THE TRUTH ABOUT

MAIL-ORDER........

Using outside-the-square techniques to make it work!

Copyright: Mindtech Software Ltd. 2002

Mail order is a recognised business method of selling to people over huge geographical distances
and ranges from a home-based “kitchen table” operation to a vast network such as Readers Digest.
A number of the worlds largest and most respected mail operators started out as a one or two
person business based from their home. They evolved a successful marketing strategy which
enabled them to make more money than they were spending and simply “snowballed” on from
there.
These days however, it’s all become a little more sophisticated. The concept of being able to place
a $500 advertisement in a magazine and receive $5000 worth of orders is generally long gone!
These days you will be lucky to cover the cost of the ad!
But having said this, I’m happy to tell you that there ARE ways to build a mail order business and
show a profit in this current economic environment!

It all comes down to what you want to sell by mail. If it is a common item which is available at any
supermarket then there is obviously no reason for people to order it through the mail . . unless . . .
the customer is living in an isolated area several hundred kilometers from town . . . or . . . the price
is so low that it appeals to your customers “greed” factor!
It is much easier to pick an item that would be of major benefit or appeal, but is not available
through the normal retail outlets. And there is such a wide range of new products coming onto the
market constantly, that it is pointless for me to try and isolate which of these might be of interest, so
I’ll assume that since you’re reading this report you already have some product in mind and are
looking for a way to successfully market it by mail.

For a start, there are two aspects of dealing with people by mail.
The first is your initial promotion to contact prospective customers. You don’t know them and they
don’t know you so you’ve got to devise a method of “finding” each other.
The second is your follow-up promotions to people who now know who you are - they have already
done business with you once!
And this is the secret of profitable mail-order in the current competitive economy!
You may have to be prepared to lose money in your initial search to find customers but you will
aim at making money on subsequent sales. This is generally known as residual value.
Most (if not all) new mail order “players” enter the game with the aim of “making a killing” from
their initial advertising promotions. The reality is that they usually lose money and become
discouraged . And very few of them seem to understand that the profit will come from down the
line - from repeat sales!
Mail order is just like any other small business “start-up”. It costs money to setup and get going
before a regular customer base is established. If you start a small business from scratch most wise
people would allow for the likelihood of losing money for the first 3 months while you are establishing
 yourself.

And it is the same for mail order!

It is going to cost you money to establish your customer base! And this is the most important aspect
of any mail order business. . . the CUSTOMER BASE!
Let’s suppose that you have latched on to a really interesting “widget” which costs you $10 each in
bulk quantities. It is small, light and easy to post and you feel it will sell OK through the mail at $40
each. It does not appear to be available in local shops so it seems that the public will be generally
unaware of it. Theoretically you should be able to make a profit of $30 on each one sold and thereby
 become filthy rich virtually overnight! Theoretically!!!!!!
But practically, here is how it will work out. . .

You decide wisely to ‘’test” the market for your widget first instead of lashing out with $10,000 or
more on a fully fledged campaign. So you enthusiastically place a $500 advert in your local paper
telling people about your new widget. . . what it does. . . how great it is, etc. You offer a
money-back guarantee and put your full address and phone number in the advert. And you ask
them to send you $40!
And you wait with baited breath for the orders to pour in! You receive 3 phone calls from curious
people. One of them wants to know if it comes with a 1000 year strawberry-flavoured warranty . .
. the other two will “think” about calling around to your house.
Three orders come in through the mail over the next few days and the horrible truth begins to
dawn. The whole exercise looks like a total flop! Over a total of 10 days or so, you have sold a
total of 5 widgets. One of the callers bought two after he’d seen them for himself.
And one of the mail order customers re-ordered another one for his boss!
And the bottom line is this . . you’ve made a net profit of (5x$30) $150 but the advert cost you
$500. Plus there was a small amount for post and packing.
Now you consider all this very deeply and decide that you probably advertised in the wrong
newspaper. So you take a $500 ad in a different paper. And . . . same result!
You’ve ended up with a grand total of 10 customers, of which two have reordered off you because
they like your widget and one of the early clients bought two off you. So, a total of 13 sales at a
profit of $30 each. This means you’ve made a net profit of $390 (less packaging and postage costs)
 and the whole thing has cost you $1000 in ads! So much for getting rich overnight!
You sit down and think about it all for a week and as a last resort decide to place a small “leader”
type ad in the same two newspapers. These cost only $100 each and invite customers to write or
phone in for more details. You tell them this information is obligation-free and will cost them
nothing!
And over the next week you receive 30 responses! You send these people 2-3 pages of literature
about your widget and ask them to send $40 for one of these marvellous items.
And 6 people send in an order. So you’ve got 6 sales at $30 profit per item which gives you $180
profit, less your postage and packaging costs. The two adverts have cost you $200, so you are a
little out of pocket. . . but not much!
So with this leader style of advertising you’ve nearly broken even but don’t quite know what to do
next.

