Let me tell you a true story …
Some years ago, a very dear friend of mine who was retired and 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.
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