If you don't have 10% returns then you aren't tryin!
 

This is taken from Joe Sugerman’s book “Marketing Secrets of a Mail Order Maverick”.

For those that aren’t familiar with Joe, he was unbelievably successful in mail order. He made tons of money with space ads, catalogs and direct mail. He was the man that gave the world ‘Blublocker’ sunglasses. And for about a dozen years he held very high-priced marketing seminars.

Here is what Joe has to say about ‘returns’ and rates of return:

“At my seminar, I was showing slides of ads created by previous seminar participant and we came to an advertisement of an audio system run in several magazines by a California mail order company. The president of the company happened to be in my class. I asked him how the product did.

“We sold thousands of them and we had an incredibly low 3% return rate,” beamed the president. The rest of the class was impressed.

The return rate he was referring to is the percentage of customers who purchase an item, receive it and then, for some reason, return it. At the time, a typical return rate was anywhere from 10 to 15%. Some customers might change their mind about the item, find it cheaper somewhere else, or just plain try it and not like it. If you had a return rate over 20%, there was usually some latent defect in the product, or the product wasn’t described properly and therefore didn’t fulfill the customer’s expectations.

But a 3% return rate was unusual. I looked at the class and asked them, “Would you say that a 3% return rate is good? And if so, why?”

The class responded with several comments. They felt that 3% was indeed very good. Obviously, the president had satisfied his customers and they were pleased with their purchase. Some in the class mentioned that the price must have been quite reasonable and others said that when the customer received their purchase, it must have been a lot better than what they expected.

After everybody had finished, I looked at the class and said, “I think a 3% return rate is totally unacceptable.”

The class looked rather puzzled. I explained, “A 3% return rate tells me that he didn’t sell hard enough. He didn’t get across all the terrific features of the product. One of the symptoms of not doing a good marketing job is when most people feel they got a better product and value than they thought they would.”

I turned to the president of the company and said “Think how many more sales you could have gotten with a 12% return rate?”

I posted this article on another forum quite a while ago. I though it would generate a lot of discussion, but it didn’t. At the time I was surprised, but after I thought about it I think what happened was that folks reading the post didn’t know how to react. They’ve been told all along that low returns are good and here is a guy telling them their world is wrong. I think it was so radically different from what they had believed that they didn’t know how what to say. For what it is worth I think Joe’s right. If you don’t have a high rate of return 8%-12% then you are leaving money on the table in unsold product. Your marketing message doesn’t sell your product hard enough.

What do you think?

Mike Winicki

It seems to conflict with....
 

Hi Mike,

That's an interesting point of view.... Certainly, Joe Sugarman is someone worth listening to!

What came to my mind is that his approach seems to clash with the common phrase -

"under-promise, over-deliver."If I understand right, he's essentially saying you should promise more strongly!

While it would make more sales, I wonder if that would affect customer loyalty? That's a possible drawback I can think of now (on the spur of the moment)...!

Certainly something to think about though... Let me ponder this further...!

- Dien Rice

On the verge of being crooked
 

> This is taken from Joe Sugerman’s book
> “Marketing Secrets of a Mail Order
> Maverick”.

> What do you think?
> Mike Winicki

I could care less if Joe Sugerman (remind me not to buy anything from him) or any other "guru" spouted this kind of crap to me. They aren't responsible to my customers, my clients, and don't have my best interest in mind. They have no idea how I want to operate my business.

So before anyone starts to think they should be over-hyping their sales letters and starts over promising and under delivering just to make a sale -- I think you need to take a good long look at yourself, your beliefs, and your values.

Imagine answering your daughter or son:

"Don't tell your school mates and teachers what I do. It is based on being deceitful. See... what I do is pry hard earned dollars from the tight fists of SUCKERS who only dream of getting rich. There isn't a chance in h*ll they will succeed as long as they keep buying from your dear 'ol dad."

You asked what everyone thinks Mike, so I told you how I feel about it. It is my choice NOT to run a business like that. What do you choose Mike?

Best Regards,
Steve MacLellan


homebusiness-websites.com

Well said, Steve [DNO]
 

dno
> I could care less if Joe Sugerman (remind me
> not to buy anything from him) or any other
> "guru" spouted this kind of crap
> to me. They aren't responsible to my
> customers, my clients, and don't have my
> best interest in mind. They have no idea how
> I want to operate my business.

> So before anyone starts to think they should
> be over-hyping their sales letters and
> starts over promising and under delivering
> just to make a sale -- I think you need to
> take a good long look at yourself, your
> beliefs, and your values.

