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Jay Abraham's Individualized Consultation Transcripts

© 1988, 1992 Abraham Publishing Group, Inc. All rights reserved. Reproduction, in whole or in part, without written permission of the publisher is expressly prohibited.

These transcripts of individual consultations performed by Jay Abraham represent real professional practices with real business problems and opportunities. The names of the business owner/practitioners have been changed to fictitious ones for privacy.

These transcripts are a publication of: Abraham Publishing Group, Inc. 25550 Hawthorne Boulevard, Suite 106 • Torrance, CA 90505 telephone: (310) 791-2300 • facsimile: (310) 791-2390

Table of Contents Introduction............................................................................5 Professional Practices & Services Medical Doctor................................................................7 Chiropractics, Seminars & Hotel Management .......................................................16 Dentistry .........................................................................25 Optometry ......................................................................30 Colon and Rectal Surgery ............................................38 Commercial Real Estate Brokerage ...........................44 Orthodontic Practice.....................................................56 Investment Broker ........................................................64 Financial Planning........................................................72 Dentistry .........................................................................81 Real Estate Sales ...........................................................85 Product Licensing.........................................................93 Insurance Sales ............................................................103 Finance Company .......................................................115 Real Estate Broker......................................................123 Dentist...........................................................................129 Export Consultant .......................................................136 Wholesale, Industrial & Commercial Businesses Vitamin Products ........................................................144 Beer and Beverage Distribution ...............................153 Building Signage and Business Software.......................................................159 Chiropractic Products.................................................168 Health and Nutrition Supplements...........................175 Electrical Contractor...................................................184 Medical Supplies .........................................................193 Cosmetic Products ......................................................204 Construction.................................................................213 Lumber Products .........................................................220 Specialty Hardware Product......................................224 Resort Development ...................................................229 Environmental Services .............................................237 Retail Businesses Custom Jewelry ...........................................................245 Mini Warehouses ........................................................251 Restaurant .....................................................................264 Newspaper Publishing................................................269 Coin Dealer..................................................................281 Cake Decorating Products & Services ....................285 Specialty Carpet Sales ................................................292 Travel Service..............................................................305 Swimming Pool Product ............................................312 Oriental Carpets/Copywriting...................................324

Furniture Store.............................................................334 Hardware Product .......................................................346 Mexican Restaurant Chain ........................................357 Patio Room Sales ........................................................371 Mom-and-Pop Grocery ..............................................384 Specialty Chemical Product ......................................387 Service Businesses Real Estate Education ................................................394 Villa Rentals and Sales ..............................................404 Business Broker/Restaurant Consultant ..................410 Health-Oriented Newsletter ......................................414 Marketing Consultant .................................................424 Home and Office Cleaning Service .........................432 Real Estate....................................................................439 Manufacturer's Representative .................................448 Employment Service for Hotel Industry .................458 Towing Service ...........................................................462 Industrial Water Cleaning Service...........................475 Limousine Service ......................................................484 Carpet Cleaning (Also Accounting) ........................493 Modular Closets ..........................................................501 Non-Traditional and Specialty Businesses Credit Improvement Service.....................................507 Hairpieces .....................................................................515 Fine Soaps....................................................................525 Stop-Smoking Program..............................................533 Temporary Restaurant Help ......................................539 Winery ..........................................................................548 Artist and Seller of Art ...............................................553 Motivational Seminars ...............................................560 Educational Tours .......................................................569 Recreational Toy Developer .....................................574 Recreational Vehicle Resort......................................582 Sales Representative for Satellite Equipment ....................................................591 Looking For a Business to Go Into..........................601

Introduction The transcripts you are about to read were selected from over 250 different marketing consultations I performed for businesses in a wide variety of industries. Most of these clients paid me $1,000-$2,000 for a one-hour consultation, and many paid me much more than that for more time. Now you will be able to benefit from this collection of transcripts that—in one sense—is worth literally thousand of dollars. In another sense, these transcripts could be worth much more than that to you because of the powerful (and super-profitable) marketing concepts and principles you will learn from them and apply to your business. However, the lessons in these transcripts will be worthless to you if you don’t apply what you learn. There are two ways you can use these transcripts for maximum results: 1.) As you read through them, keep a pad of paper handy and jot down any and all marketing concepts and techniques you see that apply to your business. My hope is that you will fill up several notebooks with exciting new marketing ideas you can implement and make a ton of money from. 2.) Read every transcript over and over again so you can learn exactly how my marketing principles are applied in different situations. Let them go deep into your awareness so that when problems or opportunities come up in your business, you’ll be able to successfully apply these principles on your own without hesitation. Yes, you will see some of the principles repeated throughout these transcripts, but that’s the whole value—because you’ll see them applied in many different ways. And, repetition is the key to learning. Also, don’t think that just because your particular business may not be covered in this set of transcripts that they’re of no value to you. Very often, it’s precisely the ones that are not in your field that help you see and understand things you otherwise wouldn’t. Many (if not all) of my concepts are universally applicable—and you should remember this as you are exposed to them through these transcripts. Don’t Complain If You Don’t Act All the knowledge in the world is useless if you don’t use it. That’s especially true with marketing knowledge. My goal is to help you succeed in your business efforts, but I can’t do it for you. You have to act on the things you’ll learn in these transcripts and persevere until you make them work. I would recommend trying the simplest things first—and only doing one or two of them to begin with. This will allow you to validate the concepts in your own mind so you have the confidence to take on more challenging ones later. If you do this consistently and conscientiously, you will soon see your sales curve rise beyond your wildest expectations. Nothing in the world could make me happier.

Jay Abraham

Medical Doctor In this consultation, I showed a professional how to make the transition from working for a large corporation to working for himself. For years, Melvin worked as a medical expert for a large energy corporation. There, he not only accumulated an enormous amount of specialized knowledge, but also developed other talents such as writing and speaking. In helping Melvin, I focused on showing him how to make the best use of all the knowledge and experience he’d already gained. If you’ve contemplated working for yourself or moving into a new field, and want to make sure you’re on the right path, pay close attention to the ideas I gave to Melvin. *

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Jay: I read your material thoroughly. We need to figure out how to do it for you in a way that doesn’t jeopardize what else you’re doing. It’s a wonderful challenge to me. Did the material I sent you provoke you favorably in any way? Melvin: Yes, some of the thoughts about the Unique Selling Proposition intrigued me. As you know, from what’s stated here, I am not sure if I should stay with what I have, or if I should try something new. My Unique Selling Proposition kind of depends on which direction I want to go. Jay: Exactly. Melvin: If I wanted to stay with the company, then I’d use some of the same kind of ideas that will improve what I am doing on the job. Jay: What I’d like to do is to go through 10 or 15 minutes worth of inquiry to help me become very focused on your business. Then, I’ll embellish on the material I give you as I get more of a handle on it. Melvin: Fine. Jay: It sounds like in the execution of your job and your profession, you’ve got some really sophisticated levels of expertise in five or six separate areas. Melvin: Yes. That’s what has developed over time. I started out as an internist, then came to work for this company. When I first got the job here, I asked if it was a good company. People just rolled up their eyes, like, “How could you ask that? It’s one of the best companies to work for.” It is indeed very stimulating in a number of different areas. There are a whole lot of things quite different from traditional medicine— quite different even than what other company doctors might do. So, it’s almost like I can walk in any direction. Jay: Let me explore the possibilities. First, I’ll broach on the periphery of a number of points you brought up. Then, I’ll try to lasso all of them and integrate them into a tighter focus. Let’s begin by talking about all things being equal and putting security and financial constraints aside. If you could literally do anything you wanted to, what would it be? What do you really enjoy the most within the realm of your discipline? What is the most fulfilling? What you are the best at, and what do you really derive the most gratification from? Melvin: I really love writing and editing. My job involves a lot of that. Also, I still very much enjoy what I started out to do as a doctor, which is dealing with patients who have alcohol and drug problems. They’re so challenging, and when you have made a success, things seem to work very well. On the other hand, I

think I am hooked by the variety of things that are involved here. I don’t know if I really want to go off and sit by myself in front of a personal computer—which I am good at—and sit and write articles, then spend the other half of my time just seeing patients all day. That sounds sort of boring. Jay: I understand. Is it contractually prohibited for you to engage in a kindred but not competitive activity? Say, for example, you wanted to start one or more specialized newsletters or other kinds of subindustry advisories that would be given out to either large or small corporations or doctors seeking to establish relations with corporations. This newsletter would give them inside guidance from the corporate, practitioner, or managerial perspective. If you did this on your own time, without relinquishing any of your job responsibilities, would you have to do it surreptitiously or could you do it openly? Would that be something you would like to do? Melvin: It could be done openly, as long it is not detracting from my ability to perform the normal work. They don’t want me going to another paying job, per se, but if this were a sideline of something I was really interested in and it didn’t detract from the job, they’d say, “Fine, go ahead.” Jay: When I read all your material, the very first thing that came to mind was for you to initially establish an educational and information-based side or subordinated publishing entity. This company could publish materials, present seminars, and offer all sorts of highly-compensated specialized tutorials that would purvey the expertise you’ve gained to people who would benefit from it. It would be noble and profitable to boot. It would fulfill your need to write. And it would acknowledge you at the most supreme level—to the extent that you could do it in the evenings or on weekends. You could even reprint stuff you have already done as long as your employer wouldn’t be offended by it. What I’m all about is taking the expertise that I have already given one person and reusing it for another person. This is a perfect example. I don’t know how many different vertical applications we can find, whether it be a newsletter, reports, manuals, or complete operational guides. You may be able to presell—that is, not sitting down and writing anything until you have already sold enough to receive validation from the market place. It would seem that the market for the various things you do would be so definable that it wouldn’t cost very much. It should be relatively easy to identify the 500, 5,000 or the 10,000 maximum prospects for any product you came up with. It would seem that price would not be as relevant as the value of the information you offer. You’ve got so many options to offer. It can be a newsletter or a series of reports on what you have learned: information like recommended procedures and money-saving and timesaving measures. You could provide the ultimate employee/patient, advisory/consulting perspective converted to a perpetual, proprietary resalable written form that would be timeless, not time-dated. If you created an archival collection of 5, 10, or 20 items, you could probably easily begin with a modest amount of capital, working on your own time, and reusing that which you have already done. That’s an idea. If you do it yourself, it wouldn’t require much effort. A neater idea, if your company is receptive to it, would be to suggest to them that you create a joint venture with them on the side. Maybe they would finance it, and you would own half of it. That would be even more exciting. It would be a great way for them to subsidize and reclaim a lot of the money they invested in the whole program. The best of all worlds would be to tell them that you’re interested in writing anyway, you would rather do it in concert with them, and it would be a 50/50 venture of sorts. They put up the minimal capital, and you just do it on your own time. Is that audacious to think about? Melvin: No, not entirely. They may be receptive to it. Jay: I don’t know how much capital you have available that you want to use, but if you do it with their blessing and make them in effect an employee, that would even be better than having to do it yourself. So often this sort of approach builds to a certain level and it’s not big enough. Let’s say you approach them and they’re receptive to it. They don’t have to put up much capital because basically you’re playing off the capital they’ve already invested in you, and they are continuing to invest in your ongoing program.

In this venture, you’re showing them that by recouping the money and training they’ve already given you, they’re only defraying and reducing the net cost to them of the medical program. In fact, this venture may even turn a profit. There’s a high probability that it will make a profit, although not as big a profit as they may want. Down the road, you may have a business that’s maybe making $1 million a year, but that profit is pitiful to your company, and they don’t want to keep doing it. At this point, you buy it from them on a note, get yourself an $800,000-a-year income, and pay them out of the proceeds. That’s the best of both worlds, especially if they finance it from the beginning, isn’t it? Melvin: I like what you’re saying, but I’m just trying to sort out the details. There could be several problems with this approach. Jay: Play devil’s advocate with it. I can only give you advice based on the constraints and realities of your situation. Melvin: The major constraint now is with the job itself. It’s so busy that when I get home, probably the last thing I want to do is take on extra activity like that. I know that sounds lazy, and to some extent, I am lazy like everybody else is. But my main concern is: where will I find time to do this? Also, I am actually doing some of this kind of thing in my regular job—you know, creating protocols for how to evaluate sanitation, catering, and food services facilities at our company’s numerous locations, for instance. Jay: O.K., let me ask you this question. Is this sort of venture transferable or reusable? Would the essence of what you have already done be acceptable, embraceable, and salable to fifty other companies? If it is, imagine the possibilities. Here’s the logic: they spend hundreds of thousands of dollars on you for salary and expenses and hundreds of thousands or millions on your education and all the investment they have. Suppose they or you could sell your product to fifty other companies for $50,000 apiece with modest editorial systems—with all the details taken care of by you. If they don’t want to do it, say to them, “Look, I want to sell this. I will do it on my own time. All I ask is that you give me royalty rights to resell.” Melvin: Well, that’s certainly a good idea. I wouldn’t worry so much about my company subsidizing me. They probably wouldn’t really care if I made a lot of money on the side. As long as I was doing the base job, they would be fairly generous in that regard. Jay: I’m not trying to take you into a field of endeavor that you’re not interested in. What I am trying to do is show you that you probably have a wonderful income that you can institutionalize sitting right under your nose. If you got bored with it, you could sell it to a third party even if your company wanted nothing to do with it. It would give you the cash flow or lump sum. It’s like an interim step. In your letter, the biggest trepidation I sensed is that it’s hard for you to say, “O.K., I’m going to go brave it myself. I’ll snip the golden handcuff, and give up the income, prestige, retirement, profit sharing, and whatever.” I’m suggesting that this is probably the easiest way to transition yourself to a point where you could afford to do what you wanted or be your own person. First and foremost, you should go back through everything you’ve ever done and find out what is reusable to the outside market. Either do it on your own or with your company’s approval. Whatever you do to, be sure to always maintain your ethics and the integrity of your job. Again, if there are 500 big corporations that would probably spend $150,000 or $250,000 a year on their own to achieve what you have already done or would do, you can synthesize what you’ve done and sell it to them for some fee or on a subscription basis. I think this would be a logical and initial way to go. You can do it yourself for a relatively modest investment of $25,000-$50,000. You wouldn’t have to earn back this investment on a lump -sum basis. You could do it month to month by hiring a savvy manager, editor, marketer, or partner. Or, you could do it for no money by getting someone else to put up the money and wait for their investment return just for the chance to have an interest in this deal and run the program for you. Melvin: Sure.

Jay: I’m just trying to open your mind. I’m very much for hedging. It just seems to me that instead of recreating the wheel, the first thing someone should do is ethically exploit everything they have done and are constantly doing. Melvin: I’ve certainly heard that a lot. You know, phrases like, “Don’t give up what you’re good at already and just jump into another project.” Jay: If by recycling, reclaiming, or reusing what you have already done or are already doing, you can establish a perpetual or long-enduring stream of income that will ease any transition you may want to make towards other objectives. It would seem to me that though this may not be the most appealing step, it would be the most logical interim step for you to contemplate. Melvin: Let me tell you about this other health professional colleague who once worked full time for our company. He now works 3 days a week here and the other 2 for himself, although it’s probably more like 3 days for himself and 2 days for the company. This fellow and I co-wrote a book for our industry. He’s one of these real entrepreneur types who has been at the head of organizations in the past. We contracted him here because he had those kinds of skills. He’s now back out on his own. Already, he’s opened up a company and has expanded to the point where he’s soliciting other companies to hire into his programs. Jay: How does he price them? Melvin: I haven’t the slightest idea. Jay: Is he doing well? Melvin: It’s only been about a year or so, and he’s getting a lot of clients based upon the fact he’s worked for our company and is well known in the industry. The reason that I bring up this fellow is because I was very much taken with the kinds of things he was doing. I have always enjoyed the association between the psychological, medical, and now the business side. My degree was in psychology, by the way, in undergrad before medical school. Jay: How interesting. Melvin: This guy has gone off and done a lot of these kinds of things. If there was ever anything I would jump into feet first, it would be something in his organization. I don’t even know if he has room for a doctor, but that’s the other thing that keeps floating to the top of my mind as an alternative for me to do. Jay: One of the things that I’ll drive people crazy with is that I try to tell them what I think is probably logical for them. It may not necessarily be what they want to hear. The point is, you have probably already created a wealth of avenues to explore. Let me give you some investment analogies. When Ted Turner bought MGM, he wanted the library of films that were reusable. In my case, I do consultations and write. I have three different publications that I have to write. They don’t make me any real money as I’m writing them. Once they’re all done, however, I have an archival product and can sell them over and over again. With this process, I don’t have to work with clients one on one. When I talk to you like this, it’s very gratifying, and it sounds very prestigious, but it’s very inefficient. However, I end up with a consultation that can be used over and over in transcription form and sold to 10,000 people. You have probably already created a multi-million dollar archival library of resalable expertise. In the duration of your employment, you have produced probably 100 reports, 100 papers, 100 procedures, 100 assessments, etc. You have devised and empirically perfected techniques and methodologies that are superior to other processes for achieving results or standards. Now you can reduce these methodologies and procedures down to some kind of instructive educational product. It can be a periodical, newsletter, course, report, manual, or whatever.

I’m not trying to flagellate the issue, but I am trying to shock you into realizing that this knowledge alone is probably your ticket to retirement or a financial position of comfort—if it is properly repurveyed outside of your company in the hands of the right marketer or the right entrepreneur to reclaim, package, and purvey it for you. You could put this together with somebody else, on your own with an associate, or sell it off to somebody for 50% if they do it all. This endeavor could generate you a $200,000-$300,000 a year income base and it could last for years. It will give you the net that allows you to pursue what it is you want, without fear of a short term cash flow. Does that make sense? Melvin: Yes. It sort of jerks me in areas like the small royalties we received from the book we did. It may have been a real limited topic, which accounted for the low royalties. I’m just not sure how big the market is. Jay: But you’re probably in a very, very exciting situation. I’m not talking about a book. It is the lowest perceived item you can possibly create. The only benefit it has, in my opinion, is credentializing and getting your stature and name negotiable amongst your colleagues in your industry. I would never want to write a book. You probably don’t know anything about my newsletter. Three years ago we created a newsletter called “Your Marketing Genius At Work.” All told, it included 17 or 18 reports that numbered about 40 pages apiece. It would have been a very voluminous book, and it would have sold for $30. As a course, we sold the same material for $500, and the value was much higher because of the dollar denomination, the value we imposed upon it, and the persona we imbued it with. 5,000 people sent us $500 for it, and it became a $2.5 million dollar enterprise. We made $700,000 off the whole thing. If it was a book, it might have sold 25,000 copies at $10 and made us $20,000. Melvin: That sounds like the right direction. Jay: I’m not trying to take you down a primrose or dead-end path. I may be looking at it a little idealistically because I don’t know your industry. But a company or a business that either needs or has their own medical department would have to spend internally tens or hundreds of thousands of dollars per year to come to the conclusions or the disciplines you have already achieved. You could give them the benefit of those disciplines for a subscription rate of $50,000 a year. In the long run, it would seem that you would be saving them tens or hundreds of thousands of dollars and expediting their ability to operate more effectively, efficiently, and judicially with their employees. Melvin: Yes, I see what you mean. Jay: It’s lucrative enough. You could put together your writings, your research, your findings, and your methodology in some written form, then have it sold by subscription, mail, telephone, or by an associate who went door-to-door and sold it for $50,000. This salesperson gets to keep 25%—why would you care? They could make themselves one-half million dollars a year and make you three-quarters of a million. Wouldn’t that be delightful? I do a lot of teaching to show people how to reclaim, resell, and redeploy the expertise that they don’t even realize they’ve created or produced. It sounds like you already have an incredible amount of expertise that could amount to profitable savings for other businesses. Maybe I’m wrong. Melvin: Well, that’s a direction I hadn’t really thought of too much. As I say, that’s the idea I had of doing with my friend who owns his own business. What I had in mind at first was phasing out 2 or 3 days a week from my company, if they allowed it, and doing this kind of thing on the side. But, I’d be staying with the company. Jay: Let me ask you a couple of questions. Do you have adequate enough capital that if you were to sever your company relationship and start either from scratch or in association with somebody, the radical reduction in compensation wouldn’t impact you adversely? How long could you last on this limited income? I’m not trying to strip you bear, but to counsel you honestly.

Melvin: Well, like many people—especially after the big October market crash—I don’t have a lot of reserve cash around. If I were to leave my job tomorrow, I would be very uncomfortable for awhile just paying current mortgages and things like that. Jay: Again, when I read all your material, the first thing that came to mind was that you must have archival knowledge and material that many other corporations would pay through the nose to get because you have taken it to the state of the art. If anyone could afford to market this knowledge, it would be you or your company. If you could make that definitive knowledge available in a cost-effective way to companies that could never afford to get it themselves, it would seem like you would be doing a noble service, and you’d be putting together resources or capital that could be played off of forever. Melvin: Jay, what do you think about the idea of moving the same thing into speaking activities? Jay: That was my next lateral suggestion. Are you comfortable speaking? Do you like to speak? Melvin: Yes, I’m comfortable. However, I think I’m somewhat dull, so I probably need the usual stories and “how to” techniques to build up enthusiasm. But I do a fair amount of speaking. Jay: You sound like a charming professional, but you have an accomplished sort of an overtone to your communication style. Melvin: I’m better in person with patients. Jay: Well, maybe the kind of public presentation we’re talking about is a difficult type of interaction. How much of what you’re looking to achieve is psychic compensation, and how much is financial compensation? What subjects could you regularly speak on, either to organizations for direct compensation or as a prelude for more substantial subsequent products or services you wanted to sell to them? Who would like to have you talk to them on what subject? What would that be worth, not necessarily just in dollars, but in increasing knowledge perception on their part? I’m asking a series of questions melded into one. Melvin: What comes into mind fastest is what I have been doing in the past year—health education and these kind of activities. For instance, tomorrow I’m going to New York to speak to some of our employees about the current status of AIDS. In the past, I’ve talked on everything from smoking to obesity to stress reduction. Jay: How could we replicate that into profit for you? I know you’re thinking that I’m supposed to tell you, but you have to help me figure out who your ability has value for, who could we sell your knowledge to on either a turnkey basis for them to purvey to their employees or on an individual basis for the end user. So help me a little bit. Melvin: In my main field of expertise, there is a great deal of activity in terms of public speaking. These programs are really all about educating the public about what they don’t know or don’t want to listen to, trying to sell them on changing their habits, and helping them improve their life. Outside of companies, the audience is the general public. Through organizations such as my friend’s (which is selling packages to companies), one might be able to offer an audiotape, videotape, or direct speaking engagements for compensation. Jay: That probably would be very gratifying. For example, I’m called on occasionally to speak at places. I’m compensated very well for it, and it’s gratifying to be asked. But I don’t make a living doing this because not enough people are willing to pay what I want. It depends on whether you need the psychic fulfillment or the financial gratification. My feeling on the matter is (and maybe I’m wrong) that there’s probably droves of less qualified individuals trying to go to corporations and speak to them on these same subjects. Melvin: That’s true.

Jay: Admittedly, you have much higher credentials and it’s worth trying this approach. To experiment, however, might cause jeopardy to your job. Because of your background, your credentials, and your affiliation with your company, you may be a very negotiable speaker for $2,000 or $5,000 a day or whatever the market would bear. The only way to find out would be to do a cursory overture such as a mailing or have someone try to promote it. Yet, if your speaking engagements were embraced, you would have to do them on regular work hours. This would put your job in jeopardy. It would be especially awkward if your job got jeopardized, and the seminars were a mediocre success and not expandable. I deal in hedging and I’m not trying to frustrate you, but I’m trying to be very logical. I would think you could experiment with this approach after you had either made the decision to definitely cut the umbilical cord from your company or had the cash flow to see you through if it backfired. The downside is definitely much worse than the upside. The upside is marginal because of all your competition. The downside is that doing it prematurely would jeopardize the sanctity of your job, and I think it going to be a hard sell. But maybe it isn’t. I’m just trying to give you my gut response. Melvin: I think you’re right. The company would look askance at me charging money to go out and speak. Jay: Saying, “I can’t be here Tuesday because I have a speaking gig in Chicago for $2,000" could put you in more unnecessary jeopardy than you need to be at this juncture. Conversely, you might be able to have somebody represent you. For example, you could only speak evenings and weekends to employee groups. That probably wouldn’t be a problem, but, you know, think about what might happen. Everything about me is dichotomy. I’ve got a compassionately jaundiced perspective on humanity and particularly on employees. If you say, “We’re going to let you take time off from your eight-hour day to be addressed by Dr. Such and Such on the subject of blank,” that’s one thing. Yet, if you say, “You’ll attend this meeting after hours on your own time. We’ve paid Dr. Such and Such $2,000 to come here and talk to you,” nobody will show up. I hope I’m wrong, but I think I’m right. Melvin: No, you’re basically correct. They wouldn’t show up. Jay: And I think that’s a problem that would frustrate you from the psychic side. I’m going to examine all sides because I don’t want to use all your time and frustrate you. One of the things that I believe in is revelation. Revelation is nothing more than being able to present something which has always been available to you and give it one little quarter twist diagonally so that it pervades your reacceptance ability, and you see its true value for the first time. I’d like to hit you over the head (figuratively speaking) and get you to realize that you can collect and inventory all the things you have ever done. Take everything you’ve written and all the technologies, methodologies, procedures, improvements, and operational and transactional programs that you have perfected, implemented, or administered that have worked, saved time, improved productivity, or saved money. Replicate these for other large or small businesses in an institutionalized format that can be resold over and over again. Singularly concentrate on putting this into a usable form that can either be purveyed in printed matter, or purveyed more expensively by some associate who implements it for a fraction of what it costs for firms that don’t have a medical director or the budget to do what you’ve done. You’ve got your security sitting there in your reclaimable past. I don’t know if this is what you want to hear. Melvin: Well, it’s not the direction I thought we’d go, but it’s an interesting idea. Jay: I’m being very honest with you. This is the safest and securest thing I would do if I were in your shoes and had your desires as far as expanding your business experiences. To challenge yourself more while being totally mindful of not diminishing your standard of living, I would look within at what you have already done. Out of the knowledge will come something more valuable. For example, what I’m telling you, I do all day long. To me, it’s a matter of fact. To you, if I can excite you, it’s worth thousands of dollars. Take the same analogy. What you do all day long provides a living. But think what it could mean to a company that’s only got a $1 million budget and is trying to do medical programming that really requires $5 million. If you could give them results that took you years and $3-10 million to develop, isn’t it worth $50,000 to them?

