What’s a “Good” Direct-Mail Response Rate?
Issue #2091
- WEALTHY: Your favorite mutual fund could be leading you down the wrong path (Andrew Gordon)
- HEALTHY: The dark truth behind those happy anti-depressant commercials (Dr. Al Sears)
- WISE: Nehru on taking the right approach
ALSO IN THIS ISSUE:
- Are you getting what you want out of your direct-mail efforts? (Bob Bly)
- So, your boss hurt your feelings (Michael Masterson)
- It’s Good to Know… about Google Street View
- Add "archetype" to your vocabulary
15 Minutes A Day To Personal Freedom…
Just think, reaching your goals this year could make the difference…
Between retiring with just enough to get by… or with a millionaire’s portfolio…
Between having a job you dread going to every day…. or the job you’ve always dreamed about…
But now it’s July and the year is half over? Is there still time?
- Charlie Byrne
When Fund Managers Get Excited, You Should Flee
With their trillions of dollars, major mutual funds have no problem moving markets up and down. They have the power to significantly enhance your position in a particular sector… or destroy it. But finding out what they’re thinking before they make their big moves can sometimes lead you to the wrong side of a trade. I believe this is one of those times.
In May, Merrill Lynch’s monthly survey of almost 400 funds showed that a record 36 percent of managers said they would like to be "overweight" in European stocks, with 56 percent already overweight. ("Overweight" means holding an excess amount of a certain type of stock, hoping it will outperform other markets.)
Based on this information, you might think it would be a good idea to buy European stocks. But not so fast. Expectations are so high for Europe that only a steady stream of good news could keep European stocks in the good graces of fund managers. A sliver of bad news could break the spell and send European markets heading down.
When a Merrill Lynch survey revealed a similar level of enthusiasm in 2000, the European market fared worse than the U.S. market for the next three years. And it could happen again… especially if interest rates - which are rising in Europe - slow economic growth too much.
Europe is not the bonanza mutual funds would lead you to believe it is. If anything, you should ratchet down your European holdings.
[Ed. Note: Andrew Gordon, ETR’s Investment Director, has authored several books on energy markets, global countertrade practices, and the hot growth sectors of China and Russia. A former professor of marketing and finance, he is the editor of INCOME, a monthly financial advisory service that uncovers income-generating stocks that promise safety (first and foremost), along with much-higher-than-average profit potential.]
"It is a fundamental rule of human life that, if the approach is good, the response is good."
Jawaharlal Nehru
What’s a "Good" Direct-Mail Response Rate?
By Bob Bly.
At least once a week I get an e-mail from someone asking me: "What’s considered a good response rate for direct mail?"
In some ways, it’s a meaningless, even absurd, question. Why? Because the only logical - and honest - answer can be: "It depends."
What does it depend on?
The product… the marketing… the mailing list… the offer… the price… the economy… the terms… the guarantee… the cost of the mailer… even what’s in the news on the day the piece is mailed.
What I usually say to my e-mail correspondent is this: "What is your marketing goal?"
Many small-business owners want every mailing to make a profit - to generate $1,000 or $2,000 or $3,000 in sales for every $500 spent on it. On the other hand, experienced direct marketers, especially the large ones, are often content if a mailing brings in new customers "at cost."
"At cost" means the company makes no profit on the initial orders the mailing brings in. A mailing that costs $10,000, for example, generates $10,000 in sales.
Why are experienced direct marketers often content to bring in new customers at cost? Because they know that, once they acquire a customer, they can make money on the "back end" - selling additional products to that same customer.
In fact, in most direct-marketing businesses, the bulk of the profits are made on the back end, not on the initial order (the "front end"). At least one major direct marketer told me they are actually happy to bring in new customers at a slight loss, because their back end is so profitable.
Depending on your goal for a mailing - whether it’s to acquire new customers at cost… double your money… or whatever - you need to do some calculations ahead of time to figure out the response rate you’re going to need in order for the mailing to break even.
First, you need to know your gross profit per unit sold - the selling price of your product minus what it costs you to buy or make it. Let’s say your product sells for $80, and it costs you $10 to make or buy. Your gross profit is $70 per unit.
Yes, there is the cost of shipping and handling. But for our purposes, I will assume you charge your customers for shipping and handling - and that the extra charge just covers the cost.
