Tips on Buying the Right Lists

In real estate, the secret to success is “location, location, location.” In direct mail, the secret to success is “list, list, list.” You’ll have much better results mailing a decent sales letter to a top-notch list than a top-notch sales letter to a decent list.

Think about it. How good would your sales letter have to be to convince a guy earning $20,000 a year to buy a Rolex watch? It just won’t happen – they’re not your target market. On the other hand, even a mediocre sales letter can sell someone on exactly what they’re looking for.

So what should you look for in a mailing list?

==> Buy from Legitimate Lists Only

Whatever you do, do not buy lists from eBay. Do not buy lists from direct mail. Do not buy email lists from any source that you haven’t heard of.

It’s very, very common for beginning direct marketers to buy lists from “hot” list sellers only to discover that the lists aren’t real leads at all.

==> Only Test Big Lists

Don’t run tests on small lists. The goal of direct mail isn’t to try to find a list of 20,000 people and eke a profit. The goal is to test multiple large lists, find one that’s profitable and roll it out to make millions.

Even if you can get a 20,000-person list to convert profitably at 1%, that’s only 200 sales. Chances are you’ll have to test a couple different lists to find that one profitable one, so even if you have a high profit margin at the end of the day, you won’t be putting much in the bank.

Try to run tests on lists that have a large subscriber base, but more importantly regularly get more sign-ups. If you can mail a list that gets 100,000 new sign-ups every month profitably, then you’re going to make a lot of money very fast.

==> Who Should You Mail To?

The best people to mail to are buyers who have a track record of buying via direct mail.

Not all names are made equally. The guy who has already bought three products from direct mail is much, much more likely to buy from you than someone who spent $1 for a 3-month trial of a magazine subscription.

Try to mail to people who’ve proven they have money and that they’re willing to order.

==> Enrolling the Help of a List Broker

Generally list brokers are paid for by the people selling the lists, rather than the list buyers.

If this is your first time doing a mailing, it may make sense to enroll the help of a professional. They can walk you through the whole list-buying process and it won’t cost you a dime.

Spend some time exploring your options for lists. Try to get into the different mindsets of the different buyers on various lists. The mailing list is one of the most important decisions you’ll make in your direct mailing career.

The Pros and Cons of Using Call Centers to Take Orders

Once you have a bona fide success in direct mail, you’ll inevitably have to ask yourself: Should I hire a call center? You’re literally getting 30, 50, 100, 200 calls all at the same time right now. The phones are ringing off the hook.

Should you try to staff the phones yourself? Or should you outsource it? Here are some of the things to consider.

==> Is Your Product Unique or Complex?

If your product is highly unique or complex, you may want to opt for an in-house call center.

Remember that each rep in a large call center handles a large roster of clients. Relatively speaking, your volume will probably be less than 5% of the calls each rep takes.

They’ll have a sheet of scripts to follow, but it simply isn’t realistic to expect them to understand the ins and outs of your product and to be able to answer in-depth questions.

==> Doing the First Few Calls Yourself

One major downside of trying to go it solo is the major initial investment.

For one, you have to get at least 50 to 200 phone lines wired into your office building. That takes some major up-front cash.

However, you’ll often find that when you’re taking your own calls, your results are much, much better than a call center’s.

Your costs will be higher and the tax on your own stress levels will be higher. Instead of making a decision in the dark, you might want to try taking a small percentage of the calls in-house to establish a baseline to compare against.

==> Biggest Benefits and Drawbacks of Call Centers

Call centers are relatively easy to manage. You don’t have to deal with employees, just one outsourcer. You pay per minute and/or a commission for sales, so you don’t have to worry about things like health insurance, sick days and so on.

The downside is lack of product knowledge and lower closing rates. Many direct mail professionals find that the lower conversion rates of call centers simply cost them too much and that staffing an internal call center is worth the expense.

==> Having a Call Center as Backup

If you choose not to have a call center take your calls, you may still want to establish a relationship to have them as backup.

Let’s say you have the systems on board to handle 200 calls at a time. Yet the first three days after a major mailer, you may expect to take as many as 500 calls at a time.

What happens to the overflow? You can try sending them to a voicemail, but that’ll lose you a lot of sales. Instead, you can set your system up so that all the overflow goes to a call center.

This gives you the best of both worlds: high conversions most of the time, along with the ability to handle high volumes professionally when the traffic hits.