> Imagine answering your daughter or son:

> "Don't tell your school mates and
> teachers what I do. It is based on being
> deceitful. See... what I do is pry hard
> earned dollars from the tight fists of
> SUCKERS who only dream of getting rich.
> There isn't a chance in h*ll they will
> succeed as long as they keep buying from
> your dear 'ol dad."

> You asked what everyone thinks Mike, so I
> told you how I feel about it. It is my
> choice NOT to run a business like that. What
> do you choose Mike?

> Best Regards,
> Steve MacLellan

Steve...How closely did you read this post?
 

> I could care less if Joe Sugerman (remind me
> not to buy anything from him) or any other
> "guru" spouted this kind of crap
> to me. They aren't responsible to my
> customers, my clients, and don't have my
> best interest in mind. They have no idea how
> I want to operate my business.

> So before anyone starts to think they should
> be over-hyping their sales letters and
> starts over promising and under delivering
> just to make a sale -- I think you need to
> take a good long look at yourself, your
> beliefs, and your values.

> Imagine answering your daughter or son:

> "Don't tell your school mates and
> teachers what I do. It is based on being
> deceitful. See... what I do is pry hard
> earned dollars from the tight fists of
> SUCKERS who only dream of getting rich.
> There isn't a chance in h*ll they will
> succeed as long as they keep buying from
> your dear 'ol dad."

> You asked what everyone thinks Mike, so I
> told you how I feel about it. It is my
> choice NOT to run a business like that. What
> do you choose Mike?

> Best Regards,
> Steve MacLellan

I am reposting a critical part of the article...

"The return rate he was referring to is the percentage of customers who purchase an item, receive it and then, for some reason, return it. At the time, a typical return rate was anywhere from 10 to 15%. Some customers might change their mind about the item, find it cheaper somewhere else, or just plain try it and not like it. If you had a return rate over 20%, there was usually some latent defect in the product, or the product wasn’t described properly and therefore didn’t fulfill the customer’s expectations."

Where does Joe talk about being dishonest? As a matter of fact he is saying that a rate over 20% is not good and certainly doesn't suggest making claims that are going to shoot the return rate up that high (or higher).

What he is saying is that most marketers do not sell their products hard enough...consequently you (the marketer) is leaving hard-earned dollars on the table for others to get.

That's all Joe is saying...nothing more, nothing less. It's not about deceit. It's about marketing your products as stongly as possible so that you can get a acceptable return on your investment.

Take care,

Mike Winicki

Why targeting higher return rates isn't immoral...
 

> So before anyone starts to think they should
> be over-hyping their sales letters and
> starts over promising and under delivering
> just to make a sale -- I think you need to
> take a good long look at yourself, your
> beliefs, and your values.

I think that targeting a higher return rate, as suggested in the original post, can make sense, and is not necessarily bad or immoral.

Let's suppose you don't promote your products that well, and you sell 100 products, with 3 customers returning it. After deciding this is too low, you decide to put more effort into marketing.

You do some more aggressive marketing, and you sell an additional 100 products, but this time 12 people return the product. Suddenly your return rate has jumped from 3% previously to 12% on this batch.

Is this immoral? I don't think it is. It means an additional 88 people have gotten a product they find useful, that they may not have gotten had you not marketed more aggressively. Of the 12 people that return the product, what do they lose? They've gotten their money back.

If you believe your product has value, and is of use to other people, I don't think there is anything wrong with targeting a higher return rate.

It's important to keep in mind, however, that this makes more sense and works better with products rather than services due to the ease in which they can be returned.

Best Regards,

- Thomas.

Does everyone interpret a message the same way?
 

When Joe says:

"One of the symptoms of not doing a good marketing job is when most people feel they got a better product and value than they thought they would."

IMHO Joe is wrong. That is a GOOD marketing job.

Joe says:

"A 3% return rate tells me that he didn’t sell hard enough"

I interpret this to read that the sales message did a good job explaining the benefits and features of the product. People were satisfied with what they bought from the sales copy that convinced them of their need/want.

When you start getting a higher return rate it is because people are unsatisfied. What lead them to believe they wanted it in the first place? Wouldn't it be the sales copy?

I look at it this way Mike. Assume Joe is right where a 3% return rate means you didn't try hard enough to sell. So how do you try to sell "harder" with your sales copy?

In my opinion it alludes to be deceitful by making exaggerated claims.

We are two different people Mike. You read the message and interpret it differently then I do. Perhaps your interpretation can help generate more sales for you -- my interpretation is a reality check to buying informational products or services that aren't going to do "didley squat" for you.