Ideally you’re looking to build a business that generates sales of $5-10,000 per week but you’ve
got to find a successful promotional formula first. So far nobody has asked for their money back
and a couple of people have even re-ordered.
So the product is obviously a good one! You decide to send a letter out to all those who bought a
widget telling them that as it was so popular you’ve decided to make a special offer of 3 more
widgets for the price of two! That is, if they send you $80 you will post them 3 widgets, so, in
effect, they get one for free. You tell them it’ s a great gift idea, etc..... and amazingly enough you
receive three orders back through the mail. And you clear $50 net profit per order! Then you have
another “smart” thought! You circularise the 24 people who didn’t order! (Remember the 30
responses of which only 6 ordered?) And you tell them that the widget was so successful that you
had stock problems (or whatever) but you now have a new batch available for immediate delivery.
Tell them it was so popular that lots of people not only re-ordered, but no one asked for their
money back under your guarantee ! And you offer them, once again, a widget at $40 and also your
 3 for the price of 2 special. Guess what? You get 4 orders!
The bottom line . . . you are now running at a slight profit! So you decide to expand on the idea of
these “leader” ads into other newspapers, making sure you code each advert so that you know
which paper it comes from.

At the same time you decide to approach a mailing-list broker and arrange to “lease” the names
and addresses of 1000 people who have recently purchased some sort of similar product as yours
through the mail. This is know as a “response” list of proven buyers.
When you receive this list sit down and hand address all the 1000 envelopes and stick a standard
postage stamp on each. The reason for this is that people like to receive mail that looks “personal”.
If it’s got a white sticky address label on it and a bulk postage stamp imprint it can quite often go in
the rubbish tin without even being opened!
You draft out a 2-3 page brochure about your widget, get 1000 quick-printed, and post them out.
The cost of leasing these names (at around 20-25c each) plus the postage, plus the envelope cost,
plus the hand addressing, typesetting and printing means that each name you post will cost you
around $1. So the whole job, including the lease of the mail list, has cost you around $1000.
And over two weeks, you receive 20 orders. That works out at a response rate of 2%.
Now your net profit on 20 orders is (20 x $30) $600 so you’re $400 out of pocket!
But. . . you’re getting a bit smarter.... so when you post each widget order out you include a
re-order form which re-offers not only the single widget at $40 but also the 3 for 2 offer that
worked for you with the newspaper ads. And not surprisingly you get enough repeat orders over
the next couple of weeks to “break even”.
So far so good. You carry on like this for 3 months (remember it takes this long to get a small
business established) but realise that you’ve only made an overall profit of $2000 for all the effort
you’ve put in! Doesn’t seem worth it, does it?
But, when you sit down and add them up. . .
You may well have over 400 happy customers!!
And this is where you really get smart!

