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

> 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