Melvin: Yes. I guess this is my other worry. At some point, this looks like a really serious avocation. The company might say, “Well, this is really not quite what we had in mind for your extracurricular activities. We don’t really think you should be doing this.” Jay: How do you circumvent that? Do you want me to address that? Melvin: Sure. Jay: First of all, if it’s very profitable, give them what I call an “entrepreneurial proposition.” Tell them you’re very interested in the project, and you’re willing to do it strictly on your own time, but you’re offering them to a chance to participate. Show them how their share of it would reduce and defray the cost of what they’re already doing. If they say no, and if you’re making $125,000 on it, then it’s a decision you’ve got to make. If it’s lucrative, you may indeed wish to become involved full-time. But you won’t just jump in from a standing start because you’ll already have a cash flow momentum in the marketplace going for you. Melvin: My company has a policy of requiring that we get their approval on anything we put into print or anything we do in terms of public speaking that relates to company activities. I think “company activities” relates not just to proprietary information but also to the general things I do. I don’t think I would ever get to the point where I would be making $100,000 and then tell my company about it. I guess that’s why I was wondering if it was worthwhile to try to negotiate working 3 days a week for them and doing my own thing 2 days a week. Jay: It absolutely is, but, again it depends if you can validate your move before you jump. That’s all I’m saying. Normally, most people have a vision that’s wonderfully idealistic. The fervor you bring to it gets you so emotional that you get quite fervent, and you jump into it without really knowing the reality of everything involved. The fact is, a lot of meritorious ideas aren’t really embraceable by the market. The market invalidates you after you’ve cut your basics. I’m just saying that you should try to calmly, pragmatically, and enthusiastically (without jeopardizing prudence) find out with certainty if the market wants what you have to offer. For example, you could do a mailing overture first and say, “Would you be interested in this?” If you get favorable initial responses, then it’s worth it to go to your company and say, “I only want to work 3 days.” I had a partner one time who ran a very large corporation. He saw me being an entrepreneur and wanted badly to be an entrepreneur himself. Here he was, president of a division of a large corporation making a couple hundred grand a year plus trappings. I was making five times that amount just working in my shorts out of my living room. I had a house over the water and everything. He lusted over what I had, so he quit his job to become a consultant. The problem was: he didn’t know how to do it. He had nothing unique to purvey, no practical, hands-on experience, and he couldn’t even articulate his Unique Selling Proposition. To help him out, I gave him office space in my office. For three months he came in, sat down, rolled up his sleeves, looked at books, scribbled notes, and did nothing else. After three months, he’d gone through all his money and was scared to death. He wasn’t directed, didn’t know how to do it, and didn’t know anything about the consultant business. So, I made him a partner in another business to train him on how to be an entrepreneur. A couple of years ago, I went through a divorce and sold him some of my businesses. Now he’s making a wonderful business income, but to do so, he needed to be trained. I picked him up out of benevolence, and he turned out to be a good investment. He made me money. But if I hadn’t picked him up and put him into a situation where he was given compensation and direction, he would have basically gone broke. I am suggesting that before you just jump off into something, consider. My friend was frustrated and going through a mid-life crisis. Don’t let it happen to you. First, get excited and see if your market is interested. If you know that you have something to market, but you don’t know exactly what it is, you should test a lot of suppositions. Maybe you don’t put anything together until you first see what the market

wants. Or, if you don’t want to solicit responses, bring in a person to get them for you by asking, “If this medical expertise was available, would you buy it? At what price?” The market can give you all kinds of validation. It may tell you that your methodology won’t sell for $50,000, but customers would love to get advisory information for $3,000 a year in the form of a monthly, thirty-page overview. Or it may tell you that clients would like you to come in once a month for $2,000 a day. Experiment with different approaches. Once you get an idea, your first tier of progression and excitement comes with finding out what the market wants. This will provide you with the fuel you need to kindle the frustrating embers of your burning aspirations. And it will enable you to make a transition securely and safely into a new endeavor even though you don’t know what that endeavor will be. While you think it may be X, the market may say “pooh-pooh” and, for the next year or six months, you’ll experiment to find the right approach. That might be a very exciting way to do it. Does that make sense? Melvin. Yes. I guess I am lucky that I have a well-paying job, and I can afford to experiment while I still have an income coming in. Jay: That’s what I mean. Let’s say you need $10,000, $15,000, or $20,000 a month to live. Instead of earning this in the future from your regular job, spend $3,000 a month now at investing in marketing. You can lose 9 times out of 10. You can try mailing solicitations, you could try hiring somebody to make overtures for you, you could try all sorts of experimental products and services and combinations. Even if you lose on 9 out of 10 and you spend $20,000 experimenting, you still have your job. You do your experimentation through other people who implement the marketing approach for you. You just direct them and pay them. When you find the winner, then you can start on it. With this winner, you can quit your regular job if you wanted to and know that you’ll still have an income. This makes more sense than quitting when you need to make $3,000 to $10,000 for experimental money every month. Melvin: So you say I can slough off on my present job for awhile? Jay: I am saying that you should take the attitude that every transaction you engage in in your present job is accruing knowledge. This proprietary information can be re-purveyed in written form, seminars, newsletters, telephone advisory, or consultation form. With your vision of establishing your own business, you should get excited about everything you do. I am just suggesting that. Melvin: I gather that you find that the newsletter idea is the most profitable in the long run instead of writing chapters for a book. Jay: What I sense is a combination. You could do a complete manual plus a certain amount of on-site instruction. You might have a product combination that will have a very high perceived value. Also, I am surmising that it requires a lot of money for someone starting from scratch to evolve to where you guys are. I am surmising that it will cost them tens, hundreds, or thousands of dollars. If you can get them there instantly for $5,000, $10,000, or $50,000, it seems like a wonderful value to me. Melvin: So just 20 clients at $5,000 a year would be a good start? Jay: That’s right. It gives you an income. Maybe not a good one, but the point is—let me tell you the hilarity of it. Right now, if you quit your job, maybe you’re negotiable as a consultant or employee. If you had 20 clients paying your business $5,000 each, and that business was making $100,000, you could sell that business if you got tired of it for about $500,000 on a note to somebody. So you’re creating net worth in the process. Think about it. If you got tired every two or three years and sold off the business you created, you’d probably sell that business for many times its annual gross to someone else. Every two years you could be an entrepreneur and make a half million dollars selling a business, while still making a hundred grand a year at your present job. Melvin: I think that’s very helpful, and I think that it constrains me to.

Jay: It’s hard to tell you how to do something until you know what you’re trying to do. I think I would spend a lot of travel time—whether you’re commuting by bus, train, or airplane—articulating the different formats and the different compositions of knowledge you could sell to others. Is it a $500 manual, a turnkey installation, a once-a-month on-site instruction plus turnkey installation, a newsletter, a counseling service where they can call on a subscription basis when they need help, or any combination of these? Does that help stimulate you a little bit? Melvin: Yes. Jay: And how do you validate it? Do you do direct mail or hire somebody to do sales, research, and development validation for you? What’s your timetable? You know the scientific process it takes to give yourself very different, stringent test cases. Take your concept and overture it in person or by some third party to a hundred prospects. That should give you a pretty indicative response. If the first approaches don’t work, that’s not necessarily indicative that your idea won’t be successful. Maybe you just have to restructure the presentation and try letters. Sometimes you need to sequence or stairstep your way to an important objective. If getting what you want requires having a safety-net stream of income, then maybe what you have to first find is something that is gratifying, though not the quintessential fulfillment that you ultimately seek. As this begins to generate enough cash, you won’t have to work your tail off every day, and you could spend 3 days or 5 days a month doing the more fun things you want to do. If I were in your shoes, I would review everything I did that was new and could be embraced in an outside market. Every month I spend some time experimenting to see if the market would buy my knowledge, my expertise. It might be that you could find some service that would make you millions of dollars and be gratifying as soon as it started. When you’re making a million dollars, you could always bring in a manager for $100,000, and then do what you want. My gut feeling is that rather than abandoning all the cumulative expertise and that mecca of knowledge sitting either in your head or in your papers, you’re going to find that all that stuff can be recreated in some kind of dispensable tutorial form. I would think you have very salable products and services to offer. Melvin: Well, I spend a lot of time on airplanes thinking through those ideas. Deciding how it all might be pulled together is quite a challenge. I guess my major concern is how to properly test the market and move ahead with my ideas. Jay: I will recommend 5, 6, or 7 really good books that you could read that are of modest cost. I’ll also recommend some of the courses I have written, which will probably be able to give you the instructions. I think you’ll find that the way to do this is very scientific and logical. The material that I sent you extolled things that really are indigenous to the training you already have. And that’s all it is. This marketing endeavor simply embraces the same analytical and quantifiable formulas that you impose on your profession. You devise suppositions—ways to test your premise. You can do it by letter, by telemarketing, or by an operative that you hire and pay by giving half the profits or a portion of the profits. I’m hoping that what I’ve done is plant a germinating seed that will get you real excited. If you never do it, but it keeps you challenged while you’re making a good living, that isn’t the end of the world. If you do it and you embrace it with enthusiasm while moving in a manageable, pragmatic, and logical way, I think it will imbue everything you’re doing with a renewed excitement so that it will make your whole life very exciting. Melvin: These are the kinds of ideas I have thought about in the past myself, but no one’s ever talked to me about trying to do something with them in a cohesive manner. I appreciate your thoughts and advice. Jay: Feel free to ask me more questions if you need to. It will help if you listen to the tape of this consultation a couple of times. Often, the people I interact with have a vision that isn’t viable. There are

transitional steps they fail to acknowledge. They look at it too theoretically, too idealistically, too euphorically compared to the reality of the events that will transpire. I’m just trying to put reality into your situation rather than say, “Give up everything and jump in.” In your whole industry, you are probably one of a handful of really knowledgeable experts on at least seven subjects. To end that just because you’re bored with it seems a sacrilege. Melvin: I agree. I have put a lot of time, energy, and money into learning some of these things. Jay: Even if you only take it to the point of creating the product, then giving it a license and selling it to some third party, you’ll still get royalties from the product. You create it, and have somebody else run with it. At least you have reclaimed your thirteen-year investment. Melvin: Those are very good ideas. Jay: Do a lot of testing. Experiment before you jump , and you’ll never get burned. You can achieve incredible goals in making a practical transition from your regular job to your dream by thoroughly understanding and acting on each step involved. *

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You can use your knowledge and experience as a ticket to success. First, make a list of all the different skills you have. Next, catalog all the different ways you can replicate this knowledge in a salable format (courses, newsletters, audio or videotapes, consulting services, etc.) Test all your suppositions in the marketplace. Use direct mail or telephone to solicit responses or hire a savvy manager to do it for you. Far too many entrepreneurs forget this process and start businesses backed only with their burning aspirations. That’s o ne way to lose everything. Once you have a winning formula, try to joint venture your business with someone else. This way, you can still earn income from your regular activities as you build your new business on the side. As profits build, you could sell your share of the venture and move on to other ventures that capitalize on your knowledge and abilities. Re-use your knowledge, test constantly, and joint venture. This logical formula may require some work in the beginning, but it can pay off handsomely once you get it rolling.

Chiropractics, Seminars and Hotel Management This consultation covered a lot of ground, because Lawrence had a lot going on—three separate businesses, to be exact. His chiropractic business had become successful, with about 3700 patients, but he had the capacity to handle a 50% increase in business. His seminars for other chiropractors on how to increase their practices were turning a profit, but he sensed they could be much more profitable. And his hotel was at 30% occupancy, only half of what it needed to make money. He wanted to increase business in all three areas. In the chiropractic area, I suggested that he play on his biggest strength, which was word-of-mouth referrals from satisfied patients. I also suggested direct mailings using the “assumptive letter” as a much more effective way of reaching the public than newspaper or radio ads. In seminar promotion, I focused on how to write effective headlines. Headlines, more than anything else, make or break an ad, and Lawrence’s headlines were not grabbing people. In the hotel business, I suggested paying very high commissions to aggressive young salespeople. These commissions would pay off in the long run because of the residual business that increased sales

would bring. This technique could be extremely profitable for anyone’s business, because it really motivates an aggressive young person to sell, and brings you big returns once you start to harvest your “back-end.” I also told Lawrence how he could get travel agents on his side. See if you can generate referrals to your business using similar approaches. PART ONE—CHIROPRACTIC PRACTICE Jay: I sense that you are not averse to marketing, and are also fastidious about not being too aggressive a promoter. Sounds like you’d love to increase referrals to your practice, which sounds like it’s a nice-sized practice. Lawrence: We have, over the years, done basic research in all types of promotion arenas— Yellow Pages, television advertising, coupons, radio—you name it, we’ve done it. And we’ve kept records on what referrals we get from them. But, I’m not a guy who believes in giving everything away. In other words, we see a lot of hucksters in this profession who offer three free x-rays, three of that, or three of the other. Well, if I have to do that, I’m going to quit. Jay: Why? Lawrence: Well, I think it’s degrading to the profession. Jay: How have you built your business most successfully? Lawrence: Good results, word of mouth. Jay: The X number of clients you currently have, where did most of them emanate from? Lawrence: Possibly 75% from direct referral from other patients, 15% from the Yellow Pages, and 10% from our sign. Jay: Right now, how much more business can you comfortably accommodate without having to add any more staff? Lawrence: I would say another 50%. Jay: Right now, if a referral comes to you, what is the procedure? Do they pay full boat for the first consultation, is it a no-charge or a modest charge? What is your procedure for a newly referred customer or patient? Lawrence: When someone comes in, we have them fill out what we call a confidential information form. From there, we have our consultation. There’s no charge up to this point. Then we tell them exactly what we have to do and what the fees will be. Jay: How long does the consultation period normally last? Lawrence: About 10 to 15 minutes maximum. Jay: When you use the reference “we,” does that mean you and the other chiropractors you have on staff? Lawrence: That’s correct. Jay: Okay, so it just depends on who’s available to talk to them. Lawrence: We do it by a rotation system.

Jay: If they begin treatment, would they normally begin that same day or later? Lawrence: Oh, yes, they generally are processed right away. We do a full work-up, which means we do the consultations, then the x-rays and neurological tests that are indicated. Jay: Do you have a word processor that’s letter quality? Lawrence: Yes. Jay: How many patients do you have right now, active or inactive? Lawrence: We’ve been in this practice since ’81, and have 3,687 patients. Jay: It would be very interesting if on certain days of every month, let’s say Saturdays or Thursday evenings, a time that you normally aren’t using for existing patient activities, you try something new for your new referrals. Here’s what I have in mind. Send a letter-quality, word-processed, personalized letter to every one of your existing or inactive patients. Let’s take the current patients first. (I’ll give you different letters for different patients.) The existing patients get a letter, personalized to them. It says something like this. “Mr. Jones, 123 Main Street, I’m writing to alert you to a new service we have decided to offer as a courtesy to our loyal patients. For the last year, many of our patients have prevailed upon us to accommodate their friends, relatives, and business and social acquaintances, who they felt could realize therapeutic benefit from coming to our facilities. “We have decided to establish, for the next 2 months, a time every week when we will, on a referred appointment basis only, provide no-cost consultations to valued friends and acquaintances of yours who may benefit from our services. If someone dear to you suffers from something, and they haven’t been able to get relief, and you believe we can assist them or we can help them,” or whatever the language, “you can use this service. We suggest that you contact them and tell them that on your referral we will give them a complimentary consultation, where we will very objectively evaluate their indications, their problems, their symptoms, and decide whether or not we think we can help. If we think so, we’ll tell them the kind of procedures it would entail, etc. “We have never done this before, but it seems that there are so many people like you who have friends and relatives they want to refer to us, and we’re always so busy during the course of a typical day that it’s really hard to accommodate them. So we’re doing this as an experiment. We aren’t promising we’ll do it very long, but we’ll definitely do it for the next two months, every Tuesday night between 7 and 9 or every Saturday between 12 and whatever. But it’s strictly going to be on an appointment basis, and it’s strictly on a referral from you or other patients. So if you know of anyone, tell them soon, because frankly we expect to fill up the available consultation spots quickly since we have 3,000 clients. But we’re alerting you in advance, because we have a suspicion that you know of somebody who could avail themself. If you do, contact us or have them contact us and mention your name.” That would be very interesting, wouldn’t it? Lawrence: Yes. Jay: Now for the inactive patients. You have a finite number of them. The best way to activate them is with a letter that connotes a sense of concern. You draft a letter on your word processor. It goes to the person who’s not been there for a a while, and it says, “Mr. Smith, 456 Main Street, I’ve been thinking about you a lot lately. Frankly, I’ve been worried. We haven’t seen you around for a long time, and I know the last time you had your series of sessions with us you had some very severe back pain (or neck pain or whatever), and I was very delighted that we were able to effect such remedial whatever and that the symptoms were totally eliminated. However, truth be known, what we have found is anyone who suffers this kind of malady normally has recurring problems, and for a number of reasons—inertia, aversion, financial difficulties—people avoid getting corrective treatment.

“It’s almost grievous, because once we’ve gotten you into shape, it’s not very difficult to correct the problem, but it becomes more pronounced the longer you put it off. I’m writing to you for two reasons: 1) I wanted to let you know we think about you; we care about you as a person, and we care about your wellbeing and your health, 2) the probability is that over the last blank months or years you have suffered unecessary back, leg, neck, arm pain, digestive problems, constipation, (whatever it is that you treat) and it’s not necessary for you to suffer when we’re available. Our practice has grown very large since we last saw you, but I want you to know we are always here to serve you if you have a problem. I’ll make time for you on our schedule. If I can’t take you myself, I’ll see to it that one of my very competent associate doctors will take care of you. The point is that the next time you have a problem, give us a call. There are many, many, many instances where we can resolve the problem in 1 or 2 sessions—you don’t have to go for months and months. At least find out.” That kind of approach will be very powerful too, don’t you think? Lawrence: That’s definitely a good concept. Jay: Another idea that we’ve tried. Something that’s very effective are the 2 or 3 ways you can do direct mail. How big is the marketing area that you serve? Lawrence: I estimate from 100,000 to 150,000. Jay: Do most of your patients emanate from a closer proximity? Lawrence: Yes. Jay: What kind of houses are around there? Lawrence: They’re medium. The higher priced homes are to the north of us. Jay: Do most of your customers come from the local area? Lawrence: Yes. Jay: You can rent the names of homeowners. You can rent them by name, not just residence. Let’s say you rented the names as an experimental test. Did you read all that material that I sent you? Lawrence: Sure did. Jay: You rent the names of 1,000 people in your area. You use the word processor again to put out a personalized letter. You try different experimental letters, because each letter will produce a different result and you want to end up with the letter that produces the best result for you. If you’re fortunate, maybe you can find 2 or 3 that all work. They will bring in different people with different kinds of problems. A letter arrives in the mailbox and it says, “Mr. Adams, 789 Main Street.” It is on professionallooking thermographed paper, so it looks very professional and isn’t just quick-printed. If you send anything, it should look impressive, and not be cheaply printed. The letter says, “I know you’ve been suffering neck, back, or leg problems and haven’t been able to get satisfactory and enduring relief. I’m writing as a service just to tell you that a lot of your neighbors have come to us over the years and we’ve been able to achieve nearly miraculous results for them. At the very worst, we have been able to almost totally eliminate any neck pain, migraines, leg cramps. Because I feel, from what I’ve heard, that you have pain and suffering that are unnecessary, I’m taking the liberty of writing and encouraging you to give me a call at your earliest convenience. Come in to my office; I will spend 15 minutes of my time with you and won’t charge you to discuss the problems and symptoms you have and the therapeutic alternatives you’ve already pursued. I’ll tell you honestly whether I think I can help, and if so, how. I’m writing to tell you

that there’s no need for you to suffer another week with the pain and the discomfort and the recurring problems that I think you have, and I would like to sit down and see if I can help.” Something like that could be very powerful and the whole premise is what I call “assumptive”—it assumes people have the problem. Most people write display ads and mailing pieces that say, “Do you suffer pain?” The truth of the matter is that the only people who are going to respond are the ones that suffer anyhow. Right? Lawrence: Right. Jay: So why do you ask the question? Why don’t you make the letter seem like you know that they suffer? Think of what that would do. Lawrence: That’s a lot better than the other way. Jay: Here’s another suggestion. You said in your questionnaire to me that you send patients out with letters to send to their intended referred friends or whatever. I suggest one of two things. Do you just give them a printed letter? Lawrence: Yes. Jay: I’d suggest one of the following. While the patient is telling you about it, go to your computer, get their intended referral name and address, print out right there a personalized letter to that person, give it to the patient to take to his friend, which is much more powerful than a printed form letter. Or, even better, with the permission of your patient, ask them if you can send them a letter direct. It would be very interesting if you sent a letter to Joe Blow, 321 Main Street, and it said “Jay Abraham asked me to write you, Mr. Blow. He told me in confidence that he thought you were suffering from symptoms that I could possibly help. I don’t know if I can help, I don’t know what the symptoms are. I do know this, though— we have been very fortunate in our ability to relieve and eliminate symptoms similar to the ones your friend, Jay Abraham, told me about, in thousands of people. We have been able to do it relatively quickly. Our procedures normally don’t take more than a few sessions. We’re very skilled, we’re very gentle, we’re very effective, and we’re very courteous. He told me that you have been suffering for so long, and I feel that’s so unnecessary when we can probably help. So I decided to take the liberty of writing you myself to tell you that we are available if you need us. “If you’re apprehensive or uncertain about whether we can help, by all means give me a call or come in to my office and we’ll talk about it. I won’t charge you for the time. I’ll be glad to consult with you. Anyone who’s dear enough to Jay Abraham, that Jay would tell me about him, must be a special person, so I’m writing to tell you.” When I give you all these suggestions, you of course have to know what your ethical constraints are, but all the approaches I’ve given you would cost but a few thousand dollars to experiment with and their yield would probably be ten times what a $5,000 ad would be in your newspaper. If you mail a thousand letters and it works, what you do is keep mailing at whatever level you can handle. If every time you mail a thousand letters, you get 50 people scheduled in your office, and you can handle 100 more people a month, then you mail 2,000 letters a week. You have somebody in your office do it. Don’t just do it haphazardly. Since you want to take people from being prospects to patients to returning patients, it’s important that you have a system, as an ongoing part of your business. Every week mail your 500 or 5,000 letters. If they work, keep doing it; if they don’t, keep trying new letters. You’ll find some approach that will outpull all the others by such a demonstrably superior margin that you could afford to keep doing it. When somebody leaves your office after the first compensated session, do you have a follow-up procedure of any kind?

Lawrence: The individual doctors call the patient at home. They ask them how they’re doing, and give them any advice to help them further. Jay: They don’t just hit or miss, they do it every time? Lawrence: Yes, and they like to do it. Jay: That’s very powerful. I was going to suggest you send a letter if they didn’t have time to call. It must be very warmly embraced by the patients. Lawrence: It never fails to get a comment from them indicating that “you’re the first doctor who has ever called me.” Jay: Something else you can do. You can hire a very pleasant, non-pushy, reception-voiced part-time woman to call all of your old clients and check on them. If she calls and says, “I’m calling for Dr. Lawrence who is busy with a patient, but he’s been thinking about you for the last 3 weeks, and he’s just not had a chance to sit down and call you or write you himself. He asked me to call and find out if everything is well with you, and that none of the pain from your back is recurring. And if it is, he wants me to tell you that he’s always here for you. If you need him, he’ll make time.” That approach is very powerful. Lawrence: We use that. Jay: As an ongoing program? And how does it work? Lawrence: It’s good enough that the people who are doing it want to continue and we want to continue. We pay them on the basis of the people who come in. Jay: That’s great. Do they call inactive patients, too? Lawrence: Inactive patients, right. We used to pay the callers by the hour, but then we got in a situation where people were paid just to make calls, and they didn’t really care whether they produced or not. Jay: That’s right. Now they’ve got a vested interest, don’t they? What specifically do you want me to get into relative to the chiropractic practice? Lawrence: Well really, I’m just searching for some ideas in reference to newspaper, radio, and TV. I’m really not sold on the fact that it will do that much for me. Jay: It can, but it’s inefficient. There are much more powerful ways. Let me give you a couple of other techniques. See if you can go to certain kinds of people in your marketplace who have customers, who have affinity followings or membership organizations—associations, retailers, dentists, anybody you can get—to write a letter for you. Look through your lists of patients, see which ones are connected with large groups, and see if you could get them to sign a letter (if it doesn’t conflict with the legal implications of your profession) to their members, saying that “I had the most excruciating migraines I have ever had in my life for 5 years. Then I met Dr. Lawrence and in 3 months of 45 minute sessions, conveniently scheduled after work, he not only relieved my pain, but he eliminated my migraines altogether. I haven’t had a migraine in six months. Before that, I used to get one every 6 days. “I’m writing to tell you that if you have migraines or chronic back pain or neck pain or whatever, there’s a very high possibility that Dr. Lawrence could really work miracles on the problem. Of course, there are no guarantees in life. However, because he respects me and because I respect him, I’ve asked him if he would be willing to just counsel for no charge with my customers (with my association members, with

my whatever) who might have really serious pain-inflicting problems that he could really help. He’s graciously agreed. If you’ve hoped that someone somewhere could relieve the pain or the discomfort you’re suffering, and so far no other professional has, I strongly encourage you to call Dr. Lawrence and tell him that I’ve asked you to talk to him.” That approach could be very powerful. Lawrence: The only restraint is that we can’t publish testimonial letters in the newspaper. Jay: Can you send a letter out or not? Lawrence: I don’t think there would be any objection to that. Jay: I think to the extent that you can introduce things like that, do so. I think that with a 3,000 patient base you probably have some wonderful referrals. You could call somebody you’ve done wonderful things for and offer them a free exchange for having them sign the mailing. For example, free service for the next 2 years. “How would you like your whole family to have free services for the whole year, on me?” Approach it as you want. Also, I think if you could find those among your 3,000 people who have organizations—ladies’ groups, businesses, people who have employees—they could make you the resident chiropractor for their little company, with a special group rate for their employees. Lawrence: That’s an idea that I hadn’t thought of. Jay: I think you could do some wonderful things if you just took some time to analyze the avocation, profession, and employment aspects of your existing and past patient base. If you’re too busy, hire someone to establish the kind of relationships I just suggested, and pay them strictly on a variable basis— they get paid based on how much business they raise. There’s probably $300,000 in that one idea if you cultivate it on an annual basis. You must be relatively successful. A half-million dollar practice is quite nice, isn’t it? Lawrence: It’s by far better than average, but there’s always somebody bigger. Jay: The point is, if you’re better than 50% of your colleagues you could probably, once you perfected some of these techniques, license colleagues outside of your marketing area to use the same letters, the same approaches. If you have a technique which definitely improved your business by $100,000 and cost $5,000, somebody would probably pay $5,000 to learn that, don’t you think? Lawrence: We’ll definitely keep that in mind. That relates to my seminar business, which I want to ask you about next. Jay: The specific ideas are very valuable, but the abstract concepts can be expanded any way you want. If you just run with what we’ve talked about, believe me you’re going to spend very little, because most of it is either internal or just in your neighborhood and reworking your past base. That alone is the best way to grow that business with virtually no overhead.

PART TWO—SEMINAR BUS INESS Jay: I understand that you put on seminars to other colleagues in the chiropractic industry to teach them such things as practice building, promotion, whatever. Lawrence: I have been doing that for 10 years. Jay: Profitably?

Lawrence: Yes. I just want to beef it up. Jay: How much does it cost to run an ad like the ones you run in the journal? Lawrence: $200. Jay: How many people will attend one of your seminars? Lawrence: It varies, about 10-35. Jay: Well, let me give you the first constructive criticism. Your headline is terrible. A headline is an ad for the ad. It’s what gets everyone to read the body copy of the ad. Your headline is so medicinal. What is it that you really want to teach them? Your headline tells me nothing and it’s boring. What is the bottom line benefit, the result, that somebody would get from giving you $400? Lawrence: Earning more income through increasing their practice. Jay: First of all you want to experiment with 2 or 3 or 4 different kinds of headline approaches to see which one brings the best response. Let me give you a good example of something that will hit home. One might be, “How to improve the profits of your chiropractic practice in 30 days or less,” or “How to double the profits of your chiropractic practice for an investment of less than $1,000,” or “How to maximize the potential in your existing chiropractic practice,” or “How to extend the worth of every patient you ever see,” or “How to double the number of patients in your practice,” or “How to acquire more new patients than your practice can handle at a price you can afford.” All of these are more exciting, don’t you think? Lawrence: Much more. Jay: And again, I don’t know which one or ones of these will work, but you can try all those different headlines. If an ad breaks even, you can run it every week or every month. How often does the seminar go on? Lawrence: Every 2 months. Jay: How many pages is the journal? Lawrence: It’s about 150-200 pages. Jay: It would be very interesting to run more than one ad in the journal but with different thematic approaches, wouldn’t it? Lawrence: Worth trying. Jay: Remember, you’re selling a result. If you can focus on the result, you can at least quadruple the attendance. Don’t expect them to have to work to realize what the benefit is. What are they going to get from attending? They’re going to get “how to.” What does a full page ad cost? Lawrence: About $600. Jay: Have you ever done a full page ad? Lawrence: Years ago.

