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Ideas/Section-3
Note: This report is
intended to relate personal experiences of
a mail order operator in order to make helpful suggestions to
individuals who are new to the field. No claim is made that the
steps outlined would be successful for someone else. Each
individual should obtain such professional advice as may be
necessary for his particular operation.
INTRODUCTION
The following is designed to provide a
check list for new
entrants into the mail order field. Each mail order business is
different, but there are common elements that apply to most mail
order businesses, as well as some specific characteristics that
may vary from business to business. The following suggestions
were developed to assist you in avoiding mistakes which can be
costly. Apply the various points as they may relate to your
specific business.
COMPANY NAME
* Select a short, easily remembered name.
* Unless you are using your own name, it is required in most
jurisdictions that a trade name is either registered with the
county or the state.
* Before you spend money for printing material, make sure that
the name you choose is not already registered to another
company. You can usually conduct a name search with an office
of the appropriate jurisdiction by telephone.
* You may consider using a name that describes your product.
COMPANY ADDRESS
* Most newly established mail order businesses
will operate
out of their home until the volume of the business requires
larger space.
* Most mail order businesses prefer not to use their home
address as their company address. If you do, you will
advertise your home address in regional and national
publications. You have two other choices, a Post Office Box
(POB) or a postal box located in a commercial enterprise which
rents out mail boxes.
* A POB is generally the least expensive, both to rent and for
advertising purposes. (See below) Some mail order operators
claim that it reduces business because people do not trust a POB
address. Yet there are just as many mail order operators who
prove them wrong. the decision is yours.
* If you rent a mail box in a commercial enterprise, (many
have sprung up in recent years), your box number usually
becomes a suite number in the address.
* Almost all publications will charge you a full word charge
for each component of your address, except the Zip Code and
State which is counted as one word, Example:
Information Books, 300 Main Street, Suite 611, Centerville,
Md 20910 Or:
Information Books, Box 1000, Centerville, Md 20910.
* The first address is counted as 9 words,
the second one as 6
words. Since advertising costs anywhere from 50 cents to $10.00
per word (classified advertising) you could save a substantial
amount of money at the end of the year.
TELEPHONE
* Some mail order companies do not show
their phone numbers on
their stationery, others do. I believe it gives the customer
some comfort to see a telephone number, although he may
never use it.
* You can show your residence phone number in the appropriate
printed material, or you can obtain a business listing for
your home.
* The residence phone is fine, for starters, if it is answered
in a professional manner at all times.
* If you plan to sell higher priced ticket items, however,
(over $15.00) a business listing would be advantageous since a
prospective customer may pick up the phone and check with the
information operator whether "Company X" is listed.
BASIC SUPPLIES
* Be conservative and frugal in your acquisition
of items that
you feel are needed. It's always wise to start small, and as
inexpensively as possible, and as you build profits, you can
buy more and better items.
* The basics are a good quality typewriter, (you can rent one
for starters for a few months). Business stationery, business
envelopes (#10's), and return envelopes, either #6 or #9 is
fine. All items should have your business name and address
imprinted on them.
* You will also need some mailing labels and some
miscellaneous office supplies.
PRODUCT
* If possible, choose a product or products
that people need
on an ongoing basis.
* Be sure the product is of acceptable quality. Know the
product before you sell it.
* If feasible, choose an item that is not widely available
from retailers.
* If you have a difficult time deciding what items or products
to select, I suggest you read the following book: "How Mail
Order fortunes are Made" by Alfred Stern. This book lists
hundreds of different items. It will give you many good ideas.
* Develop a line of merchandise. It is rarely possible to
make money with just one or two items. The availability of a
line of related products is paramount to mail order success.
* The more specialized your products are, the easier your
marketing becomes.
* If you are selling books, for example, it would be
impossible, except for a very large company, to sell all
types of books. You may decide to specialize in books pertaining
to sports, and may want to go even further by zeroing in on
football or baseball.
SUPPLIERS
* Your suppliers should provide you with
reliable, quality,
and reasonable pricing.
* Since you probably should provide some type of a money back
guarantee (30 days is standard) you should expect the same
guarantee from your suppliers.
* When buying from out of town suppliers, be sure to include
the shipping charge in comparing prices to local suppliers.
DROP-SHIPMENTS
* Under a drop-ship agreement which is
available from many
suppliers for a variety of products, the supplier ships your
customers' orders directly under your shipping label.
(Suggested reading: "American-Drop-Shippers Directory".)
* It is customary that the supplier guarantees not to include
any of his promotional materials with the shipment; or to use
your customer's name for any future mailings.
* Drop-shipping arrangements are suitable for people getting
started. It allows you not to have to carry a costly
inventory.
