retiree health-care costs are exploding: The service has a $50 billion obligation to its retiree health fund and is in a dispute with Congress about who should pay that balance. When the USPS reported a record annual loss of $8.5 billion last month, Representative Darrell Issa (R-Calif.), who will chair the House Oversight and Government Reform Committee, warned that the Postal Service must trim costs to match revenues so "taxpayers don't get stuck paying for a bailout."

The USPS in March released a McKinsey & Co. study that recommended slashing delivery to as few as three days a week, expanding into other business lines, and shutting post offices. Congressional Democrats and labor unions have blocked an end to Saturday delivery to prevent constituent uprisings and job losses. Despite Chaffetz's warning, even some Republican lawmakers are loath to shut facilities that are named for local VIPs—and often are the social fulcrum of small towns. The Postal Regulatory Commission, the service's overseer, on September 30th denied a request to raise rates an average of 5.6 percent because that would exceed the inflation rate. The USPS is appealing. "The key issue for us," Donahoe says, "is either reducing cost per delivery or increasing revenue per delivery." The service makes $1.40 per delivery now, down from $1.80 in 2000. The last time mail volume increased was in the first quarter of fiscal 2007.

The service spends 78 percent of its budget on salaries and benefits, higher than either FedEx's 43 percent or UPS's 61 percent. The American Postal Workers Union, the larger of the postal unions, is resisting further cutbacks and instead wants to "restore work that has been outsourced or given to supervisory personnel," union President Cliff Guffey said in a December 1st statement. The best hope may be that volume climbs for the USPS's two biggest customers, FedEx and UPS, which use the service for last-mile delivery, since mail carriers go to all 151 million U.S. addresses six days a week—at least for now.

The bottom line: The U.S. Postal Service, blocked by Congress, unions, and regulators from making tough business decisions, may need a bailout next year.

8 Direct Mail Marketing Tips for Success

by Anthony Harris

Direct mail marketing is a costly strategy to implement, and that's why it's very important to get it right the first time around.

Because people tend to have very good memories with regard to unsolicited mail, executing your campaign without flaw becomes all the more necessary.

Limit your proposal to a maximum of three pages.

Anything longer than three pages could discourage your recipients from even taking a glance at it. Keeping it brief is always good but never to the point that you've failed to deliver salient points of your proposal. Of course, costs are also another consideration. The fewer pages you use, the lower your expenses are on printing and postage.

Work on making your letter visually attractive.

Let's start with the first thing your recipients will see: the envelope. It doesn't have to be made of linen, but make sure at least that the envelope texture is nice to touch. White envelopes always look professional, but they're more vulnerable to dirt as well. If you can find an alternative color that would still appear professional and match your company's color scheme, so much the better.

Offer a free gift.

The smaller and lighter the free gift is, the better because you get to save on postage. Offering freebies is crucial: it's yet another incentive for people to learn what you have to say. If possible, make sure that the words FREE GIFTS are printed on the envelope. Naturally, it won't hurt your cause if your free gift just happens to be related or even complementary to the products you're marketing.

Make an offer they can't refuse.

Direct mail marketing won't be successful simply because you're giving away free gifts and you've written an excellent marketing piece. More often than not, recipients could simply enjoy your gift and throw away your letter. To avoid that, you need to give them yet another incentive - one that will require them to meet you in person.

Your second offer doesn't need to cost you a thing. You may tell your recipients, for instance, that they have the option of joining your business seminar for free. You can tell them that it's a chance for them to learn how to become  a millionaire.

Place a deadline on your offer.

A deadline creates a sense of urgency. It helps convince people to make a move rather than allow them to continue floundering in their indecision. And if you're worried that deadlines could instead force you to turn your back on your customers, don't be. Remember: you can extend those deadlines anytime and simply tell them that it's due to popular demand.

Make sure it's free from technical errors.

Technical errors have nothing to do with what you're selling and everything to do with the rest. Consider grammar, punctuation, font effects, and spacing. If you don't want to entrust your mail to the post office, you should look for a freight company that offers affordable but efficient service.