An example is a client (a very experienced marketer) who has bought not once but twice, from two different companies offering to send a million visitors to his website. The sales copy sold him. He emailed me about it to see if the server his site is hosted on could withstand the traffic.

Well... in both cases the traffic never came, and he got his money back from one company -- the other one wouldn't return it based on some loophole.

So it would seem that the companies "tried very hard" to promote their service with their sales copy, and no doubt have a high return rate.

And this is good marketing because...?

Best Regards,
Steve MacLellan


homebusiness-websites.com

Steve I agree with you that...
 

promising benefits you can't deliver on is wrong. And again Joe does not say (this is a fact) nor imply (this is my opinion) you should do that in any of his books or related information.

What he is saying is that if your returns are minimal your copy could be made stronger to flag a wider audience. With any ad you have a wide variety of prospects that may purchse. Consider for a moment that you have people that "want" your product, have an "urgency" to buy it and have the "means" in order to pay for. These folks are a slam dunk...they buy and the returns are low. Now consider the person that has a "want" and an "urgency" but they don't have the
"means" to buy--at least not buy without injurying their current financial position. Your ad is so strong that many of these folks take a chance, risk their financial situation and buy. They receive the package...many of them keep it, they like the package and are happy. Others return it...it's not what they are looking for under their current financial circumstances. Does this mean your copy is making promises your product can't keep? No, absolutely not. Your returns go up but you end up selling a lot more product. Is this a bad thing? Only if your returns are astronomically high or you don't return the money to those folks that are unhappy.

There is nothing wrong with getting more people to buy (and risking higher returns) using more powerful sale's copy. And "more powerful" doesn't mean make promises you can't keep. It could be something as simple as a new headline.

Take care,

Mike Winicki

Wrong Focus
 

Sugarman is very successful, but he is focusing on the wrong numbers here. I find it incredible that somebody would think they are getting the most value out of their marketing because they were getting some arbitrary percentage of product returns.

When running a marketing campaign you look at the net revenues produced by that campaign. Both immediate and lifetime from that customer. Through testing you maximize those revenues. The focus is on the revenue not on the percentage of returns. I want to get my products into the hands of as many people as possible with as FEW returns as possible.

Giving customers more than they expect is not a bad business decision. It does not matter if you are one on one chatteling or mass marketing a product, giving more than is expected will increase your bank account more than you expect.

If you have a high return rate, you are over promising and your product is under delivering. I have worked with plenty of salesmen that over promise telling the customer just what they want to hear. It's easier to make the sale that way, but when the product does not perform as promised do you think those customers have much lifetime value for that salesman. Most customers who have gone to the trouble to order your product don't want to return it. Sure, there are always some that will order knowing full well they are going to return it, but they should be a very small percentage.

All of this said, if you are in business to make a profit (if you are not trying to make a profit why are you in business?) you should always be looking at your numbers. You should know which ads are the most profitable and which are the least. Saying your rate of product return is too low is meaningless.

Les




Have you read Gordon's Chattel Report??

Les, I think your not looking at this from Joe's perspective...
 

You see Joe had all the numbers from many, many different products and the numbers told him that he made more money with a higher rate of return (say 10%) as opposed to say (3%). And why is that? Easy he made a lot more sales with the 10% return rate. You see Joe wasn't 'thinking' this was the result--he knew that was the result based on the huge database of information he had collected over the years. This wasn't guesswork by any stretch of the imagination.

You see the problem we have here is that we equate returns to a 'bad' thing. But Joe is saying that returns can be a very good indicator of how well you are marketing a product plus I can tell from my own personal experience a customer that is treated with respect during a returns situation is often turns out to be a very-good long term customer.

You're thinking the 'sale' is the only thing here but on the contrary it's both the sale and the building of a customer list that's important. I believe Joe found out very quickly that if he had 3 customers out of a total of a 100 that returned a product he was much better off with having 15 return products out of 150 sales. Not only did he have more sales he also built his customer list that much faster.

Don't make the mistake of thinking Joe only focused on the rate of return with no other factors involved. What Joe has done for you and I is boil the soup down and give you the results...what we're not seeing is all the ingredients he put in to make it.

I understand why this is making people uncomfortable. We were always told something was 'blue' and maybe it is 'red' like Joe says and it makes us uneasy. But that is why Joe is good, he isn't some guru just stating the obvious.

Take care,

Mike Winicki

> Sugarman is very successful, but he is
> focusing on the wrong numbers here. I find
> it incredible that somebody would think they
> are getting the most value out of their
> marketing because they were getting some
> arbitrary percentage of product returns.

