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INTRODUCTION
Much of the following text is based on
mistakes, some of them
costly ones, which I made during the early part of my mail
order career. In addition, I have worked with many people over
the years and have observed the most common mistakes that are
made over and over again by most entrants into this business.
THE GREAT MAIL ORDER MYTH
There are a number of totally unrealistic and irrational beliefs
about the mail order business. To belive in any of them can be
dangerous to your pocketbook. Here are some of the most common
ones:
1. It is possible to make vast amounts
of money in a short
period of time under the following conditions:
a. No experience
b. Little or no investment
c. Insignificant work effort
If this were a multiple choice test, then
A, B, and C, would
be FALSE-- FALSE AND FALSE AGAIN
It does take experience, and knowledge,
which can be acquired
through reading, observing, and doing... There are many good
books as well as some bad ones, on the mail order business.
Stay away from books that make unreasonable promises. Our
Special Report Series is designed to give you factual
information on a specific subject. Universities and colleges
across the country give courses in mail order and direct mail.
You can learn a great deal by observing
companies that have
been around for some time and are successful. Read their ads,
study their offers and promotional literature. Some of the
most effective direct mail offers are written by professional
writers who are employed by large companies and who will not
have a job unless they write successful and effective material.
So, the next time you throw away a piece of mail from American
Express or the Book of the Month Club, look at it and study
it carefully.
The mail order business, like any business,
requires an
investment... It may be smaller, in many cases, than a
business which requires a store front.. In most cases, mail
order entrepreneurs launch their businesses from their homes.
The amount of the investment is largely determined by the
magnitude of the entrepreneur's effort. A part-time mail
order business can be gotten off the ground for less than a
thousand dollars... The belief however, that a business,
any business, can be started for $50 or $100 is totally
false. I might add, it can be very profitable to those who
make their living telling people it can be done.. of course,
they are usually the ones that want, and often get, the only
$50 they say it takes to start the business.
And now we get to the really good part--little
or no work. In
some peoples' minds, it goes something like this: Put in a few
hours here and there, easy work, just stuff some envelopes, run
a few ads; and wow, the money will be pouring into the mail box!
Anyone who belive that probably also believes they are going to
win a few million dollars in the lottery. The odds are not very
far apart. Building a business, mail order or any other, is hard
work.. It takes great perseverance, belief in your efforts and
lots of work.
2. Many people belive that they can get
lucky in this business.
Don't believe it for a minute.. It is the greatest mail order
myth of them all. To belive it is fatal. Look at this business
in the same way you once looked at your job anytime you first
began to learn a new skill. It took time to acquire those skills
and this is no different. It will take time and also effort.
3. Finding the one book or product that
thousands or even
millions will buy. Well, it is obviously possible since it has
been done, however, your chances of coming up with another Pet
Rock or Rubik's Cube are highly unlikely. It is equally u
nlikely that you will discover the one book that will be bought
by hundreds of thousands. But your chances of becoming a success
in this business and making a lot of money are excellent, if you
adhere to the rules and principles of the business.
4. Running a small ad in a national magazine
and getting
hundreds or even thousands of orders.
5. Renting a mailing list of 1,000 names
and getting 150 to 200
orders. A very good list will generally produce no more than 2%
to 3%, 20 to 30 orders for 1000 names. Your own list may do much
better.
There are a few of the ,most common beliefs
about our business
that are almost always totally false.
PRODUCT CHOICE
Since my experience in the mail order business
is exclusively
in the area of selling information products, my comments will
be most pertinent to that segment of the market. However, much
of the information covered here is applicable to any product
sold by mail.
The first task any new entrant into this
business has to deal
with is to determine what product to sell and to whom he will
sell it.. This is a considerable task and it should not be
taken lightly.. Many serious errors are committed in this area..
To become well informed in this area, it is necessary to read
various publications that cater to those people to whom you
wish to sell your products. REad the news content and study the
ads. Send in for free information on those ads that are close to
the products that you select have an ongoing demand so your
customers will want to buy from you again and again.