Have it reviewed.

Don't send your promotion out just yet. You still have two more steps to take care of. First, find an objective and knowledgeable third party to review your offer. Make sure you let him or her see even the type of envelope you're using. Make the necessary changes.

Verify addresses of recipients.

To avoid waste of time and effort, try verifying the addresses of your recipients. Talon can help you with this step.  If everything's in order, then good luck! You're all ready now to launch your direct mail marketing campaign!

Phone-Wielding Shoppers Strike Fear into Retailers

by Miguel Bustillo and Ann Zimmerman, The Wall Street Journal

Price comparison apps are changing the way consumers make purchase decisions.

Tri Tang, a 25-year-old marketer, walked into a Best Buy Co. store in Sunnyvale, California, this past weekend and spotted the perfect gift for his girlfriend.

Last year, he might have just dropped the $184.85 Garmin global positioning system into his cart. This time, he took out his Android phone and typed the model number into an app that instantly compared the Best Buy price to those of other retailers. He found that he could get the same item on Amazon.com Inc.'s website for only $106.75, no shipping, no tax.

Mr. Tang bought the Garmin from Amazon right on the spot.

Until recently, retailers could reasonably assume that if they just lured shoppers to stores with enticing specials, the customers could be coaxed into buying more profitable stuff, too. Now, marketers must contend with shoppers who can use their smartphones inside stores to check whether the specials are really so special, and if the rest of the merchandise is reasonably priced.

"The retailer's advantage has been eroded," says Greg Girard of consultancy IDC Retail Insights, which recently found that roughly 45% of customers with smartphones had used them to perform due diligence on a store's prices. "The four walls of the store have become porous." Some of the most vulnerable merchants -  sellers of branded, big-ticket items like electronics and appliances - often prompt buyers to comparison shop. Best Buy, the nation's largest electronics chain, said recently that it may lose market share, a downward trend that some analysts are attributing in part to pressure from price comparison apps.  

  Ticket Giveaway!   

Talon has great seats for you to win.

We are giving away a pair of tickets to see the New York Islanders!  To win, be the first telephone caller (please don’t hit reply or email). Voicemail messages count so it's fine to leave a message.   Call Michael Borkan at 631-667-5500 x 11. 

  • Tuesday, January 11th, 7:00 PM.  Islanders vs. Vancouver Canucks

Do you know of anyone else who would be interested in receiving our newsletter?  Please let us know by email:  mb@talon-mailing.com

To learn more about our company, please visit our Web site: www.talon.com or contact Michael Borkan at (631) 667-5500 x 11.

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In this Issue:

A Bailout for the U.S. Postal Service?

8 Direct Mail Marketing Tips for Success

Phone-Wielding Shoppers Strike Fear into Retailers

Islanders Ticket Giveaway!

New Clients

Mike Borkan's Links - Web sites you probably haven't seen

View Samples of Our Work

Newsletter Archives

Direct Mail Humor!

New Clients:

Talon welcomes the following new clients this month to our growing roster of customers:
  • The Robin Report

  • Resource Stock Advisor

  • 3 New Lists from Statlistics

Mike's Favorite Links:

Some interesting links...

reversephonelookup.com - Free Phone Reverse Lookup.

yelp.com - The fun and easy way to find and talk about great (and not so great) local businesses.

traffic.com - Free real-time traffic information for your driving trips and commutes. 

Google Translate -Translate any text to and from over 50 different languages.

Patch.com - Localized source for news, events, business listings, and discussion.

CelebrityCafe.com - Offers interviews, book and CD  reviews, contests, bios, travel stories, and games.

Work Samples:

Did you know Talon offers the following services? 

Click on the links below to see samples.

Newsletter Archives:

Click here if you wish to see past newsletters. 

Click on These Links to Learn More About Talon:

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If you do not wish to receive the Talon Mailing & Marketing Newsletter please click here: