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  #1  
Old October 6, 2002, 07:14 PM
Michael S. Winicki
 
Posts: n/a
Default 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
  #2  
Old October 7, 2002, 12:07 AM
Dien Rice
 
Posts: n/a
Default 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
  #3  
Old October 7, 2002, 09:07 AM
Steve MacLellan
 
Posts: n/a
Default 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
  #4  
Old October 7, 2002, 09:29 AM
Boyd Stone
 
Posts: n/a
Default 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
  #5  
Old October 7, 2002, 09:42 AM
Michael S. Winicki
 
Posts: n/a
Default 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
  #6  
Old October 7, 2002, 09:47 AM
Thomas Rice
 
Posts: n/a
Default 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.
  #7  
Old October 7, 2002, 11:05 AM
Steve MacLellan
 
Posts: n/a
Default 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
  #8  
Old October 7, 2002, 11:52 AM
Michael S. Winicki
 
Posts: n/a
Default 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
  #9  
Old October 7, 2002, 12:45 PM
LesD
 
Posts: n/a
Default 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??
  #10  
Old October 7, 2002, 02:21 PM
Michael S. Winicki
 
Posts: n/a
Default 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
 


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