Next, you need to know the cost of the mailing. This is calculated by adding the cost of its four components: list rental, postage, printing, and "letter shop" (the process of assembling the mailing and bringing it to the post office).
For our example, let’s say it costs you $700 to mail 1,000 pieces. With a gross profit of $70 per unit sold, that means you’ll need 10 orders to break even - which is a one percent response rate.
(By the way, there’s a free online tool that can perform this break-even calculation for you: dmresponsecalculator.com.)
A one percent response rate may not sound great - especially if you’ve "heard" that the average direct-mail response rate is two percent. Well, that was never really true - and it is less true now. The two percent figure was, at one time, the average response rate for direct-mail packages selling magazine subscriptions. But the average response rates for other products… and other offers… were different. For instance, seminar promoters often got response rates from .25 to .50 percent… and sometimes as low as a tenth of a percent.
Not only that, but response rates overall are declining. One fundraising consultant told me that response rates for direct mail in the nonprofit field used to average three percent. Today, they are closer to one percent.
Why the decline? Consumers are bombarded by so much mail - and so many other advertising messages- that it’s more difficult to grab their attention. All the more reason to make sure you know what you are hoping to achieve with your offer before you test it in the mail.
[Ed. Note: Master copywriter and best-selling author Bob Bly is the editor of ETR’s ETR’s Direct Marketing Masters Edition. a program to help you start your own successful direct-mail business. Sign up for Bob’s free monthly e-zine, The Direct Response Letter, and get more than $100 in free bonuses.]
Now You can Join Wall Street at the 10-Q Profit Party
There is nothing like earnings news to send a stock soaring or crashing. In May, you could have grabbed 14% on IBM, 15% on EMC Corp, and an incredible 63% on Amazon, when these companies reported first-quarter earnings.
But while these stock moves are dramatic, they are nothing compared to the rocket ship potential of options… The IBM May calls returned +303%, the EMC Corp May calls returned +60%, and the Amazon May calls delivered an eye-popping +841%… all in less than a month.
Click here to learn how YOU can profit from moves just like these quarter after quarter.
Don’t Bring Your Problems to Me
A high-level executive wrote to me saying he is very upset with how he’s been treated by his partners: "First they tell me to do this. And I do it. Then they tell me I can’t do it anymore and I need to start something new. So I start something new and they switch plans on me again. I no longer trust them. I am demoralized. My people are demoralized."
Suggestion to ETR readers who sometimes feel this way: Blaming your colleagues or superiors because you feel like they’re pushing you around is not an effective way to become successful. People who head up companies are paid to create growth and solve problems. In doing so, they are expected to take responsibility for their actions. If they run into obstacles and must make adjustments, they must make them. They can’t hold other people accountable for decisions that they make.
Conduct yourself like a professional. If you feel like you have been taken advantage of or in any way treated unfairly, translate those feelings into a rational process. Don’t worry about whether you have been screwed over and by whom. Instead, ask yourself what it is that you want and figure out how you can get it.
Correct the situation by creating a new game plan that gives you what you are looking for and gives even more to the person or people you are working with. Remember, the secret to success is making sure everyone who deals with you feels like they are getting a great deal. There is always a way to do that and take care of your own needs if you are creative, hardworking, and able to communicate your message positively.
Reader Feedback: "I am absolutely BLOWN AWAY!"
"I have just finished (as in 2 days ago) Michael Masterson’s Automatic Wealth: The Six Steps to Financial Independence, and I must say that I am absolutely BLOWN AWAY!
"As I was reading through the different steps, I could say ‘YES! I know what to do!’ and begin implementing my ideas immediately. The message that Michael presented inspired me to renew several potential wealth-generating ideas that I had let fall by the wayside. The concept of generating several income streams was totally new to me. (Go figure?!) I had the old mentality that I had to find the ONE thing that would generate the type of income I desire. I never considered the fact that earning an extra $100 here and $1,000 there (a) could improve my life NOW and (b) may develop into ‘The Thing’ that will allow me to eventually quit my day job.
"During the course of reading Automatic Wealth: The Six Steps to Financial Independence, I made dramatic improvements to my plan for wealth building:
"I became a better employee in my current 9-5 career - with a clear plan on exactly what I want to achieve in this career with this company. I made changes to my management style in my 9-5 career. I improved the marketing and financial structure of my personal business. I submitted designs to R&D for new off-shoot products for my personal business. I launched a 2nd & 3rd business - which should begin producing revenue long before the end of this year!