During this early stage of your mail order
career, it is
of utmost importance to control your enthusiasm. If you don't,
you will get drawn into the SHOTGUN APPROACH. In this scenario,
you will be so enthusiastic and impatient that you will make a
number of rapid moves such as the following: You will buy one
or more distributorships; choose one or more products that you
know a little about (it amazes me beyond belief that people make
marketing decisions about products they have not seen--this is
simply insane): run one or more of the publications; or rent a
mailing list and have no idea how the names on that list were
accumulated.
Needless to say, you can spend a thousand
dollars or more in a
hurry and you may get little or no results from your efforts..
And what is even worse, you will probably become discouraged and
get out of the business before you had a chance to understand it
at all.
When choosing a product, take care in considering
all aspects
associated with the marketing of it.. The most important
considerations are:
demand and repeat demand
Cost and mark-up potential
Shipping or dropshipping arrangements
Reliability of your major suppliers
Product storage in case you decide to do your own shipping
Cost of shipping
The most important consideration in choosing
a product or line
of products is your belief that this product represents a
service or need to your potential customer. The product or
products must also have related products that can be sold to
your customer at a later time.. Each product you sell should
be marketed with the aim of selling additional products. This
is why, in general, selling just one product is so very
difficult and selling a line of products via a catalog for
example, is so effective... A versus a single one. The more
items you can sell each customer, and the more repeat sales
you can generate, the more money you will make.
THE PROMOTIONAL OFFER
Once you have chosen your product, set
the price, decide who
your supplier is going to be and how it will be shipped, you
begin to put together the marketing material.. This is more
crucial in our business than in any other business and it is
also precisely the reason why a percentage of the population
will not buy by mail---because they cannot see, smell or fell
the product until they have paid for it.
The most common mistake committed in this
area is to duplicate
exactly what another enterprise is doing. One of the big
problems with this approach is, since there is so much
plagiarism going on in this business, you may be copying
someone who is just as new in this business as you are and
who is also copying someone else's idea. It is OK to copy
what others are successfully doing example, many companies
in the information product line will provide their dealers
or distributors with ready-made promotional material. In
most cases, this is the least expensive way to get started
and, if you are dealing with a reputable and successful
company, you will be promoting products that have been
proven successful.
It is recommended however, that you use
this approach only
until you get your feet wet. Then you should begin to develop
your own material. Once you have a better understanding of
what sells and who is buying it and why, develop your own
brochure, circular, etc. You can still utilize the material
of others as an addition or follow-up to your material.
Developing your own material is not at all difficult and
can be done professionally and effectively on a rather
small budget. A good promotional offer consists of several
important components which include:
The circular or brochure, or catalog. A
brochure or catalog
does not have to be a 40 page instrument but can be as few
as 4 pages.
An effective sales letter
The ordering instrument--this may be a
built-in order form,
separate order form, etc.
Return envelope
Of the above, the development of the brochure,
circular or
catalog, is the most expensive so here is where you will
most likely use something that is supplied to you by your
supplier.. A hard hitting sales letter is as important as
the brochure. You have generally three options in tackling
this project:
1. You can copy one from someone else.
Since an exact copy
may be illegal, you should probably use elements of the
letter and make some changes but the end result generally
leaves much to be desired.
2. You can pay someone to write one for
you. This can be
very expensive and may still bring about less than desirable
results. The biggest problem here is that the writer of
your sales letter will generally not understand your product
as well as you do.
3. Do it the right way, the hard way. Do
it yourself.
There are many good publications on effective
letter writing
for direct marketing and you should read one or more of them.
Keep in mind that no one will understand your product as well
as you do..
To do a good job, it is a definite requirement
that you believe
in the product and believe that it has one or more important
benefits to the buyer. Just having the desire to sell the
product, so it will make money for you,, will not cut it as a
rule.. Once you understand the basic components that need to
be in every sales letter, you should be able to write one.. A
little practice may be necessary. You will become more proficient
with each new product.
An order form should be user friendly.
Your customer should
be able to read the instructions with ease. If your brochure,
circular, etc. has a built-in order form, it is generally a
good idea to enclose a separate order form.. This way the
customer can keep the original offer intact.
Enclosing a return envelope is strongly
suggested. The idea
is to make it as easy as possible for your potential buyer to
part with his money and send it to you without too many hurdles.
