THE £1,000,000 DIRECT MAIL FORMULA
Most of us have been at the customer end of Direct Mail. Who
hasn't had a mailshot from Reader's Digest, sumptuously
illustrated in colour, temptingly written ... who has been
able to resist ordering, on approval, one of their excellent
publications?
Reader's Digest is, of course, at the top end of the Direct
Mail market. There are many more of us who make money from
Direct Mail by posting out much less extravagant brochures.
One of my own most successful mailings consist of just one
sheet of white paper printed on both sides!
So how can the small operator take £1,000,000 using Direct
Mail? First let me say that he won't do it in a week. He
won't even do it in a year. This is not, after all, Cloud
Cuckoo Land. But I reckon that with a combination of luck
and skill it could be possible to turn over this sum before
you go off to the Bahamas for a well-earned retirement. And
if you think that's too long to wait, work out how much your
present job will bring you in that time.
To show you that it is possible, let's do a little thought
experiment. Let's imagine that you go into the Direct Mail
business and let's further imagine that you are selling, let
us say, a book with a retail price of £20.00.
A really good mail shot will bring a five per cent response.
This means that out of every hundred letters you post, five
people will actually order the goods you're promoting. Note
I said really good. Most mail shots don't achieve this
figure. I only get it myself very occasionally. So let's
say that you'll average two per cent during your Direct Mail
career.
If you get a two per cent conversion rate, you'll take œ40
for each hundred letters you post. How many letters could
you post a day? Well, the big firms think nothing of mailing
out 10,000 pieces, but they've got all kinds of sophisticated
machines specially designed to print circulars, fold them,
put them in envelopes, stick on address labels and frank them
with the correct postage. I assume that you don't have one
of these machines tucked away in your garden shed, but have
to rely on your own hands. Shall we say three hundred
letters a day? It would take two or three hours to do this,
so it's certainly achievable.
Three hundred pieces of mail and a two per cent return. That
means £120 turnover per day. Do this for six days a week,
forty eight weeks a year (you deserve a holiday) and you're
taking £34,560 a year. At this rate you'd have turned over
one million pounds in about twenty nine years - which is less
than the average working lifetime.
Yes, yes I agree. That £120 a day isn't all yours. In fact,
most of it isn't. It's going to cost you (at the time of
writing) around £60 to print the circulars and post letters
to three hundred customers. Then you've got to buy the books
to fulfil orders. If you buy them for a fiver each,
wholesale, your total expenditure per day is £90, leaving you
with £30 a day for yourself.
Doesn't sound much, does it? But with only a couple of hours
work a day, it's a part time income. And if you can pocket
£180 extra a week by dabbling with Direct Mail part-time,
think what you could do if you made it a full time
occupation!
This is all an oversimplification, of course. We've assumed
the addresses are free, and that the customer is paying post
and packing on top. But it does serve to give you some idea
of the eventual possibilities.
The Direct Mail Formula can be stated as follows:
1. Find something to sell which you can buy at a suitable
wholesale price.
2. Obtain some tempting promotional literature for your
chosen goods.
3. Get the addresses of people likely to be interested in
your goods.
4. Post a lot of letters.
5. Keep on mailing your buyers with details of new offers.
6. Rent out your own list to other dealers.
We'll consider each of those points in turn. First, however,
a word on the subject of investment.
Anyone starting a business has to invest both time and money.
There's no escaping this. A person opening a shop, for
example, will have to spend quite horrendous sums of
premises, shopfitting, stock, advertising, etc.
If you move into the Direct Mail business, you're also going
to have to invest your time and your money. Fortunately you
won't have to find large sums for premises and shopfitting.
The money you invest will be quite small sums spread over a
period of time. It will be money spent on posting letters to
people who don't want to buy - or on goods which have no
appeal. The money will be spent, in short, on testing.
Testing different address lists, testing different products,
testing different sales circulars. This means that you
shouldn't, under any circumstances, give up your job to go
into Direct Mail. You're going to lose money to start with.
This money won't be lost for ever. Eventually you should get
it back many times over. But in the early stages of your
Direct Mail business, you'll need money to live.
CHOOSING A PRODUCT
Most of the readers of this manual will be in the Business
Opportunities section of mail-order and will be interested in
selling books, manuals, cassettes, newsletters - anything on
which information is recorded. We'll therefore assume that
you're going to sell an information guide. The general
principles outlined here, however, are relevant to selling
all goods by mail-order.
Obviously your product must appeal to the market you're
aiming at. The only sure way of knowing that your
information guide will appeal to the market is to try it.
Here's your first investment of "test money". However, your
own feelings will give you some guide, and the longer you
spend in the business, the better you will become at
selecting a winner.
One thing you can make sure of, however, is that the price is
right. You saw from the example above that even with buying
a book for £5 and selling it for £20, most of the takings
were swallowed up in expenses. You're going to need this
sort of mark-up to succeed.
SALES LITERATURE
The best product in the world won't sell by mail-order unless
the literature which promotes it is both well written and
attractively presented.