The “Official Envelope” Look for High Open Rates

People sort through their mail with one hand over the trash can. That means that if they think what you’re mailing them is junk mail, it goes straight in the bin – often without even opening it.

Mailmen also throw mail away. If the mailman thinks a mail piece is junk mail, they may just toss out the mail as long as they don’t think they’ll get caught.

There are two types of mail that people simply won’t dare throw away, however: personal mail and official mail.

Personal mail is mail that is directly addressed to someone with a handwritten address.

Official mail is mail that comes from a doctor, a lawyer, a government institution and so on. A mail man would never dare throw something like that away, nor would someone dare throw away that envelope without at least opening it.

Naturally, you can’t forge a doctor’s letter or a government letter. That could land you in jail pretty fast. However, you can easily create something that looks very similar. Similar enough that your mail gets delivered and opened.

Here are a few different ways of pulling off this effect.

==> For Intended Recipient Only

This is the IRS look. In the lower right corner of the envelope, print a statement that says (something to the effect of):

“For Intended Recipient Only
Penalty for Violation: $200″

Of course, there’s no actual penalty if someone else opens it. However, just this line alone is usually enough to get someone to set your letter aside and open it.

==> Government or Medical-Looking Logo

Place a government or medical-looking logo on the front of your envelope.

When you’re doing this, make sure you don’t use an actual logo used by the government or by medical professionals. Simply look like it.

You can invent a department in your company and name is something official sounding, like the “Department of Earnings.” Create an official looking logo and place it on your envelope.

==> The Post Office Look

You can also make your letters look as if they’re certified mail.

The key is to make it look different enough from certified mail that you won’t get tossed by the post office.

Dan Kennedy has a great example of a fake certified mail mailer. There’s an eagle on it and the primary colors are red and blue, yet it really isn’t certified at all.

These are a few different ways you can make your envelopes look more official. There are endless possibilities. Once you understand the principle, you can come up with your own ideas for increasing the official-ness of your mail pieces. Make sure you never overstep the boundary between looking like it’s official and pretending that it’s official.

The New Direct Mail to Internet Combo

One of the biggest strides in direct mail over the last decade and a half is the advent of the “direct mail to internet” combination.

In the past, marketers would use what’s called a “one two” mailer to tease interest. For example, you might offer a free guide or report to be sent to someone. You mail that offer to a large list, then cultivate a smaller list of people who responded. That list gets marketed to much more heavily.

The downside to this previous “one two” method is that it’s very costly. Not only do you have to do an expensive mail campaign for a free product that you’re not making a profit on, but you also have to send the free product and then more mailers until you have a sense of whether or not the campaign was a success.

The internet has changed all that. Now, you can do almost exactly the same thing, much more efficiently and for a far lower cost.

==> How the Combo Works

The combo works like this. A mail piece is sent out as a teaser. The mail piece has a strong benefit statement or promise, along with ample amounts of proof.

Instead of asking someone to mail back or call for a free report, they’re sent to a website instead. Each mail piece has a unique code, such as “X7PQL5″ that the user needs to type in when they get to the site to get their freebie.

Once the code is typed in, you’ll know exactly who typed it in and what their address is, based on your mailer’s database.

You now have a “hot” lead. You have someone who’s expressed interest in what you’re offering, someone who’s much more likely to buy than a cold list.

==> The Magic of this Combo

What really makes this combo tick is how much cheaper you can do it than the traditional way.

It doesn’t take that much to get someone to go to a web address. On the other hand, it takes a huge amount of effort to get someone to mail back a card.

That means that instead of having to do a two-page or a seven-page mailer, you can often get profitable results with just a postcard. A great postcard can drive a lot of people to your website, cutting down the price per mailing dramatically.

This technique opens up a whole host of other media that you can try out. You can try half page or even quarter page ads in magazines profitably, for example.

This internet-based “one two” mailer is much more cost effective than the traditional method. It also tends to convert better, as people today often feel more comfortable entering personal information online than on a direct mail form.

Pricing Your Product: The Arithmetic of Direct Mail

Direct mail is all about numbers. It’s about conversion rates and prices, average customer values and upsell rates. If your numbers work and you get a decent conversion rate, you’ll make money. If your numbers don’t work, you won’t.

The price you choose for your product has a huge impact on whether or not you’re profitable at the end of the day.

Generally speaking, in order to succeed in direct mail you need to price your products at around $60 or higher.