Jay: How did it do? Lawrence: I didn’t really see that much. Of course, I didn’t run it that often. Jay: It would be very interesting, if you could afford it, to run a full-page ad after you run the little ones to find what works the best (they’ll tell you what the market wants). The winningest headline becomes the headline. You take the full-page ad and you tell them that “Dr. Lawrence’s is still the practice that people envy. It’s 2-1/2 times the average, and he’s got more people coming without any major advertising. And when he does advertise, he knows how to take a dollar and make it do the work of 10 or 20. He’s got a higher residual and his patients stick with him more than in nine out of ten other practitioners in the nation and certainly in our impoverished state marketplace. He does it without manipulative hyperbole, and he does it with such common sense logic that you’ll laugh at the simplicity and the obviousness of it once it’s revealed to you. “It requires very little capital investment; all it requires is a designate within your practice, e.g., an office manager or a secretary/receptionist, to implement and retain simple programming. He’ll give you the entire concept, he’ll give you complete brochures, he’ll give you a complete manual, and he’ll give you sample letters, sample ads, and sample techniques. He’ll reveal actual figures to you and he’ll hold nothing back. At the end of the seminar, you should easily have learned how to improve the profits and the growth potential of your practice by 25% or more on an annual basis. If you don’t believe you’ve learned that, you’re entitled to your money back.” That’s a pretty powerful ad, don’t you think? Lawrence: Yes. It will attract attention. Jay: Once you get such a full page ad, you know how to make yourself an extra $30,000 to $50,000 twice a year.

PART THREE—HOTEL MANAGEMENT Jay: To do more than one thing at a time is a challenge; to do three is amazing. Your hotel has unique problems: a) You don’t have the best location, b) You’ve got a terribly impoverished economy, c) You’ve got other businesses to run. Right now you’re doing 30% occupancy. What occupancy do you need to break even? Lawrence: 60%. Jay: The clientele you do have—where are they coming from? Lawrence: Part of it is local, corporate individuals. Jay: Do you have a salesperson working on that? Lawrence: Yes. You just mentioned what the situation is. The economy is off in our state, there are about 8,000 surplus hotel beds in the city, so we have to be innovative. We have to do things that everybody else isn’t doing. Jay: Are you price-competitive? Lawrence: Yes. Jay: What do you charge for a room? Lawrence: $12 single occupancy, $24 double occupancy.

Jay: That’s nothing. Lawrence: We want to get people in. It’s better than nothing. Jay: I understand. What does the room cost you, what does the maid cost you? Lawrence: If we just figure the basics, it’s actually about only $6.00. Jay: But you hope to make money on room service. Is the restaurant nice? Lawrence: Yes, it is. Jay: What is the average ticket there? Lawrence: For one person, approximately $10. Jay: Why don’t you hire somebody? Lawrence: We just did last week. We hired a professional management company to come in and take over. Jay: What are they charging, a percentage, a fee, or what? Lawrence: They wanted to do it on a basis of a salary plus percentage, but I said no, I’ll do it strictly on a percentage—anything you can increase over last year. Jay: Good. How much do they get? Lawrence: 25%. Jay: You might also work a deal with young, aggressive people where they can develop corporate or whatever business. From anything they do, the first night they get 100%, and then you have variable deals where the percentages are so generous that people go out and really work their hearts out. In the first 6 months, if you increased your volume by $100,000 but it cost you $100,000 to do it, you’d still probably get a lot of residual from that, don’t you think? Lawrence: I think so. Jay: I found when I was young that I got motivated by guys who would give me these crazy deals where they realized the back-end. They would give me almost all the front end, not just 10% but 90% of it, or 90% of the first order, or 120% of the first order to get me going, and I would work my heart out. I generated millions of dollars because I had these incredible deals offered me. What if you got maybe 5 people and you gave each one a territory, and you found people who were calling for other businesses and you gave them some outlandish first deal for sending business your way? They keep 90% or 100% of the first night’s profits as long as it’s more than one night’s stay. Right now if you filled every room and made nothing for 6 months but you got people acclimated, once you stop paying people you would probably have half of that to sustain, don’t you think? Lawrence: It would definitely work out that way. Jay: You might make other deals. Right now, if you know that it costs you $6 to do a room, you might do a one month’s special where you say to travel agents, “We’ll give you 90% of the first night for anyone, just because we want people to get familiar with our hotel.”

Or better yet, if 90% of your business comes from a specific area—a few nearby cities—and there are perhaps 1000 travel agencies there, you could send a letter, or get a telemarketer and you’d pay the WATS line cost but nothing else, and say “On a room that cost $24 we’ll give the travel agent 50% for inducing it.” Shamelessly bribe them for one month to see what business they can bring through, or do an experiment to see what the back-end is or what kind of repeat business it will bring. Make it irrestible: every time they book somebody through you, they keep the whole night or whatever. Just experiment, and see what happens. If you see a lot of people coming in, even if you make nothing on the room but you make $40 on drinks and food, you’re still making money. Am I giving you some ideas? Lawrence: Oh, yes. Jay: Do you have banquet facilities too? Lawrence: Yes Jay: Good ones? Lawrence: All the ones in our area are basically equal, but there aren’t any of them that have been that good. Jay: You could try some really creative things, like: “Book a banquet with us and get 25 rooms for nothing.” Lawrence: We did that. Jay: Does it work? Lawrence: Yes. The best results we get as far as banquets go is through word of mouth. Somebody else comes in and says, “Go to the Lawrence Hotel, they do a better job than so and so.” Jay: One of the things that I’ve done is to get young people who are mature, particularly college kids who want to work part time but would like to make full time salaries, and give no salary at all, but make the most inordinately generous variable deal for business they bring. What if you had four different college students working part time, each working a different part of town. You gave them a title and you paid $40/week in gas and nothing else and that $40 went against 25% of the banquet or whatever they brought in. Mature youth motivated with a very lucrative, variable compensation is probably the most powerful and overlooked device you have available to you, you know. Lawrence: That’s definitely a good idea. Jay: Make a deal where if they succeed maybe you’ll make very little on it, but it’s found business you didn’t have and you’ll get the back end. If they bring in a $1000 deal and you’re going to make $500 and you’ve got to give them $250, it’s $250 you would never have had, and it’s seeding new business. In the same way, you could have a young man in your chiropractic practice going out one afternoon or evening to small businesses where you had a special rate for their employees. You could give special deals that were done professionally but very innovatively, and the operative that engineered it would get half the profit. If they started making $3,000 a week, why would you care? If you can transcend that mental impediment, you’ll do very well. The very best of luck to you. Lawrence: Thank you. Let me review a few of the many points I covered in this consultation.

First, think about whether you can motivate satisfied customers to bring in referrals for you, either by alerting you to friends of theirs who need your services, endorsing your services or giving testimonials, or making your services “official” (at a special reduced fee) in their organization or business. Second, think about using direct mailings of “assumptive letters” to potential customers in your area. Third, if you advertise, think about whether your headline is an “ad for the ad.” It shouldn’t be cute or vague. It should promise the reader some benefit or make some claim, so that the reader knows immediately how he’ll benefit from what’s in the ad. Fourth, think about whether you could hire mature, aggressive young people as part-time salespersons, with little or no salary but huge percentages on any sales they make. This will really motivate them, and will benefit you enormously if you can generate a large back -end of repeat sales.

Dentistry Scott has a very large dental practice, yet has had trouble attracting new patients. To build his business, he has used three approaches: (1) Yellow Pages ads, which he hasn’t tracked responses for; (2) referrals, which his front office personnel don’t enjoy doing; and (3) advertising agents, who he feels waste his money. In this consultation, I showed Scott one of the most powerful yet overlooked marketing formulas available: building an intimate rapport with customers already in your database, even customers who are no longer active. *

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Jay: I read your material. It sounds like you have a very large practice. Scott: I have two part-time associates, and I have an orthodontist. Jay: Let’s talk a little bit about advertising. Tell me what you want to get out of this consultation. Scott: I’d really like to know how to get more patients into my office, because it’s getting harder and harder to do this in the dental practice world. Jay: You indicated that you don’t really attract new patients well. Scott: I’ve had a hard time getting my front office staff to ask people how they happened to hear about me. I know this has to change. Jay: You understand that I’m a very staunch believer in constantly testing and analyzing results. I know only too well that by changing the preface or the headline, you can make the same ad pull 3 or 4 times better. And you won’t know how high the highest response is, or what the possibilities are, until you experiment. Do you do much experimentation with your ads? Scott: I really don’t. I know that’s a weakness that I really have to change. Jay: This, for example, is your newest Yellow Page ad. Has it been published yet? Scott: No. Jay: What is the cutoff date? Scott: About the middle of May. Jay: How many books are you in?

Scott: Two. I’m in a split city and have to use two different telephone companies, one on either side of the city. Jay: What do you spend for your Yellow Pages ad? Scott: Oh, that ad will run me about $250 a month. Jay: Do you track pretty well? Scott: I have reasonable contingency with the telephone book. Although there are a number of Yellow Pages, I don’t run ads in them any more because they don’t do me much good. Jay: Do you run in TV guidebooks, and if so, how do they pull? Scott: I’m not in those at all, because I’m not sure I get very much out of it. Part of it is because my front office just resists it. There was a handout distributed by the postal service to about 10,000 people, and we got a few responses on those. One of the problems I have is that I can’t really offer them anything. Jay: What are your worst constraints? Scott: We can’t promise anything free, such as a free examination or free X-rays. We could give them some kind of a little gift. Jay: You said you gave them a free emergency dental kit. Scott: We offered that, but we never had anybody ask for it. But we never had anybody gripe about it either. Jay: Is it a nice gift? Scott: Yes, but I can’t get them any more. Jay: You understand the concept of marginal net worth? Scott: I’m not sure. Jay: It’s important to ascertain what a patient is worth, not only for the first visit, but for the life expectancy of treatment. Let’s determine the average value of a customer’s first visit. Let’s say we know that out of every 100 new patients coming in, 50 will be worth another $500 over the next 2 years. Therefore, you know what you can afford to spend to get a new patient. It may be based on experiences with other work and services you perform for them. Perhaps you could afford to pay 100% of what they’re worth to you in the first meeting because every time you spend the initial value of, say, $50, you’re accruing $500 over the next few years. That philosophy would justify the initial expense, but few people interpret it that way and apply it to their practice. What do you think a patient is worth to you? Scott: I think that in the first visit, the patient is worth around $75, and over the next 3 years, they’re probably worth $750 to $1,000. Jay: Is 3 years pretty accurate as far as work they’ll need done? Scott: I would say so, because most of their dental work is going to be in maintaining, cleaning, and those things. Jay: You have somewhere in the vicinity of 8,000 patients? Scott: Yes, I believe we do, but we haven’t put them on computer.

Jay: I think the very first thing you should do is put your patients in your company’s database. How many new patients does your practice see? Scott: We average somewhere around 50 or 60 new patients a month. Jay: Do you have any idea where these are coming from? Scott: Most of them come in from word-of-mouth referrals. Jay: Do you ever endeavor to solicit them? Scott: I have personally said to my patients, “Hey, why don’t you take some of my cards and give them to your friends?” I’ve asked my front office staff to do it, but they don’t do it any more. Jay: So, of the 50 or 60 new patients, a good portion of them are referrals? Scott: Yes. Jay: Do you spend money on promotional advertising? Scott: I spent around $25,000-30,000 a year on advertising. I think that last year I spent too much for what I got. I looked at my bills at the end of the month and believe that a lot of them went to advertising. I went to an advertising agent, but that was a waste of money. Jay: I think most agents don’t understand the type of business you’re in. Scott: It turned out that he took the money, but he never ran the ads. Jay: They don’t realize that if they do their job and you grow, you wouldn’t mind spending $100,000 on advertising. They’re such fools that they think they can take a handful of dentists and doctors and make fast and easy money. It’s very shortsighted. So tell me exactly what you’re doing with your advertising money. Scott: In January, I decided that my advertising was fruitless as far as I could determine, and that I wasn’t going to spend any more money on it. At first, I was going to hand out flyers and publish in the local newspaper. Then I said the hell with it—I’ll depend on referrals instead. As a result, in January and February, I’ve probably been as busy as I’ve ever been. Jay: You should track it, because 3, 6 or 9 months from now, you’ll see the correlation between your decision and the response it brought. Scott: Really, all I’m doing now is paying for the Yellow Pages. I had one patient who said he saw my ad in the Yellow Pages and thought it was really impressive. Jay: You advertised in this other phone book. How much does that cost? Scott: I paid about $350 a month for that ad and got 6 new patients. Basically, this is the ad I ran in a nearby large city newspaper. It did not track well, so I’ll continue to use the other ad. Jay: That’s why tracking is such a critical thing to do. If you knew before the end of the month when the bill is due that you got 6 customers, you’d know that that response accrued you $700 a year and provided you with a cash flow. That’s how you can really grow your future. Scott: I used to use coupons, but people seldom brought a coupon in. Once in a while I will have somebody say, “Oh, I saw your ad in the paper for such and such a price,” and they will have the coupon.

Jay: Are these prices you mention in all your ads actually the regular prices? Scott: Yes. Jay: Are you an anesthesiologist? Scott: No, but I’ve had some training. I have a card from the American Heart Association and can do cardiac life support, so I have some of the same training that Emergency Room physicians have. Jay: Well, to start off, the first thing I would recommend doing is to take your customer base and maximize it. Pull off all those people who haven’t been to your office in 2 or 3 years. Since there is no certainty of response, you should always hedge your bet by testing. Of your 8,000 customers, let’s say there are 4,000 who haven’t been active. Split these up into 3 or 4 identifiable segments, and send each segment 1,000 or 1,500 form letters. Analyze which letters work the best and then send these to all the other segments. You can experiment with the following types of letters. These letters should be personalized on word processors. You can customize these letters according to the category of treatment your clients had. Put your name and address on the top and say, “I’ve been thinking about you, wondering why we haven’t seen you lately. The last time you were here, you had relatively extensive treatment done on your teeth (here, customize the letters in the categories). Frankly, for all the beneficial treatment that you’ve paid so much for, we’re worried because it’s highly unlikely that you haven’t had some problem in the last 2 or 3 years. We’re worried that you might be suffering needlessly in pain. “Thus, I’m writing to you for two reasons. First, if you have a problem and are avoiding coming back because you can’t afford it, believe me, we can work out some arrangement. Second, if you didn’t enjoy our type of dentistry to begin with, and you found my manner for any reason offensive or unpleasurable, I would like to talk with you about it. My only intent is to give you effective and comfortable service. If you don’t enjoy me, I’ve got other dentists in the office who are gentle and kind. They’re good with children as well as adults and can handle every type of complex dental work. Frankly, I would prefer to deal with you myself, but if you would prefer otherwise, that’s fine. I’d like to hope that the reason that we haven’t seen you is that you have another dentist.” Use the kind of approach that shows you really care. Make them a proposition and say, “Do me a favor. Call my office and ask for Susan. She’s the receptionist and she’s also my daughter. Please tell her what day you want to come into the office. To give you the most affordable service, I’ll try to lower the cost of your examination. I can’t give it to you for free because of my professional constraints, but I’ll do the next best thing and pay three-fourths of the cost.” Don’t just take one approach because there are so many factors in the lives of those 4,000 people. You’ve got to find the right combination—which is a trick, because everybody’s situation is kaleidoscopically unique. If I give you ideas for three or four letters, you might like one better than the others. That doesn’t mean your patients will respond with the same fervor. You owe it to your pocketbook not to let you, your wife, your daughter, or your son-in-law make the decision. The more you put it to the test, the greater will be your chance to succeed and show you care about your customer. The second letter I’d like to show you is called an assumptive letter. It’s very powerful with people. You don’t ask if they have the problem; you assume they do. It goes something like this, “I know you’ve been suffering discomfort and pain. How do I know? I’m your dentist. I know the probability that in any two-year period, any number of things can go wrong. It could be your molars, an old filling, a root canal that no longer is sealed properly, or the fact that you’re not flossing regularly. We often allow ourselves to endure recurring dental pain for any number of reasons. “I’m writing you to tell you that there’s no need to suffer. I’m willing to do anything necessary to encourage you to take care of your teeth. We’ve got techniques that are very good. If you’re worried about

losing time from work, don’t be. I’m only too happy to work my hours around yours to help you.” That’s a very effective kind of approach. A third letter might say, “I know you’ve been thinking seriously about calling my office. We all know that of all the people you can put off, it’s usually your dentist that you put off first. I don’t mind except that it’s doing you a disservice.” Go into a little description of a common dental problem, such as root canals. Scott: Or bleeding gums. Everybody has bleeding gums. Jay: Tell them in a way that doesn’t scare them—for example, “I don’t want to scare you, but you should know that a lot of people are scared when they discover the first signs of a tooth problem. Whether you’ve got a bad filling, a cavity, inflammation, or a root canal that needs taking care of, it’s grievously wrong to avoid seeing your dentist just because you’re scared. I’m just writing to tell you that this is a common situation. I know you’ve really thought about coming in, so I’ve asked Susan, our receptionist, to give you a call. When she calls, don’t be mad at her. Be mad at me because I worry about your teeth. She’ll be calling you some time within the next two or three days. Feel free to tell her the time you have available for an appointment.” It’s a very powerful approach, don’t you think? Another letter can come from the receptionist saying, “Dr. Scott asked me to call you, but I thought I would write you first to tell you that he’s worried about you. He hasn’t seen you in the office, but he really values you and knows how important your teeth are. He senses that maybe you’re worried about finances. He hopes that you’re all right and, just to make sure, he’d like me to call and see how you’re doing. I’ll be phoning you in the next couple of days. If you have any dental questions that you’d like answered, or if you have something that needs taking care of, please tell me when I call.” Scott: One thing I would like to be able to figure out is if I’m going to lose money on this approach. Jay: Perhaps you’re going to lose a little bit. But if you take a category that you like, develop some good dialog that is positive and easy to relate to, send letters and analyze the follow-ups, you’re not really giving money away. You can make money on the back-end. Scott: We’re starting a new type of a cap or a crown that we could offer. It’s cast in glass. We would have to sell it for $550 a tooth. Jay: Is that price competitive? Scott: That’s a competitive price. I’ve already told my dentists that for every one they sell, I’m going to give them $25 over and above what they normally get. So it’s worth $25 to them. We haven’t started it yet because I’m waiting to get all the literature and all the details in place. Jay: You have a lot of flexibility. You could write 4,000 people a charming, interesting letter. You can experiment with three or four letters. If you could activate 1,000 of those 4,000 people, it might be very cheap to pay for 100% of their examination. Sometimes you have to make it obscenely obtrusive. If you have some people who would like to make extra money, working a letter could be a great ice breaker. For example, bring in 10 retired people who haven’t been in your office before. The odds are that three or four of them would probably do a good job and stay on. Remember, you’re not paying them any salary for it. Experiment with them on the customers, working out the language and the script. You’ve got to know that they won’t get nervous, and you have to assure them that it’s a role they’re playing. They’ve got to adopt the same posture as you would, using derivatives of what I suggested in the letter. For example, they could say, “I’m calling for Dr. Scott. He told me to tell you that he knows you have some dental problems, and he knows it’s one of three things. He knows that you’ve been afraid, you can’t afford it, or you’ve found another dentist that you’re happy with. He would be hurt, of course, to hear the latter, but it’s the choice he prefers because he feels there’s no need for anybody to suffer. He’s probably the most flexible, compassionate guy you’ll ever deal with. He’s authorized me to tell you to come in.

Personally, he’d like to give you the examination for free, but he can’t because of professional constraints. So, for you, he’ll work out any kind of arrangement it takes to bring you in. He’s also told me to tell you right now he’s cleared to make an appointment for you.” If these salespeople make $20,000 over six months, you can’t resent them for it. Scott: I never resented paying people for doing this, and I feel it would be fertilizing the field. Jay: Most people want to go outside. There’s an old saying in the mail order business that your own list is your best list. Most people don’t work it. They want to go outside and spend a fortune to bring in a customer. One letter I would strongly recommend would go to patients for the purpose of generating referrals. It could read as follows: “I’m writing to alert you to a situation. Over the years, I’ve gotten to know you pretty well. We’ve always given preferential service to referrals provided by preferred customers such as yourself. Frankly, I may have to seriously consider ceasing this service altogether. Before I make my final decision, however, I thought we’d offer you this courtesy one more time. For a limited time only, to demonstrate the appreciation we have for you as a patient, we’ll still give preferential treatment—including a reduced price—to any referral you provide.” You have to think about how you want to craft your letter. Offering treatment for half price doesn’t sound as dynamic as saying, “I’ll pay for half of your examination.” When somebody comes to your office for the first time, do you have a sequence of letters that you send out afterwards? Scott: We have them available, but we have never used them. Jay: Let me show you another approach that’s great. After the first visit, you can take two different angles—one for people who had nothing wrong and another for people who need additional work. Tell the first set of patients, “I’m delighted that you had such a perfect dental examination. I just want to tell you that you are very lucky, and I hope you continue to take such great care of your teeth. To ensure your continued dental health, I would like to see you every six months.” Now, if somebody has something wrong, say, “I’m sorry we uncovered those problems in your dental examination. Actually, though, it could have been much worse. To ensure your future dental health, I want you to come back in two weeks and let me take care of what we found.” Basically, reassure them. If you can do that, it will require a little more effort, and it’s going to cost you $5,000 a year. But, believe me, that person will remember your service. If you look at the reasons why people don’t come back, and address these reasons in your sales approach, you own these clients for life. It’s fun to care, and it’s really exciting to see how much you can do. Caring is the most overlooked, under-acknowledged strategy. In your case, I would set up a series of letters and calls. If your front office staff won’t do it, then hire people to do it. It’s simple stuff, i.e., some combination of letters and calls and a script that goes along with it. When that patient leaves your office, he or she needs to be followed up by a very personal, caring letter or phone call. It’s very simple and it’s boringly mechanical, but if you do it diligently, you won’t believe the results. Scott: Well, most people are trained to think that you have to play a role to get certain kinds of clients. For one thing, I don’t get as many children to come in as I used to. Jay: It’s interesting that most people don’t use any intimacy in their marketing approaches. You could say to your clients, “I was talking the other day to a marketing consultant about the irony of how people are trained to take their kids to doctors with fancy titles, such as orthodontists, because somehow they think they’re more skilled. These professionals are quite often no more skilled than regular dentists. Yet, you get in a quandary because your child outgrows his or her need for such an expert, and you don’t know where to take them.

“One of the reasons I became a dentist is because it’s a challenge to acclimate a child, adolescent, or teenager to a procedure without hurting them. I’m just telling you this because you have young children. I want you to feel assured that we welcome any and all of your children to our office. I love children and it’s a challenge for me to treat them. As a courtesy to you, I’ll pay for all but $5 of your child’s first examination. Talk with your child about visiting us, and give us a call when you’re ready to make an appointment.” Try this approach with your clients. You’ve got to tell them the reasons why they should see you— that orthodontists are a lot more expensive, it’s impossible to get in to see them, etc. Play off these reasons and tell them, “If you have a concern and have contemplated making a change to a different dentist, consider giving us a call. Some of our best work is in orthodontia and in saving teeth that have been hurt in accidents. I’m concerned about your child’s needs and appearance. At least call and talk to us—at no charge to you, of course. I will be glad to personally talk to you about what we can do. I’ll explain any complicated procedures you don’t understand, outline the benefits that our service can provide, and recommend the specific approach I think will work best for you and your children.” What do you think your Unique Selling Proposition is? Scott: At one time I thought it would be that I have done a lot of cost-effective treatments. Jay: You need a preface that uniquely captures and makes a promise that is more appealing than all of your competitors. Scott: How about, “Stop the high cost of dentistry.” Jay: Are your prices very modest? Scott: They’re pretty modest. Jay: How about something like, “A quality dentist who really cares.” Try using words that people will notice, such as “kind” and “gentle.” Scott: Great! Thanks. *

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To increase your profits, you don’t have to step out and spend huge sums of money to attract new customers. Instead, maximize your customer database. Take the names you haven’t given service to in recent years and experiment with different approaches to pull them in. The money you spend here will accrue to your advantage in the years ahead. Intimacy is the key ingredient to getting customer response. In fact, it is the most overlooked, underacknowledged strategy around. Build caring into all of your promotional material, from personal letters to phone calls to your Unique Selling Proposition. For example, train your sales people to approach customers with warm, personal language. In your sales letters, use words that build empathy, such as “caring,” “kind,” and “gentle.” If you do this diligently over time, you can achieve long-term customer loyalty and tremendous profits.

Optometry Harold has had an optometry clinic for ten years, and through the use of direct marketing has made it successful. But his recently opened second clinic, which is in a wealthier community, hasn’t been getting as much business as he’d hoped it would. The new facility is barely breaking even. In this consultation, I showed him how to use direct mailing more effectively than he’d used it before. For one thing, I showed him several ways to greatly increase the number of relevant mailing lists available to him. For example, related businesses—in his case fashion retailers—can make their lists available on a

host basis, and can even endorse his services. (I also gave Harold a number of other ways to use these host relationships.) Once you have a list, getting the people to respond is the next step, and I showed Harold some techniques of direct mailing that could be worth a fortune to you. I told Harold about the “assumptive letter” and various other approaches—techniques that probably apply to your business. I also told him how to use direct mailing to keep customers coming back over the months and years for return business. In Harold’s field, the initial visit brings only a small amount of the potential profit from a customer; it’s when the customer replaces lenses and frames or buys extra ones that the marketing investment pays off. This principle, the back end, applies to almost every business there is. *

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Jay: In your older clinic, when you do direct mail, how do you do it? Do you insert it in somebody else’s packet or do you mail it yourself? Harold: Insert it in somebody else’s packet. Jay: When you do it, can you see visibly an immediate profit? How much do you spend in a given month or week on the mailing? Harold: Approximately $2500 a month between the various mailers that we do. We track each group of 10,000 units as the coupons come back. The direct mail comes in clusters of 10,000. Jay: When you do 10,000, then, you’re spending $250. Harold: Actually, it varies between $260 to $300, depending. Jay: On that $300 investment what will typically emanate? Harold: I would gross at least $900 to $1000 in business. Jay: So, three times your investment. What does that $900 cost you to fulfill? Harold: Somewhat less than one-third. Jay: So, really, you double your money. Harold: That is correct. If we don’t allow for time pressure at all. Jay: And that also doesn’t factor in the residual value of the customer. Harold: That’s correct. There is a tremendous value in that. Jay: Tell me a little bit about the residual value of a customer. What does a customer typically comes in for? Take all the people who come in the door, and put them into categories for me. Harold: O.K.. About one-fourth come in for an exam only, which is kind of an irritant but a necessary evil. Jay: What do you charge for an exam? Harold: $25-$35 depending on the promotion and the area. Jay: That isn’t very profitable is it?