* As your business increases and you develop a sense of what
sells well, you can stock limited supplies of certain fast
selling items, and continue utilizing drop-shipments for
slower products. Eventually, as your business flourishes, you
can carry an inventory of everything you sell.
* Handling your own shipments is advantageous for the
following reasons: It cuts down your shipping expenses, it
decreases the shipping time, and it allows you to include
promotional material directly with the shipment.
* When you do utilize drop-shipments, be sure to send your
customer a note that his order is being processed and he can
expect it by, or around a certain date.
* It is unnecessary to make your customer aware of the fact
that the item is being drop-shipped. Include some promotional
material with your letter or note.
PRICING
* Buy at a price that allows you an adequate
mark-up. In
setting your prices, allow for all costs:
* Cost of product, shipping cost and postage, bank charges
including credit card charges, wrapping, bad debts, rejects,
refunds, etc. In addition, the other normal overhead costs
need to be considered,. Lastly, there is the substantial
marketing cost for advertising, and for printing of
promotional items. (See following paragraphs)
* Your prices of course, have to be fair and in line with your
competition.
* It is not necessary that you make a big profit on each and
every item. the real profit in mail order comes from
follow-up orders.
* THE 3 BIGGEST EXPENSE CATEGORIES IN MAIL ORDER ARE:
ADVERTISING, PRINTING COST, AND POSTAGE. Over 80% of your total
expenses are in this area. Watch these expenses very
carefully.
ADVERTISING EXPENSE
* Start with classified ads. As you test
them and know what
is successful, you can switch to display ads.
* To test an offering and a specific ad, run it once in a
specific publication and you should get a reading that could be
very positive or very negative. It might also be
inconclusive. If that is the case, simply run it again.
* It is best to test an ad by running it in different
publications.
* Advertise in publications that advertise similar products.
* If you have a sure seller, buy larger space.
* Special interest products should be advertised in special
interest publications.
* Keep on changing the ad and offering until you are satisfied
it is right.
* Examples of changes you can make are: size of ad, copy,
appeal, special gimmicks such as discounts, free gifts or
reports, etc.
* Remember that a given ad can be 20 or 30 times more
successful than another ad advertising the same product. it
pays, therefore, to continue testing until it is just right.
* Repeat a successful ad until you no longer get a
satisfactory return.
* The conventional advertising cost is 15% of sales or more in
mail order.
* To evaluate your advertising cost, think in terms of cost
per inquiry. this is calculated by dividing the number of
inquiries into the cost of the ad. that cost may vary from
about $$0.80 to $2.00 or more.
* Be careful when you allocate advertising funds to small mail
order publications. The ad may appear to be very
inexpensive. However, a $15.00 ad that gets no response is a
lot more expensive than a $150.00 ad that gets over 100
inquiries.
* Stay away from those publications that have no news or
editorial content, and also those that have poor printing
quality.
* There are a number of quality mail order publications, but
it takes time to find the right publication for your product.
(See American-Drop-Shippers Directory.)
ADVERTISING COPY
* Write tight copy.
* Write as you speak. You are generally appealing to a mass
market.
* Prepare your copy carefully. It must fit your specific
medium.
* The emphasis should be on YOU rather than I, the company.
* Be sincere and don't make unreasonable claims, but remember
that you are selling.
* Try to convince the reader that you are reliable and
trustworthy.
* Give simple specific instruction.
* Key all ads to test their effectiveness.
* Check and double check, and have someone else check your ad
to make sure everything is correct and easy to understand.
* Watch where your competitors are advertising.
* Experiment with new publications.
* It is generally considered impossible to sell something that
costs more than $2.00 - $3.00 direct from either a classified ad
or a small display ad. This is because there just is not
enough space to convince someone to part with $10.00 or $20.00,
for example. It takes a full page ad to do that.
* If you use an agency, use one that specializes in mail
order, even if it is located out of town.
RESPONDING TO INQUIRIES
* Each inquiry you receive in response
to an ad should be
answered via First Class, if at all possible, within 24 hours.
* The contents of the envelope going to the prospective
customer should contain: a circular, promotional flier, or
mini-brochure, a sales letter, an order form (the order form
can be part of the circular), a return envelope, and other
appropriate information, such as a fact sheet, a free
report, etc.
* In general, circulars should be limited to one 8 1/2 x 11
page.
* A sales letter, on the other hand, can be as long as it
takes to say everything you need to say to a prospective
customer in order to sell him the product.
* Sales letters should have an attention getting opening. The
idea of the opening is to get him to read the rest of the
letter.
POSTAGE AND SHIPPING COST
* Answer inquiries to your advertising
immediately and via
First Class Mail. Use Bulk Mail for future mailings.