Because of this, the products you choose and the lists you promote to are limited. The likelihood of getting “free” subscriber sign-ups to buy are much lower. Instead, the value of buyers who’ve purchased more expensive items goes up considerably.

It’s much easier to sell to people who’ve bought $200 items from catalogues or your $60 product than it is to sell someone who signed up for a $10 subscription.

These are the most important numbers to know.

==> The Golden Rule: Shipping and Handling

The golden rule is that your shipping and handling needs to cover the costs of shipping and product production. That means that every dime you make from the product price needs to be gross profit.

If you sell a product for $69.95 and have a shipping and handling of $7.95, that $7.95 needs to cover both production and shipping.

The simple truth is, marketing costs a lot of money. Direct mail costs a lot of money. Even with a 100% gross profit margin, you still have a large chance of failure. Having all the profits you can get to funnel into your marketing costs and net profits is essential.

==> Why the $60?

Let’s take a look at what would happen if you sold your product for $30.

Let’s say it costs you $800 to mail to a thousand names. If you’re mailing to lower quantities, your cost per thousand will be higher.

If your product sold for $30, in order to make $800 you’d need approximately a 2.66% conversion rate. In order to make a profit, you’d need an even higher conversion rate.

That’s simply not going to happen. Even home-run mailers are about 1% to 1.5%. If your business model depends on a 2.6% response to succeed, you’re dead in the water before you begin.

==> The True Goal of the First Product

The true goal of your first product should be to cover your marketing costs and the cost of acquiring a new customer.

In our previous example, even with a $60 product and a 1% conversion, you’d still barely be breaking even. That’s actually a very good thing.

Most direct mail campaigns won’t make money on their first run. Instead, you’ll make the majority of your money on back end products, upsells and continuity programs.

The first product’s goal should just be to get a new customer into your funnel at as low a cost as possible, preferably free.

Postcards: Can They Be As Effective as Envelope Mail?

When people think of direct mail marketing, they often think of two things: letters and postcards. You can’t use as many words with postcards as you can in a seven-page mailer, but there’s still a whole lot you can do with these seemingly small yet powerful pieces of paper.

==> The Magic of Lower Costs

Mailing a postcard campaign can be as much as 40% cheaper than running a standard mail campaign.

That means that instead of paying $3 a person, you’re paying only $1.80 a person. That’s a huge difference that goes directly towards your bottom line.

With postcards, you can mail more people and still be profitable with a lower response rate.

==> What Are Postcards Best Used For?

You shouldn’t try to use postcards to sell products. If you’re selling a $69.99 supplement plus a monthly subscription, that should absolutely be sold via mailer or a multi-step mailer.

However, postcards can be a very cheap way to test a message or list. You can get a rough sense for whether or not you’re looking at a live list at a much lower cost.

Postcards are also great for lead generation. Use postcards to drive people to an internet website or a call-in number. The cost per lead generated will be much lower than using standard mail.

==> What to Avoid with Postcards

The number one thing to avoid with postcards is appearing like a screaming salesman.

That means avoid big bold “40% OFF!” signs and giant red headlines.

First off, you risk getting your postcards tossed out by the post office if you’re extremely salesy. Second, most people sort through their mail over the trash can, ready to toss out any mail that sounds like junk mail.

Instead, try to make your postcard appear as if it were coming from a friend. Use cursive writing printed. Do still use a headline, but don’t make it look like a sales letter.

Use a first class stamp. Not a printed one, but a real physical stamp. That’ll help get your postcards through the post office, as well as help you get your mail read by the receiver.

Try using different card sizes. Unusual sizes tend to get read. Extra sized postcards or even smaller than usual postcards can both catch attention.

Mailing postcards successfully requires a slightly different mindset than direct mail. With direct mail, your goal is to create a sales letter that hits as hard as possible.

With a postcard, your goal is to titillate and generate interest without giving too much away. Your goal should be to either get their address or their email so you can hit them with a stronger sales message through a different medium.

Once You Have a Successful Test, Here’s How to Roll Out

Direct mail starts out using a number of different tests, followed up by massive rollouts. When you find a product and sales letter combo that converts well, your next step is to milk it for all it’s worth.

Successful campaigns don’t last forever. Knock-offs will come on the market, customers will change, even lists and magazines can change. When you have a home run, your job is to run with it as fast as you can.