Harold: No, because some of that 25% need an exam only. They don’t have a prescription and they have never had an exam and they see it as an opportunity. Some of them will take the prescription and run to the cheapest place they can to have it filled. Another 25% will have their exam and order one or more pairs of glasses from us, which is where the profit begins to come in because the ordering and processing of glasses doesn’t involve any significant amount of my time. Jay: Also, you have some very interesting incentives to multiple purchases, right? Harold: Right. Jay: So, does the average person order more than one pair of glasses? Harold: The average would, yes. A lot order only one pair, but you work on upgrades and you work on second or even third pairs, and you can get them sometimes. Jay: So the person comes, gets their eyes examined, 25% walk away and you never see them again. Harold: 25% walk away. We may see them one or more years down the road for another exam but more often... Jay: Do you, in fact, solicit them on a regular basis to come back? Harold: Yes. We give them a little card. Jay: And what does it say? Harold: Real standard, typical, not particularly well designed or laid out, I suppose. Jay: It’s important that you set up a standard re-solicitation for whenever someone should have their eyes examined, and it shouldn’t just be a little card, in my opinion. Do you have a letter-quality computer? Harold: No. Jay: You can get somebody to print it for you. You should experiment. A neat letter, seemingly personalized, from you to somebody on why they should get re-examined. Give the reasons: “Eyesight can improve, it can get worse, or it can stay the same. If it’s one of the first two scenarios, then to have the clarity of vision to get the most out of every hour that your eyes are open, Mr. Smith—and it would seem that since you’ve already invested, you want to get the most out of them—it’s grievously unnecessary for you to be squinting or for you to have strained eyes or to not see everything clearly or to have trouble at night. It will take a whopping 45 minutes and since you are one of our valued customers—you know, or maybe you didn’t know—we want to give you a $25 rate to come back. The best thing in the world would be that you don’t need a new prescription, but so many of our customers find that for fashion purposes, they love to upgrade or change frames. If you have been thinking about it and putting it off, this is a wonderful way to kill two birds with one stone.” Plant the seed. I think you’ll be very surprised at the profound yield that will effect. Maybe that isn’t the right letter, so you want to try two, three, or four different experimental letters to different segments of your 4,000 or 1,000 named customers. You might get 10% of them. Let me ask you, how many exams do you do a year? Harold: Around 1,300 or 1,400. Jay: Out of the 1,300, how many would be first-time customers and how many would be repeats? Harold: Probably approaching 40-50%—about half and half, which is normal for an established practice.

Jay: My experience is that if you start setting them up in an organized, structured program, you’ll get a really exciting increase in repeats. All you do is start sending off letters explaining the value of what you offer. You’ve got to educate them; you’ve got to make a neat proposition. People need a rationale, a reason, for making emotional decisions. For example, you might say to them: “When you go to dinner in an elegant restaurant, you don’t wear your jeans. Conversely, when you go out shopping at the mall on Saturday, you don’t wear your tuxedo. A lot of people don’t realize that having different glasses is also a matter of style.” Instead of the “first pair, second pair, third pair” concept, you might experiment in letter form to your past customers with the concept of “formal, casual, fun-wear.” People come in, they get their eyes examined. A finite percentage of them go away without buying, and for those people, I’m going to suggest a strategy. You do or don’t have a computer? Harold: Not yet. Could I really use one? Jay: I think you should have one. The strategy I suggest is this: put your people in different substratas. Write some wonderful letters based on different scenarios. For example, somebody gets their eyes examined and needs glasses, but doesn’t get them from you for whatever reason. You should have time sequences: 30 days after they came, a letter goes out to them, 6 months later a second letter goes out, etc. Each substrata in your computer is ticked automatically, so you know when to send them letter A, B, C, D, according to their category. Try different letters in each category because I don’t know which one or ones will work the best and which ones won’t. The marketplace will tell you, when you experiment. The first letter might say, “Dear Mr. Smith, It’s been 30 days and I was concerned when you didn’t instruct us to prepare your lenses”—or contacts or frames—”when you were in our office, because I know with far-sightedness”—you can have it categorized farsightedness, nearsightedness—”you’re going to have problems with eyestrain, fatigue, and irritability; you’re not going to see things as well; you’re going to have trouble at night. So I hope, though we haven’t heard from you, that you would want someone to take care of your vision. I so much want you to come to us that we’ll make you an offer that is, I hope, irresistible. We’re making it because we don’t want you to be miserable and we don’t want you to be vision impaired. If you come in within the next 30 days or the next week”— you experiment with different time inducements—”I’ll make up a pair of glasses or contacts and give you a 25% discount. I sense that maybe price is bothering you, and we don’t want price to be the detractor from allowing you to have perfect vision.” Of course, he or she could be removed from the non-converting category to a different one in your computer if they purchase. But if nothing has happened, 6 or 9 or 12 months later another letter goes out that says, “Mr Smith, it’s been a year since we prescribed lenses for you, and we haven’t heard from you, so I’m presuming you went somewhere else and got yourself fitted with lenses or frames or contacts— because I hope you haven’t put off getting glasses this long. In either case, though, you may be interested to know that vision isn’t necessarily constant. Particularly when you start having vision impairment, it’s not uncommon for it to change every year. Normally it gets progressively worse, sometimes it actually gets better depending on a lot of factors, maybe changes in your environment, fatigue, and the way you use your eyes. Now that you’re probably wearing glasses, it’s very, very important to have your vision reexamined at least once every 12 months, because if your vision changes you have the same problem, but it’s even more complicated than before. We really want to help, so I’ll extend to you the same offer I made to you about 6 months ago. That is, we’ll be delighted to re-examine your eyes for X, and if you’re interested, etc.” Don’t give up on them prematurely when you do a mailing. As long as the mailing pays off, keep doing it. Harold: Good. The other half of the responders to the initial coupons in our mailings are the contact lens bids.

Jay: And what do they want? Harold: Well, they buy contact lenses and have them fitted, at fees anywhere from $79 to $149, depending on if it’s daily wear or extended wear. I’d view that almost as a loss in terms of time, but this is the type of person who needs more frequent follow-up care, who isn’t likely to respond to letters he gets from somebody else. Jay: That’s a very good point. How frequently do they re-purchase? Harold: I would say that about once a year, on the average, they examine a new pair of lenses. Some go a little longer, but some are going to lose lenses in between. Just the replacement of lenses, which is taken care of primarily by my staff, becomes very profitable in terms of time. Jay: You ran a full-page contact lens ad in a TV magazine. It says “Free Exam” at the top and “we’ll turn your brown eyes blue.” It mentions daily wear and 30-day extended wear. Of the people responding to that ad, how many avail themselves of each one of the categories? Do you experiment to see which ones contribute to which? Harold: We’re not running that any more. It was not profitable. Jay: The thing is, you had five separate offers melted together. Of the five offers, you should keep track of how they hold their own, and what the contribution is for each category you promote. Harold: I see. Jay: Do you get more business from glasses or contact lenses? Harold: In general, probably 60% of the revenue comes from contact lenses, though servicing the lenses takes 75% to 80% of our time. Jay: So the first visit of a contact lens customer is not profitable, but the repeat is a piece of cake, right? Harold: Right, whereas with the eyeglass exams, the revenue is somewhat less, but it requires much less time. It’s much more profitable up front and the repeat is less certain. It’s good, but it’s less certain. Jay: Now here’s another angle to think about. Do you have a lot of designer sort of stuff? Really neat looking frames? Harold: In our new store, we’ve upgraded quite significantly from when we took it over, and we have some really nice stuff. In our older one, the street we’re on divides the town between the half-million dollar homes on one side and apartments and condos with Medicare patients and fixed income people on the other side. So in that clinic we carry more of a mix of frames. Jay: Do you draw from a very close or a wide proximity? Harold: Very wide. Jay; And most of this emanates from your direct mail, the kind where you insert it with someone else’s pack. Harold: Right. Jay: That’s very interesting. The most important point I’ll make to you is that your own list is your best list and if you don’t work the living daylights out of it on a frequent nurturing basis, you’re allowing probably—with the size of your combined practice—$100,000 worth of profit to stay on the table.

Harold: After just reading over the materials you sent, I also had my new clinic’s manager read them, and we began to discuss ways to work the back-end. Jay: It’s so important. The first contact with a customer may be slightly profitable, may break even, or may lose; the only way to get your advertising investment back is through return sales and services. To keep them returning, though, people need to be led, given reasons, and given irresistible propositions. I would start experimenting with those 4,000. They should get a professional-looking letter from you which says, for example, “John Schmidlapper, 123 Main Street, It’s been a long time since you replaced the frames for your glasses, John. I was talking to Cheryl, the stylist in our shop, the other day and your name came up. We were talking about how we hadn’t seen you in a long time and thought of you because the most incredible pair of frames came in that we thought would be perfect for you. It’s a really hot pair, and I don’t know if you know but a lot of people view frames the same way they view clothing. There’s formal attire; there’s casual. For preferred customers we have a standard offer—if you buy the first pair at X, the second pair is Y, the third pair is Z, and we’ve got some incredible designer glasses, really stylish and tasteful and a couple of them are outlandish and I think it would be fun for you to come in and take a look. And while you are here, you should have your eyes examined.” Don’t you think that kind of letter might be interesting? Harold: Yes. Jay: Also, it’s paying it’s own way. Harold: Right. Jay: Each letter should make a specific proposition and provide a charmingly humanized education. It gives them a little education, but the essence of it should be conceived as your concern for them, and should be very understated and shouldn’t be hard sell. Here’s another idea, which might be audacious. You should keep experimenting, mailing to your list as many times as it pays off. Mail different kinds of letters every 3 weeks, or every 12 weeks, or every week if they work. There’s no such thing as overkill. All you do is pull names out of the file. For example, it’s possible—you could experiment—that someone who just came in might come back for something else. To interest them, you might write a letter about the frame of the month (or the quarter) club. Talk about how “everybody likes to get their frames changed, so we’re seeing if there are enough people interested so that we can buy advantageously every quarter. We’ll buy the most updated frames and we’ll set them for you.” Write it with a charming, self-effacing manner, to communicate to the customers at the same time. You try it on a couple hundred people, where it’s just enough of an indicative cross section. If it doesn’t work, you’re down a few hundred dollars; if it works, you have a 100 people that every quarter buy 1 or 2 pairs of frames. And it’s possible. My former wife probably had $500 of prescription and non-prescription sunglasses and 12 different kinds of contact lenses. There are those people. You should segregate those people out and those people should get special treatment because those are your big-hitter repeat buyers and you should deal with them in a separate manner. Something else very interesting: do neat things for your clients. You have 4,000 people and it would be very interesting if you sent them something really useful. People think when they start marketing, “How can I get my product to be more important to the customer?” But they’re missing a very important point. If you can make the customer’s life more fulfilled, it brings their appreciation, and accrues for you an inclination on their part, a desire to reciprocate for some service you’ve done them. With a lot of my ongoing clients, I get them to send their customers or prospects items that have a much broader scope. For example, let’s say there’s a really neat book out called Eat to Win or Psychology for Success or just a fun novel or something. I’ll have them buy a hundred or 5,000 copies at an

advantageous price and have them send them out to all their customers with a cover letter saying, “I don’t know if you’re like me, but I’m always on the run, I’m missing meals, and I was always being sluggish or irritable and I read this book and it changed my life. I started eating regularly and I started feeling great. With renewed vitality, my energy level is up about five times, my eyes seem to glisten, my skin seems to glow, I get up at 7 and I don’t go to bed until 12. I don’t know if it will help you, but it helped me so much that I’ll bet you would really like to have a copy. So I bought you one. I hope you enjoy it. If you don’t, no problem, but if you do, why don’t you pass it on to someone else—and by the way, I haven’t seen you in a long time and it might be wise to pick up the phone and give us a call and schedule an examination.” A change of pace, that’s very powerful stuff. Harold: That would be very interesting. Jay: It’s so unexpected. You’re competing with a cacophony of all the commercials on TV, all the ads in the newspapers. You want to distinguish yourself in a couple of different ways. You want to serve them more and you want them to believe that you don’t just want their darn money; you care about them. You care about them in a professional sense; you care about them in a paternal sense. The more you get that feeling conveyed, the better off you are. Again, you can have a number of wonderful letters. You’ll be planting seeds...programming them. Once you experiment with enough letters to know just what you can do with a customer at a certain progression in their life cycle with you, then all of a sudden you can project your cash flow. If you invest on the side—let’s say you have a note due or a second mortgage—you can project by knowing that you can do a special kind of mailing. Once you know that when you do a mailing it’s worth X and for every time you bring in 100 new customers you accrue $50,000 in profit in the next 18 months, then you can depend on your cash flow. By the way, did I talk about marginal net worth in that material I sent you? Harold: Yes, you did. Jay: Most people don’t understand that. It’s powerful, isn’t it? Harold: Exactly. Jay: And once you realize, for example, that you might only break even or lose $5 to bring in a customer now, but that you’ll be accruing $500 six months later, then as long as you have the cash flow to fund it, you should be running ads to solicit customers all day long. People don’t understand that. Just by that one piece of knowledge, you have such an advantage over competitors, it’s unbelievable. I’ve got a lot of clients experimenting. Some experiments work really well and some of them don’t. Everything I’ll tell you is predicated on empirical success, but there’s no indication that what worked in Scenario A will work for you. Every situation is kaleidoscopically unique, so when I give you a recommendation, an advisory, an admonishment, be clearly advised that you’ve got to test it because I don’t know what will work relative to your business. Test the minimum number that’s valid. Test 500 first class or test 1,000 or test 10,000 inserts. One thing you should definitely try testing is an assumptive letter. Most people send letters that are questions, but the assumptive letter assumes that the person reading has the problem. If, for example, you know that 1 out of every 2 people has a vision problem and 8 out of 10 wear glasses, and you get a list of all the residents in a geographic area by name, send a letter to them saying “Mr. Poindexter, I know you wear glasses and I know you haven’t had them re-evaluated for a long time and you’re probably wearing old frames that you would like to update. I’m going to make you a proposition that is irresistible. If you’ll come in to my shop on Monday or Wednesday, I will give you (a) a $50 examination for $5 or $10, (b) your choice of a $200 designer frame for $150.” The only person who will respond is a person who is a prospect.

Or send a letter saying “I know you wear glasses and I know you’re fashion conscious. You’ve probably been thinking about upgrading your frames.” Admittedly, people who haven’t thought about it will throw the letter away, but that’s not who you’re writing to anyhow. It’s a very powerful approach, don’t you think? Harold: It makes a lot of sense. Jay: Try 1,000 letters. If it costs you $500, it’s probably not going to lose you money, and it might only break even. And keep in mind, you should always re-evaluate. For example, right now, you’re grossing 3 times your money every time you send an insert. But you might find that you’re better off sending an insert every week even if you just break even on it, because you’re accruing back-end. Harold: Basically, I’ve mailed to every area, but tend to only mail maybe 4 or 5 times a year. Jay: Another suggestion. There are different hot buttons that stimulate different people. This especially applies to headlines. One headline appeals to a completely different focal perspective than another. You should experiment with those 10,000. Don’t just throw the same ad at all of them, but try 3 different ads to 3,000, 3,000, 3,000. I think you might be very surprised to take a different piece, buy 2 ads and make them on different focal planes and experiment. If it works, you want to see how high is high so you put another one in there and say “$500 designer frames, only $150 while they last” or something like that. Start tracking it and if that works, you start experimenting. Are you starting to get some ideas? Harold: Yes, we tried that briefly about a year or so ago but I’m not sure if the second piece was appealing enough. Jay: Put some real thought in the headlines: how many different ways can you articulate? Just because you do it one time and it doesn’t work, don’t give up on it. I would do at least 3 different experiments. I would take a 10,000 pack and try 3 different control ads and see if you can gauge which ones produce. I’d try that in one segment, and in another segment, I’d run the same ad as your lead ad in all 10,000. What if you found that every time you did that you tripled your yield? Think about what that would mean to your bottom line. Another one of the big overlooked areas that I’ve made people fortunes with is finding host relationships. Hosts can refer business to them, and can do mailings to people on their lists. Does your new store have some classy frames? Harold: Yes, sure. Jay: O.K.. Since frames are an extension of fashion, it would seem to me that you could get a list of all the customers of all the hot retail fashion stores and mail under the stores’ auspices, giving the stores a mailing fee. See what I’m saying? Harold: I see what you’re saying, and that would be no problem. Jay: Let’s say you go to 10 hot stores—womens, mens, shoes, clothes, it doesn’t matter, restaurants—and you write for them a letter that they agree to sign and let you print on their letterhead or a mocked version of their letterhead. They agree for you to send to their customer list if you only mail to them once and if you keep all the names on the list in confidence. The letter talks about you and, it talks about fashion. “We’re writing to tell you that Dr. Harold Smith has some really hot designer eyewear and he can do some really neat things like turning your brown eyes blue. We haven’t seen a selection like his. We’re encouraging you to go in and, in fact, as a customer of our store, we have arranged with the doctor a special bonus: when you buy this (high ticket item), they’ll

give you Anne Klein frames free.” Because you’re going to go to people who are used to spending $500 and more, the possibilities are pretty awesome. Harold: That’s a terrific idea, and I know exactly who I’m going to go to. Jay: O.K., but if it works with one, it can work everywhere. The idea that you go to them with is, “Look, I can probably make you, Mr. Retailer, $1,000 to $5,000 that will cost you nothing and it will not supplant a dime of the business you already have. I’ll do everything turnkey, you approve it, all the customers will be tracked and correlated, and you’ll get X percent of the business not only on the first sale, but I’ll make it annuity as long as you let me mail it once a year. It’s like insurance, they’ll keep coming back and coming back, and if you want I’ll put a little display in your store.” You sell them, but remember you’ve got to reduce it down, when you pitch it, to specifics. Harold: Great. Jay: It’s a very powerful idea, and it’s so overlooked, it’s incredible. If they won’t give you the endorsements, just get the names of their customers and give them a lesser amount. Warrant them that they can see the letter in advance, so they know what’s in it, and that all the names will be kept in the strictest confidence. This idea, very frankly Harold, is probably worth a fortune if you can dispatch it right. Harold: I see that. That’s a terrific idea! Jay: Now here’s another idea. Anything you do as a by-product of what I teach you that goes well, think of documenting it and selling licenses on the techniques to your colleagues outside of your marketing area. If what emanates from this increases your profits by $150,000 a year, you can’t tell me that you can’t get 100 or 200 opticians to pay a percentage for you to sell them the actual procedures. Don’t discount that possibility because there’s got to be a ton more like you. Harold: That’s very interesting. Jay: Another question: where else do you run ads besides the throw-aways? For example, look at premium magazines and try renting their mailing lists. It may cost a premium, but once you get the people who subscribe to them, you could make it up many times over. Also, what if you did a deal with retailers where you had special days where they could buy all their customers free examinations that day? Could you actually set up an operation? Is the equipment movable? Harold: No. Jay: What if you did this. What if you had designer frames you lent to retailers on the weekend, or you made up samples, or you sold it to them for cost if they wore it. What if you went to all the retail stores and said, “For anybody who wears glasses and wants designer frames, as long as you guys will make us your official optometrist, we’ll do your glasses for you at cost.” Or every week you give them a different pair. There are a lot of fun things you can do. Harold: Let’s talk about the concept of the Unique Selling Proposition. I think I may be a bit unclear in my own mind on whether or not the advertising... Jay: What this is conveying to me is that your Unique Selling Proposition is that you pack value on a quality service. Are there other ways besides turning your brown eyes blue, are there green? Harold: Brown eyes, blue, green, or aqua. Jay: That’s a good headline by the way. Does it work well?

Harold: In the 4-1/2 months we have been in our more wealthy town, we have done twice as many opaque colored lens fittings than we have ever done in the older clinic. It’s not that we didn’t advertise the eye color changes in the other area. Matter of fact, we eventually stopped using the mailer, because we just didn’t get any interest there. And yet in the new one, people are coming in and asking for it. Jay: So that might be a really interesting ad to put in a premium magazine. You might want to experiment and see if you can crystallize it differently. It looks to me like what you’re doing is purveying quality in a price-advantageous manner. Harold: That’s what I want. Jay: Analyze and try your dardnest. When you start playing with the numbers and defining what you have learned—when you can say that for 100 people coming in the door, 50 come back within a year, and 25 buy at least 3 pairs—when you can quantify it, it will have an impact on your attitude towards advertising. You might say, “Hey, I can spend $25,000 a month until I get my $500,000 because the cost of sales is so miniscule, just a letter.” It’s a shame if you don’t have 12 or 15 experimental letters started. Find which ones work and you have an ongoing system. Get a computer and don’t cut corners. What if on one issue of this mailing where you did the 10,000 mailings you provided them with four-color pictures of all the frames, or four- color pictures of the girl before and after with the brown eyes? It costs 3 times as much, but that’s only relevant if it doesn’t pull 3 times better. Harold: We did on the “brown eyes, blue.” Jay: How did it do? Harold: Not so well, I was really surprised. Jay: Maybe you erred in the execution. Harold: It’s possible. It was besides the regular mailer. Jay: Aside from the endorsement or at least getting the names, think also about anybody else who does mailings to their customers that you can insert in. What if you went to women’s groups, and did eyeglasses style shows at their luncheons? As you perfect things, you always have to test. Don’t get cocky. The biggest mistake I see people make is they don’t sustain and perpetuate. Don’t be content with anything. For a little more effort you can make a mailing an ongoing thing. You may find you can mail to your customer base ten times a year and every time you mail them you make $5,000. Be interesting, wouldn’t it? Harold: Indeed. Thank you for your help. *

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If you direct mail, think about ways of increasing your list size through relationships with other businesses whose customers are people you think will respond to your product. Think also of how to use a series of mailings to keep former customers—or even prospects who didn’t buy—coming in for further services and sales. Think about whether a computerized system (putting prospects into different categories based on frequency, type of purchase, average dollar amount, etc.) would be useful for your business. Try writing direct mailings in a charming, self-effacing manner. The tone (not only the content) should convey to the reader that you are interested in his or her well-being. It should not be hard-sell, and it shouldn’t make readers feel that you only want their money.

Colon and Rectal Surgery Sam, a surgeon specializing in colon and rectal surgery, wanted to increase his practice by about 50%. To accomplish that, I first suggested ways of increasing the number of referrals from other doctors. Second, I suggested ways of making his presence known to the public. Third, I detailed how to get mailing lists, and how to find the lists that will be most responsive to his product. This information can be a goldmine for any business. Finally, some who do need his services are reluctant to get help, and in his publicity he can address their fears. In fact, one approach I recommended, which has been very successful, is to advertise on when and how to avoid using one’s services (in this case, hemorrhoid surgery). In all of these approaches, Sam will be helping people by providing information, and that in itself will increase his patient load. *

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Jay: After a preliminary office call, how many patients go on to surgery? Do you have a way of quantifying that or can you just approximate for me? Sam: It would be 1 out of 10 or 20 that goes into major surgery. The ones that don’t might generate a couple of hundred dollars in fees. Jay: If someone has a problem in the colon or rectal area, is it recurrent? Do they seem to come back forever, or is it just a one-shot deal? Sam: Usually one-shot. It’s pretty much either treating them without surgery and getting them well in a month or two, or (in the 1 out of 10 or 20) doing surgery and following them for a month or two. But there aren’t very many that come back year after year. Jay: So, right now your patient base emanates from a Yellow Pages ad which you don’t think generates very much, and from promotion which generates, what, very little or a lot? Sam: I would say moderate. Jay: And the bulk emanates from colleague or patient referral. Sam: The majority from colleague referral and some from patient referral. Jay: Let’s take each category. First, colleague referral. In your town, there must be, what, 500 or 1000 doctors? Sam: There are probably about 1000 doctors, 110 general surgeons, and about 6 colon-rectal surgeons. Jay: So a general surgeon could in fact do what you do. Sam: Yes. I do some general surgery too. Jay: So, a general surgeon is your direct competition. Out of 1,000 doctors, 900 do not do general surgery. Sam: Right. Jay: Would you know who those 900 are?

Sam: Yes. Jay: Out of the 900, what rapport, what communication, what public relations efforts or referral nurturing have you effected with them? Sam: Well, I haven’t done anything to try to get in touch with all of them. It’s mostly a matter of meeting somebody and introducing yourself and maybe asking somebody in the medical field to see one of my patients, and they ask me to see one of their patients. You give them good follow-up and good service when they do send somebody. Things like that. Jay: If a physician wants an opinion, would they call one another and do that gratis? Sam: We normally charge the patient for consultation. It’s not really a free type of thing. Jay: I saw the article you ran as an advertisement. Sam: I had three articles similar to that. The first two ran as an insert and were sent to the whole area. Jay: The tear sheet I’m looking at—on the subject of hemorrhoid surgery—is that the insert? Sam: Yes. Jay: How did it do? Sam: A few people called up to make appointments. Jay: What did it cost you to run that ad? Sam: $1500 each time. Jay: And you couldn’t tell what came of it. Sam: Well, you get a few patients that come in and say that they saw your article in the paper. Today, a lady came in who said she saw my article about skin cancer in the paper. But it hasn’t been an overwhelming response. Jay: In most of your articles, you don’t really direct people to act. Sam: No. Jay: Is there any stigma or negativity vis-a-vis the professional implications of advertising? What are the rigors imposed upon you ethically, legally, etc.? Sam: Well, there’s no legal or ethical restriction. For example, an ophthalmologist in town actually had television ads with well-known people endorsing him for doing cataract surgery. It’s looked upon as being strange, but nobody’s really gotten upset about it. Jay: Do they work, those ads? I’ve seen the equivalent, so I assume they must be doing well. Sam: Well, they’re doing a lot of cataract surgery, so the ads must be helping them some. Jay: I have a philosophy: it takes promoting yourself or expending the money to reach 100,000 or 300,000 people in order to find the 1,000 who can most avail themselves of your services. By rendering your service you do a noble benefit to them, and sometimes advertising and marketing is the only way to identify the people you can help.