The biggest sins are committed under this
topic of The
Promotional Offer and, since the promotional offer is the
only thing your customer sees before deciding if he will buy
from you or toss you in the nearest trash can, you must do
things right, there are absolutely no exceptions. If you are
sloppy here, if you try to save a few bucks, you are cheating
yourself, not your customers. Keep in mind he is an expect at
rejecting offers since he had many years experience. the
average American is presented with approximately 6,000 plus
offers to buy something per week--TV, radio, newspapers,
magazines, road signs and, last but not least direct mail.
Or, putting it into more personal terms, YOUR OFFER. So
sweat over this one SO YOU WON'T GET TOSSED.
THe money which is wasted annually in this
country on
substandard direct mail would make a substantial dent in our
country's national deficit. Every week I see dozens of offers
come across my desk that could make me weep.. Such garbage!
Return envelopes with crooked rubber stamp imprint, sales
letters with spelling errors, grammatical errors, etc., so
called brochures which were apparently copied by a 20 year
old copying machine.., circulars that look extremely
unprofessional because the order from section has obviously
been changed by a typewriter and they arrive all by their
lonely selves, no sales letter, no return envelop.. God it
is awful! The authors of this garbage are screaming to the
world: "! am an amateur, I am an amateur, I have no idea
what I am doing but I want your money. You'd better believe
and not forget that this country is made up of 240 million
of the most sophisticated buyers to be found anywhere on
this globe.
Yet, this is also the area where you can
shine and excel
beyond your wildest dreams.. Modern technology has given us
the tools to produce marketing material that can make you
look as good as some of the largest and most successful
companies in this country. And you can do it right out of
your home. You will find professionals who can help you
in this endeavor. Right in your own city there are desktop
publishers, graphic designers, and word processing services
that are eager to help you. You could get a 4 page brochure
designed for as little as approximately $100, in most markets,
plus printing. The brochure can look just as good as the
brochure of a million dollar company.
Therefore, you must do things right. The
average buyer will
look at your piece for less than 8 seconds to decide whether
to junk it or study it.
MARKETING YOUR PRODUCT VIA ADVERTISING
Most new mail order entrepreneurs will
sell their products
through advertising once they know what they will sell and
have developed their promotional offer. Since display
advertising is generally quite expensive, it is best to start
out with classified ads in monthly national publications.
Classified ads, as well as small display ads, should only
be used to get inquiries from promotional buyers. The
inquiries are sent the promotional material you have developed
and a percentage of them are converted into buyers. This
percentage generally will range from between 6-12%. If you
want to sell something directly from an ad, the item should
cost less than $4. There is not enough space in a small ad
like that to convince a buyer to spend $10 or $20. For that
reason, you see full page ads selling products in that
price range.
The first task is to choose the right magazine.
One of the
most effective ways to find the right magazine is to choose
one that carries ads by successful companies that sell
products similar to yours... The wrong magazine is generally
the one whose content attracts readers who are not at all
interested in the product you are selling.
Choosing the right classification in the
publication is as
important as choosing the right magazine.. Again follow the
leaders. Since there are thousands of magazines catering to
almost every possible interest group, the possibilities of
finding new opportunities to market your products are
unlimited. I suggest, however, that in the beginning you stick
with well known magazines and leave your experimentations for
later when you are better established.
Monthly publications are generally more
cost effective than
weekly magazines, and certainly, daily papers. You can get
inquiries from a national publication, such as Popular
Mechanics, for months and sometimes well over a year. A
daily paper, on the other hand,, will rarely produce an
inquiry beyond 2-3 weeks after it was published.
A common advertising mistake is to choose
inexpensive
advertising such as in shoppers papers, mail order trade
journals, etc. It is not how much the ad costs but how
much each inquiry costs you... If you ad costs $100 and
you receive 100 inquiries, each one has a direct cost to
you of $1. Early in mail order career I spent a
lot of money for a $10 ad here and a $20 ad there. I
soon learned that sometimes I would only get one or two
inquiries for my $10. Expensive! To test a product and
promotional offer it is sufficient to run the ad just
once.. The magazines and advertising agencies will often
tell you that to test an ad you must run it 3 or more
times. I say no. Not until you know how the first one
pulls. You will need some patience for this endeavor
since most monthly publications have a lead of two or three
months.. But its is much better to wait a little while than to
spend hundreds of dollars without getting needed results.