> When running a marketing campaign you look
> at the net revenues produced by that
> campaign. Both immediate and lifetime from
> that customer. Through testing you maximize
> those revenues. The focus is on the revenue
> not on the percentage of returns. I want to
> get my products into the hands of as many
> people as possible with as FEW returns as
> possible.

> Giving customers more than they expect is
> not a bad business decision. It does not
> matter if you are one on one chatteling or
> mass marketing a product, giving more than
> is expected will increase your bank account
> more than you expect.

> If you have a high return rate, you are over
> promising and your product is under
> delivering. I have worked with plenty of
> salesmen that over promise telling the
> customer just what they want to hear. It's
> easier to make the sale that way, but when
> the product does not perform as promised do
> you think those customers have much lifetime
> value for that salesman. Most customers who
> have gone to the trouble to order your
> product don't want to return it. Sure, there
> are always some that will order knowing full
> well they are going to return it, but they
> should be a very small percentage.

> All of this said, if you are in business to
> make a profit (if you are not trying to make
> a profit why are you in business?) you
> should always be looking at your numbers.
> You should know which ads are the most
> profitable and which are the least. Saying
> your rate of product return is too low is
> meaningless.

> Les

Re: If you don't have 10% returns then you aren't tryin!
 

Hi Mike,

I can see his point, but when it comes to credit card sales (as most sales are today), I don't think this is practical, as a 10-12% return rate would probably jeopardize one's merchant account.

Just my $0.02 worth . . .

Best,

Paul

Paul that's true but have you considered this...
 

> Hi Mike,

> I can see his point, but when it comes to
> credit card sales (as most sales are today),
> I don't think this is practical, as a 10-12%
> return rate would probably jeopardize one's
> merchant account.

> Just my $0.02 worth . . .

> Best,

> Paul

Paul,

You don't have to refund the card. Send a check or money order...we've been doing that in our business for years with very few problems or complaints. No sense screwing up your merchant account!

Take care,

Mike Winicki

Re: If you don't have 10% returns then you aren't tryin!
 

Mike,

I have a friend who is an actress with a lot of training in psychology. For a while to make ends meet, she had a telemarketing job. She lost the job because she was TOO GOOD at it. Her return rate was too high. She was so good at convincing people to buy that a very high percentage of people realized when they got the merchandise that they hadn't really wanted it.

What made this rate too high? One factor not noted in the discussion here is that it takes a lot of customer service time and effort to deal with dissatisfied customers and returns.

Another factor not mentioned by Sugarman and that almost everyone who's responded in this discussion seems to feel is the effect on the reputation of the company and one's own integrity. A good friend of mine sold some reports by someone else that got about a 10% return rate, and she stopped selling those reports very quickly because the comments made it clear that the buyers expected better quality from her. She felt that in the long run, her business would be more profitable if nearly everyone who bought something felt happy with the purchase.

Finally, it's vital to note that for every dissatisfied customer who returns a product for a refund, there are probably two others who felt the same way but did not request a refund. With a 30% dissatisfaction rate, I think most of us would not be happy, even if it was the road to profit.

Marcia Yudkin


High-priced reports with a low return rate

You make a good point on...
 

the cost of handling customer returns, Marcia. This has to be figured into the equation, which I'm sure Joe had a firm handle on.

I do have a problem with this statement though...

> Finally, it's vital to note that for every
> dissatisfied customer who returns a product
> for a refund, there are probably two others
> who felt the same way but did not request a
> refund.

You are making an assumption that may or may not be true. I think much of it would depend upon how aggressive a merchant was in promoting a money back gurantee and how easy it was for a consumer was to return products. Plus there are different "degrees of disatisfaction", which would have to be discussed and analyzed.

Now I can tell you companies that market apparel via catalogs typically experience a 20-40% return rate, which on the surface blows the 10% rate that Joe suggests for the product category he was discussing (consumer electronics) right out of the water. Now how do those people stay in business? Easy, their margins are high enough compared to the cost of handling returns so that they make money.

Take care,

Mike Winicki

My opinion is...
 

If I had a 10% refund rate, I would examine my promotional piece for accuracy because

I was obviously over-promising and under-delivering.

It may be true about different degrees of customer satisfaction and whatnot. Though, now it is You who is making the assumptions.

The answers given are opinions. Each as valid as Sugarman's. At least, the opinions given here can be made clearer if needs be. Sugarman's quote doesn't do that... Sugarman is not here to make what he said more clear. All we have is your interpretation of it... and your interpretation is as valid as everyone else's.

Also, lets consider the FTC aspect. If you are dis-satisfying at least 10% of your customers enough that they ask for a refund, how many also complain to the FTC about you and your product?