The problem is doing it cost-effectively. Is most of what you want to do in the area of colon/rectal or are you interested in other types of surgery? Sam: Well, I’m interested in all types of surgery, but I feel that the colon/rectal is the area most susceptible to being marketed, because of the laser hemorrhoid surgery, and other laser surgery around the rectal area. Jay: How does its cost compare to conventional surgery and cauterization? Sam: The same, as far as my fee is concerned. The only difference is that the hospital is apt to charge the patient several hundred dollars extra for use of the equipment. Jay: But you indicated that it can be done as an outpatient operation. Sam: Right. Jay: So you actually save them money, don’t you? Even if it costs more for the equipment, they don’t have to pay day rates. Sam: That’s right. Jay: That might be a thematic approach. Let’s stereotype, if we can, the prospects for hemorrhoid surgery. Do they fall into demographic groups, or is it everybody? Sam: I’d say almost anybody between the ages of 30 and 70. Jay: So older people do not necessarily have a higher probability. Sam: Right. Jay: Right now, how many doctors refer to you? Sam: Well, I’d say maybe 10 to 15 refer occasionally. Jay: Backtrack for me the origin of their relationships with you. Sam: Most of it is basically what I said earlier, meeting them and getting to know them. Some of them reciprocate back and forth for different problems in their field. Jay: What if you communicate by letter to colleagues and offer them useful information? If you sent a personalized letter to non-surgeon physicians around town, with valuable information that maybe they weren’t aware of, but would help them with patients who had hemorrhoidal symptoms, would that accrue benefit to you? Sam: I think it would. Jay: But you’ve never done that. And is it easy to compile a list of all those physicians? Sam: Yes. Jay: Do you have a laser computer printer in your office? Sam: No, I don’t. Jay: But you can find somebody that does, it’s really not that expensive. Another thought about mailing to non-surgeon physicians with information on hemorrhoid surgery: most doctors write in medical terms

which I can’t understand, and the few times I’ve tried to read medical journals I couldn’t comprehend them either. Would a humanized letter, in plain English, be good for doctors, or would they pooh-pooh that? Sam: That’s hard to say. Jay: It would be very interesting to take the 900 non-surgeons in your area and break them into 2 or 3 groups and identify which group got what approach. Try 2 or 3 different letters or components on them. One group could get a humanized letter, another a more technical one. Also, send one taking the opposite approach from trying to solicit surgery, actually trying to avoid waste. You might use a headline saying, “When hemorrhoid surgery is totally unnecessary,” giving them a complete synopsis of when that might not be prudent to recommend, some alternatives to alleviate the pain and let it heal itself if it’s on the borderline, but giving them techniques that can help their patient unless it’s a real problem situation. Whenever I’ve gotten my clients to go to their customers or their prospects with ways to avoid using them if at all possible, that accrues great benefits. Sam: I understand the point you’re getting at and I think it would be possible to give them something like that. But you’ve got to be careful, when you give tips to doctors, that you don’t insult them. Jay: Do specialists ever put on mini-symposium seminars or some kind of instructive meetings for their colleagues, to try to give them more updated information on their specialty? Sam: Occasionally. Usually the format that’s used is hospital staff meetings, departmental meetings where somebody has some new techniques or some news. Mostly it tends to be in the areas of cardiovascular or antibiotics—things that nobody knows about. Jay: Of course, hemorrhoids are probably a more recurring area of discomfort and pain to more people than some of the other things. Sam: Right. Jay: Are you in good stead with most of the hospitals? Can you get a hospital to sponsor something for you if you financed it? Is that something that’s distasteful or is it do-able? Sam: I don’t know if you could interest doctors to come and hear about hemorrhoids, really. Jay: Then let me take a different approach. What if you put up the money, or you got the hospitals to put up the money and cooperate with you, to do a series of lectures for the public? Sam: That might be good. Jay: And since the hospitals are the beneficiaries too, and most of the hospitals have marketing funds, what if you got them to collaborate with you, under their auspices? The deal would be maybe a business transaction and the hospital would be the beneficiary and their facilities would be used by you. What if you had a seminar or a series of seminars every month? Try different ads, but get the hospitals to collaborate on financing preferably, or, if nothing else, just to lend you their credibility. You could do seminars for the masses on the subject of hemorrhoid surgery or how to avoid hemorrhoid surgery. You could experiment thematically with different approaches and see which ones engendered the most response. You will have to schedule it once every 3 or 4 or 5 weeks or months or whatever frequency makes economic sense. If you went to the hospital and said, here’s the deal, if you put up the seed money, we’ll try one, and if it works thereafter we’ll both match it. What if you got 4 or 5 specialists, who didn’t do conflicting surgery, to go together and do an interesting afternoon and do short courses for the public that are sponsored by the hospital, with everyone defraying the cost?

Sam: I think going to the public is probably going to be the most likely way to bill the hemorrhoid problem. Jay: I think you’re probably correct. The public knows when they’re miserable and the public is looking for relief, and what you are representing is a result. Advertising by and large should be designed to do the following. You should make a big promise in the headline. The headline is an ad for the ad. The promise should be of a great benefit or a resolution. The ad should be educational, it should give reasons why, it should have incredible validation, and as much specificity as you can give it. For example, “100% of the pain is relieved in case studies within 2 days,” and you give some information on that. Specificity is very powerful even if it’s an informational ad or an article-based ad. Also, remember that people need to be directed on what action to take. Most people are silently begging to be led. For example, “Patients should contact their physician or me for...” You might also talk about pain, because I think most people are scared to death about pain. You might write about how “When the examinations are done in the hands of a professional or specialist it’s virtually painless and it doesn’t have to be excruciating. They know how to examine you without irritating and provoking.” I think that’s very important. You may disagree with me, but I think a lot of people don’t even visit doctors because of fear. But if you can allay their fears and say “it’s virtually a painless procedure, and even the examination can be done with almost no discomfort whatsoever,” and explain it with compassion and gentleness. I think that’s also something you should incorporate. Using sub-headlines is very important in your ad, because a lot of people skim read in order to focus on the subject that comes closest to their interest and their problem. Different headlines and different themes equal different responses and different people. People are afraid of cost, they’re afraid of discomfort, they’re afraid of embarassment. If you can address all that in a very charming, educational manner, it would be very useful. I’m just trying to give you some fragmented criticisms. A question: out of 100% of any population at a given time, how many would be suffering from either hemorrhoidal problems or related symptoms? Sam: I don’t know if there are any statistics, but I would say a majority of adult Americans have some degree of hemorrhoids. Jay: What would happen if somebody got a letter saying, “Dear Mr. Smith, From time to time we all suffer pain of many different types,” and you outline the type of pain different people have. “Some people are afraid to confront it, some people think it’s just going to go away, some fear the worst but are terrified of finding out, some allow themselves to suffer the real and psychological misery of never knowing or never getting relief when many problems can be easily and painlessly resolved for them more often than not through non-surgical procedures. When surgery is necessary, it can be done with a minimum of pain and discomfort and at a very modest cost. “As a service to the public, we’ve set up an information department for people worried about such things,” and you indicate the things they are able to call in and get information about. “We have it staffed by a knowledgable information officer who can answer almost any question you want. We have material we can send you. I’m available to talk on the phone briefly if you need to, and if necessary we can schedule time for a preliminary office visit.” It’s very emphathetic and educational, and tells the general story but also focuses on the areas that you are most involved in. You can talk about allaying fears or dispelling misconceptions. For example, “People think that rectal problems are always hemorrhoids and always require surgery. That’s not true. 95% of the time they can be taken care of with a simple prescription, and you lose the pain and it never comes back. Another

misconception is that when hemorrhoids cannot be taken care of in that fashion, it’s painful and exorbitantly expensive, requiring debilitating surgery. Maybe in the old days that was so, but now there are such advances that the examination is painless.” Incorporate the kind of factual information you have in your article. Say, “I don’t know if this information is useful to you, but so many people in the community have misconceptions. We’re sending you this letter just because you might need the information, maybe not today but in the future, so you ought to keep it. If you ever have questions, doubts, or the need for information, please feel free to call. We have an information officer available.” Designate times. You can have some knowledgeable, personable, empathetic, and sensible nurse or somebody. That would be fascinating, don’t you think? Sam: Yes, definitely. Jay: And it costs very little. You can rent the names of individuals not by residence but by name. There are mailing services that do laser-printed letters that look personalized. You can experiment with 3 or 4 different approaches. Different focal points and different hot buttons: people’s fears, their motivations. For example, you can try offering a free examination as part of a research project you’re doing. You should never arbitrarily choose a certain marketing thrust to use for everybody, but should let the market tell you—through controlled experiments—what it will respond to the most and what will be the most profitable to you. Always in the letter direct them to some action even if it is the following: “Mr. Smith, if you or anyone in your family has problems that are disconcerting and you don’t know what to do, give us a call. If you want information, education on the subject, it’s available and there’s no charge or obligation. If you’re worried about things like hemorrhoids, and you’re afraid that it will be painful or embarassing, be assured it is not. In the hands of a specialist who understands it, examination is close to painless.” But tell them what to do. “Save the letter, write the number down and hopefully you’ll never need it, hopefully this letter covers subject matter that’s never been and never will be a concern to you. But if something disconcerting does occur, the frustration of uncertainty is unnecessary when the information is readily and freely available. Admittedly, we can’t be available to give information all the time, but we have certain times of the day and week when an information officer has been allocated as a public service. Call us then.” After you’ve tried 1,000 of those letters, then analyze what response you get not only just in calls, but in how many of those calls resulted in office appointments, and how many office appointments resulted in surgery. If you found that every time you spent $350 sending 1,000 letters off bulk rate to 1,000 heads of households, it resulted in 50 phone calls, and out of the 50 calls you got 10 actual scheduled first-time examinations at $65 apiece, then that $650 was actually a double return on your investment in the first 6 weeks. That would be an incredible return, but if out of those three people, one of them turns out to need a $3,000 surgery, that’s an enormous return. It may not happen, but it’s worth an experiment. Correspondingly, you might try a different letter to another 1,000 people. Say that you want to find out how much of an impediment pain is to getting people to take care of something like hemorrhoidal discomfort. So as part of a research project, you’re going to give 100 people who have the manifestations of the problem a first examination at no charge. You want it for your own research, to demonstrate that it can be done painlessly. See how many people come in from that. You’ll find through experimentation that one approach is going to outdo the other. Sam: I think these are very good ideas.

Jay: Now, something else we’ve done for people is set up a hot line and run little ads about it. Also, you could give seminars. What does a hospital make on a typical surgery? Sam: Probably a couple thousand would be their gross charges on an out-patient hemorrhoidal surgery. Jay: You go to a hospital and explain to them that you’d like them to put up two or three thousand dollars for an experimental test ad. You’ll write it subject to their editorial approval. It would for a be a very knowledge-based, non-threatening seminar under their auspices. It would be not so technical that it would be a turn-off, but something that’s related to hemorrhoid surgery. It could be on the latest developments, “the painless, cost-saving, time-reducing advantages of laser surgery for hemorrhoid problems and why it makes sense.” It will indicate in the ad the reasons why, and it will give them the educational background. You will have bulleted examples of the subjects that will be covered, and it will spotlight the implied endorsement of the hospital. They put up the money and depending on what emanates from it, you split back the reimbursement to them for advertising, so much per person. If it works, then you get them to cooperate 50/50 or 100% and you show them that they need only one surgery emanating from it to pay for the ad. Even if they don’t really make money, I think utilization of the equipment is what they’re looking for, isn’t it? I don’t know how they justify it, because it might not be a for-profit facility. I don’t know who you operate with, whether you do the HMO’s at all. You go to somebody and show them in dollars and cents what they can realize, what’s the minimum yield they need to make it economically feasible. You could run an ad in a Sunday paper. Maybe it costs $200 for a quarter page ad, an invitation to your seminar. To maximize it you might even do it over 2 or 3 different days and just experiment with it and see what happens. But what you also do is record the seminar and transcribe it and turn it into a neat little report and make that available if anyone’s interested. Run a little ad saying you have a complete report on hemorrhoid surgery, on whether it’s necessary or not, the alternatives, expenses, and that you give a complete analysis, free for the asking. Any time they ever come to your office, you give them that. And you can send copies off to all the 900 physicians who don’t do surgery, with a cover letter saying that “this was done with such and such hospital and a lot of people thought it was very clarifying. It explained things in lay terms, and you might enjoy reading it over.” And if they want you to send a copy to any of their patients, you’d be glad to do that if they’ll give you the names. Do hospitals ever market to their own past patients? Do they have their past patients on computer? Sam: They have them on computer, but I’ve never heard of them doing any marketing. Jay: It would be interesting if you could do letters under their auspices, inviting people who have had operations at that hospital to attend this seminar or get a copy of the transcript free. Remember, you’re better off in the experimental stages to do a small quantity and pay a premium, because if it doesn’t work, maybe it’s going to cost you 60 cents each to send a letter out. But if it works, then you’ll start sending it every week—5,000, 10,000 or 15,000 of them—and the cost is going to come down to 30 cents each. What you do is you find a device that works and is replicable. Then you can manipulate your marketing and your expenditures backwards towards your objectives. For example, say you need to fill the non-utilized time in your practice. If that means 20 more patients a week, once you find out that that requires mailing 6,000 letters a week, you can manipulate exactly what you need. Also, it will reach a point of diminishing necessity because it will generate referrals. It’s very exciting because if you spend $50,000 in 3 months, instead of mailing 5,000 pieces a week for the next couple of months, you mail 10,000 and you do double. It’s very manipulable. Every offer and every service that you purvey is so kaleidoscopically unique that you’ve got to experiment. You’ve got to experiment with thematic approaches, with headlines, with offers and propositions. You will find, through analytical experiments, that one approach will always do better than the other.

But there are different criteria. One approach might bring more phone calls, but not a lot of patients. One approach brings a lot more initial calls and patients, but not as many of the kind that evolve into surgical procedures. You’ll analyze and you’ll find some marketing approach that is a hybrid and brings in the best combination of front-end business for you. It’s so scientific and analytical that it’s funny. Sam: How do you go about getting in touch with the company that has the mailing list? Are they in the Yellow Pages? Jay: In the Yellow Pages, under advertising services, mailing lists, go to “mailing houses.” There are mailing list brokers. You go to a mailing house to find someone who can do computer letters and who knows how to do comp uter tapes and generate letters, or laser printed letters. Also, there’s a company called Standard Rate and Data Service in, I think, Skokie, Illinois, and they publish directories of all sorts of things, magazines and mailing lists. You can buy a copy of their directory. There are 2 of them—one is business and compiled lists and the other are consumer lists—but there are all the people who are in your locale by whatever delineation you want. You can be assertive and find all the lists that are available on the market, and you can do it by zip code, by age group, by professional and vocational delineation. It’s very, very exciting, the possibilities. For example, what if you found out that there are in your town 10,000 who bought a book by mail on something like hemorrhoid surgery, or if you got local people who subscribe to Prevention magazine. Wouldn’t you like to know who they are? If you mailed to them, you might find that those people were particularly responsive. There are all sorts of possibilities. SRDS sells a master directory that you could peruse at a well-equipped public library. Any mailing list broker should have one too, but it’s sort of fun to let your imagination go wild because there are all sorts of possibilities. You can rent different categories and overview them. For example, a certain kind of lifestyle might augur very well for that kind of problem. You can really rifle, you can get lists of all the homeowners by name; you can get any kind of delination you want. You can also get the list of the doctors if it’s not readily available. I would suggest you spend a day. And don’t just rent them, but ask a list broker who you feel you can trust to get you samples of the actual advertisement or mailing solicitation that was used to build that list. For example, if they bought a book about life-prolonging or avoiding cancer. Cancer is probably the big thing they want to avoid. There are certain newsletters on health. Anybody who subscribes to them and lives in a 100 mile radius is probably a perfect prospect for you. You might offer a different type of letter. “I recommend, for peace of mind, a fundamental examination.” The possibilities are there. When you understand the resources at your disposal, you can direct your business any way you want. I hope that I’ve provoked a lot of ideas that will gestate and converge in your mind in the next couple of weeks. Sam: I think you have. *

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How large is your mailing list? Think about whether you could use mailing list services and directories to expand your list and to find those people who will respond most to your product. Think also about whether providing educational information could increase referrals from professionals and from the public for your product or service. This strategy has applications for a lot of businesses other than the medical profession.

Commercial Real Estate Brokerage Duane, who worked for a large commercial real estate business, recently went out on his own in commercial real estate loans. But so far, he hasn’t generated much business. In this consultation, I worked on finding Duane’s Unique Selling Proposition—what he offers to the public that competitors don’t. (If you you don’t have a clearly articulated Unique Selling Proposition (USP), then you don’t have a marketing program.) I then showed Duane a plethora of methods for convincing the public of why they should come to him—by showing them, rather than just telling them, his USP. We covered so many approaches that almost any business person will find this transcript to be of immense value. *

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Jay: The forty deals you have in process right now—where did they emanate from? Duane: Primarily from calling up people I knew. Also, I’ve made a deal with this one real estate company in particular, one of the guys who was a real estate broker where I used to work. Jay: For a fee split? Duane: Yes. I said I would give him a third of the fee if he would give me business. Jay: Is that customary, or is it unusually enticing? Duane: I don’t think it’s too much. Jay: Will anyone share commissions? I’m wondering what your competitors do. Duane: Some do and some don’t. Jay: Some do openly, some do under the table. There’s nothing illegal about it, as long as it is acknowledged. As long as there is no regulatory or similar problems. Now, the 9-1/4% or the 9-1/2% loan rates that you’re offering to the public, are they price competitive? Duane: We had a problem with someone saying they could get a better rate than that. Jay: Okay, but you have the advantage that you can move and get a fast decision. Did you read the material that I sent you? Duane: Sure did. Jay: Did it give you any ideas? Duane: There were a few things it pointed out that I didn’t know. Jay: Sometimes it’s as simple as just a tiny little twist different. But the people that are running all these ads you sent me, are they generating business? You showed me the first issue. As a reader type ad or a direct response ad, does it work? Duane: I don’t know. I only saw it run once. Jay: You’re basically by yourself. Do you have secretarial help in your office?

Duane: My younger brother and I have a secretary. Jay: Among your competitors, who is comparable to you in size but doing very well, and how have they gotten there? Duane: Well, I don’t know. I mentioned one when I wrote to you. Jay: How do they operate? Duane: There are four men, one secretary, and that’s it, and they close $200 million a year. Jay: How do they get their business? Duane: They don’t advertise at all. The only thing I see is the little announcements in the real estate weekly or real estate magazine, “They closed the loan for this amount on this property for such and such a person with a New Jersey savings bank.” And that’s it. But I guess they have steady customers that they’ve built up. They’ve been in the business for over 30 years. Jay: Let’s focus on your Unique Selling Proposition for a minute. All things being equal, what is the advantage you think you would offer above and beyond your competition? Duane: Well, I think that most of the people that work those big operations are people with very little knowledge or experience and are just telephone canvassing. Then they have their big shots who just do the placing with the lenders. In other words, in my newest ad format I’m trying to stress construction, development site projects, conversions, something where you need a little knowledge of real estate and different ways of doing things. You know, most of these mortgage brokers, except for the top men of course, wouldn’t have a clue as to how to do what I do. Jay: Is putting the package together a lot of work? Duane: Yes, it is. Jay: And what does it cost, in hard dollars? Duane: It doesn’t cost much in hard dollars, maybe $20-$50 for photographs, material, and so forth, and maybe $100 for traveling. Jay: So, suppose you offered to put people’s packages together for them if they’d give you first shot at the deal—is that worth doing? I’m trying to find an advantage. Duane: You never give the person the package, because then they’ll just photocopy it and send it to the bank. Jay: So, do most people in your capacity do the packaging for them, or do they come to people like you with a package deal? Duane: Well, that’s the main part of the job. We pull the information out of them, which is difficult to do in many cases when you’re trying to get net worth statements, tax returns for the last 2 years, etc. But once you’ve got it out of them, then it’s easy to do loans for them in the future because you’ve got everything. Jay: You can keep it in on your computer, almost. Duane: It’s difficult pulling the stuff out of them. We’re putting a package together right now that comes close to an inch thick of material on one project, and has taken us quite a bit of time.

Jay: Like a month? Duane: No, I’m talking days, like 3 days. That’s why we don’t want to do little packages because it takes just as long to do them, but with much lower potential income. Jay: Right now, what do you forecast? I mean you’ve got 40 deals in process. How many of those do you think will come to close? Duane: Well, we’ve got 6 of them that I have crossed out for various reasons already. Jay: That means they got rejected. Duane: No, the person decided not to buy. Jay: And you had to spend the same amount of effort on them as if they had gone through to fruition. So you got rid of 6 of the 40. Of the 34 left, what’s happening? Duane: Well, I guess we’ve got four now that are into the verbal approval stage, where the lender said, “Yes, we’ll do it. These are the terms.” We’ve said to the borrower, “Here are the terms, do you want to do it?” We’re waiting for them to decide. Jay: You said you get a percentage for putting them together? Duane: Yes. Jay: So, on a million dollars is that $10,000 or is that $100,000? Duane: That’s $10,000. Jay: So, you do a million dollars and you have to split it, so you only get $5,000 on a million dollars. That’s a lot of work. Duane: A couple of deals I myself will submit to lenders. Jay: And so you’ll get the whole thing. Are there other ways to make it, except the percentage? Duane: No. Jay: Okay, so it’s worth $10,000. Duane: The problem is that most of these guys just do “tombstone” ads with property, name, address, and phone number. That’s like 90% of it. Jay: Do you think it’s because of the tombstones that they get a lot of business, or is it off of their cumulative reputation? Duane: I don’t know. Jay: I don’t believe that the tombstone alone does it except to the extent that it validates their performance. Can you identify for me, from 100% of the prospect market, what kind of business you get? Are they all kinds of people, or can we identify the thousand or two thousand or five thousand most probable prospects in your marketing area, and if so, who would they be?

Duane: Number one would be developers of office buildings, or developers of apartments who also happen to own and convert apartment buildings. Sometimes the people that own and convert the co-ops are different. Jay: Okay, let me ask you a question. All these names are readily available aren’t they? Duane: Yes, by using a guide that’s published once a year. Jay: How many people are listed in the guide? Duane: About 1,300 names. Jay: But if we went to tax registers, rolls, or some kind of association memberships, or people who subscribe to certain kinds of publications or newsletters, or members of certain kinds of organizations, couldn’t we assemble a comprehensive list of 80% or 90% of your prospects? Duane: Yes. I think so. In fact I have a few thousand names if we want to go more nationwide. Jay: Can we assemble a listing by name, by business, by title of all those categories of the 5,000 or 10,000 most likely individuals who would be your most viable prospects either locally, regionally, nationally, whatever sector of geography you want to work in? Duane: Locally, I’ve already got 1,300 or so into my system. Jay: What is your system? Duane: Rolodex Label Express program, and that’s good. They’re mailing labels and it prints out Rolodex cards. Handy program, easy to use. But, sure, if I wanted to use the two or three different guides I’ve got, I could easily have 5,000. Jay: Let’s presume we assembled 5,000. Here’s what I’m going to suggest. First of all, all things being equal, from an information and education basis, can you educate someone on ways to make the process of getting their loan easier or less costly? Do you have a certain knowledge base that you could offer to a prospective loan applicant that would give them an enhanced chance of getting a better rate or a faster approval? Duane: I guess what I say I offer them is I’m going to take their project and analyze it and present it to a lender in the most favorable light so that they would get more dollars than they could by doing it themselves. Jay: I’m representing the attitude of a recipient who doesn’t know you. I’m going to ask this question: “Why should I believe you? Why should I believe that you’ll represent me any more favorably than John Smith from ABC Mortgage Company? What advantage do you have that could ensure your ability to make my loan easier to get, or at a lower rate or whatever? Are you more skilled? Do you have a better understanding of how to package things? What is it? What are you really selling me?” Duane: Well, I have my partner, of course, who is the former head of the commercial lending department for a major bank, and is very skilled at packaging, and personally knows a lot of major lenders all around the country. That’s one of the reasons he’s able to get loans. Sometimes he gets loans approved from lenders who had already rejected the client when he came to them on his own. Jay: Can you say that? That your partner is the former head, or is that allowed? Duane: I do say that in my mailing. Jay: And the mailing that you just sent out, how many did you send?

Duane: About 500. Jay: Tell me again, how many responses it rendered? Duane: About 20 phone calls. Jay: Of the 20 people, were any of them serious? Duane: Yes, a few. They’re on that list of 40. Jay: So a few of them are in process right now. So you sent out 500, you got twenty. 500 letters cost you first class about 65 cents each, so for a $300 investment you generated maybe 15 prospects, which is a response rate of about 3%. And if you make one loan, it is a very profitable endeavor, isn’t it? Duane: Yes. Jay: Are you mailing every week? Duane: Yes. Jay: Let me give you the first lesson: you should keep doing something continuously if it makes money. For example, if you can mail 500 letters and you get 15 responses, which is a 3% response, you should keep mailing that letter. But you should concurrently keep experimenting with different letters extolling different things: reasons why you can make the loan, reasons why you can package better, reasons why you have a higher probability of getting them the money, reasons why you can get it quicker, get an okay, or get a lower rate, or get maximum equity out of their property. Try different thematic focuses on different letters to 100-, 500-, 1,000- name segments of your prospect list, to evaluate which ones produce the most front-end response, i.e. the most leads, and which ones produce the most conversions. This is because there are two totally different factors and dynamics in lead generating. Dynamic one is how many people respond to the offer; dynamic two is how many actually convert. By the way, everyone’s situation is kaleidoscopically unique. By that I mean the dynamics you experience may be totally different from somebody in a similar business. So you’ve got to experiment. 3% may be great, it may be terrible. The point is, if you spend $300 every week on a mailing to 500 people and there are 5,000 prospects in your direct marketing area, that means that every tenth week you’re coming back to the first group again; so you should be trying different letters continuously, analyzing which ones produce the best response, which ones aren’t worth repeating, which ones produce the best respondents that convert. Experiment all along—some will produce 3%, some will produce 4%, some will only produce 1/4 of 1%—but the quality (how many convert) is a different factor. Do you understand that? Duane: The thing I was looking for from you was some idea of what to send out. Jay: I’m going to tell you. You’ve got to be able to convey to your prospect, in very compelling imagery, why you can do something for them that other people cannot, or why, if they’ve got 10 people to choose from, they should choose you first. We’ve got to find that. We’ve got to find the best reason why, the best Unique Selling Proposition or advantage for you to extol to them in your letter or in your contact. If you do a seminar, or if you dispatch people, we’ve got to figure out assets you can commandeer, and also who else has vendors or salespeople calling on them or dealing with them, and who you can work referral arrangements with, and who you can access on an independent contractor/referral type basis. I’ve got to do a lot of probing with you. Duane: How about a direct response ad? Can you think of any way of doing that in my business?

Jay: Sure, of course. We can write it on the phone and you can just record it and you can have it transcribed out and send it into type, and I can describe to you how to do your headlines, how to do the proposition, and how to do your offer, and I can tell you the techniques that people have used most successfully, and the kind of inducements they have used to radically enhance yield. I can do all those things for you, but again, I’m not trying to titillate you. You can use the time any way you want. What I first have to do is understand your unique capabilities. Let’s talk about different approaches. Direct response mail and direct response newspaper ads are very similar to one another except for their efficiency. When you run an ad in your regional edition of the Wall Street Journal, when you run an ad in the local newspaper business section, you’re paying for 100% of the circulation but you’re only appealing to a fraction of the readers, so you need to have a great headline and a great offer, and you’ve got to have a great response device. The same needs hold true for mailings, but mailing pieces are more efficient. You’re rifling instead of shotgunning. And everything you do in the ads can be modified to mailing pieces. If you’re going to do ads, depending on where you’re going to do them, you need to experiment. You don’t want to do just one ad; you want to find the best. Whatever monies you’re going to spend, you want first to experiment with as many different suppositions as you can, to see which ones your market will respond the most to. You don’t have the right to tell your market. Your market will tell you the answer to any question you have so long as you put it to a test, meaning you run the smallest ad you can in the smallest circulation or for the smallest cost that’s viable and test several ads to see which ones pull the most response. You’ll probably find that one ad will outpull the others by a big margin. You’ve got to focus on that subject, your Unique Selling Proposition. You’re looking for somebody who needs to make a million dollar loan but who probably realizes there are a lot of other alternative sources available. Your ad has to give them reasons why they should go to you, and that’s the theme— instant, compelling reasons why they should favor you with their business instead of somebody else. Duane: What do you think of that thing on my letterhead—the one that says, “All real estate financing, with particular expertise in...” Jay: No, that’s not it. You know why? Because it doesn’t tell me anything. I’m talking just as a recipient. Keep saying in the back of your mind, “Reason why—Unique Selling Proposition.” You want an instant, instant, instant viewing of your ad to convey a big, big promise that is more compelling than what any of your competitors say. Everyone’s got construction loan experience. You want to basically say something like... Duane: Most of these ads seem to stress that they do permanent mortages on apartment buildings. Jay: And are you able to do that? Duane: Yes, sure, but it’s not my main thing. Jay: Okay, let me tell you what sometimes is bad. Sometimes being a generalist isn’t as good as being focused. I’m going to suggest you start off with a bunch of specific ads. Take each category and focus on it. What if every day or week in the paper you tried a different approach? Day one, you are a specialist in construction loans, 90% construction loans. Day two can say, “construction loans on new commercial or multi-dwelling property.” To talk specificity is very good for three reasons. O ne, it culls out a lot of marginal prospects who aren’t worth it; two, it sounds like you really know your business; three it’s more compelling than a general statement. I would take each of categories and try a different approach with each, and again, it can be small display ads.