How do you roll out once you have a successful test?

==> Mail as Far Back as It’s Profitable

When you first mail a list, you’ll usually only mail the recent names and recent buyers. Once you’ve proven profitability with recent buyers, try also mailing lists from further back.

Mail the 1-month, 3-month and 6-month names progressively and see if you’re profitable. If so, you can even try mailing the 12-month names.

==> Test Similar Lists

If you’re mailing to Entrepreneur Magazine’s list for example, you might want to try mailing to another business-oriented list. If Maxim Magazine is converting for you, you might also want to try Playboy.

Just because a demographic is similar doesn’t necessarily mean you’ll succeed in mailing the list. However, if you have a profitable sales letter on your hands, it’d be criminal not to try it on every conceivable list that it could be profitable on.

==> Do a Print Ad

If your list came from a magazine, go for a print ad. If you’re profitable via direct mail, you can almost guarantee a profitable print ad in that magazine.

Generally you should start with a full page ad or even a two-page spread. Your conversions will be highest in the beginning, then gradually shrink as people get used to your ad.

As your conversions shrink, shrink the size of your ad to increase ROI. Go from two pages to one, then to a half page and even quarter page ad.

==> Roll Out to Other Media

A home run shouldn’t be kept just on direct mail and magazines. It should be blasted across every medium possible.

Go for infomercial TV ads. Go for direct response radio ads with tracked telephone numbers. Use the internet and tools like Google AdWords to generate traffic.

Roll out your product using the same sales message across other kinds of media. This can drastically increase your reach.

==> Prep the Ground Work

There are three things you need to prep before a huge rollout: fulfillment, call center and merchant accounts.

Your fulfillment center needs to stock up on products and get ready to ship a lot of product quickly. Do not surprise your fulfillment center with huge orders, as that’ll quickly cause problems.

The same applies to merchant accounts. If your account has only been doing $5,000 a month and all of a sudden jumps to $500,000 a month, you can bet you’ll get shut down. Talk to your merchant account before running huge volume spikes.

Finally, make sure you have the systems in place to handle the volume of calls that’ll come in from a successful product rollout.

How Much Does an Entire Direct Mail Campaign Cost?

How much can you expect to spend to get a direct mail campaign off the ground? There are a lot of different expenses to consider.

These are the costs for various expenses, priced per thousand. Naturally, the more you order at a time, the lower your expenses will be.

==> Printing Costs

What you’re printing will have an impact on how much it costs. By and large, most mail pieces will cost you about $400 to $500 for every thousand letters you print.

==> Postage

Postage fees go up quite regularly. At the beginning of 2012, sending 1,000 letters cost you $450.

This is for first class postage. While you can send direct mail using other kinds of postage, almost all direct mail marketers swear by using first class.

==> Letter Insertion and Postage Licking

Getting either a person or your print shop to stuff the envelopes and place the stamps will typically cost you between $80 and $120 per thousand envelopes.

If you’re hand addressing each envelope, as Gary Halbert did with his “Coat of Arms” mailing, you can expect to pay a lot more for this process.

Typically, a mailer label that’s stickered onto the envelope or a mechanical pen is used. The costs are much lower, as it’s all done by technology. If you have to hire staff to take over the process, it’ll naturally hike up your costs.

==> The List

The list typically costs between $500 to $700 for a standard list of 5,000 names. You can’t order any smaller than that.

If you have special restrictions on the names, such as “American Express buyers only,” you can expect to pay more per name.

==> Phone Line Costs

Phones are too varied to give exact estimates. Potential costs include the costs of wiring in phone lines, purchasing multiple 800 numbers to track different mailer responses, switchboards and people to answer the phones.

You can also outsource your call answering to a call center. You usually need a minimum volume before you can take this route. You’re charged either by the minute or by commission.

==> Cost of Producing the Product

Finally, you need to produce enough product to meet the demand that’ll come from a successful mailer.

You shouldn’t over-produce, however, or that’ll just turn into tied-up inventory and wasted cash. Instead, produce just enough to fulfill the demand on a mediocre hit, while making sure your fulfillment company can handle a large unexpected hit of volume.

Start by producing enough product for a 0.4% response rate. If you mail 20,000 letters for example, produce 80 products. Make sure your fulfillment company can handle as much as a 2% response rate on short notice.

These are some of the most important expenses to consider when you’re prepping a direct mail campaign.

