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 £40 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 article 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 article, we'll assume for the purpose of this article 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. 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 article 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.

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