Acquire New Customers... Without Spending $1K/M (1,696 words)
By Denny Hatch
Periodically I get phone calls from fledgling entrepreneurs who have great products and want to get into direct mail.
"What else have you got?" is always my first question.
"Wha ... what do you mean?"
"What other products?"
"This is my only product."
I say, "In the words of consultant Susan McIntyre: 'The key to long-term profitability is to build a large house list of repeat buyers.' That's true for any direct marketing business—catalog or otherwise."
"But don't you want to hear about my product?"
"What does it sell for?"
"Uh, $20, maybe."
"Test it in space," I tell the person. "Take a small space ad in a publication where you find a lot of response ads in direct competition to you and see if your product and pricing fogs the mirror."
"Fogs the mirror?"
"Breathes life." I add, "And stay the heck out of the mail, or you'll go broke!"
Jack Schmid's Dictum
In the 1960s, '70s and early '80s when postage and list-rental costs were more reasonable and the mail stream wasn't so glutted with competing offers, it was economically feasible to look for new customers by renting names and sending your catalog. Today, we're looking at $1,000/M or more to prospect, that is, to send catalogs out to cold lists. If you're lucky enough to get a 2-percent response (20 orders per thousand), each customer will cost you $50, which most catalogers can live with. A lower response means your cost per customer is correspondingly higher.
In 1995, catalog consultant Jack Schmid wrote:
You must have an alternate plan for reaching and attracting new customers. Believe it or not, there is life after list rentals. Successful catalogers realize that renting lists of mail-order buyers is but one of dozens of ways to find and attract new customers. Consider the following alternatives for building your customer list that don't require postage: magazine and newspaper advertising, referrals, package inserts, co-op mailings, television/radio, card decks, trade shows, credit card inserts, doctors' or dentists' offices, or public relations.