Five Tips for Hiring a Top-Notch Copywriter

Your sales copy is the centerpiece of a successful direct mail campaign. If you’re not a rock star copywriter yourself, how can you hire them and get them to work for you? Here are five tips.

==> Tip #1: Let Them Know You’ll Run It As Is

There’s nothing copywriters hate more than having their copy changed around by clients.

Copywriters spend hours upon hours refining their copy to hit just the right psychological sweet spots. When a client comes along and changes something, copywriters see it as disrespectful – and it usually lowers conversion.

Let them know right up front that you’ll run their copy exactly as they write it.

==> Tip #2: Get an Introduction from Another Marketer

You have to sell yourself to a top-notch copywriter just as much as they have to sell themselves to you. Top-notch copywriters are in high demand and there just aren’t that many of them.

To establish your credibility as a client, get a referral from another known marketer, preferably one that the copywriter has worked with before. This will help get you through the door.

==> Tip #3: Expect to Pay Five Figures Plus Commission

The price of copy can vary greatly, from just a couple hundred dollars for amateur work to six or even seven figures. Gary Bencivenga famously earned over a million dollars for a single sales letter from the massive amounts of commissions it generated.

To hire a truly world class copywriter, expect to pay a five figure deposit, plus have some sort of commission agreement. For example, you might put down $15,000 up front, plus pay 2.5% of gross sales.

The copywriter makes their real money on the commissions. The $15,000 up front is just to show you’re serious.

==> Tip #4: Hire a Copywriter with the Right Style

Different copywriters write in different styles. John Carlton writes in a high octane, massive promise, in-your-face kind of way. Bencivenga writes in an under-the-radar, subtle persuasion kind of way. The late Gary Halbert often switched between these two kinds of styles.

In addition to stylistic preferences, different writers also have different market specialties. Dan Kennedy is great for marketing and business-related products, while John Carlton is one of the top writers in the golf industry.

Know what kind of style you want to represent your product with before you go looking for a copywriter. Try to hire a copywriter with experience in your field.

==> Tip #5: Give Them Ample Time to Write

Copywriters hate to rush their work, because they know it’s simply impossible to do a great job in a pinch.

Instead, try to give them at least four to six weeks to write their sales letter. Some copywriters can work faster than that, but most world-class copywriters like to take some time to get each and every sales letter perfect.

Are Your Mail Pieces Getting Tossed by the Post Office?

The post office is one of the most overlooked aspects of direct mail. The reality is, between you dropping off your mail piece and it landing in your reader’s hand, a very complicated process has to happen.

Someone has to take your mail stash and put it in the post office system. The mail has to get sifted, then go all over the country to different post offices. Those post offices have to sort the mail, then send individual postmen out to deliver those mailers.

In each of these steps, there’s the chance that someone will decide to simply toss out your mailer. Don’t think it’ll happen? Think again. It’s one of the biggest problems in the direct mail industry.

Anytime a mailman thinks that a mail piece is “spam” or unwanted mail, they may think it’s okay to just toss it out. After all, it’s not like the recipient is looking for the mail piece – who would know if they cut ten minutes off their delivery route and just tossed it in the trash instead?

Learning to get your mail delivered is a crucial component of a successful campaign.

==> The #1 Most Important Factor

The #1 most important thing you should do is apply a physical, real first class stamp.

Do not use a printed or automated first class stamp. That instantly tells the mailman that the stamp was placed by an expensive machine, rather than a real person.

Hire someone to apply real stamps to envelopes. There are also machines that can do this today.

First class mail should either be delivered to the recipient or returned to sender. If the mail piece just disappears, the sender will know something happened. That fact alone keeps postmen in check.

==> The Envelope

The second most important thing to consider is the envelope.

Your envelope should look like one of two things: either an official looking envelope, as if it came from the government, phone company or lawyer, or it should look as if it were a personal letter.

Never, ever use direct mail that looks like direct mail. For example, don’t put “Special Offer Inside!” in red on the outside of your envelope.

==> Checking to See If Your Mail Is Delivered

The best way to see if your mail is actually getting delivered is to put test addresses in your mailing lists.

Put at least ten test addresses in each mailer, more if it’s a large mailer. Sprinkle these test addresses all throughout the country to get an accurate read.

If only 3 out of 10 of your mail pieces are received, then you know you have a major problem. Try dropping your mail off at a different mail center or changing your envelope.