Many Business Books which you can buy wholesale already have
tried and tested sales brochures to accompany them, and it's
often possible to have your own name and address added to
these. Check with your suppliers.
If your product doesn't come complete with sales literature,
you'll have to get some done for you. This is very much a
job or the specialist and you'll need to get in touch with an
author skilled in the art of copywriting. See the end of
this book for useful names and addresses.
The sales literature doesn't need to be lavish. There's no
need for expensive colour printing, for example - you can
often achieve a very attractive effect with tinted paper. A
typical mail-shot will consist of the following items: a
circular describing the book (or other goods); a letter
underlining the advantages of the book and urging immediate
action; and an order form. The mail shot may also include
other bits and pieces - a reply envelope or some additional
incentive for prompt ordering such as a discount or a free
gift. The value of including these extras can only be
assessed by testing.
FINDING A MAILING LIST
This is the hardest job of all. Finding a mailing list which
will give you that necessary two per cent - or whatever
percentage conversion you need.
Many professional mail-order operators build their own
mailing lists by advertising in the press and recording the
names of people who respond to the ads. Since the whole
business of classified advertising is discussed later in this
book, we'll assume for the purpose of this book that you are
going to rent other dealers' lists initially.
You'll need a list of people who have already bought a
product similar to the one you're selling. With business
information guides there's no problem. There are many lists
available of "Business Book Buyers".
It's not too difficult finding a mailing list to rent. Many
list owners advertise in the business pages of the national
papers, or in Exchange and Mart, and when you've been in
mailing order for a few months, you'll get plenty of mail
shots from companies wanting to rent you their address lists.
See also useful addresses at the back of the book.
Unfortunately only a very small fraction of the lists
available are good ones. What do we mean by a "good" list?
A good mailing list has two characteristics. It's clean and
it's fresh. Most rented lists are neither.
A clean list will contain less than five per cent "gone
aways" or "not known at this addresses". A fresh list will
have been compiled in the last six months.
One way to ensure that you get a clean, fresh list is to buy
several enquiries from other dealers. Several mail-traders
use this approach - they write to small mail-order firms
advertising in the Business Opportunity press offering to buy
the actual letters which enquirers have sent, provided they
are not more than, say, three months old. if you do this,
you'll have to pay around 10 - 12p for each name, but the
date on the envelope should ensure that it's fresh. The only
snag is, most advertisers now record the names of their
enquirers on computer, then throw away the letter, so you
might not get too many addresses using this method.
How much should you pay for a mailing list? They are
currently on offer at prices ranging from £20 to £100 per
thousand, with the addresses on self-adhesive labels. And,
note, this is just a rental charge in some cases. That's
what you pay for just one use. In point of fact, one use is
all you'll want, since it's buyers you're interested in.
Those people who buy from you will become part of your own
list, of course, and you can (and should) remail them as
often as you wish.
If you try to use a rented list twice, or, worse still, try
to sell it to someone else, you'll be found out in no time.
You see, the person who rents you the list will have
"planted" it with the names of a couple of trusty friends in
different parts of the country. If they get more than one
mailing from you - or a mailing from someone else who hasn't
rented the list, they'll inform the list owner. He will have
cleverly coded these addresses in such a way that you are
immediately spotted as the culprit. I mention this because,
as I'm sure you will already guessed, one day you will be
renting out your own list (clean and fresh, let us hope) and
you'll be using the same techniques to prevent cheating.
O.K. You've obtained some mailing lists. Start posting your
300 letters a day - or as many as you can afford anyway. I
emphasise again that you are making an investment here - if
you break even right away you're doing well. The object of
the exercise is to build up your own list of buyers.
Let's assume that you don't get your desired two per cent
return. Let's assume that you only get, in fact, a one per
cent conversion. You can work out how much money you're
losing yourself (I repeat, this is your investment). My aim
here is to show you how your own list of buyers will grow.
With one person out of every hundred buying and with a
mailing of nearly three hundred per day, after one year
you'll have nearly 1000 names on your own list. This list
will be worth far more than it's weight in gold to you. It
will be a list of PRIME, FRESH, BUYERS. They will be people
who like to buy by mail and they will be people to KNOW YOU.
You'll now have a list which will give you a much better than
two per cent return on your future mailings. You'll have a
list which other dealers will be eager to rent. And if you
keep it nice and clean they'll be eager to rent more off you
later.
With your own list you'll now be in a position to get free
mailing lists by simply swapping your list with another
trader. You can do this as often as you like. You're now
spending much less money on your own mailings, so your second
thousand buyers won't take as long to build up.
The actual management of a mailing list is a complex subject,
and there's certainly no room in this short manual to
consider it properly. Your usual supplier should be able to
suggest a readable guide on the management of mailing lists.
You will now be aware that you only make money from Direct
Mail when you have a list of your own. Mailing to lists
rented from other firms may not make you a profit, may even
make a loss. The purpose is to construct your own list. It
takes time, it takes money. But once you have your own list
- the £1,000,000 Direct Mail Formula will work for you.