Duane: One could say, “Construction loans...” Jay: Another one could say rehabs, another one could say stand-by commitments. You’ll let the market tell you what your best niches are. Does that make sense? Duane: I’m sending my brother to a night class now on being a mortgage broker, and one of the things the teacher said in the second lesson is that the trends is for the broker to specialize. Jay: That’s absolutely right. But what I want to teach you both is that the marketplace will show you where the best niche is. All you have to do is experiment. Don’t blow all your money on a full-pager. Try a lot of little ads, and let them be very compelling, but have them not be bait and switch. They should be very factually active, but very specific. Set up your critieria right in the ad. In other words, if on a re-hab loan, you’ve got to have a piece of property that’s at least $2 million, and you’ve got to have a property ratio of 20%, whatever the criteria is, stipulate that. Talk about the fact that “if you qualify we can give you an answer in so many days and we’ll do all the packaging for you,” and have them call in. Have another ad that says, “Stand-by commitments at 1% under current market.” Try a leader ad to see what happens. Try a bunch of different approaches to see which ones engender not only the most responses but also the most desirable responses. For example, I used to run ads when I started my consulting practice. When I ran a particular one in the Wall Street Journal or the Los Angeles Times, I’d get 500 phone calls, amongst which I’d probably find 3 people who are worth working with. It’s a lot of money and work to go through, considering the final result. I’ve got another ad I run that would only pull 40 responses, but 36 were exactly what I wanted. I’d much rather only deal with the 36 people who are viable than spend my time, my money, my energy, and my phone expenses trying to cull out the desperadoes. You may find a similar situation. Have you tried different twists? Try different package approaches. In other words, “If you’ve got a million dollar loan, we’ll package it for you free,”—just try that. You may be finding people who just don’t know how to put it together. Duane: That’s what they’re paying me for. Jay: I understand you know that. But sometimes they may not know that. Take somebody who’s never really done it, or take somebody who’s used a mortgage broker who did a poor job of packaging for them. By approaching the fact, complete packaging, there’s a whole different twist. “If you qualify, we’ll package your entire million dollar mortgage loan application, and there’s no charge unless the loan is made.” Basically, it’s just a different way of saying the same thing, isn’t it? Duane: Yes. Jay: And again, all you’re trying to do is find the articulation that captivates qualified people to favor you first, isn’t that right? It’s nothing but a lot of experimentation. All that I’m going to teach you to do is to try a lot of suppositions very conservatively without blowing all your capital. Look at what you’re going to do from a marketing perspective in a couple of stages. The first stage is experimentation. You’re looking for the most powerfully effective focused approach and media combination that will produce the largest number of workable, viable prospects for the dollar. It may be by pushing generalization, or by pushing one specific area, or by restating the obvious that you’ll package the loan. Did you read Robert Ringer’s Winning Through Intimidation? It turns the tables on being a salesman, doesn’t it?

Duane: That’s sort of the way my partner acts. He still acts like he’s the bank even though he’s not working for the bank any more. He expects people to pick him up at airports, to drive him to see the property. Jay: I bet it works though, doesn’t it? Duane: It does. Jay: That’s posture. What I’m suggesting is trying a lot of different postures. For example, look at what I do for a living. I have certain clients for whom I do $2,000 normal consultations. I have certain clients that pay me thousands of dollars a year just to talk to them for 15 minutes once a week. I have other clients that I wouldn’t touch unless I get a big share of the profits. But it’s all in the posture. You find which posture works right for which kind of market and that’s the posture that you adopt for that market. But sometimes just by reversing the posture, you get a niche: just because everybody and their brother will package a loan, it doesn’t mean you couldn’t say “We’ll turn-key package your real estate loan application and get the loan made at the most competitive interest rate available, and there’s no charge until the loan is funded, if you qualify.” That’s a whole different twist, isn’t it? It may not work, but what if that twist gets you lots of business that other people couldn’t get just because now the prospect sees you on a different focal plane? Duane: I’ve never seen anyone else do it that way. Jay: What’s it going to cost to try? All I can do is lead you to suppositions. You’ve got to volley against the marketplace for a while, and let them vote and let them decide. But that’s one approach. I’d like you to sit down with your brother and make a list of all the specialized knowledge you’ve got that you may think everybody knows but they don’t—about cutting the problems and reducing the rejection and reducing the points and premiums people have to pay for loan money—and try taking those thoughts and integrating them into different experimental edges. For example, if you know one approach that can cut the interest rate down by 20%, and nine out of 10 people don’t know about it, incorporate that sort of teasery into an ad and talk about the fact that “if you have a loan package that’s ready to present and it’s a million dollars or more, and you don’t know these points, you’ll probably cost yourself an extra 1-1/2%. For a complete evaluation, call...” and set up something where people can call you and you talk to them. You develop an advisory capacity to them. Or you might have a headline that says, “Free advice or consultations on how to package and present a million-dollar-plus loan.” But all those possible thrusts should be presented singly, not trying to put them all together in an aggregate like the one I’m looking at. That’s too general, I believe. I may be wrong, but the way to find out is to try one against the other and analyze which ones produce not only the most response, because response is not the key criteria, but the most quality and convertability. Experiment with what posture you could adopt. You don’t want to be just another mortgage broker unless you’ve got a unique proposition and can say, “We’ll package and place your loan a different way.” If everybody is cost competitive, but you’re willing to give somebody a rebate anyhow, you could just take the rebate and build it in and say, “We’ll package and place your loan at 1/2% under market,” and that will just be a rebate back to them. By taking what you’re already willing to do and stating it really innovatively, and then experimenting with that offer direct to the market, you might evoke really interesting responses. Those are about 10 different ways you can use display advertising. They have utilitarian ability. You got to modify your language depending on the market you’re going to address. If you’re going to run it in the business section, it will be a little more general than in the 9,000 circulation real estate circular that you’ve run in. Duane: Yes.

Jay: Is that circular heavily read by everybody? Duane: Yes, by those 9,000 people. Jay: Okay, let’s talk about it, then. How much does an ad cost there? Duane: Well the ad that I ran is like 3 inch by 3-1/2 inch is $108 plus set-up if you go through an agency. Jay: Is a full-page ad exorbitant? Duane: I think one thing that has to be surmounted in this business are the problems that a lot of people have had with mortgage brokers. They don’t come across with a loan when people need it desperately, just because they’re lazy, sloppy, and disorganized. And people also get constant phone calls from some of the brokers, constantly harrassing them. I can sense the annoyance in some people’s voices. One guy, I was just talking to him about what he was doing, and he said, “Oh, you’re not going to start calling me too because I’ve got a big loan coming up are you?” I said, “I’m not going to mention it again unless you do.” Jay: How do you convey to somebody that you’re not like those people? Duane: I was rather insulted by him acting that way. Jay: But he’s just analyzing you like everybody else. Does your whole industry have a taint to it because of opportunists? Duane: No, it’s just that everyone’s going for the good deals, the ones that are easy to get approved, and nobody cares to go after a deal that’s a little tough. Jay: Okay, if it is a little tough, can you usually make it? Duane: It takes more work and more time, and these bigger companies have so many deals coming in from their canvasses that they just focus on the ones that they think are good. Jay: That might be one of your niches. You might write a direct mail letter. The kind of letters I recommend that my clients do are not quantity but quality, a letter that is either personally done, or laser printed off of your computer, if you have laser printers, or done by an outside service. You might go to all the people with this approach: “If you’ve got a difficult loan to place, or one of your clients has one, we’re willing to do the necessary work to make it. It doesn’t mean we want a loan that’s not do-able, but if you’ve got a loan that is do-able provided certain difficult criteria are met, we’re willing to do the complicated work.” I don’t know what you have to do, but that might be a wonderful niche to adopt. If somebody’s rejected, does that mean that the loan is not makeable, or is it just complicated, or does it necessarily mean anything? Duane: We might do an ad saying, “If you’ve been rejected, we’ll do the loan.” Jay: Here in Los Angeles there are a couple of insurance companies that run TV ads all the time with people who have been cancelled by their insurance company. They’ll take those people and charge them a higher premium instead. That might be the whole angle of being cost-competitive—you can charge a premium to make the hard-to-make loans. I’m not suggesting that that’s the answer, but I am suggesting that in your embryonic stages of development, it’s certainly worth experimenting, don’t you think? Duane: My partner doesn’t like the idea. We’re spending too much time now working on all of these deals we have now, he says, and I should be just focusing on getting more easy deals. Jay: Okay, let’s take his business for a minute. Let me ask you a question. How did he build that business?

Duane: Well, he was working for a company where he was dealing with loans all the time from a whole department of people. He took a few of the biggest clients that he had there and said, “If I went into my own business, would you still stick with me?” They said sure, and that’s how he started. He started out successfully. Jay: Are you a good manager? You said you worked for a large real estate company. Are you a good manager on your own? Duane: I’ve always been good at motivating people and getting a lot out of them. Jay: Let me tell you something very interesting. If there are key people in your marketing area who could influence business, and they are working with all sorts of other people, and you could hire them as partners, maybe not as a partner but as a joint venture affiliate where they got the lion’s share of the commission on the loans they placed with you—if they came to work with you, do you think that would be interesting and worthwhile? Duane: Sort of affilitated people? Jay: Yes. There’s a method to this madness. If you solicit a lot of people to come to work with you and make them very generous deals, and they are people who are in influential positions where they could refer clients to you—if they come to you and they bring their resources over and you only make a meager share, you still make money. By the very fact that you’ve developed the dialog on a more personal and intimate way, like trying to put them into business with you, they tend to think more favorably, and they tend to throw you more business, anyway. Did you know that? Duane: No. So just flatter them, by asking them? Jay: By courting them. I do that a lot. There are a lot of people I solicit all the time for businesses that I or my partners have interest in. I’ll always solicit people who I think will make a contribution, knowing that if they come, they’ll pay their own way instantly, and if they don’t come, they’ll probably throw us so much business anyhow that it’s worth the effort. Keep an ongoing dialog with them; there are a lot of different ways to pervade a seemingly impervious obstacle and that’s one of them. Make the guy a proposition: “How would you like to be a partner? Here’s the deal: I make one point, I’ll give you 3/4 of it for the first year. You can use my offices, and I’ll do all the work for you.” Tell them honestly what you’re trying to do, but tell them you believe they can grow and be a great partner and if they could make $40,000 or $80,000 now, then they could probably make $180,000 the first year working with you. Build them up to where they see their contacts as being utilizable. Start thinking about all the people you know who could influence business for you if they were in partnership with you. People who don’t even realize it themselves. Duane: Well, the natural thought is, of course, real estate brokers who invest in property. Jay: Exactly. Duane: Their offices hold most of the deals. Jay: Let me ask you a quick question. What if you had a service for every real estate office who had new deals; you would basically do all the packaging for them. What if you had some kind of a neat service, where you got first access because you would work hard to do something that is a pain but is necessary? What if every time that they had a client who was thinking about buying something, you would sit down and give every client an evaluation on how difficult or easy it would be to finance it—before they ever made the bid? Duane: I’m doing that for some brokers now.

Jay: I’m thinking about turning it into a real neat service. A neat service which their client could avail himself of in advance, not just whenever. What if it was something you got a lot of real estate companies to put into their whole proposition, part of their sales benefit? If they have a client who’s looking at a property, they say, “Look, we’ve got an arrangement with Vanguard Mortgage and they’ll give you complete evaluation of the difficulty, the time problems, and the problems in doing the deal before you even have to make an offer on it.” It brings you in and puts your posture way up front on the deal, doesn’t it? Duane: So, when they’re making their sales pitch, they can also make the financial pitch for their... Jay: And keep in mind, everything I’m saying is not either/or. It’s experimenting. The big successes I’ve been able to craft through counseling my clients have all been realized through getting them to build layers of different marketing functions criss-crossing. You’ll find that maybe none of them work ideally, but each one of them will throw off ten prospects a month, five prospects a month, three leads a month, and the cumulative effect not only is exceptionally lucrative, it’s impossible to kill. Duane: What if they don’t want to come work for me, but they would like a referral fee to send me business? Should I offer referral fees, or should I hope they’ll send me business anyway? Jay: Let me ask you a question. What if you did a letter to all the real estate companies around. By the way, most of the brokers and the agents don’t really get involved in mortgage money, is that right or wrong? Duane: Right. Jay: Okay, what if you contacted them and made them a proposition: “How to make a million dollars a year off of people you’ve already sold.” The idea is you’ll put together a mailing program, a telemarketing program, a seminar program on-site, a customized counseling program where they can offer all their old, their current, and their future clients your services for nothing. You’ll do all the work, they’ll endorse you, and you’ll basically go to their sites and do all the work for them to see. Maybe they’re thinking about refinancing what they’ve got, or they’re thinking about buying something else. But because of the relationship and the trust the realtor probably has with the client, you’ve asked them to put you in touch with old clients who have properties in the the million-dollar-plus range and you’ll do all the work. You’ll solicit them, you’ll educate them, you’ll work with them—again, I’m being very general because there’s a whole spectrum of different products and services you could offer them. But take a typical realtor, who probably has a hundred past clients in that range, and have him let you contact them and work with them. There’s a philosophy with this called “the changing or moving parade.” Given time, somebody’s circumstance will change. Somebody’s borrowing money who didn’t really want to borrow before. For example, they just finished a divorce. When they started that divorce, their home was owned outright. They never wanted to have a mortgage on it. They loathe mortgages. However, as part of the settlement, they have to write their ex-wife a check for $600,000 more than they have. All of a sudden, they need a mortgage instantly. Changing circumstances can work to your advantage. What you have to do is not just keep your name among them—I think that’s wrong—but focus different specific self-serving concepts to a prospective audience. For example, you can talk to them about refinancing their property, talk to them about how to use an existing property to buy more property or to finance something else. You can talk to them about the best strategies for acquiring new property. You can talk about ways to save money on points and financing. You can talk about ways to get the maximum equity out of the property they’re going to buy. And you can teach them all this as a counselor would, as opposed to sitting across the desk. They trust you if you start giving specialized educational sorts of things that they might not know about.

But I think you should also have different mailings going on continuously. Can you write tutorial type information? I don’t mean academically and scholastically. If there are special approaches, like how to save interest and points on jumbo mortgage loans. Duane: I write very good articles, but I feel stupid doing it now, before I’ve even placed a loan. Jay: Why? Duane: How can I profess to be an expert if I haven’t done anything yet? Jay: Have you ever heard of self-proclamation? Duane: No. Jay: The question you have to ask yourself is, are you really more knowledgeable than 50% of the people trying to do it, are you really more conscientious, can you really render more noble advice, can you really and truly help save them money, get them more equity, get them better rates, save them effort and frustration? If the answer to most or all of those questions is unequivocally yes, don’t worry about the fact that you haven’t done it. If you know that you can do it, take the premise that you are doing it, you have done it. Don’t be embarrassed. Take the premise of educating them. Duane: My partner has done it and... Jay: Take the affiliate assumption that you’re part of the partner’s business. Write reports or articles on how to get the maximum equity out of your house, how to get the lowest interest rate, how to shave points, how to get your loan packaged so it will sail through, how to refinance and lower your rate by 20%. And if you do a series of those, and everytime you do it, you send it out to 1,000 brokers... Duane: You’re saying, not necessarily get it published but write an article? Jay: You send it out to the end-user. Don’t worry about publishing. Typseset it so it looks as good as if it were published. I’m not suggesting that you and your brother commit 100% of your resources to any of these. I’m suggesting that you experiment, because while you know you’ve never placed a million dollar loan, the marketplace doesn’t know that, and that isn’t even as important as your ability to help them. If you can give them knowledge, that’s better and more useful than 50% of the people who are going after their business. The customers will decide. If the information is bogus, they won’t do business with you. Why don’t you let them decide? Don’t predetermine. Write some articles that are useful, send the articles with a cover letter saying, “A lot of people are looking for money these days, a lot of people are being very frustrated these days, a lot of people are going through the motions and finding brokers who are ragged and who slopped together a proposal and threw it to a few lenders but by the time they’re waiting for that they’re out hustling new people and trying more deals just waiting for something to hit. Admittedly, that’s a way to make business, but we look for somebody we can build an on-going relationship with. Frankly, the best way to do that is to work a lot harder in the beginning, and we’ll work about five times harder and it may cost us more, but it pays off in the long run because you’ll keep coming back to us. So we’re very willing, even if you’ve got a difficult loan, as long as it is makeable, as long as you’re forthright with us, as long as you’re cooperative and you’re open, we’ll do cartwheels to get you the loan you need at the rate you want and to get you the maximum equity possible.” Try that as a letter. Try it as an ad, too; but personalized letters are so effective, and if you write an article, then send a reprint of the article and say, “You probably didn’t see this, it might be useful to you. I’d like to talk to you about letting us handle your packaging and submission work.”

Another offer you might make: you might run an ad or a letter and say, “Let us compete with you on your next loan. Next time you have a loan, we’ll knowingly package the loan with someone else. Let us go to our people, you take it to yours, let’s see who gets the loan made.” See if you can really outperform them. Then, document it and have them agree that if you’re going to be willing to work hard and maybe lose the deal, they have to be agreeable: if you get it, they will let you use it as a case study in an ad. That would be very provocative wouldn’t it? Duane: Yes. Jay: I’m trying to give you some possibilities. I still think there’s going to be a plethora of resources that could get you referrals, resources that you normally wouldn’t think about, so let’s think now. Who would know and have a great posture, a great positive relationship with people who would be prospects for you? Real estate people, we’ve talked about them. You could just go to them and you could ask them to solicit. Duane: Lawyers. Jay: How many lawyers are there around? Can you identify lawyers who specialize in real estate law? Duane: I guess it’s possible to get a list from the Bar Association. Jay: And you might do a seminar. Keep in mind, the more you can help educate people, the better. Some of the promotions we’ve done, we took the examples that you saw in that letter I sent you and we actually printed them free, included in the promotional piece, because it gave clear constructive free sample evidence of what I’m all about. I have always felt that if you give somebody a sample, it implies that you could do a lot more for them if they give you their business. I think you could get a list of all the real estate attorneys in a reasonable area and you could send them a letter inviting them to a seminar, where you’re going to go over 21 ways to improve the chances of their client getting a jumbo loan in 30 days or less, and you’ll cover the following points... Duane: I don’t think the lawyers really care about how their clients are getting their financing done. Jay: It doesn’t matter. What you’re trying to do is work all the angles. Duane: Can we offer a lawyer a referral fee too? Jay: Can you legally do that? Duane: Yes. Should I, is what I’m asking. Jay: What if you did 100 very earnest letters, which started off, “Mr. Lawyer, I don’t know if what I’m about to say will offend or excite you so please construe or embrace the offer in the spirit it is made. My name is Duane Thomas. I’ve got the following business. I genuinely believe I can do a service that few other people will do: I know how to make a problem loan; I know how to make a good loan; I know how to get the maximim equity, I know how to get the lowest interest rates; I know how to get points slashed to the bare-bone minimum; I know how to get loans made fast; I know how to get them funded; I know how to get them cleared through escrow and get a check dispersed to my client in very rapid order. I need to be put in touch with people I can help. Can you help me find people I can serve? “Obviously I’d love you to do it nobly. Quite frankly, I make a profit and it’s all variable. I don’t know your sense of morality. I have a certain amount of money I make. I will willingly share that commission with you or pass it on in the form of a reduction to your client, whichever is the more favorable and professionally embraceable by you. I can help people demonstrably and I can save them grief and can save people’s businesses and lives by getting them difficult loans when they need it, with minimal grief. Can you help me? Let’s at least discuss it. Call me.” That’s not terribly offensive, is it?

Duane: No. I like the part about “or you can pass it on to your client.” Jay: Yes, let them decide. Duane: They’re giving a real benefit to their client. They’re saving them money. Jay: You say, “P.S. I’ve got a standard fee, but as a courtesy to all the attorneys I work with, we’ll do the whole packaging process in advance and we will also counsel in advance any client contemplating buying a property, to help them gauge the difficulty of financing it.” Try that. Keep in mind the essence of what I’m suggesting to you and your brother: experiment with a lot of approaches and a lot of suppositions, presenting yourself in a different capacities and letting the marketplace tell you which approach has worked best or least by their response. Does that make sense? Duane: You seem to be stressing the mail primarily. How about cold calls? Jay: Cold calls are wonderful if you have the time. What’s your ability and what do you look like? Do you present yourself very well, and are you very strong in a one-on-one sort of environment? Duane: Sure, but my time is limited. What do you say in a phone conversation? Jay: I like direct mail because it has two advantages. First, it sweeps in a radar-like fashion the 1,000 or 5,000 people on a given day who are suspects, and finds the 50 or 100 people who are prospects. Second, it has the prospects contact you by telephone or by writing, so your posture to them is much more powerful than if you called them cold. Just like that, if I solicited you cold, my posture to you, trying to compel you to use my services, would be infinitely less strong than when you’re responding to me, do you understand? When it finds the prospects, when they contact you wanting you to talk to them, their posture is not antagonistic or defiant or skeptical or dubious. They’re very receptive and they’re favorably disposed. That’s why I like it; it’s a much more efficient way to operate. And actually, it’s not necessarily cost inefficient. If you guys throw your coats on and take the bus, train, or car, and you make calls, there’s only a finite number of physical calls you can make in person. On the telephone it’s very difficult getting through to people. I like direct mail, though, because it culls out prospects and has them ask you to call them, so your posture is more favorable. Duane: One of the books I read recently on marketing says that direct mail is not your marketing; the phone calls you make after the direct mailing are what make the sale. Jay: I agree, but your posturing is better because of the direct mailing. Let me tell you what you can do. You can create an image of anything you want with direct mail. You can create a knowledge base, you can overcome all sorts of reservations, you can erect whatever kind of image or posture you want, by manipulating your letter ethically. You want them to think of you as a specialist in whatever they want. You can experiment to see what their hot button is. Right now if you call cold, you don’t know what they’re interested in. If you try 20 different kinds of letters addressing 20 different kinds of subject matters, you can find out what somebody’s hot button is and address just that when you talk to them. It’s a great advantage. For example, I’m having to focus to see what you want to do. You want to talk about telephone. I’ve been talking about something else. If I had focused just on phones, I would have probably had your ear better. So the point is, try both, because you want the vehicular combination that is the most efficient, most effective, and most lucrative for you with the miminum amount of effort, since it’s only you and your brother and a secretary. The best thing in the world is to have an outside service or a computer service or your secretary every Monday morning be sending out 1,000 letters of A, and have an ad run in the New York Times every Sunday which is B, and have seemingly personalized letters to real estate brokers every week offering to have lunch with them, C. Send maybe 10 letters inviting the people

to have lunch every Tuesday, knowing only 1 or 2 will accept and call you, and try to keep setting up lunches. You have a whole system working for you. Just keeping advancing and playing all sorts of differing angles and see which ones work the best, which ones produce the best initial business, which ones accrue the most, which ones have the best residual value, which ones are worthless. Analyze and experiment and modify, and it sounds sort of silly but it really works. I want to be able to call you up in 3 months and have you and your brother tell me that you started doing it, and at first it was a little confusing, but it started working and you just placed 20 loans, and you’re generating $200,000 a month, and it really works. Duane: I’d like to be able to tell you that, believe me. Thank you for your help. *

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What, in a sentence, do you have to offer a customer that your competitors don’t? If you can convey that in a simple, immediate way to your prospects in every piece of advertising you do, you’ll get the best possible response. Your Unique Selling Proposition has to be not an abstract concept, but a specific benefit or result that the customer will realize by using you. Are you experimenting to find the mix of marketing approaches that will generate the biggest response? Don’t stagnate. Try out new suppositions on a small scale, see how the market responds, and then put bigger resources into those approaches that brought the best response.

Orthodontic Practice Mark had a big-city orthodontic practice and also did part-time orthodontic work in rural dentists’ offices. At the time of our meeting, he had three major questions: (1) how often to keep running a successful ad; (2) how to compete with dentists who practiced orthodontic work without proper training; (3) how to advertise as a professional without stooping to crass commercialism. If you’re looking for creative and successful ways to advertise ethically in your profession, this transcript is a must. *

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Jay: I read with fascination the note you attached. It’s a very interesting challenge that you give me. Let’s talk a little bit about a couple of things. Of your $400,000-a-year practice, is that amount your break-even margin, your profit, or what? Mark: It all depends. I try to run my corporation so we have little or no profit, to get a tax break. I pay my staff a good salary and lots of benefits. In order to do this, I end up not taking a paycheck. I can, of course, not pay all the benefits. I have reduced the number of personnel in my office. Frankly, I hate to see the practice disintegrate before my eyes. Jay: I understand. This other doctor who was listed in one of your ads—is he an associate, a partner, or what? Mark: He is an employee. He will be 65 in March and will retire. I hope to be able to keep him, on at least a part-time basis, to man the office on the days I take vacation. Jay: How many days do you currently work?

Mark: I try to work four days a week. This other doctor also works four days a week. He takes Monday off, and I take Friday off. I’m usually in the office on my day off, however, doing desk work and other things. Jay: The satellite offices that are referred to in your ads, are they just affiliations with other dentists? What does that mean? Mark: I rent offices with dentists in those communities, and they are usually out of the office when I work. I could not afford to have buildings of my own. Jay: So basically, once a week or once a month, you’ll have appointments in these other offices. Mark: Every six weeks. Jay: And how does that work out? Mark: It works out beautifully. If I didn’t have them, I couldn’t afford to have my main office here. Jay: I understand. This ad that says, “Thank You, Thank You, Thank You,” the one you said did extremely well. Tell me where and how many times you ran it and what “extremely” or “outstanding” response means. Mark: I ran it twice a month during the summer months. I ran it in the Sunday paper, which has the largest circulation. On Monday, the phone would ring off the hook. We had very few new patient calls prior to those ads. After the ad, we had a barn-burner of a summer. Jay: Why did you stop running the ad? Mark: Because I used that particular ploy up. Jay: You mean the ads ceased working? Mark: Not at all, but how many times can you run the same ad? Jay: When I answer you, don’t be offended, because it’s going to be a little shocking. You keep running the ad until it stops working. If hypothetically your newspaper had a readership of 200,000 people and a barn-burner response was 30 calls, that is such an infinitely small fraction of 200,000 that it would probably take running that ad 100 times to saturate your audience. Mark: Okay, I understand. Jay: Let’s try to quantify something. When you ran the ad, the ad would cost you something like... Mark: $150 for each insertion. Jay: Was that once a week? Mark: Every two weeks. Jay: So every two weeks, that $150 produced for you how many inquiries, new patients, introductions, free examinations, or whatever? Mark: Probably 10. Jay: Out of the 10 that came in, how many would evolve to paying, ongoing patients?