You have been searching for, and successfully located, a different type of widget which could sell
to the same customers. You are also able to buy it for only $10 but figure it could sell for $50
each! So you work out a 2-3 page promotion telling all about it and also offering a 3-for-2 price,
along with the single item cost of $50 each.
You then post this promo to your 400 plus customers. . . and also to the several thousand other
people who responded to your newspaper ads but didn’t buy! And within a few days 10-15
orders arrive. And so on! Over the next two weeks you receive 120 orders from you hot 400 list
and around 80 orders from your larger enquirers list.
A total of 200 orders! But some people have taken you up on your 3 for 2 offer so you actually
have orders for a total of 350 new style widgets! And you’re netting between $23 and $40 per
widget depending on whether the order is for a single item or your 3 for 2 offer. So at an average
of better than $30 profit per item you’ve cleared ($350 x $30) $10,500 in one burst - minus
postage and packaging costs. And with each of these orders you post out you include a re-order
form. So you take in, over the next month or so another $2-3000. And your mailing list has grown
from 400 to 480 customers as 80 odd people from your large enquiries list (who didn’t want your
first widget) wanted your second one. At this point . . . you’ve found your formula!!
And you build on it from here! Search for new widgets. Advertise for new clients. Work new
mailing lists. But. . . always do small samples! Don’t commit a lot of money to a new untried
promotion, and make sure each newspaper advertisement is coded so you can tell when the
response from each paper wears off. (The advertising staff will tell you how to code it). If for
example the net profit drops to half the price of the ad, then I would cancel the ads in that paper
for 5-6 weeks then try again. So if a small leader ad cost me $100 and I only sold two $40
widgets from it, my profit after packaging and posting would only be around $50 which only
covers half the cost of the ad. So I’d give that newspaper a miss for a while. Unless of course they
agreed to do a newspaper story on my magic widget, then in my ads I’d mention the newspaper
article to remind people that the media people thought my widget was quite neat! Get the idea?
I had a ton of fun with this concept when I first advertised the hard-cover version of the
Millionaires Manual. This was a book on wheeler-dealer style bartering I wrote several years ago.
I was spending up to $1000 a page for full page ads in various magazines and providing the sales
covered the ad costs I let the ads run. However, when sales profits dropped below the cost of the
ads I told the advertising heads of all seven national magazines I was dealing with that I needed a
story (some editorial) to back up my ads, otherwise I would have no option but to cancel the ads.
Result.... six of the magazines wrote covering articles about this book (which turned out to be a top
seller in Australia....but is virtually unknown elsewhere). I was then able to refer to these articles in
my ads. So sales from those ads “took off” again.

Then I extracted the best editorial comments from all of the six “editorials” and used them as
testimonials on the back cover of the paper-back version of the book.
Over the past two years many people have asked me how I managed to achieve such “glowing”
testimonials from six different nationally known magazine editors....now you know!
OK! Back to the story of our ambitious mail-order entrepreneur!
At this point you will still have piles of people who have responded to your ads but not bought
anything. Now the thing is these people were interested enough to respond to you in the first place
but for reasons unknown to you have not YET made a purchase from you. But they HAVE heard
from you several times and probably accept that you’re not a fly-by-nighter.
You may be inclined to throw their names in the rubbish tin. . . but DON’T.... because. . it’s
already cost you good money to ‘’capture” these names and addresses. So, for a year or so, send
them out the odd promotion on your new products and maybe offer them a special discount on
your original widget. Maybe they could have two for the price of one, etc.
Even if you only financially break even on this group but manage to get another 100 orders out of
them, you have captured another 100 customers at no financial loss to yourself!
Look at the logic of this. . . you have got 100 new customers at little cost and with very little work,
whereas it is going to cost you quite a lot of up-front money and a lot of time to generate 100 new
customers from newspaper ads and leased mailing lists! Make sense??
In reality, when I was selling the original hard-cover version of the Millionaires Manual at $49 per
copy, it was costing around $20 to locate each new customer. So from the sale of each book I had
 to deduct the $20 in advertising costs that it had taken to find that buyer Each name on a mailing list
 cost me $20! Makes you think, doesn’t it?

