Empty Mailbox: The Truth About Mail Order and Direct Mail Businesses

Beginners lose money in direct mail and mail order because they are given the impression that they need little knowledge and money to succeed. The truth is that each mail order and direct mail is just that, a business. It requires knowledge and skills to operate and succeed.

Our purpose is to describe the above businesses, but more importantly to give you sources to help you find the information you need to succeed.

MAIL ORDER

MAIL ORDER is the process of selecting a product, advertising it in print magazines or newspapers, (and also consider radio and television) and fulfilling the orders that come in to your mail box.

Many have made millions in mail order. Others have and continue to earn a good living. Over the years, they have learned the business by testing their ads in local or regional publications before going national or purchasing display ads.

This is what happens to many: THEY PICK A PRODUCT THAT NOBODY WANTS TO PURCHASE BY MAIL

Perhaps its easier for the customer to buy the same product locally. It's an original product never sold by mail order but nobody wants to purchase it by mail. The problem here is that the seller never studied the market enough to see if such a product would sell by mail order. There may be too much competition locally, in the media being used, or on the Internet.

They Price the Product Incorrectly

Experienced mail order operators test classified ads by changing the price of the product. For example, a booklet with a cost of $1.00 to print might be offered at $2.95, $3.94, and $5.95. when the orders come in, the seller counts the number received at each price offered, records the cost of the ad, records the amount of money that came in, subtracts the printing cost and the ad cost and determines the profit. The seller then knows the best price to sell the product.

Let's say that the classified ad cost $150.00.

He sells 300 books at $2.98. At the 2.95 price, the seller sells 300 booklets. The cost of the booklets is $300.00. Adding the ad cost, he has $450.00 cost. Let's say it cost him $0.60 to ship each book because the booklet weighs 2 oz. So 300 booklets would take $180.00 to mail. Now our cost is at $630.00. The total received from the buyers is $885.00, leaving a profit of $255.00.

He sells 280.00 at $3.95. That brings in $1106.00. The cost of books and the ad is $430.00. It cost him $168.00 to ship the books. The profit is $562.00

He sells 60 books at $4.95. This brings in $297.00. It cost him $36.00 to mail them and he has the book cost plus the ad cost of $210. His profit is $51.00.

So what price does he sell his books at? The profit at the $2.95 price was $255.00

The profit at the $3.95 price was $562.00

The profit at the $4.95 price was $51.00

The seller places his national ads at a price of $3.95.

They Sell at the Wrong Time of the Year

Selling during the month of December and the summer months can yield low sells. Experienced operators can estimate what their sales will be during July, for example, and decide if they want to advertise. The information is available.

Competition Lowers or Eliminates Profits

As soon as your competition sees your ad, they will try to copy your product and sell it in the same publications your ads are in. They call this EMULATION which means they not only copy your idea but they improve upon it, making their product better or less expensive than yours. Let's say that you got very excited about your product. You sold 1000 booklets in a few months. Your printer told you that if you printed 10,000 copies, he could drop your printing cost in half. Wow! You could see big profits. Instead, your competition came in and put you out of business. You are left with a bunch of booklets you can't sell. OUCH!

The key is to quickly define your market, jump in, and be ready to jump out. If your ads are pulling less than three times the cost of the ad, you are getting into that Never Never Land that can break you. Don't overstock your products.

Remember that it is best to find a product that is not easily reproduced or copied. May the old lady up the road has the best honey in the United States. You get a guarantee from her that she will only sell her honey from her stand, but you have the rights to sell the product by mail. You've got it! You make a deal. If you're old enough, you will remember the German Coo Coo Clocks sold by mail order after World War II. The gentlemen that sold them tied up all the manufacturers in Europe before he sold. He made one heck of a lot of dough! You can still buy them by mail. He cut the competition out!

The Seller Has Only One Product

You must pay a price for a customer. Most mail-order companies know this. For that reason, they often take a loss on the first order and hope to gain from future orders from the same customer. Many operators have catalogs that they send to their customers to gain repeat orders. That is what mail order is all about. You want to get customers, make them loyal to you, and sell, sell, sell.