All variables considered, with a 10% refund rate, you are going to get complained about.

So you have to ask yourself... is making one person in ten unhappy with you and your business a good thing to be doing? Is making a large number of people unhappy so as to generate FTC complaints a good things for you and your business? And is generating so much bad word-of-mouth good for you and your business?

I would rather have fewer sales and a lower refund rate, than to annoy ever increasing numbers of people just to turn a buck. That is MY opinion. Sugarman can annoy as many as HE wants to. He is him and I am me. We both have opinions on the matter and conduct our businesses accordingly.

As for apparel... come on Mike... don't start picking and choosing industries to help strengthen Sugarman's point. From what I can tell, Sugarman's statement is aimed at a general market. Apparel by mail has many things going against it that other "general" market products do not - color, size, how it looks on, how clean the item is when it arrives, any pulled stitches, and a market known for buying, wearing once and returning.

Lets apply Sugarman's 10% rule to other industries...

Cars... Ford, how do you feel about getting a 10% request for refund rate? Out of business and sued left, right and center most likely.

Tires. Is a 10% refund rate good for you?

Appliances.

Sony, want a 10% refund rate on the PlayStation? Nintendo? Microsoft?

Sugarman may be comfortable wanting to create so many unsatisfyied people it generates a 10% refund rate. That's him.

You may be comfortable with that too. And that's you.

I am not comfortable with it. So are others in this thread. And as we are each in charge of what our respective businesses do and how we want to run them, what we do in our business is as valid as what Sugarman does in his.

Sugarman is obviously more concerned with bigger bucks because he is willing and eager to make more people unsatsified. And others are more concerned with customer satisfaction.

As Jim Straw says, sort of... everyone is right and everyone is wrong.

As with all things... take what you can use and discard the rest.

This is one bit of Sugarman advice I will be discarding based on the available evidence and how I want to conduct business.

Michael Ross

P.S. Mike, you do know it is against credit card regulations to issue refund checks when the purchase was made via credit card, don't you? You could be risking your merchant ability by doing this.


The Great Ideas Letter satisfies

Re: My opinion is...
 

Michael,

It goes back to who says a 1% return rate is the right rate or 10% is the right rate? It all comes down to the numbers. Feelings... impressions... opinions have nothing to do with it. Apparently Joe using the information at his disposal found that a 10% return rate was acceptable given the amount of sales of a given category. I think given his sales his method was successful. That's not to say it would be successful in all categories.

The bottom line is everyone tells us what the 'bench-marks' should be but I doubt most have the numbers to back it up.

Take care,

Mike Winicki

> If I had a 10% refund rate, I would examine
> my promotional piece for accuracy because

> I was obviously over-promising and
> under-delivering.

> It may be true about different degrees of
> customer satisfaction and whatnot. Though,
> now it is You who is making the assumptions.

> The answers given are opinions. Each as
> valid as Sugarman's. At least, the opinions
> given here can be made clearer if needs be.
> Sugarman's quote doesn't do that... Sugarman
> is not here to make what he said more clear.
> All we have is your interpretation of it...
> and your interpretation is as valid as
> everyone else's.

> Also, lets consider the FTC aspect. If you
> are dis-satisfying at least 10% of your
> customers enough that they ask for a refund,
> how many also complain to the FTC about you
> and your product?

> All variables considered, with a 10% refund
> rate, you are going to get complained about.

> So you have to ask yourself... is making one
> person in ten unhappy with you and your
> business a good thing to be doing? Is making
> a large number of people unhappy so as to
> generate FTC complaints a good things for
> you and your business? And is generating so
> much bad word-of-mouth good for you and your
> business?

> I would rather have fewer sales and a lower
> refund rate, than to annoy ever increasing
> numbers of people just to turn a buck. That
> is MY opinion. Sugarman can annoy as many as
> HE wants to. He is him and I am me. We both
> have opinions on the matter and conduct our
> businesses accordingly.

> As for apparel... come on Mike... don't
> start picking and choosing industries to
> help strengthen Sugarman's point. From what
> I can tell, Sugarman's statement is aimed at
> a general market. Apparel by mail has many
> things going against it that other
> "general" market products do not -
> color, size, how it looks on, how clean the
> item is when it arrives, any pulled
> stitches, and a market known for buying,
> wearing once and returning.

> Lets apply Sugarman's 10% rule to other
> industries...

> Cars... Ford, how do you feel about getting
> a 10% request for refund rate? Out of
> business and sued left, right and center
> most likely.

> Tires. Is a 10% refund rate good for you?

> Appliances.

> Sony, want a 10% refund rate on the
> PlayStation? Nintendo? Microsoft?

