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