Don't forget that most products have a life cycle. It may not be too long before you can't give a product away. You must find or develop new products. See the references to see how to do this. Let me tell you a secret: It is a great advantage to operate mail order out of an existing business that has walk-in customers. That way, you are always in contact with your customers one-on-one and you can assess their needs and wants. Your products tested locally will also sell by mail order.

The Seller is Shutdown for False Advertising

Don't think that federal, state, and local officials are not watching your business practices. They get complaint every day. You must deliver according to the rules (see the references). The product must be as advertised. Deceptive advertising is not allowed. Years a go, a mail order operator advertised a professionally engraved portrate of George Washington. He send a postage stamp with George Washington engraved portrate as the product! Don't try that in this day of age. You could go to jail!

REFERENCES FOR MAIL ORDER

When ever I want to purchase a book, I try to buy it at a discount. To do this, I go to one of the online book sellers and try to find a used one in good condition. Just put Mail Order in the search box and read the discriptions carefully. Also, search the Internet using the same technique. Contact the United States Printing Office for more information. Also, contact your local and state governments and your chamber of commerce.

I don't like to push my sites in the content of a newsletter but I do have materials at www.bookfindhelp.com (IWS Sources) and www.dumbincome.com (ClickBank sources). Here are two pretty good books:

THE COMPLETE DIRECT MARKETING SOURCEBOOK By John Kremer ISBN 0471553875. If you don't buy any other book,especially if you are in the mail-order business, buy this one! However, it does not replace the following books. Get at least one of these.

HOW TO START AND OPERATE A MAIL-ORDER BUSINESS By Julian L. Simon ISBN 0070575312

BUILDING A MAIL-ORDER BUSINESS By William A. Cohen, Ph.D. ISBN 0471109460

DIRECT MAIL

DIRECT MAIL is when you send an offer directly to the customer in the mail. The offering includes a letter, a sales brochure, an order form, and a self-addressed envelope. When the customer orders, you send the product (or deliver the service) along with promotion materials on other products or services you offer.

As with Mail-Order, the object is to find a customer and then to keep the customer for as long as possible so that he or she will purchase other items that you want to sell. A catalog is often used, as in mail order.

WHAT HAPPENS TO MANY IN DIRECT MAIL

The Offer is Illegal

Just because some block told you that an offer was legal it may not be legal. All of a sudden you are in trouble with federal, state, or local regulators. You look out the bars of your jail cell and say to your self, "Gee, I told them the bloke told me it was legal." That means nothing to judges and prosecutors and is not a defense. I get lots of mail and receive illegal offers all of the time. They do not pay off when you pursue them and they can get you into big trouble.

Costs Exceed Income

Of course, this is the main reason for failure. As an example, Joe Sellmor has a fine product. The sales material is not professional in appearance, it is not describe properly, the potential buyer is not persuaded to buy, and to make things worse, the mailing list is old and to the wrong people.

Do you know that you can get zero response from a mailing to 1000 people? I have!

Do you know that you can get a high percentage of returns because the delivery address was no longer valid? I have!

To succeed, you MUST GET A LIST BROKER. DO NOT BUY MAILING LISTS FROM ANY ONE ELSE UNLESS YOU HAVE TESTED THE SOURSE AND KNOW IT TO BE GOOD. But even if the list was good, the product may not sell.

Let others ask you questions to see if the answers are in your materials. You must answer the customers questions before he or she asks in direct mail.

Another thing is to do what many direct mailer people do. They don't even use mailing lists. They use classified ads to obtain inquiries. When they get an inquiry, they mail them the direct mail offer. They sell to about 20-30% of the inquiries.

All of this must be factored into cost before the campaign begins. Direct Mail is a difficult business. You are competing against the big boys.

See the references under MAIL ORDER and order the last three publications. They relate to direct marketing.

John T. Jones, Ph.D. is a retired VP of R&D for a Fortune 500 company. He is an author of both fiction and nonfiction books and has published numberous articles in national and international magazines. Descriptions of his activities are at http://www.tjbooks.com Business materials are at http://www.bookfindhelp.com and http://www.dumbincome.com