by J.F. (Jim) Straw
Let me tell you a true story …
Some years ago, a very dear friend of mine (retired; living on Social Security) came to see me. He had with him a mailorder “drop ship dealer” program he wanted to get involved with and wanted to use some of my mailing list.
The offer he wanted to mail was for a $20 “how to make money” book. The flyer was exceptionally well written and appeared to offer a good value for those who bought the book (I read it). So, I gave my friend 1,000 names and addresses of my customers for his mailing.
About a month later, my wife and I had dinner with my friend and his wife. Over dinner, I asked him how his mailing had done. His response was, “It only pulled 43 orders, so I decided to look for something that sells better.”
I thought nothing more about it until the next day. – Sitting at my desk, eating my sandwich for lunch, my wife remarked that it was too bad our friend hadn’t made any money on his mailing. – That started me thinking.
Forty three (43) orders on a 1,000 piece mailing … at $20 per order … produced a gross revenue of $860 (86¢ return on every envelope mailed).
After sending 50% to the publisher of the book, my friend had a gross profit of $430 (43¢ return on every envelope mailed). – NOT big money … BUT …
Back then, First Class postage was only 10¢ ($100 to mail 1,000 pieces). A 1,000 name mailing list rented for $35. Envelopes were about $14 per thousand. Reply envelopes $8 per thousand. Printing was $16 per thousand. And, reply postage was 14¢ per reply envelope received.
In other words, my friend had spent about $180 (including the $35 list rental he didn’t have to pay me) on his 1,000 piece mailing (18¢ per envelope mailed), to produce a gross profit to him of $430. – A net profit of $250 (25¢ for every envelope mailed).
If my friend had put the same $180 back into another 1,000 piece mailing, his profit for the 2,000 pieces would have been $680 … the next 1,000 piece mailing; for a total of 3,000 pieces, would have left $1,110 profit … on and on, building his profits.
The only “out of pocket” money my friend would have spent would have been the first $180. The cost of his future mailings would have been ONLY that same $180; which would have been returned to him again and again on each mailing … to use for more mailings.
After I ran the numbers, my mouth was watering. I called my friend and told him how profitable his mailing had been. But, since he was already involved in something else, he didn’t want to pursue the project. So … I asked him if it would be okay if I pursued it. – He agreed.
Unfortunately, when I contacted the publisher, they had discontinued their drop ship program. – It seems some of their dealers were collecting the $20 orders and not sending the orders and money to the publisher for fulfillment. – To punish those few crooks, the publisher cut-off their own nose … punished all of their dealers for the actions of a few … and eventually went broke from a lack of sales.
Now … if you will re-read (and re-read again) the story about my friend’s involvement in mailorder, you will clearly see how most of us who made millions in mailorder did it – and – why most people who get involved in mailorder don’t.
While you are re-reading, take note that all of the costs and revenues are stated in “dollars” (or cents). – And the costs and revenues are broken down to a “per envelope” dollar value. – That’s because all of us who really made money in mailorder didn’t put any value in “percentages.” Our real costs and revenues were calculated in dollars and cents. – Remember: 100% of nothing is still nothing.
One of the real secrets to making money in mailorder is to find something (anything) that produces a profit (even a very small profit). Then, keep mailing it … over and over … building a larger and larger customer list. (The same holds true in Internet marketing.)
Dreaming about accidentally hitting that One-Time (lucky) Big Success is part of the intrigue of mailorder … we all did it … but, those of us who really made money in mailorder (every day), didn’t let that dream overcome our on-going profits.
Believe it or don’t, TODAY the opportunities in mailorder are growing bigger and bigger every day because the competition is almost non-existent.
Having spent over 50 years in business, doing business successfully, J.F. (Jim) Straw now shares “Practical Instruction in the Arts & Sciences of Making Money” at the Business Lyceum. — http://www.businesslyceum.com