In my previous article How To Be 100% Sure That Your New Product Is A Winner We have discussed dropping losers.
I hope I have given you the message strongly enough. But the same principle applies to milking winners. When you get a winner in-demand product, it is a license temporarily to print money.
You will have so much of the folding stuff pouring through your letterbox or credit card numbers blocking up your email account... that you will hardly know what to do with it.
HOWEVER: Every product has a strictly limited life-span. It doesnt matter how well the product performed in the early weeks, the response will gradually tail-off over a couple of months - year to a point where the product starts losing money. There are two big factors which cause this:
1. Everyone has seen your marketing material (emails, web-pages, direct mail letters, postcards, newspaper ads etc) a hundred times, and those that are going to buy the product, have, in the main, bought it already.
2. You lucked-into a mood of the moment. For example, everyones suddenly worried about car security at exactly the moment you advertise your steering-wheel lock. This mood will rapidly pass as the population (driven by the media) move on to the next area of worry or concern. (What a terrible cynic I am.).
I have seen people make lots of money on a product, and then hand up to 50% of it back to the newspapers as they attempt to breathe life into a dying market. I have seen a single advert in The Sun take one thousand orders for a 49.95 product. Then, six weeks later (after the product has been heavily advertised), I have seen the identical advert pull in only eighty or so replies (and of course, lose big money). You must listen when the market says it has had enough of your product. Getting out early is a sure-fire way of keeping most of the money you have made.
Its the same with the stock market. Everyone aims to sell at exactly the peak of the market, and buy at exactly the trough. But, of course in reality, these peaks and troughs are impossible to predict accurately. The stock-market winners sell early, and buy early. The losers sell too late and buy too late - they stay on the roller-coaster too long. They hang on to a rising market out of greed, thinking the market will rise forever.
The same is true of product development and direct marketing. When you get a winner, it is tremendously exciting. But your greed can make you hang onto the product long after it should have been dead and buried.
Want to know a sure-fire indicator of when to pull out
Quite simply, you should pull out when all the other developers and marketer boys (and gals) start piling in after your initial campaign. This takes tremendous self-discipline, but pays enormous dividends. The strong temptation is to hang on, and hang on. If an advert fails, you attribute it to something funny about that particular issue of the paper, or day of the week. You advertise again and again, spurred on by the glint of gold.
Also, another factor comes into play here (and Im telling you 100% solid truth); it is the distraction factor. You see, you dont run this huge mail-order organisation, do you There is no packing and shipping department; thats YOU in the shed/garage, late at night. So when you get a winner, the chances are that you will be overwhelmed trying to keep up with sourcing and shipping the product. This will take 100% of your time. Meanwhile, every newspaper from Golden Labrador Weekly, to Clay Pigeon Shooting Times will be on the phone pestering you for an advert. The danger is that you will just say Yes, yes, yes to all these people, and end up spending tens of thousands of pounds on a dying product.
The solution is to keep your eye firmly on the ball. Retain your policy of only taking adverts in the mainstream press I advised. Dont go too crazy with the adverts, as this will alert all the other mail-order boys, and push the rates up. As soon as the papers see that you have a winner, suddenly the rates go up, and adverts become hard to get away. You must play a double-double bluff game here. Above all, never let on to anyone how well your advert is doing. If asked by someone trying to sell you space, you tell them that the response was lousy, but that you are going to give it one more go. Could they offer a cheaper rate When you have a mail-order winner, beware the fatal combination of:
1. A falling market - and its nearly always falling after your first few adverts.
2. A diminishing market share due to everyone else piling-in.
3. Rising advertising rates (sometimes steeply) due to the papers locking-on to the fact that you have a winner.
Most direct marketing successes are quick in and out jobs. You know this is true, because you rarely see exactly the same product advertised week after week, month after month and year after year. You want to be in there, and out within a few weeks. Then you can sit back and smile as everyone else piles-in and tries to emulate your success in a falling market against stiff competition. Sure, youll lose a few orders, sure, you might have been able to milk it a little bit more before diving out, but at least you creamed off the most profitable share of the market, and kept all of it. This is what its all about. Dont learn these lessons the hard way.
There is nothing more heartbreaking than making 100,000 clear profit in the first two months of a campaign, and then handing 50,000 of it back to the media over the next six months of hard slog. In other words, you work hard for two months and make 100,000, then you slog for a further SIX months and LOSE 50,000. I have seen this happen time after time after time. To get rich in this business, you must develop a sense of timing. Knowing when to get in, and more importantly, knowing when to get out.