To write successful ads also takes practice and work.. Once
again, follow the leaders. A successful ad can often pull two,
and sometime three, times as many inquiries as an ineffective
one.
MARKETING YOUR PRODUCT VIA MAILING LISTS.
This approach is often preferred by the
newcomer.
Unfortunately, it is also generally the least effective
way. It is preferred by many because it is perceived to
be easy. And if it worked it would be. Millions of dollars
are made by companies in renting the wrong names and stale
names to new mail order entrepreneurs.
Both sides lose. The company renting the
names will not
get any repeat business and the customer often goes out of
the business if his efforts are futile. Almost my very first
mail order experience, "a very rude awakening," was when
I
rented such a list, sent out 1,000 offers (first class no
less- a definite no, no) and I got how many orders: "How
about two or in dollars $20." Between postage, printing,
renting the list, etc.,my cost was well over $300.
The most unfortunate mistake newcomer make
here is to assume
one list as good as the next one. I generally recommend that
inexperienced mail order operators start out advertising, and
as they gain experience, begin to use mailing lists in addition
to their advertising. But, if you absolutely cannot resist, at
least be very picky in choosing your lists. Deal with a
reputable broker or smaller mail order company that you know
advertisers frequently. Find out how the names were generated.
What did the ad that brought the inquiry sell? If you are
trying to sell books on how to start a new business and end
up with the names of people who answered an ad about how to
find a better job or learn a new hobby, you will have wasted
your money... Likewise if names are older than 6 months,
preferably no more than 3 months, you will get too many
returns and people may not be interested in the same subjects
anymore. Mailing lists especially your own, can be highly
successful, but only if you have gained enough experience
to make wise selections.
MANAGING YOUR BUSINESS
The single most important element of managing
this or any
business is watching each and every expense. Although mail
order companies, even larger ones, have relatively low costs
in the area of labor, office rent, etc.,they do have very
high costs in these categories: postage, printing, and
advertising. You must watch these expenses like a hawk.
The best way to look at your expenses is on a per unit
basis. We already addressed the cot per advertising inquiry.
Let's now look at a typical mailing of 1,000 pieces.
Your Cost
1,000 #10 envelopes..................................$25.00
1,000 #6 3/4 return envelopes.........................20.00
1,000 sales letters imprinted on both sides...........28.00
1,000 order forms 8 1/2 x 11..........................28.00
1,000 4 page brochures................................90.00
1,000 postage (bulk 0.26.7 cents per.................167.00
Total $358.00
1,000 names--rental...................................40.00
Total $398.00
Now think in terms of cost per unit, each
one costs 40 cents.
If you were to use First Class Mail instead of Bulk Mail, your
cost would shoot up to 48 cents, a 20% increase. If, on the
other hand, you could buy your printing for a little less, you
might be able to cut 5 cents off your cost.
It is also very important that your product allows you a high
enough profit margin. A markup of 200% is preferable but 100%
may be sufficient, especially if you sell via catalog and will
therefore, generate more than one item per order.
Let's assume you will get a 1.9% rate of
return on this mailing
which will give you 19 orders at an average order of $38.00
which:
Would give you a gross take of....... $722.00
Less -- Cost of product - 35%........-.252.00
Gross profit......................... $470.00
Less -- Cost of Mailing............. - 398.00
Net profit............................$ 72.00
Let's assume you had sent your mailing
First Class. The
additional $80.00 would have robbed you of your entire
profit.
The above figures are merely used to illustrate
the importance
of thinking in cost per unit and being highly cost conscious.
The receding pages have attempted to cover
some of most
important areas you should be aware of as you start out in
this exciting business. Although the emphasis in the preceding
pages has been largely on the negative, I belive strongly that
this business has immense potential and rewards for anyone who
has the interest and dedication to learn it. If you do your
homework and make deliberate moves based on your personal
knowledge and experience and you expand with each success,
the potential for your ultimate success is almost unlimited.
Don't forget that unlike your friendly neighborhood retail
store which sells only to a confined geographical market,
you can market your product to over 260 Million people in the
U.S. and Canada.
So remember before you can earn you must
learn!