> Sugarman may be comfortable wanting to
> create so many unsatisfyied people it
> generates a 10% refund rate. That's him.

> You may be comfortable with that too. And
> that's you.

> I am not comfortable with it. So are others
> in this thread. And as we are each in charge
> of what our respective businesses do and how
> we want to run them, what we do in our
> business is as valid as what Sugarman does
> in his.

> Sugarman is obviously more concerned with
> bigger bucks because he is willing and eager
> to make more people unsatsified. And others
> are more concerned with customer
> satisfaction.

> As Jim Straw says, sort of... everyone is
> right and everyone is wrong.

> As with all things... take what you can use
> and discard the rest.

> This is one bit of Sugarman advice I will be
> discarding based on the available evidence
> and how I want to conduct business.

> Michael Ross

> P.S. Mike, you do know it is against credit
> card regulations to issue refund checks when
> the purchase was made via credit card, don't
> you? You could be risking your merchant
> ability by doing this.

But Mike, you asked
 

What I think, in your first post. And now you're saying "opinions have nothing to do with it."

Opinions have Everything to do with it...

To quote your quote... "One of the symptoms of not doing a good marketing job is when most people feel they got a better product and value than they thought they would."

Meaning: you under-promised and over-delivered.

And Joe says THAT it bad marketing.

The implication being... it is better to over-promise and under-deliver because you will make more sales.

Again, I say, it is not something *I* am comfortable with. JS obviously is, otherwise he would not suggest to do it.

And while it is nice to say it all comes down to the numbers, it cannot be totally about the numbers. Running totally by the numbers is what generates feelings of ill will from customers. That's why they feel used and abused... as if the business is just after their money. Because when you run totally by the numbers, all you are interested in is the customer's money.

It really boils down to your own internal standards as far as customer satisfaction goes.

> Apparently Joe using the
> information at his disposal found that a 10%
> return rate was acceptable given the amount
> of sales of a given category. I think given
> his sales his method was successful.

The success of the method is not being questioned here. The ethics of it are. JS is basically saying to under-deliver and over-promise.

> The bottom line is everyone tells us what
> the 'bench-marks' should be but I doubt most
> have the numbers to back it up.

I don't recall this "everyone tells us what the benchmarks should be" thing. Now you're changing the subject. JS quotes some averages... and that's all they are. And averages are made up by higher than average numbers and lower than average numbers.

You asked for my opinion, I gave it. It is different to JS's opinion on the subject and, I gather, your opinion.

I won't run my business JS's recommended way. JS can. You can. The whole world can for all I care. I won't. To hell with the numbers. I'm about trying to please the customer. Not "get as much business as you can and to hell with pleasing the customer."

It's about The Pizza in the Oven.

Michael Ross


Discover The Great Ideas Letter

Michael...you see it one way, I see it another...that's OK.
 

> Opinions have Everything to do with it...

> To quote your quote... "One of the
> symptoms of not doing a good marketing job
> is when most people feel they got a better
> product and value than they thought they
> would."

> Meaning: you under-promised and
> over-delivered.

> And Joe says THAT it bad marketing.

> The implication being... it is better to
> over-promise and under-deliver because you
> will make more sales.

That does not have to be the implication...the fact Joe is pointing out is that if you under-promise and over-deliver a great many people will not realize how great your product is. Thus they won't derive the great things your product delivers. They don't buy because your marketing is weak. You haven't flagged as big an audience as you could have with better marketing. In essense you've robbed the customer of the joy/benefit/excitement of owning your product because they don't realize (or realize enough) that your product is right for them.

What the Joe's message is: "Promise just as much as you deliver!"

Michael, after spending the last 20+ years marketing a wide variety of products and businesses I can tell that most businesses suffer from under-promising and over-delivering rather than the other way around and that's why they aren't as profitable as they should be. The companies that do it the other way (the illegal, non-ethical way) aren't in business very long. I think Joe's longevity speaks volumes.

Take care,

Mike Winicki

Hang on...
 

> the fact Joe is pointing out
> is that if you under-promise and
> over-deliver a great many people will not
> realize how great your product is. Thus they
> won't derive the great things your product
> delivers. They don't buy because your
> marketing is weak. You haven't flagged as
> big an audience as you could have with
> better marketing. In essense you've robbed
> the customer of the joy/benefit/excitement
> of owning your product because they don't
> realize (or realize enough) that your
> product is right for them.

> What the Joe's message is: "Promise
> just as much as you deliver!"

Is this further explained in JS's Work? Because it was not part of the post you asked opinions on.

