I’m opening up the mailbox and answering YOUR questions!
Everything comes down to the right principles…
If there’s one BIG lesson you can take away from reading Breakthrough Marketing Secrets, it’s that understanding the core principles of marketing and business will get you about 90% of the way to success.
Applying them in the right market will get you about 99% of the way.
And hard work will take you over the finish line.
Yeah, I just made up those percentages. But the point is valid. So much of success comes down to getting the principles right.
Then being in the right place at the right time and earning your keep takes you the rest of the way.
Which brings me to today’s Mailbox Monday question.
If you have a question about marketing, copywriting, selling, business-building, or other related topics, click here to submit it to be answered in an upcoming Mailbox Monday issue.
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Roy,
What ACTUALLY creates marketing profits?
– J
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OK — first things first — this is a lazy question…
I usually delete one-sentence questions. But I figure I can give an answer to this one that will be ultra-valuable to you.
So let’s dive in…
A lesson from one of the greatest copywriters ever to have lived…
Gary Halbert was known as “The Prince of Print.”
One of his successful direct response businesses was actually able to achieve the Holy Grail of direct marketing — to mail the phone book.
That is, most marketing is only profitable if you can target it at a list of people who’ve bought similar products in the past.
So, investment newsletter pitches work to investment newsletter buyers. Fitness pitches work to fitness product buyers. And so on.
But Gary Halbert’s family crest business was able to profitably send direct mail simply to everyone who shared the same last name.
Considering that phone books are free and buyers lists can cost hundreds of dollars per thousand, that’s a feat!
Gary went on to run many successful mail order businesses, and to partner with clients to create a huge number of winning ads.
What Gary taught was that marketing came down to two things: behavioral psychology and arithmetic.
If you want to achieve marketing success, you must study how people ACTUALLY behave…
This is a big one.
It’s easy to be a moralist.
It’s easy to say that people should behave one way, or should not behave another.
And while as a marketer YOU should choose how YOU behave (in line with your personal values and ethics), you cannot control how the market behaves.
The market — and each individual in it — will behave how they want to behave.
Your success or failure will be dependent on figuring out what you can put in front of the market in order to get them to respond.
Here’s a very current example…
The stock market is in questionable territory right now. There’s plenty of reasons to believe we could go into a recession and stock market downturn. Last year’s final quarter showed how quickly the market could begin to fall if that happens.
Then, the markets recovered into the beginning of this year.
Now, a prudent investor will look at everything going on and say, “You should probably not be invested in risky stocks. You should probably get mostly out of the market, because its likely future direction is down.”
Investment information buyers don’t care.
They want to buy hot stock tips for stocks that are going to shoot for the moon. They want the next greedy opportunity for either free money, or big profits.
They’re happy to be over-invested in stocks, because they haven’t crashed yet.
Trying to get them to act in any different way is difficult at best, regardless of how you think they should behave.
Zooming out…
Again, you can decide you don’t want to play into people’s bad decision making. If you don’t believe it’s in a market’s best interest to respond to a certain appeal, don’t put it out there. But do it knowingly, fully aware that if that’s what the market wants, that’s what they’ll buy from whomever chooses to put that message in front of them. And if your message simply isn’t as appealing, you’ll likely lose the sale.
This is why we test.
We try things. We see what works. We try other things, to see if they’ll work better.
All in pursuit of the moving target of knowing what exactly will make our market respond today.
But that’s not all…
It’s one thing to generate response — it’s another thing entirely to generate PROFITS…
This is why Halbert also emphasized arithmetic.
Ultimately the answer to “What actually creates marketing profits?” is simple…
Invest less in marketing than it generates in revenue.
That is, if you’re able to implement a marketing strategy that generates $1.01 in net revenue (or profits) for every $1.00 you spend you have marketing profits.
How you do that can be tricky.
One critical thing to understand is that getting a customer often happens at break-even, or perhaps a loss. That is, you’ll spend $1.00 and get $0.90 in revenue from the first transaction.
But you also got a new customer.
A new customer that, if you serve them well enough in that first transaction, is far more likely to buy from you again.
In fact, you may have a new customer who will immediately buy more, if you set up your offers in the right way.
And so you may make $0.90 on the first transaction, but within minutes they spend another $0.60 for every $1.00 invested. So suddenly you’re spending $1.00 to get $1.50. And those same customers will spend another $1.50 within the next 90 days. So you’re spending $1.00 to get $3.00 over a three-month introductory period.
This is about offers.
Understanding that the most critical threshold someone can cross is spending their first dollar.
And once they’ve spent that first dollar, they’re far more likely to spend more. Often dramatically more.
You just have to figure out what additional value they want.
And so you may have an offer to get them in the door that costs $5… The next step up which is a $49 offer… The next step which is $299… And yet another offer that’s $999.
This stacking works for certain business models, and not so well for others.
But the principle is the same.
Once someone has done business with you, they’re more likely to want to do it again. And because they’ve done business with you, you now have their contact information and can market to them directly, to introduce them to new and valuable offers.
Wanna make all the marketing profits? Do this…
First, figure out what you can offer to a market to get them to spend their first dollar with you.
This should be a targeted offer. Fulfilling a need the market has, that you can fulfill at multiple levels and multiple price points.
Make some sales of that. Figure out what pitches work best.
Then quickly build in higher-level offers to maximize the value of each customer, both in their initial interaction with you and over the lifetime of their relationship.
These are the fundamental principles of what works to generate marketing profits.
There’s very little beyond this, besides experimenting with implementation at the strategy, technique, and tactical levels, or applying them though different media and technologies, and in different markets.
Yours for bigger breakthroughs,
Roy Furr