Mark: Three or four. Jay: I hate to reduce your practice into mundane profits and losses, but let’s do that for this illustration. How much were those three or four patients worth in gross revenue over a year or two? Mark: $6,000-$8,000. Jay: Okay. Now, if every time you spend $150, you can accrue $6,000-$8,000, the first thing it’s going to teach you is to keep running the ad until it stops working. It might be that you could run it every three weeks and you only get one patient, yet you’re still making money on the ad. On $6,000-$8,000, what’s the profit? Mark: 40%. Jay: So, a $150 investment accrues somewhere in the vicinity of $3,000 in profit within a year or two. That’s a great annualized return on your investment. I don’t know if that ad is the best ad you could run, but I think it’s very intriguing. Right now, it’s your control ad. I would take the same ad and put it right back in the newspaper. In your offer, where you advertised a drawing for a 10-speed bike, if that offer has expired, experiment with another offer. Now, can you give me the demographics of the people that would respond? Mark: They’d live in a radius of 150 miles. Jay: Would they be young, old, children, parents, or what? Mark: All ages responded to our ad. Of course, the kids were interested in the bicycle, but we also had many adults who came in. Jay: The point is, every time you ran that ad, you brought in 10 qualified prospects, and three or four would become patients. Mark: Right. Jay: Okay. The first thing I want you to do is immediately run the ad or a derivative of it again. Say the same thing—”We’re on the verge of completing 31 wonderful years and want you to help us celebrate,” and make your offer, whether it’s a bicycle or whatever. The only people who are responding are the ones that have a need to respond right this moment. You should have the philosophy of the moving parade— i.e., people’s circumstances are perpetually and continuously changing. They didn’t respond to your ad because of a variety of different reasons—they didn’t have the need, the motivation, the financial capability, or sensory perception enough to think it was necessary to respond. All you’re trying to do every time you run an ad is telescope, radar, or sweep 100% of your mass audience to find the 20, 30, or 50 who, at a given moment, are really thinking about your message and will be touched by your ad. I’m not certain that this is the best ad you can run, but it’s already certain that every time you spend $150, you make $3,000. The first thing I want you to do is start running this ad once a week instead of every two weeks, until it stops working. Meanwhile, you start experimenting with new ads. If you know that every time you spend $150, you’re going to accrue $3,000 in profit, it gives you some breathing time to experiment because you’re still generating cash flow with the old ad. I would take virtually the very same ad and change the drawing. I would try five or six different prizes over five or six different weeks to see which prizes evoke which kind of responses. You read the material that I sent you, right? Mark: Yes, I did. Jay: It’s all very simple, obvious, and potent stuff, but most people overlook that.

Mark: As a so-called professional man, the real problem I have is stooping to crass commercialism. Any kind of advertising at all was an extremely difficult psychological hurdle for me to step over. Jay: You addressed some very candid and interesting challenges in the body copy of your ad. How badly have you engendered the wrath of your colleagues? Mark: Pretty badly. Jay: I need to understand these details so I can give you strategies to overcome whatever impediments you’ve run into. Try to be more specific about what happened. Mark: About seven to ten years ago, dentistry started to come upon hard times. There were too many dentists and fluoridation had reduced by two-thirds the number of cavities that needed filling. In order to keep the wolf from their door, dentists started doing everything and anything they could, including speciality work such as orthodontics. This field is extremely popular because entrepreneurs are offering courses to general practitioners telling them how much money they could make. Everyone is trying orthodontics. Jay: Without having the necessary skills. Mark: That’s right. They did not have adequate training, but they were selling braces. It took approximately seven years for these dentists to discover that they were in deep trouble, and some got hit with lawsuits. Then these dentists bail out of orthodontics, and another crop of youngsters succumb to the same ad offering weekend training in motels and hotels. Jay: How many years did you have to really invest to to do it right? Mark: Two. Jay: Plus you personally have 30 empirical years of owning your profession. Do you do great work? Mark: Yes, I do. Some people think I’m one of the best orthodontists in the country. I think that’s a little heavy, but I do good quality work. Jay: Do you have a charming personality? I thought you expressed yourself very clearly, very forthrightly, and you’re doing a noble job and a very clear job in this conversation. How are you with your patients, honestly? Mark: Straightforward. I tend to say, “Doggone it, why didn’t you brush your teeth better? We’ve got to change this around, or I’m afraid your teeth are going to be harmed.” Jay: How do they respond? Mark: They’re embarrassed. No one likes to be criticized. I feel my responsibility is like a parent—I’ve got to take care of these kids. When a 3-year-old wants to run in the street, you yank him back, and you paddle him if you have to. But you don’t let him play in the street with the cars. The other orthodontists in town hardly every criticize. Jay: They just take their money. Mark: Right, and the kids’ mouths can be ruined. I can’t stand that. I can’t abide it. Jay: One of the things that you should have learned from the letter I sent you was that you can test, experiment, and scientifically gauge and ascertain the effectiveness—or lack thereof—of all sorts of different approaches, premises, concepts, and forms of conduct. Have you ever experimented with a gentler or buffered way of doling out your philosophy?

Mark: Yes. Jay: How does that work? Mark: In the early years, I was a tyrant, just like the German general. I would have parents angry with me. Well, I have modified that completely. Now, we just simply mention the situation and express our concern. We don’t say, “You’re naughty,” or anything like that. Jay: So, you use a softer approach now. Mark: Yes, but it’s hard for me to be soft. Jay: I understand fully. Let’s talk a little more about you and your colleagues. Back about seven or eight years ago when you were vocal, be more specific about what you did. Mark: When the fellows started doing orthodontics, I said, “Guys, I understand what you’re doing, and I know where you’re coming from. I’d probably do the same thing if I weren’t so busy.” They didn’t like being told they weren’t busy, which was dumb on my part. They would complain among themselves that they weren’t busy, but to have someone else say that their practice was slipping implied that they weren’t doing their job well enough. If you go into orthodontics, you’re going to find that it’s far more complicated than you’re led to believe by those people who are persuading from the podium. Jay: How many non-orthodontic practices would there be in that 150-mile range you operate in? Mark. Around thirty and there are only 50 dentists in my town. Jay: I thought there were more. What’s the population? Mark: 50,000. There are quite a few guys doing orthodontics on the side. One of these fellows and I got into a discussion over lunch about his doing orthodontics. I said, “Bill, let me ask you something. If you start an oral surgery procedure on an impacted 3rd molar and you get into trouble with it, you’d have no compunction at all about taking your patient over to the oral surgeon, would you?” He said, “No.” I told him, “That’s standard practice in dentistry, but let me ask you, if you get into trouble orthodontically, are you going to call upon one of us orthodontists to help you with the case, or are you just going to complete it best as you can, perhaps get inadequate results, and tell the patient it’s the best you can do?” He was really offended. Jay: Why? That makes very intelligent sense to me. Mark: Yes, but he didn’t like an accusation pointed toward him that he might not be able to do the job well. These guys have to learn for themselves that they can get into trouble doing orthodontics, and it takes years for them to learn. My friend Tom is no longer doing orthodontics, and he refers his patients to the other guys. Jay: Because of your statement? Mark: Right. Jay: How many orthodontists are there in your area? Mark: There are two in my office and two in other offices. One is a former partner and the other is weird psychologically. I have never seen a man more skilled at people manipulation in my life. Jay: How is he as a technician?

Mark: He could do adequate work, but he’s is primarily interested in dollars. He has six or eight assistants doing his work for him while he walks around and plays big shot. Jay: What about the other doctor? Mark: He does the same thing. Jay: How big are their practices? Mark: Very big. People love them. Jay: And their business emanates from what? Mark: I think the one who manipulates people has built himself a reputation because he is a former educator and has other doctors in his office whom he has taught orthodontics to. Patients pick up on that and say, “My doctor is a teacher.” He’s very shrewd. Jay: Does he comes across in a cherubic way? Mark: You got it. He’s everybody’s friend. Jay: Are you comfortable in addressing groups? Mark: Yes. I can speak with no problems whatsoever. Jay: And what do you do with them? Do you captivate, antagonize, polarize, mobilize, or what? Mark: I don’t know what their reaction is. All I do when I talk to groups is to tell them my opinion on any specific thing. Jay: Are you comfortable allocating a moderate amount of money to experimentation? Everyone’s situation is kaleidoscopically unique, and the only way you’re going to find what works the best for you is to experiment. In the interim, the first thing I’m going to caution or advise you to do is to get your control or winning ad back in the paper right now until it stops working. If it stops working for one week, don’t cancel it unless you see it not working for two or more weeks. If you can make $3,000 every week and it only costs you $150, you literally could run the ad for four, five, or six weeks to make one sale, and it would still pay for itself. I want you to have a generator of prospects that gives you new patients and a cash flow while you move on to the next stage. Are you comfortable taking $3,000-$5,000 to play with in your market? Mark: Yes. Jay: There’s a couple of things I think you should do right off the bat. First of all, if you run an ad, the headline should be very powerful and convey an easily perceived benefit. The body copy should give reasons why they should take you up on the offer, plus a call to action, preferably one that is so risk-free that the responder will have much to gain and nothing to lose by taking advantage of it. Experiment with different propositions. For example, give free exams as one offer or talk about $75 off an exam. One approach I’ve used very successfully for a lot of different kinds of clients is what I call the “marketing test.” It basically is a rationale for making a preferred price offer to people. You might try a derivative. For example, you’ll give a $150 initial orthodontic examination and consultation at no charge as part of a research project being done by you. The body copy reads, “Dr. Such and Such has the feeling that price has been an impediment to people. To verify this, he wants to interview and evaluate 100 prospective case study patients. To see if you qualify, call the office and discuss your situation.” The idea is to give them some participatory way to get into your offices. The rationale is that you’re doing a survey.

You should really do this approach anyway for your own marketing and research purposes. Are you flexible or fixed in price? Mark: Very flexible. I do a lot of free orthodontics. Jay: Try another ad saying, “Dr. Such and Such is looking for...,” and use a phraseology that doesn’t make someone seem poor, such as like, “If you work to support your family, and you’ve always wanted braces but can’t afford it, give me a call.” Offer a fee reduction and a scholarship, such as five scholarships to deserving people. “To see if you qualify, call during business hours. If you work and it’s inconvenient to call during the day, call after hours. Dr. Such and Such will be in the office on Tuesday nights to talk to qualified applicants.” I’m giving you very fragmented outlines because I don’t want to bombard you with details, but that might be a very powerful approach. Mark: That’s good. Jay: And it’s classy, tasteful, and not deceiving. Another approach could be for you to put on seminars once a week. Run ads with the headline, “Do you really need braces? This 90-minute free seminar will give you the pros and cons of orthodontia.” Tell them the good and the bad, how to tell when they really need braces, the price range, what to expect, how to evaluate the dentists. Put on the seminar and schedule appointments. You’re locking yourself into a tutorial educational mode that potentially could be very valuable for you. I can’t promise you that anything will or will not work. But I can assure you this: come up with 10 or 15 suppositions and convert each into a different one-quarter page ad that you run in your Sunday paper. Analyze critically which ads produce what kinds of leads, and which leads convert the best or the worst. Experiment with 10 or 15 kinds of approaches over a ten, fifteen, or twenty-six-week period and spend perhaps $3,000-$5,000. You will eventually find a control ad that you could run, or more than one ad that you could rotate and run every week, every month, every two weeks, or any frequency that you need, because you can predictably know how many patients you’ll be adding three weeks or three months from the time you run your ads. If you start experimenting, you’ll evolve some powerful approaches that will give you what you want and put you ahead of your generic competitors. Is this getting you a little excited? Mark: Yes. Jay: Here’s another approach: Pick out 30 dentists that you know. Even though they don’t necessarily hold you in the loftiest regard, I would suggest that you send each one of them a charming letter. First of all, with referrals in your profession, is revenue sharing ethically unacceptable? Mark: It’s illegal. Jay: Okay. What other provisions are there? If someone calls you in to consult, they can pay you a consultation fee. That’s acceptable, right? Mark: Right. Jay: Okay. Now, if someone refers a patient to you, there’s no tangible reward you can legally give them? Mark: That’s right. Jay: How do the doctors handle referrals then? Mark: Some of the specialists send expensive Christmas gifts to all the dentists. I have never done that. I have wanted to be accepted for the quality of my work and my sincerity and honesty. Jay: Okay. Let me tell you one of the most intimidating approaches I know. I think you should send a registered or certified personal letter to these dentists inviting them to attend a weekend or day-long

seminar that you’ll put on. At this seminar, you’ll tell all you know about orthodontia and tell them what they should know if they are going to do orthodontia, or what they should know if they are going to refer someone. So, you’re very honest. Tell them, “Of course, I would love to have your referrals, but it doesn’t matter if you’re not giving them to me. The least I can do for both of us is to give you the benefit of my 35 years of experience. I believe I’ve got expertise that you could benefit from. I am willing to tell you in the course of eight very enlightening hours all I’ve learned, both good and bad, about orthodontia. I ask for no commitment on your part other than that you sit and listen to me and have an open mind. “The information I pass on will be of benefit to you if you practice it. You have nothing to lose. I assure you that if we never talk again after this seminar, you’ll emerge with more wisdom than you had when you came in. Some people will say this is a gambit on my part, but it’s one I’m willing to take. I’ve taken a conference room at the Hilton next to the airport for this seminar. Attendance is by reservation only and lunch is included. The seminar includes two sessions. The first session covers technique, and the second covers the pitfalls of orthodontic practice.” Give them a whole outline. I think that might be a very provocative thing to do. What do you think? Mark: I think it would be wonderful, and it will stimulate me to start taking some colored slides— something I’ve never done. Jay: If only five dentists show up, I have a feeling that win, lose or draw, they have got to concede to your expertise. I think that approach would be very disarming and intimidating to them, don’t you? Mark: Well, I hope so. Jay: Okay, what’s the worst thing that could happen? First, try the approach and have them start referring you to others. Add a P.S., such as “Even though we may not be philosophically in accord, I’m there if you need a consultation, have a real problem, or want to refer to me. Whatever your situation, I’ll come over and help with the problem as a service to you.” The point is, I think you can intimidate with information and education as long as you make great efforts to disseminate the information to anybody who shows up. I think you’ll be surprised that a number of them will respond if you write the right kind of letter. Instead of mailing the letters, you might have messengers deliver them and only relinquish each letter as the dentist himself signs for it. That’ll impact his reading. Mark: You’re talking about the dentists who are doing orthodontics. Jay: I’m talking about those doing orthodontics and regular dentists as well. If you could get the ear of 30 people, knowing that five of them were going to take the information and use it themselves, and maybe six of them would refer to you, that could build the $200,000 you need to pull your practice off almost overnight. The downside is the time and cost of creating 30 personalized letters, and paying $25 to handdeliver all of them. I think the downside is minimal. If they don’t show up, then you try something else. I believe you should cultivate your dental colleagues along with the retail market and have them working in tandem so you’re playing and leveraging off both of them. This creates a catalytic effect. At the same time let me ask you this question. I’ve been to a lot of dentists. I frankly go about once a year because I have the typical kind of procrastinative aversion. When my teeth start hurting and I start worrying, I go to doctors more often. Do a lot of doctors have any impact on referring their patients elsewhere? If a patient had an orthodontic problem but he hadn’t really done anything about it, could a doctor recommend that he go to an orthodontist? Why don’t you write another personalized letter to doctors in your area and introduce yourself? Tell them you’re a businessman and not hell-bent, like some of the younger dentists, on building a practice for the money. You like to touch people and change people’s whole lives by reconstructing their mouth. You’ve found a lot of people don’t really care. They don’t go to the dentist often enough because they’re afraid of it, can’t make the payments, or whatever. You’re hoping to change that with your scholarship programs. For patients who these dentists feel are deserving, you’ll be glad to give them a free $200 consultation to see if they really need orthodontic work. Tell them, “If you have a patient who you think would be either psychologically or physiologically

enhanced by orthodontia but can’t really afford it, I’d be very interested in seeing them. I’m very flexible and my interest in you is not dollar-driven.” I think if you wrote this kind of letter to 35 or 50 doctors, that would stimulate another segment of business, don’t you? Mark: Yes. Jay: What about civic groups? Let’s say there’s 50 or 100 civic groups. You could send letters to them saying that you set up a partial scholarship fund for orthodontia work. If they have a deserving or underprivileged person in their group, you’ll give them a partial scholarship. Tell them that you’re giving one of these special scholarships to certain charitable and civic groups. You’re giving half price off the cost of treatment, and maybe the civic group can take up a collection for the other half. You see what I’m trying to say? If you networked 50 different service, civic, and affinity groups like the Elks, women’s auxiliary for the hospital, etc., and each had a half orthodontia scholarship and could raise the money for the other half, I think that would produce very interesting results, don’t you? Mark: Yes. Jay: I’m trying to give you some good ways to outmaneuver your competition in a more noble fashion than is normally used. Mark: How you feel about radio advertisement? Jay: It depends on how it’s used. Have you used it yet? Mark: I have an orthodontist friend who says he gets his best results by radio ads rather than by newspaper. Jay: Did he tell you what his ad says? Mark: No, I didn’t think to ask. Jay: Did he say that they’re profitable for him? Mark: Yes. Jay: Is there a singular radio station that predominates in the area? Mark: No. We have four or five stations, and I don’t know which one of them is predominant. Jay: Is the economy very good there? Mark: No. Jay: Then I have two suggestions. First, go to your friend, and ask him to furnish you with a dub of his commercial. There no reason to recreate the wheel if he’s already experimented with this approach. You could make a deal where he’ll let you use his commercial if you change the words and give him a usage fee. Or if he’s just your friend, he’ll let you do it free. One of the things I want to teach you is that I don’t have any final answers. All I can do is teach you is that there is only one vote that really counts, and that’s the marketplace. What you’ve got to do is formulate certain suppositions and test them in the marketplace. What you, I, your colleagues, your wife, your partners, or your nurses think is of no relevancy. The only vote that counts is the marketplace. Until you get enough response to make sure that what you’re doing is profitable, you don’t have the right to make the decision for the marketplace. Correspondingly, you have the obligation to put any supposition to

a conservative, inexpensive, and definitive test, and let the vote or lack thereof tell you whether to continue or discontinue doing something. If you understand that, it’s very exciting. I want you to read “My Life in Advertising” and “Scientific Advertising” by Claude Hopkins; these are two books that are published as one. Also, get hold of “Confessions of an Advertising Man” by David Ogilvy, “How to Read, Write, and Think More Effectively” by Rudolph Flesch, and “How to Write a Good Advertisement” by Victor Schwab. Every evening, read a chapter of two or three of them, and try to integrate what you read. The Claude Hopkins’ one covers concept and strategy. Schwab writes about constructing ads. Flesch tells you how to write the way you talk. Ogilvy covers philosophy, conduct, and attitude. His is very classy, high integrity-oriented thinking. This combination of books will have a catalytic effect on bringing to fruition the kind of programming we’ve talked about. Once you get rolling, the sky’s the limit. You can stairstep from one informational, educational, experimental endeavor to another, and I don’t think you’ll be surprised at the results. You’ll be very pleased with the way you work. Stop doing the approaches that don’t work, but continue with the ones that do. Mark: Okay, I will. *

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If you’ve got a successful ad working for you, don’t stop using it until it fails to bring in responses. Meanwhile, experiment with derivatives of the ad: try new offers, different dynamic headlines, and body copy that tells more and has a stronger call to action. With each new ad, measure the results. Remember, the only vote that counts is the vote of the marketplace. You might try my “market test” strategy, where you offer a huge discount “to test whether price is an impediment.” Or offer scholarships or discounts to local civic groups. To build your referrals, disseminate useful information. Offer seminars where you discuss the pros and cons of your services. Send hand-delivered, personal letters to gain attention. Above all, no matter what strategies you’re using to build your business, remember always to test, and always to continue to use—and experiment with—the things that work. The catalytic, cumulative effect of this one simple strategy can be awesome.

Investment Broker In this consultation, I gave an investment broker some powerful tools to reactivate and build his customer base. For many years, Walt has worked as a traditional investment broker. Some of his clients have done quite well, while others have stopped using his services. With no USP (Unique Selling Proposition) and no back ground in contacting prospects, Walt didn’t know where to begin to attract new business. My main lesson for Walt was: instead of wasting time and money on cold-calling, use direct mail to reach your customers with a personal message. If you want to learn more effective ways to build your customer base, take note of the direct-mail methods I outlined for Walt. *

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Jay I’ll try to give you all the good ideas I can. The typical program that you would use is what? Walt: Stocks, bonds, and other various investment assets that either appreciate quickly or in the long-term. Jay: What do you spend on direct mail? Do you use mailing lists?

Walt: Yes. Jay: What is your USP (Unique Selling Proposition)? What can we say or demonstrate about you that will make a prospect see that your value is demonstrably superior to that of someone else? Walt: That’s a good question. To me, there is no difference in our industry, whether we’re with E.F. Hutton, Paine Webber, or whatever. Jay: Keep in mind that you’ve got to be able to make your prospects see that there is more benefit from entrusting their capital to you than to somebody else at another brokerage. What’s the advantage? What are you going to do for me and my capital that the others wouldn’t do? Walt: I don’t know anything you can legally print. Jay: You have corporate research, but do you also research things within the areas of your recommendations? Walt: Absolutely. Jay: What are the ramifications if you recommend something your firm doesn’t want, and it fails? Can you be sued? Walt: The problem is, our firm only backs us on their recommendations. I once tried to send out a letter that said I had a unique commodity. My firm kind of “pooh-poohed” it, but I would still be willing to do that. Jay: In my opinion, you’ve got to hold out some proposition. I’ve got a market for you to attack, but I can’t tell you about it until I find out what it is you’ve got to offer. Once I do that, I can tell you how to make a lot of money. Walt: The only thing I’ve got is the name of the firm I work for. Jay: Have your clients made a lot of money, a little money? Walt: Some of my clients have done quite well. I have no control over the market. Success also depends on how much control you have over the account. Jay: How many clients do you have right now? Walt: I probably have 20 good accounts. Jay: Do you mail to your clients regularly? Walt: No, I don’t have any back-end support. The question is, what to mail them? Jay: Well, let me talk to you about that. I can probably make you many times your investment before you leave here by telling you what to mail. Walt: Okay. Jay: The clients you no longer have, were they happy with you when they stopped trading? Walt: I don’t think too many people were unhappy with me.

Jay: But there is still a segment of that market you can win back. Let me tell you my opinion on the easiest way you can make a ton of money. It is overlooked by people on a local level. You rent the lists of names of the subscribers and recent subscribers to hard-money newsletters in and around a 25-, 50-, or 75-mile radius. After you rent them, you can send different kinds of personalized letters that say things like, “I know you have a strong interest in commodities, but you have never really gotten seriously active because you were afraid of getting hooked up with somebody who would take advantage of you, was unethical and unreputable, had a bad system, or gave you imprudent advice. I’ve been dealing in commodities with a large firm for X years and maintain a number of very satisfied clients. Any of these clients would be glad to furnish references if you like. “Moreover, I have an approach—call it a system if you like—but it’s a sound, sensible, long-term approach to commodities investing. If you’re suited for it, both psychologically and financially, it could make you money. It’s not for everybody—certainly not for those who want to trade penny stocks this week, coins next week, and bullion the following week. But if you’ve been seriously watching the movement of the commodities market, you realize that extraordinary situations like a drought can make people hundreds of thousands of millions of dollars. If you want to participate in this market in an intelligent and pragmatic way, I could probably help you. “At least it would probably benefit each of us to talk to one another. I would explain my approach to you, my philosophy, how I deal with my clients, the real exciting upside, as well as the downside and the pitfalls. I would caution you about how to approach this market, and I would explain to you that it is not a wise investment for somebody who isn’t comfortable putting a certain amount of risk capital into play. But, on the other hand, if you’ve already got risk capital in play, I could show you how deploying it into commodities could increase your upside yield by a factor of hundreds of percent if it worked, and your downside would be no worse than any of the speculations you’re already involved in. “The kind of program I advocate is sound, sensible, and as safe as anything there is in the market. I am interested in having you as a client next year and throughout the next decade. I would like you to call me, or, if you don’t want to call, send back the card I’ve enclosed. I’ll send you, at no obligation, a confidential report I’ve just prepared. This report explains the basics of my system, describes the mentality it takes to be a successful commodities investor, answers 25 of the most frequently asked questions, identifies five very infrequently asked questions that explain the downside and things you need to look out for, and outlines different strategies you might consider embracing if you want to get started. “To get your free copy of this special report, give me a call or drop me a note today. I can send it to you immediately, we can talk on the phone first before I send it to you, or you can meet me at my office any day. I have a very flexible schedule and can arrange a meeting for any time that’s convenient for you. As long as you are sincere, I’m willing to make time for you. I sensed that you had the interest in this area, but have never been comfortable getting involved. I believe there’s a good chance that if we talk, I can give you the assurances and the knowledge-based education that you need to make a sensible decision. Since you’ve got nothing to lose, I would encourage you on a risk-free, obligation-free basis to give me a call.” That’s a pretty nonthreatening letter, don’t you think? Walt: Yes. Do people read stuff like that when they get it in the mail? Do they really look at it? Jay: Did you ever see a promotion piece for an investment newsletter? Walt: Yes. Jay: Why do you think they keep mailing 16-page letters? Because they don’t work? They don’t work for everybody, but who cares? There are a million people who have paid a lot of money to become subscribers to hard-money newsletters. Of those million people, 15-20% of them are probably in your geographic area. Of those 20%, I have no idea how many are within a 25-mile radius of you, but you still have a great thing going for you. Most of the people who have intelligently played off these subscribers are national advertisers using telemarketing.