So if you lease a mailing list at 20c per name and you get a 2% response it means that for every
100 names you post out (at a total cost of around $100) you receive 2 replies. So it’s cost you $50
per reply! That is, each of those new customers has cost you $50 each. So for obvious reasons,
make sure you’ve got plenty of profit stacked into your product.
Until you earn a $50 net profit out of each of these new customers you haven’t broken even!
And these days it’s hard to do that up at the “front end” so we do it down at the “back end” by
making constant “fresh” offers to your existing customer base.
And that is the reality of the mailing game these days!! But you’ve got to be prepared to spend the
time and money to find the formula that suits you and your product. There is no short cut. You may
have to use variations of the above to make it work for you...... depending on what your widget is.
. . and how interesting and compelling your promotional spiel is.

PROMOTIONAL MATERIAL

The trick to writing good promotional material is to work it all out very carefully, put it on paper,
then put it away in your drawer for a couple of days.
Then pull it out and look at it with a fresh mind - this way you will more easily see the “flaws”. I
personally never rush promotional material - it is too easy to make a critical mistake. I once saw a
character hastily draft a $600 ad for the local newspaper. It was a good ad - except he’d forgotten
to put his name, address and phone number in. And when you’re drafting lots of ads, it’s amazing
how often you almost forget to insert a critical piece of information like this! I usually try to get
someone else to check my ads, just in case I’ve missed some vital point.
The other trick to writing good promotional material is to be original and enthusiastic Also the first
few lines under the heading must grab peoples attention, so for this reason I like to use “bullets”. A
bullet is a brief one or two line encapsulation of your message . Here are 3 bullets I used to promote
 a publication. They were extremely effective!

** Double the turnover of virtually any business without one single new customer.
** Buying property the impossible way - on YOUR terms - with very little cash.
** Triple your restaurant trade on off-peak nights with no extra cash outlay.

The first thing that happens when you receive a multi-page promotion through the mail is this. . .
you search quickly for a couple of headings to tell you whether the thing is going to be of any
interest to you! Right? If the promotion contains “bullets” I scan those because I know that the
whole message will probably be encapsulated in those few simple lines. If these “bullets” capture
my attention, I read further! But if I can’t figure out what the whole thing is about in the first 30
seconds I lose interest!
Remember your continuous profit will come out of repeat orders, or the “back end”..... generally
not the front end. Customers who like your operation will remain loyal to you if you treat them
well. It is a fact that a lot of people are distrustful of mail order operators and once you have their
confidence you will be able to do long term business with a fair proportion of them. Treat your mail
order business as a long term project. If you go into it for quick overnight ‘”bigbucks” then there
will be a 90% chance that you will come unstuck!

HIGHER VALUE PRODUCTS

Just because you’re selling widgets in the $40-$50 price bracket doesn’t mean to say that people
won’t buy higher priced items off you. If you offer a $500 widget to those that have purchased off
you before, you will probably be pleasantly surprised to find that you make a few sales! And you
won’t need a 400-500% mark-up on it either because of its high dollar value. Obviously lower
priced items must carry a very high mark-up otherwise you won’t cover your promotional costs.
There is really no UPPER limit to what you can offer, dollar wise. If customers like your operation,
they will be prepared to look at whatever it is that you are offering!
Many mail-order operators mentally restrict themselves by assuming that their customers won’t go
beyond the $40-$50 mark. A business associate of mine used to think like this until he advertised
$2000 items. He was astounded when he received 53 orders!!! And he was absolutely delighted
as he had 100% profit stacked into his product! But he would never have achieved this unless he
had carefully built up his mail order company to the level of customer confidence it enjoyed! So
your success is really only limited by your mindset, once you have your company up and running.
The secret of successful mail order in these rough economic times. . .is the effectiveness of your
promotional material. Not the quality or the appearance of the graphic layout . . . but the
EFFECTIVENESS!

And how will you know if it’s going to be effective? Simple . . .

WRITE MATERIAL THAT WOULD CAPTURE YOUR ATTENTION
 ..........IF YOU HAD JUST RECEIVED IT IN THE MAIL!!

HOMEPAGE