I alluded to this in my previous post... that JS wasn't here to "clear up" his statement.

Regardless of that, lets run some numbers...

Product: BlueBlockers (just for example)
Retail Price: $150
Cost Price $25
Profit: $125
Total sales: 100,000 units
Total Revenue: 12,500,000
Refunds at 10%: 10,000 units at $125 = 1,250,000

That's JS's "as quoted by you" method.

Refund reducing ploy...
Cost: $1.
Total cost for 100,000 sales = $100,000
Refund rate reduce to 9%.
Refunds thus: 9,000 units at $125 = $1,125,000

Difference: $125,000 less refunded.

Take away $100,000 spent on premium = $25,000

By giving a premium (over delivering) you are $25,000 better off.

IF, each additional premium reduced the refund rate by 1% and cost $1, and refunds could not be reduced below 3%, then this example would have you spend the following:

Premiums $7
Refund rate 3% (3,000 units)
Total refunded $375,000
Total spent on refund reducing: $700,000
Total out: $1,075,000
Better off by: $175,000

Of course, these numbers are made up and IF numbers.

It assumes the product would always get a 10% refund rate no matter what type of marketing, without a premium. It assumes each premium costs $1 and reduces the refund rate by 1%, and that there is a $125 profit per sale. With no "restocking" expense. And so on.

The point is, by reducing your refund rate, you stay in front... get to keep more money.

But you gotta do the math first - as it applies to your business.

For JS to make a blanket statement is shoddy.

> Michael, after spending the last 20+ years
> marketing a wide variety of products and
> businesses I can tell that most businesses
> suffer from under-promising and
> over-delivering rather than the other way
> around and that's why they aren't as
> profitable as they should be. The companies
> that do it the other way (the illegal,
> non-ethical way) aren't in business very
> long. I think Joe's longevity speaks
> volumes.

My Biggest question is about Customer Satisfaction. JS may have sold many many items over many many years. How Many of those items were to previous customers though?

Also, the bit you quoted from JS was comparing an electronic product with an info product, right?

Maybe the pocket calculator vs a niche-market audio tape set?

Can such items even be compared in the first place?

How many items has JS sold to the same market? As in, sold along a theme as an info-product creator might do.

In other words... was JS after repeat sales or one off sales on the front end.

There are a lot of questions to be answered. And knowing the answers might give an insight into why JS would suggest a 10% refund rate.

Again, without JS here to "clear things up" (or me having a copy of his Work in front of me to get clarification myself) we can only comment on the small bits presented and asked for comment.

Michael Ross


Get business ideas. Click here.

More of Joe's Chapter on Returns...
 

> Is this further explained in JS's Work?
> Because it was not part of the post you
> asked opinions on.

> I alluded to this in my previous post...
> that JS wasn't here to "clear up"
> his statement.

> Regardless of that, lets run some numbers...

> Product: BlueBlockers (just for example)
> Retail Price: $150
> Cost Price $25
> Profit: $125
> Total sales: 100,000 units
> Total Revenue: 12,500,000
> Refunds at 10%: 10,000 units at $125 =
> 1,250,000

> That's JS's "as quoted by you"
> method.

> Refund reducing ploy...
> Cost: $1.
> Total cost for 100,000 sales = $100,000
> Refund rate reduce to 9%.
> Refunds thus: 9,000 units at $125 =
> $1,125,000

> Difference: $125,000 less refunded.

> Take away $100,000 spent on premium =
> $25,000

> By giving a premium (over delivering) you
> are $25,000 better off.

> IF, each additional premium reduced the
> refund rate by 1% and cost $1, and refunds
> could not be reduced below 3%, then this
> example would have you spend the following:

> Premiums $7
> Refund rate 3% (3,000 units)
> Total refunded $375,000
> Total spent on refund reducing: $700,000
> Total out: $1,075,000
> Better off by: $175,000

> Of course, these numbers are made up and IF
> numbers.

> It assumes the product would always get a
> 10% refund rate no matter what type of
> marketing, without a premium. It assumes
> each premium costs $1 and reduces the refund
> rate by 1%, and that there is a $125 profit
> per sale. With no "restocking"
> expense. And so on.

> The point is, by reducing your refund rate,
> you stay in front... get to keep more money.

> But you gotta do the math first - as it
> applies to your business.

> For JS to make a blanket statement is
> shoddy.

> My Biggest question is about Customer
> Satisfaction. JS may have sold many many
> items over many many years. How Many of
> those items were to previous customers
> though?

> Also, the bit you quoted from JS was
> comparing an electronic product with an info
> product, right?

> Maybe the pocket calculator vs a
> niche-market audio tape set?