"These exciting changes happened just during the reading of the book!
"Sitting here on my desk is Michael Masterson’s Seven Years to Seven Figures. Imagine what changes will take place in my life once I begin reading this book. The possibilities are endless!
- Jenn Woodward
Klamath Falls, OR
[Ed. Note: Want to see your name in print? Let us know how ETR or one of Michael Masterson’s books has changed your life at ReaderFeedback@gmail.com. We may run your comments in an upcoming issue of Early to Rise or post them on the brand-new Michael Masterson website!]
The Depressing Facts About Anti-Depressants
By Al Sears, MD
Commercials for anti-depressants like Paxil, Zoloft, and Prozac all do their best to portray the drugs as harmless. But this class of drugs, known as SSRIs (selective serotonin reuptake inhibitors), can be highly addictive for many who use them. And when they stop taking these drugs, one in four will suffer from withdrawal symptoms.
Millions of Americans take SSRIs. They’re the medication of choice for many psychiatric conditions, including depression, anxiety, posttraumatic stress disorder, and obsessive-compulsive disorder. Part of the reason for their popularity is that drug companies have gone to great lengths to prove that they’re not addicting.
These drugs have now been in widespread use for years. And despite the fact that scores of drug-company-sponsored studies have shown them to have no potential for addiction, we’re starting to get results from non-drug-company-sponsored studies. Several of them have concluded that patients do, indeed, develop problems, physical and mental, when stopping these drugs.
A recent report in the Journal of Postgraduate Medicine notes that up to 25 percent of patients who stop taking SSRIs experienced a number of symptoms, including anxiety, insomnia, mood swings, irritability, nausea, vomiting, tremors, chills, fatigue, lethargy, headache, and dizziness. The symptoms begin 24 to 72 hours after stopping the SSRI. They last one to three weeks, but resolve if the medication is restarted.
I prefer natural remedies to pharmaceuticals. If your depression is mild, consider trying St. John’s Wort or SAMe first.
SSRIs can be helpful for those with severe depression. If you and your physician decide that you are a candidate for one of these drugs, take the following precautions.
- Never abruptly stop taking your medication. If you stop treatment, slowly taper off.
- Eat choline-rich foods, such as eggs, beef, cauliflower, peanuts, and spinach.
- Supplement with choline, lecithin, and B complex vitamins.
[Ed. Note: Dr. Sears is a practicing physician and an expert on heart health. Learn how to apply his winning heart-healthy strategies in The Doctor’s Heart Cure.]
It’s Good to Know: Google Street View
The satellite views of Earth offered by Google and other Web companies have been supplemented with the arrival of Google Street View, which provides ground-level views of several American cities. The format is scrollable, offering an experience similar to driving down the street.
Currently, only portions of Las Vegas, San Francisco, Denver, Miami, and New York City are available. Go to maps.google.com and click on the Street View tab to check it out.
(Source: Google)
How a “Dumb Blonde Moment” Led to a Secret Golden Backdoor That Earned Me $3,012 in Only 48 Hours… I Tripped Over This by Mistake!
I thought I was following the DVD down to a tee. But I guess I was having another “blonde” moment.
I did the exact opposite… Hey, what did I know? Oops!
Then it happened: $3,012.00 in 48 hours doing the opposite of what everyone else is doing.
Read on to learn how you can have your own “blonde” moment.
Word to the Wise: Archetype
An "archetype" (AR-kih-tipe) - from the Greek for "original" - is the model after which other similar things are patterned.
Example (as used by Mark Sarvas in a New York Times review of I Love You, Beth Cooper by Larry Doyle): "As long as there are nerds among us, they will seek their revenge. The pimply-faced debate captain lusting after the head cheerleader is an archetype nearly as durable as the hero’s journey or the star-crossed lovers."
[Ed. Note: Become a more persuasive writer and speaker … build your self-confidence and intellect … increase your attractiveness to others … just by spending 10 VERY enjoyable minutes a day with ETR’s new Words to the Wise CD Library.]
Michael Masterson
Copyright ETR, LLC, 2007