For this reason, I advise against trying to follow the crowd into a product idea. If the papers are full of adverts for steering-wheel locks, the naive player thinks: Great. This must be the thing to get into. So they rush around like crazy trying to source a product - often at too high a price because they are desperate to get into the market. They then advertise this product in a falling market which is fiercely competitive and at extortionate advertising rates (because the papers have locked-on to the success of this product). The result is that they lose big money.
My favourite strategy for mail-order is as follows:
1. Come up with your own, unique product idea. I dont mean invent a product and have it tooled and manufactured. I mean source a product which YOU believe will sell, and that you cant recall seeing in a newspaper or magazine as a mail-order item.
2. Test the product in a suitable cheap advert. If it flops, drop it.
3. If it looks good, then buy a single insertion in a big-league paper like the Mirror, or the Sun.
4. If this works, then plan a campaign which ramps up quickly over (say) three weeks, holds steady for (about) four weeks, then ramps down over (say) three weeks. Aim to be out of the product in three months maximum.
In this strategy, the me too brigade will only start piling-in as you are ramping down your campaign. This is perfect. If your product is paper and ink, then it will take much, much longer for the competition to copy you. It takes quite a while to write a book or a course. Also, the general mail-order chaps arent very keen on this type of product. They prefer plastic gizmos and real products. A book or a course can have a much longer life - often years if you are subtle about it. Also, if you have a great back-end product and are buying advertising at low, low rates, then you can go on for years and be untouchable. People will try and copy you (periodically, I see Midas type adverts coming and going), but they soon die because they are paying twice the money you are paying, and they are not exploiting the back-end - where most of the money is made.
They retire broke, puzzled and confused. They wonder at how you can possibly keep advertising when they know that the product only takes half of advert cost. You know the secret. You are buying distressed-rate space, and you have a great follow-up product which makes more than the original sale of the book.
Nick James is a UK based direct marketer and product developer. During the last 3 years Nick has sold in excess of 1 Million of products and services. Subscribe to his Free Tip Of The Week email at:
If you are convinced by now that you wish to do an online business and would like to find out which business models are available, this article is written specially for you.
The different avenues that you can make money are:
1. E-bay model
Got junk or an interesting product to sell No problem! Hop on to http://www.e-bay.com. There are millions and millions of visitors each day to the site. Just create a free account and you are ready to start.
2. E-Affiliate/network marketing programs
You earn a commission if you are successful in selling affiliate books, programs or network marketing programs. This business model has advantages in that you do not have to create your own product or write your own sales letter. You also get a replicated website as an affiliate. All you need to do is to actively refer your friends and market the product or program.
Go to http://www.clickbank.com for an extensive range of affiliate programs that you can represent.
3. E-Shopping model
In this model, you are interested to sell your goodies online. Here, your website will feature pictures and clear descriptions, shopping cart and a payment processor. However, if you are selling physical products, you have to be address issues like warehousing and delivery.
On the other hand, there is no need to create a product yourself, if you do not have one onhand. Simply go to directories such as http://www.mydssd.com , http://ww.ownawebstore.com and http://www.bizwarehouse.com . These sites will even handle the shipping and delivery for you.
4. E-directory model
Here you create a free directory of various resources and links. Your job is to drive traffic to this site. You make a revenue from businesses who wish to advertise on your website.
5. E-Create-a-product Model
This can be in the form of either a digital book or software product. There are lots of advantages of doing an e-book. An e-book is low cost to produce as you just need to write it once and update the contents as and when necessary. You also get to keep all the profits as there is no need to go through a publishing house
Similar advantages also exist for producing a software product. The difference between producing an e-book and a downloadable software product is that you can charge more for the lattar due its higher perceived value and thus earn a higher profit.
6. E-Membership Model
In this business model, you create a high quality, content-rich site and charge your members a subscription every month in order to use your sites resources. This is a good business model to follow as it helps you earn a recurring income. However, you must be able to continually update its content; otherwise, your members have no incentive to stay.
7. E-Professional Services Model
Here, you offer your skills to people who are looking for solutions to their problems via the internet. For instance, if you are a graphic designer, you can offer to design other peoples websites for a fee. If you intend to freelance, you can always advertise your expertise at http://www.elance.com.
8. E-Zine Model
In this model, you are publishing a content rich newsletter for your subscribers in a particular interest group. You either earn revenue from promoting on the related products advertised in your newsletter or charging your members a subscription fee.
The models mentioned above depict the main ways that you can earn money. However, they are not the only ones available. It is good to spend some time analyzing on how you would like to make an online living. Happy hunting!
Evelyn Lim is an Online Business Entrepreneur. She publishes a free newsletter Mapping You to Success for aspiring e-biz owners. The aim of her publication is to equip readers with skills to acquire multiple sources of online income. To subscribe, please visit