> Can such items even be compared in the first
> place?

> How many items has JS sold to the same
> market? As in, sold along a theme as an
> info-product creator might do.

> In other words... was JS after repeat sales
> or one off sales on the front end.

> There are a lot of questions to be answered.
> And knowing the answers might give an
> insight into why JS would suggest a 10%
> refund rate.

> Again, without JS here to "clear things
> up" (or me having a copy of his Work in
> front of me to get clarification myself) we
> can only comment on the small bits presented
> and asked for comment.

> Michael Ross

Michael,

Here is more of Joe's chapter on "The Rate of Return":

"Let's talk about return rate in general for a moment to understand my comments more completely (see my first post in this thread for these comments).

The one thing I learned very early in my advertising career was that you can't please all of the people all of the time. Remember my first pocket calculator ad for the Craig 4501 that I told you about in an earlier marketing story?

I was personally very exited about this new pocket calculator back in 1971--one fo the first in the world. It was selling for $240 and it could actually fit in your pocket. At the time it was a truly revolutionary product.

When we received our first response to a mailing I made, we got a 10% return rate. Some of the people who returned it thought it was the biggest rip-off they ahd ever seen. One letter said, "You guys should be put in jail for trying to foist something like this on the consumer."

But we also received some very complimentary letters. One said, "I must congratulate you on this wonderful and exciting product and your excellent service."

Had I examined just the return letters without looking at the complimentary letters, I would have been worried. But I still wondered, how could a small percentage think a product is terrible while another group thinks the product is terrific? I soon realized that you cannot please all the people all the time and that a return rate of 10% was a normal day-to-day average, for a variety of reasons.

But whenever my return rate dropped well below 10%, I always reread my copy to see if perhaps I was not selling hard enough. And if the return rate was very high, I took close look at my copy to see if the product lived up to my promises.

Loot at it another way. I satisfied 90% of my customers. Not bad. When does a political candidate satisfy that large a percentage?

Return reates reflect more than they way you've written your copy of course. Ther performance of your product is also important, and there are other subtle factors that also affect return rates. One of the most important is speed of dleivery. If you ship a product right away, your customers who receive it are still in a state of anticipation. They still desire the product and this desire is fresh in their mind.

But ship a product late, and other the customer may even forget he or she ordered it. Customers may change their minds, financial circumstances may take a turn for the worse, or buyer's remorse may surface--and all these factors grow in direct proportion to the time it takes you to ship your product.

Another factor is the presentation itself, the impression the customer gets when he or she receives a package. Is the box substantial enough so it arrives in good shape? Is the merchandise wrapped properly? In short, what is the impression your customer gets upon receiving the product?

Finally, you should look at a customer return not as a problem but more of an opportunity--an opportunity to show what a terrific company you really are. Unfortunately, the simple act of fulfilling orders does not make cusotmers enthusiastic. But how you resolve their problems does. And supplying the customer with simple instructions and a simple procedure for returning their purchase will ensure you of an enthusiastic customer when it comes time to order again.

If you understand the meaning of the return rate associated with the products you ship in response to your advertising and know what an average return rate (neither too high or too low) means that you can get the greatest response and still satisfy the largest segment of your customers, you'll hold the secret to maximizing your profits.

And if you realize that a returned package from a dissatisfied customer is not a problem but an opportunity, then you've got one of the real secrets of growing a mail order business"

Yes, Joe was applying his 10% return rate to consumer electronics plus he was building a list...customers were sent a catalog of other products.

Would he apply his 10% return rate on one shot sales like 'Blublockers'? That's a good question, maybe I'll ask him. I would think, he being a good marketer would test market the product under a variety of conditions and let the numbers decide what is the right approach.

And you're right you have to analyze the numbers.

Take care,

Mike Winicki

Ah ha...
 

Here's is the meat of what he said...

> If you understand the meaning of the return
> rate associated with the products you ship
> in response to your advertising and know
> what an average return rate (neither too
> high or too low) means that you can get the
> greatest response and still satisfy the
> largest segment of your customers, you'll
> hold the secret to maximizing your profits.

In other words... each product you ship could have different return rates associated with it.

This is the "after meat treat"...

> And if you realize that a returned package
> from a dissatisfied customer is not a
> problem but an opportunity, then you've got
> one of the real secrets of growing a mail
> order business"

And this explains a lot too...

> Yes, Joe was applying his 10% return rate to
> consumer electronics plus he was building a
> list...customers were sent a catalog of
> other products.

What a difference it makes when clarifying elements are mentioned. Why he said what he said.

Thanks for posting it, Mike.

Michael Ross