* You can save a great deal of money by getting a Bulk Mail
permit. The minimum number of pieces per mailing is 200.
Mail must be zip sorted. Postage is 16.7 cents for up to 3.3
oz. Get more specific information from your Post Office.
* Keep your mailing lists clean - updated.
* Utilize all of the various mail classes, such as Printed
Mail and Book rate.
* Compare costs of shippers other than the Post Office.
* Guarantee return postage.
* Watch your shipping weight. A fraction of an ounce can make
a big difference in a large mailing.
PRINTING COST
* Very large printers will not be interested
in your business.
Very small ones, quick printers and instant printers although
convenient, are generally too expensive. Their equipment is
not large enough to be competitive.
* There are many medium sized printers that will give you good
pricing and quality printing. Often they have the capability to
help you with layout and design.
* Don't hesitate to use out of town printers. If you live in
a high cost-of -living area, you can probably save a substantial
amount of money. Many of these printers advertise in mail order
publications.
* Utilize the promotional material available from your
supplier.
* Until you know what sells, print small quantities, even if
it is more expensive.
* Use colored paper for your promotional flyers to spice up
your offer. Use white paper, blue or black ink for everything
else.
CUSTOMER PAYMENTS, REFUNDS AND COMPLAINTS
* Accept cash, money orders and checks.
* Some mail order companies state in their material that they
will not ship for 10 days to 2 weeks when payment is made with
an out of town check. This may be an unwise practice
because, it can create ill feelings with your customers. NSF
checks are rare.
* An increasing number of mail order companies accept credit
cards - Visa and MasterCard - for payment. It is generally
felt that it does increase sales.
* If you cannot obtain a credit card merchant agreement with
your bank work through a credit card clearing house. A
number of these companies advertise in mail order
publications. Since these companies generally charge between
6-9%, it may be wise to set a minimum amount such as $15.00
for credit card orders.
* Remember, "the customer" is always right. An argument
won,
is usually a customer lost.
* If you receive an order with an underpayment, ship the order
and bill the customer for the difference.
* Make refunds on overpayments quickly.
* Most mail order companies offer a 30 day money back
guarantee. Some offer 90 days and even more.
* It is unwise to offer money back guarantees on items priced
very inexpensively, for example, a $3.00 report.
RECORD KEEPING
* As in any business, it is important to
keep records.
* You need records to tell you what is going on in your
business; to evaluate both your revenues and your expenses.
* It is also required by law that you keep certain records.
* Keep especially good records of your advertising expenses so
you can evaluate your advertising on an ongoing basis.
MAILING LISTS
* It is recommended that you do no direct
mailings, except to
your own list of customers and inquirers, until you have
thoroughly tested a specific product through advertising.
* Stay away from inexpensive mailing lists, under $40.00 -
$50.00 per 1000.
* Avoid mailing lists whose owners make unrealistic claims.
* Work with a list broker who wants to see your product before
he will rent you a list. Lists are rented for one time use.
* Lists from professional list brokers rent from $60.00 and
up, per thousand names.
* The general consensus is that you need to mail a minimum of
1000 names to get a fair reading. 5000 names would give you
a more accurate test.
* Buyer' names are better than names of inquiries.
* The best mailing list is your own list of buyers. Second
best is your own list of inquirers.
FOLLOW UP
* The most important factor in mail order
is FOLLOW-UP
Substantial profits can be generated from this segment, if it
is properly handled.
* You can generate a lot of sales by including promotional
material when filling orders for customers. Other orders are
generated from mailings that are made to former customers, as
well as individuals who inquired about an offer in the past.
* Send out regular mailings to your customers. At a minimum,
four times per year. However, you can send out mailings as
often as every 6 weeks or so, if you have a new product to
offer.
* As you build your mailing lists and you send out regular
mailings, your orders will start flowing in.
RESEARCH AND EDUCATION
* Whether you are new to this field or
not, to stay on top,
you must continue your education by reading books and reports
on mail order and subscribing to mail order publication.
* Always be on the lookout for new products you can offer your
customers.
* Study the advertising of your competitors. Request their
material and study it.
* Study all mailings you receive.
* disregard the MLM schemes that you receive, chain letters,
recipe clubs, etc. they are all the same, a big waste of
money. Many of them are illegal.
* If you are new to mail order, study the attached information
on various publications. Depending on your knowledge of the
field, one or several of the books shown may be very useful and
can help you to be more successful.
Continue to learn about mail order by reading,
experimenting, and
talking with other mail order operators. Have patience. Success
will not come overnight. It takes time to build a successful
business. Start slowly and expand your business from your
profits.
Good Luck!