You could add a great P.S. to your letter saying, “One of the biggest reasons people are afraid to get into commodities is because they are dealing with a negative guy on the phone in Chicago or Florida. If you want to be my client, I insist that we meet person-to-person before I ever open an account for you. I insist that you come to my office and that we get to know a little bit about one another. I’m not investing for the moment, I’m investing for the long haul. The way I’m going to keep your good faith is to make you money. I can’t promise you anything, but I’m going to give the best effort imaginable to make you a lot of money on whatever you invest with me. I’m going to preserve your capital like no other investment advisor or broker has ever done before. Why? Not because I’m altruistic, but because the best thing I can do is make you a lot of money because then you’ll stay with me for years and bring me other people. I have a lot to gain by treating you right. You’ll find my approach very conservative and sensible, and my techniques very long-term oriented.” Walt: Let’s say you’re trying to call small corporations. Jay: I wouldn’t call anybody. I think it’s harder. I would send letters to qualified leads. I would send out the kind of letter I’m talking about. You might even send out an invitation to a seminar. The point of it is, I would go to people who subscribe to national publications on money, investments, and things that advocated speculation. People who subscribe to Doug Casey’s newsletter, to Ruff’s newsletter, to Personal Finance, and three or four others. I’ll give you the name of somebody you can call who can make recommendations. Don’t get people who already subscribe to commodities newsletters, because they’re too sophisticated for you. You want somebody who is predisposed favorably towards controlled speculation and intrigued with commodities, but scared to death that they’re going to get burned. You want to comfort them, assure them that you’re stable, and tell them you’re not just a person to answer the phone. “I won’t open your account unless you come to me or I come to you. It’s that simple. I want to convince you that my goal is not to take your $5,000, $10,000, or $20,000 and turn it into commissions and be gone with it. My goal is to do everything in my power to turn your $20,000 into $70,000 for you over the next three to five years. “Obviously, I’ll make a lot more money on you if I can make you half a million dollars, because the commission on a half a million dollars is a lot more than your original $5,000. That’s about as blatant as I can be. But to get to that point, I’ve got to make trades that pay off. I’ve got to nurture you. That’s what my commitment is. I’d like to explain it to you. I’m willing to spend as long as it takes, whether it takes five, six, or ten meetings, before you’re comfortable with me. I’ll do whatever it takes to have you feel comfortable and confident that you can entrust money with me and know there’s a high probability that I’ll be judicious with it, husband it, and build it for you to the greatest extent possible in this risky, complicated field.” Walt: Do you call these people after you mail the letters out? Jay: You can do one or both. The first thing you do is send off about a thousand letters with a response card asking them to call you or send back the response device. If you do it right, you’re going to get 100150 people calling you. If you send 5,000 out, you’d spend a couple thousand dollars. By the way, you’ve got to rent a minimum of 5,000 names. The problem is, if you’ve got a newsletter that has 30,000 subscribers, the odds are they really don’t have 5,000 subscribers within 35 miles of you. You might be able to make a deal with someone in a larger city where they buy some of the names you get. But, then, there’s no reason why you can’t do it nationally, is there? If it works locally, you could modify your letter and say, “I’m going to be in your town, and I’d like to meet you. We could have an intimate breakfast, or you could attend a small seminar that I’m having for ten other prospects. This way we’ll get to know if we’re compatible.” That’s a different approach from what you usually do. Me, I’m different. I write ads and wait for people to come to me. Cold calling is such a pain. I’m not saying it doesn’t work. It seems so much easier to send a qualifying letter to 5,000 prospects you know a lot about, get 100 or 200 of them to acknowledge their interest in you, and then really put your abilities and your efforts into working them. If you can take an investment of $2,500 in a 5,000-piece mailing, get 200

prospects, and convert 20 of these into clients, I would think you would make a lot of money. With cold calling, you do a lot of calls, get exasperated, and get hung up on. With a mailing, you’re being embraced because everyone who calls is saying, “Yes, I agree with your philosophy. Yes, I want to meet you.” They have the willingness and the capacity to be a prospect. It’s a whole different thing. Walt: How would you try doing this to get the attention of businesses? Jay: What’s your unique advantage? Again, I’m just trying to give you a way to win them over. What you do is find the people who are already identified as qualified prospects instead of calling 50,000 unidentified people. I think it would be very sensible for you to get the names of 30 people who are interested enough to extend themselves by buying a subscription to somebody’s newsletter. Now, you say you want to sell pension products to small and medium-sized companies. Why? Why should anybody put their pension money with you? Walt: I take a financial planning approach. I look at the company, what its assets are, what your contributions are, and what goals and objectives are down the road for your retirement. And, based on that, I find various investment vehicles that are safe, conservative, and well diversified to meet those objectives. Jay: You can’t negotiate your commissions. Is it illegal to guarantee? What if you say, “If I don’t make you money, I’ll refund my commission.” Walt: You can’t make promises about profits. Jay: Not even with your commission? You can’t say I’ll give back a portion of my commission? Walt: You can’t do that. Jay: It seems like you should be able to. That’s such a powerful approach, don’t you think? Walt: In fact, there are cases of people being sued right now for paying for their clients’ losses out of their own pocket. Jay: You could say, “Give me 20% of your money.” Can you say that? Can you say to the company, “I only want your business if I can outperform whomever is managing or advising you by at least such and such a percentage”? What if you started a letter like this, “It is my goal to achieve annualized returns of 14-15%. If you’re doing better than that, I don’t think I can help you. If you’re doing demonstrably less than that and taking any level of risk, or doing a lot of complicated and time-consuming research yourself, I’d like to talk to you. If you like what I’m all about, my philosophies, my rationale, and my approach, I’m not going to try to knock the broker you’re using now out of the box. “All I ask is that you let me handle 20% of your investment money for a 12-month period. Gauge very accurately and very honestly how my 20% compares with the other brokers. I also ask that you don’t use my recommendations and advice for the rest of your investment funds unless you allow me to manage these investments. If in the course of a 12-month period I can’t outperform your other advisor by a substantial margin (you decide what that margin is), I’ll voluntarily relinquish your account. On the other hand, if I do outperform your other advisor, I’m going to be on your doorstep for the next 12 months asking to handle the rest of the money. “I frankly don’t expect to make any real profit with this venture. The effort that I’ll put forth for the modest commission on the 20% you entrust me with will probably negate any profit I’ll make. My goal is to make you so much money over the next 10 to 20 years before your retirement that you’ll be delighted for me to keep your account and grow it. Bear in mind that I’m investing your money for the next decade. Consequently, you have very little to lose because I’m going to research, analyze, and do diligence to your 20% more than anyone ever has. If I’m fortunate enough to outperform them by a demonstrably superior margin and you entrust me with the full amount of your investment funds, I’m going to keep growing your profits forever. Any time I stop, I will encourage you to take the account away.”

If they send back a card or a letter, you can call them and say, “Let me prove it to you directly. If that is too threatening or time-consuming, let me do it vicariously. If you will award me an established percentage of your investment funds, I will send you some very valuable and comprehensive material that I have prepared for my existing clients. It explains the approach I take, the analysis I do, the philosophy I use, the investment mix I recommend depending on your objectives, and my whole philosophy. “Even though I’m sending this information expressly for you, you can give it to your advisors and they could adopt it. But unless they eat, breath, and sleep my formulas, they may not profit from this report. So I am going to share the innermost workings of my investment philosophy with you—up front before we meet—if that’s what it takes to get you as my client. Get your secretary to call and ask for my report, or send back the enclosed card.” There’s a great philosophy in marketing called “preemptive advertising.” It involves being the first person to clearly explain to a customer or a prospect the processes you go through to do a job. In other words, they may not realize the effort involved. You could send them the report broken down into three parts. The first part may talk about your philosophy in three or four different investment areas. The client’s objectives would determine how you would construct the portfolio, the kind of stocks you would suggest, and the research you would give. You’re dealing with corporate, not financial-based, research. You could tell them, “It’s wonderful that we have a research department that can identify 20 or 30 groups of stocks and categories. Those stocks may not necessarily be the stocks you want to incorporate into your portfolio for any number of reasons.” For example, tell them the kind of personalized research, personalized advice, and personalized whatever you can offer. You might say, “How many of your current advisors directly phone the president or the controller of the stocks to ask these questions? How many of the people who currently advise you will reach into their own pocket to get on an airplane and look at a manufacturing plant you’re putting your money into? Like I said, I’m going to spend the first year and all the profits I make on you in commissions to give you this kind of service—and I’ll probably spend many times that. My commitment is forever. I want to build your portfolio for you. I don’t want to just trust some guy sitting in New York reading gobs of financial material. I want to do the necessary research on my own, just like you would expect me to. When I say it’s good, I want to give you the reasons, the facts, and the figures. You want them to be valid. I’ll do cartwheels for you. “Here are the kinds of research I’ll do. First, I’ll do what’s already been done—even following the guy who’s doing it himself based on abstract readings of the Wall Street Journal if his results were demonstrably superior. But I don’t stop there. I do this, I do that, I read this, I read that, I call this, and I call that. I’m paying for this out of my commission. Fortunately, I advertise this service to all my clients. Quite frankly, though, the $1,000 or $2,000 I’m going to make off of you this year won’t begin to pay for the education and research I’m going to give you. It only pays off if I can grow to the point where I get all your investment money and justify myself in the market. And I know I won’t achieve these goals unless I perform. So if one of us has to take a risk on the other, I’ve decided I’m going to take the risk on you. You don’t have to risk on me.” That’s a way of saying “risk-free” without talking about the risk-free element in the profits. That’s a very powerful approach. Walt: Do you think that groups getting together and sharing leads is a very good idea? Jay: How so? Give me an example. Walt: A CPA, an attorney, a stockbroker, and several different professionals get together every Tuesday morning and have breakfast. Jay: There is a more effective way. You can synthesize a collection of a topnotch CPA and a topnotch, speculative-oriented investment broker, and put on seminars. “For owners of businesses that make money, this seminar offers such vital information that it’s by reservation only.” You can subsidize another seminar at the same time. If you run an ad in the regional edition of your newspaper, it may cost $2,000 for a full

page. That’s an exorbitant out-of-pocket expense for you, but if there are seven of you on the speaking roster and it’s an all-day seminar by invitation and reservation only, the seven of you could split the expense. I did a seminar ad once where I very clearly qualified everyone who could attend. You had to be an accredited investor with a certain income, because we were going to have hot-shot expert speakers, and we didn’t want a room full of people who wouldn’t be able to benefit from the information. We wanted a very qualified audience. You can make it a more discerning approach. If each speaker had $500 and you put the funds all together, you could pay for an ad in the Sunday regional edition of your newspaper. It can have hot buttons and other attention-getting devices. Walt: You would use a full-page ad? Jay: I don’t think it costs that much. A full page in the county edition is $4,500, so maybe it’s $4,500 for a full page in the regional edition. If there are seven people on the roster and each of you pays $800, you pretty well have it, don’t you, including the cost of producing the ad? It’s not so terrible. Walt: How would you structure the ad? Would you list everyone’s name who’s giving it? Jay: It would say something like, “An invitation to attend an all-day, no-holds-barred seminar. This is a very unusual and very in-depth business and investment seminar geared towards the successful entrepreneur. The subject of the seminar is ‘How to Maximize Your Personal and Business Profits in Today’s Entrepreneurial Environment.’ The topics to be discussed will range from ‘How to Make Sure You Never Get Taken Advantage of in Business Deals’ to ‘How to Compound the Profits You Make Within and Outside of the Business.’ We’ll cover everything—legal aspects, accounting aspects, personal investing aspects, tax shelter aspects, negotiating aspects, etc. There’s been nothing like this before. We’ll have on hand an expert in business law, an expert on tax law, an expert on changes in tax reform, an expert on loopholes that weren’t cut out by the tax reform, an expert on pension fund and IRA management, an expert on speculative investing, and an expert on broker responsibilities. It’s going to be intensive, very heady material that will be broken up into four segments. Segment I will cover you and your business, Segment II will cover your business’ investments, Segment III will cover you and your investments, and Segment IV will cover estate planning (or something like that.) This seminar is sponsored by Such and Such (some pseudonym for your amalgamation of experts). Walt: Would you charge people to go to this? Jay: It depends on what you are trying to do. You tell them it’s “only for people who are principals or seniors in entrepreneurial companies. If you’re in a very large company, not self-employed, the decisionmaking manager of a company, or a professional such as a doctor, you’re not invited. Professionals are invited if they have their own practice. There is no obligation, and you will not be solicited to buy products. The whole session will be informative. You’re invited to bring your own financial professionals if you have them. “Why is this being done?” Here, you have to give a rationale. “This is being done because our organization believes there is a lot of poorly informed, hap-hazard advice being rendered on some of the most critical money-making preservation and enhancement subjects that impact entrepreneurs. We believe that the business climate is more competitive than ever before. Making one critical mistake is not suicidal, but it can set you back in your business growth, personal growth, and personal net worth for years. You owe it to yourself to hedge yourself by knowing the most learned, well-researched, and well-reasoned opinions and advice on every one of the subject matters that impacts you. “These professionals have graciously agreed to reveal their expertise to qualified people who will appreciate their information. When you’re exposed to someone who knows three, four, or five times what your current advisor does on the subject, there’s a high possibility that you might want to seek out this more knowledgeable professional for further help. That’s obviously the reason why our speakers are volunteering to make presentations. But, remember, this seminar will make no obligation whatsoever on you except that you qualify. All you have to do to make a reservation is call this number and answer five simple questions that are designed to determine if you qualify financially and professionally.”

That’s a hot concept. No one’s ever done it before. If it works, you have to follow up on the prospects because you can’t solicit them at the seminar. During seminar breaks, you have plenty of things going on. Whenever one of you is not talking, have a table in the back where you can make yourself available to talk to people. In the promotion you can say, “There will be 45 minutes of questions and answers. All the speakers have agreed to make themselves available for consultations during this period.” I think that’s pretty powerful. Walt: How do I get these speakers? Jay: You’d be surprised. A CPA who has enough confidence and is good on his feet, or a hot business attorney, or a management consultant can be encouraged to pay $800 for the opportunity to speak. It could be really interesting. I come from a hard-money background. The way the hard-money marketplace has made money on seminars is by getting all the speakers to be the exhibitors. They pay all the costs. I just did a marketing boot camp for coin dealers. I got 40 people who paid me $5,000 to be at this boot camp seminar for two-and-a-half days. I just did the seminar to make $200,000. However, what I didn’t realize was that I had a captive audience for two days who listened to me attentively. I just spoke as if they had paid expensively to receive generic information. At the end of it, 13 of the 40 sought me out to take them on as a client. If I had solicited them cold, I probably wouldn’t have gotten two of them as clients. You’re begging when you call cold. And it’s very inefficient when you have to call 1,000 people cold, find 20 who are interested, and one you can get as a client. But the posture’s different when you’re putting on a seminar. You’ve allied yourself with expert advice by having a speaker roster. You may even want to pay one of the speakers. You may get five other speakers who are knowledgeable but not great, and then you bring in someone who is really great. You’d pay this expert $500 to bring you all up to an equivalent level of stature. If you do one of these a month, you could have more clients than you could work on. Again, $800 is all it will cost each of you to run the ad. That isn’t so terrible. What I would do when you line your speakers up, is make them sign an agreement stating they won’t speak on their own if they’re going to participate in your ads. I would really try this out with all the participants. If it works, you don’t want to have them speaking independently all over the place. Walt: Is there a better place to advertise than in a newspaper? Jay: Sure. You can turn the ad into a mailing piece, and rent a list of business owners. You can rent D&B (Dunn and Bradstreet) lists of presidents of companies by categories. Walt: It’s rather discouraging to do this unless you’re a certain type of personality. If you’re working with individuals in a pretty affluent area, and you want to do mailings to the homeowners around there, do you think the best way to go is to stick with these seminars, and invite four or five different people to talk on topics such as “Investments in these troubles times” and “How to keep your assets preserved”? Jay: I believe that people want to be made to feel that they’re important, and I think you have something of serious individual value for them. I believe that the more you can personalize your communication with them—the more they sense that you’re not just soliciting them and that you have something of real value to offer them—the more inclined they will be to respond to you. Walt: Let’s say you want to get advertising, and you don’t want to pay for it. Jay: I would go to a bunch of professionals and say, “There are people who respect you and people who think you can make money for people.” How many clients do you have that you make money for? Walt: Probably fifty or so. Jay: What do they tend to be—entrepreneurs?

Walt: I don’t think you can categorize them. Jay: Suppose you went to those people and told them you were preparing to do a seminar. Tell them that before you go and spend a lot of money putting your money into advertising to get people to pay to come, you would rather do it for anyone they knew, because you only want to take on a few more clients. The seminar would be a complete learning module, and those who attended would walk away with enough knowledge so that they may not require your services. You would hope, however, they would be impressed enough that they would want to favor you with some business. You’d be glad to invite someone they know at no obligation. If they want to give you names and addresses, you’ll send their friends a letter. Or if they’d rather, you’ll give your clients the letter to deliver to their friends. I do a lot of endorsed programs where I get people to write letters to their customers recommending another person. You could go to a client who you have and are making money for, who owns a business. In that business there are two subcategories—employees and customers/vendors. That client would allow you to pay the cost of sending a letter to vendors/customers, and/or an internal letter to all the employees saying, “This is a very unusual letter I’m writing, but I wanted to tell you about my broker. It’s unusual for me to write a letter to my employees (or vendors) about an investment broker, but this guy is really good. He has made me money consistently over the last five years without wasting money. I’ve used a lot of brokers, and this guy’s different: he works hard, he’s honest, and he researches and finds little overlooked areas that can be nice investments for me. And if an investment won’t keep me riding all the way to the top, he’ll get me out. “I’m writing to tell you about this broker because I think he’s somebody you might want to talk to if you’re interested in serious investments. I’ve asked him to talk to you on a no-obligation basis for 30-60 minutes by phone, in his office, or at lunch. He has agreed to do this as a service to me. Remember, he’s offering this service to you at no obligation. He’ll just tell you about investments. I think if you talk to him. you’ll learn an approach to investing that is overlooked by probably 90% of all people. At best, you might find a broker who will worry more about your money than you do. “Again, let me assure you that there is no obligation. My broker is not a hard-sell person. Because you are my friend and customer, he will only accept you if you really want his service. But very frankly, for me to write this letter, I must think very highly of him, which I do. There is nothing in it for me at all, except for the knowledge that my broker has made me a lot of money. The best way I can show my appreciation to you as your employer (or as a vendor or customer) is to introduce you to somebody who maybe could make you a lot of profit in your pension account, your investment account, or whatever. There are no assurances, but I can tell you this: in the last five years, my accounts have averaged 14.5%. Once when the market fell, my accounts dropped to 8%, but other people lost 20%. So talk to him. Here is his number. Tell him you’re calling at my recommendation. He will give you all the time you require, and he won’t bill you for his time or advice. He won’t hold anything back, and he won’t try to sell you anything.” That’s very powerful. Walt: Certainly, but it may be very difficult. Jay: What if you wrote a letter and said, “Here is something I think is very unprecedented. I’m going to make four recommendations today that I think have merit. I’m not going to ask you to trade with me. Just watch my predictions for the next few weeks, and see how they do. If they perform well, they’re indicative of the recommendations I make for my clients all year long. Bear in mind that these are recommendations made out of context, not knowing what your individual investment objectives are. If my investments don’t pay off, you won’t hear from me. But if they do pay off, I’m going to write again in three months and introduce myself to you. All I ask is that you take my call.” If you recommended seven stocks, and you did nothing but call somebody... Again, it’s a deferred thing, but if you’re going to be in the business in a year anyhow, you should send 1,000 people that letter every month. Every four months, the stocks either go up or down and you then call the people you sent letters to, unless the stocks all go down. You just call and say, “I’m the one who gave you the

recommendations. Did you keep track of them? How did you do? The odds are probable that with one out of four going up, you ought to be able to make a profit.” I’m just trying to give you some ways to break the ice in a notable way that will get peoples’ attention. These ideas are powerful, but they’re only powerful if they’re implemented correctly. Do some calls and see if you can get some professionals together. You can go to someone and say, “Look, if I can come up with a program where you only have to spend $800 every six weeks and you get ten new clients, is that worth it?” One of your contacts could make so much on these seminars that he may be the person to cover the whole thing. It’s better to coordinate a broad spectrum of other professionals so it doesn’t look like a setup. You may find in the course of doing this that one guy, such as the attorney, gets 20 clients. So you go to him and say, “Look, we can’t justify continuing this. But if you’ll contribute a larger amount because you get most of the business, then we’ll keep doing this.” Walt: I’ve got a lot of good ideas to work on now. Thanks.

Financial Planning This two-hour consultation ranged over a wide variety of topics. In addition to being a fi nancial planner, Will was into a wide range of entrepreneurial endeavors, including an employment agency and a company that sells natural food products through vending machines. The following excerpts from Will’s consultation will give you the essence of some of the most important marketing concepts I teach. If they seem abstract at first, I suggest you reread the transcript several times. Every one of these concepts has been applied to a spectrum of different businesses, and, properly executed, every one of them can literally multiply your profits. *

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Jay: You’ve done direct mail? Will: I did a 10,000-piece mailing, and we got a 1% response. It was on a single premium insurance product. The problem was that they found out it was life insurance, and we had only three sales. It cost me about $8,000 to do the mailer. We had three sales, luckily one was a very large one and I made about $30,000 on the deal. We had one doctor who came in and wrote out a check for $300,000 and laid it on the table, or we would have lost on the deal. But the response rate is usually around 1% on insurance. No matter what we do, 1%. I’m tired of working like that, you know. Jay: Do you have any plans for doing things differently? Will: I’m thinking about doing a newsletter for insurance agents. Teach them how to use attorneys, how to get an accountant, how to do the type of things that we’re doing. Would you pre-approach a letter to them, telling them the material is coming? When I get all this direct mail stuff in the mail, a lot of it just goes in the trash can, unless I like the envelope, but the majority of it gets trashed. If I sent a personal letter to you saying, “I’m so and so and I’m going to be sending you some material, this is what it’s going to be about, and I would appreciate it when you do get it, don’t trash can it. Take the time to read it or whatever. This is what it’s going to be about, look forward to it.” Would you do that, or do you? Jay: I’ve never done that, but as a technique, it has been very successfully used by people. Will: Would you recommend it?

Jay: Well, I would use the following: I would allocate a test budget—$10,000 or $5,000, some set amount. I would repeat to myself before I start that I want to try a number of experiments and analyze the results. One experiment I would try would be just what you said, a personal letter. One might be a postcard drop, followed by a package. Then I would try a personalized initial package. You can try a lot of formats. You are better off having it personalized. At least having the envelope personalized, not labeled. If you rent a list of financial planners or insurance agents, or whatever, I would have the list printed out, take it and spend the extra money and get a mag tape. I would find a service that can laser print, and depending on how big the package is going to be, it may or may not require a large-sized envelope like the one you received from me. Yours may just be an eightpage letter which you can fold, and if that’s the case, it’s easy to laser print on a letter or personal sized envelope. At the same time, I would try that against a mass-printed one. Now, remember the mailing you received on my series of marketing reports? I actually gave a tutorial in that, didn’t I? And if you read that, you got many new ideas, and I’m suggesting you adhere to something like that. What I did instead of teasing you with all of the things I was going to teach you, I taught you a bunch of things right there in the letter, where you might think, “That’s a great idea. I should do that.” And it becomes implicit if somebody is going to give you that kind of education for nothing, he or she must be so knowledgeable that it’s foolish to try to do it yourself when they’ve got the infrastructure and the methodology down so well that they can just give it to you for $500. This can be one experiment, because it may or may not work. I think if you took the approach, you know, “Let me tell you how we doubled our business. Let me give you a short course on how we doubled our business overnight. We did this, we did that, we did that. You can too. Of course I’ve given you the essence of it, so that you can take this letter and not do anything else, and spend the next year and $40,000 of your money trying to figure it out, and do what we did—hit or miss. Or, you can spend $500 or $1,000 one time and a modest $50 a month for every month you use it, using our services where you’ll get the benefit of etc., etc.” I wouldn’t be afraid to give them real examples. Most people like to titillate. My philosophy is, let’s give them such an education (we gave you 10 or 15 marketing concepts in that letter) that if you never ever responded, you’d probably make $25,000 more a year almost just by reading it, and it would become implicit that if somebody can give you that kind of education free, and be willing to give it to you as a free sample, he or she must be so knowledgeable, I’d be a fool not to try it, particularly when there is no risk. I’m suggesting that you do the same thing. Doesn’t that make sense? You might even put a twist on it. You can say, “As long as you’ll sign an agreement” (and you’ve got to word it so it’s not threatening) “that you can try it out for 60 days on a money-back guarantee, where you agree to not use our materials or concepts if you opt for the refund.” You can have a lot of fun with it if it works. I always believe that if you’ve got something to sell that is inherently effective, you’ve got everything to gain and nothing to lose by offering the most liberal, risk-transferred guarantee. Now let me tell you something. You will have a certain number of people who will ask for their money back. I get a certain small percentage of the people who take me up on my offer who write me the nastiest letters telling me my grammar is wrong, and that what I teach is the hokiest, most simplistic thing in the world. But I could show you 100 letters of people who made hundreds of thousands, a million dollars, tripled their business, made an ad do 10 times as well, and so on, based on the same marketing reports the other people received from me. So you’re going to have a certain amount of people who just don’t understand. Build into your psyche that two months later when it comes time to exercise their refunding capabilities, some people are going to do it. So be prepared for that and don’t worry about that. Just say, that’s a cost of doing business, and who cares. If you never get mad and you go forward, people’s needs change, and finally people will see the clarity down the pike.

Will: So you should keep them on file even if they ask for a refund. Jay: Absolutely. Same thing in lead generating. You’ll find, as you probably know, that people will ask for the free information but they won’t give you their phone number. Now, most companies will take the position: I won’t send the free information if they don’t give me the number. I take a position that’s different. I send a letter to them, and say, “I know you must be one of the most discerning people in the world because you didn’t give me your number. You probably don’t give it to anyone. It means you’re probably a real tough sell. I understand that, and it’s my job to really educate you, because I’ll bet when you’re ready to buy, when you finally find somebody who you really trust and you start developing” —and this may be abstract, but even the people who cancel, don’t throw them away. Put them in a file and immediately send them letters saying, “I’m sorry, but we’re going to check with you again in three months, and we’re going to give you the results that 400 other people have gotten.” Do you understand the point I’m making? It’s very important, because you can salvage half those people. In the letter to those people who ask for a refund, I tell them I have 100 letters of actual people who made $50,000 and $1 million from my subscriptions through a period of time. I tell them, “I’m not trying to say you were wrong, but I don’t think these people were wrong either, and I’m going to give you a chance if you want to, without any hard feelings, to re-send your subscription.” That can get 30 or 40% of them to stay on as subscribers. It’s important that you don’t ever get turned off. When people say, “No”, and they say, “Give me my money back,” what they are really saying is, “Reassure me.” Will: One of the things I wanted to do, even if I didn’t make money on the newsletter, was to get a client or a group of people to open up once the package that my newsletter comes in. Because whether they become a client or not, after they have done that for a month or two, then you start putting other stuffers in the same thing. Jay: Let me give you the dynamics, some examples about my newsletter, because this will help you understand. We sold something like $2 million worth of subscriptions in the first year. Half of that was incredibly profitable because I used alternative advertising. I used inserts, deals where instead of mailing outright, I was able to buy 7 or 8 pages in Entrepreneur Magazine at a quarter of what it would cost to have mailed to the same list, and I got three times the readership at a quarter the cost of sales. But after that, I had to go to the real market where it costs me 50 cents apiece to mail to the marketplace. When I do that, it costs me $450 to buy a $500 sale. To get you to subscribe year one costs me that much. It’s about a break even. I may make a little bit—$20, I may lose a little bit—$20. On that basis it doesn’t seem very worthwhile. However, what I’ve ended up with is the following: I can take all those 16 or 18 issues, reports if you will (I would call yours reports, depending on what you’re doing with them) and make them into other products. I can sell them individually for $50, $60, and $70 apiece. I can amalgamate any 4 or 5 of them categorically. I can meld them together. Do you see what I’m saying? If you look at your newsletter, you’re right. If you can buy a subscriber for up to break-even—or, if you’ve got the money, sometimes even a little bit more—and you can come up with 4 or 5 or 6 or 7 other products and/or services, you can vend to them over the course of the year in the form of inserts, or external solicitations with your name and build it around your name. Parenthetically it’s always better to build it around an individual than a generic entity. I mean it’s much better to be Will Jacoby. There’s a cultism, there’s something about if you’ve gotten a letter from the publisher or the editor of a newsletter. I mean it’s just a whole different thing. You want to build around yourself and you can become a franchise property. If you hired 28 people to work for you, if it becomes a big business and it’s you doing it and you have any kind of discord with them and they want to leave, they are not as big a threat to you. It’s one thing if it’s a generic entity, if it’s the National whatever. You’re just always better off. It doesn’t matter if you have a corporate name as the publishing name, but you want your name affixed right along, you know it’s Will Jacoby’s this or that. It’s important for a lot of reasons, not the least of which is the residual ancillary products and services you will offer them. How many financial planners are there in the country? Thousands, tens of thousands? If you could buy 5,000 affiliates—other financial planners—and give them some geographic protection, and you made

nothing in year one, you probably would sell 500 to 1,000 of them at least one other product or service in year one. If you did a very good service, you probably would renew, if you had a renewable concept, at least 2,000 of them in year two. So, if you build 500 people at $1,000 apiece and it cost you $1,000 to build them, you break even in year one. But in year two you’ve already accrued for yourself an annual $200,000 income if you do nothing else. If you do inserts for other financial planners, or for consulting products, or courses or seminars or whatever, it can be wonderful. Will: Yes, well I was thinking of a video. We do seminars, and we pull quite a few people. We can go to a grade school where there are 30 teachers and 20 of them will sit down with us. Jay: Well, then you want to syndicate that. You want to make that available to other financial planners. Will: Yes, so it costs us maybe $20 to produce the video. Jay: So you want to package it, but my suggestion to you is more than that. You want to package not just the video, but the video along with the marketing concept, the script, you know because that’s where you can pop the price. Will: Right. O.K., so you’re saying do the script for like $80, and then if you want the video... Jay: I think it would be a package. You know, “For $500 you get the following: You get the whole program that we’ve used and we show you how to go in and every week it’s 30 school teachers who sit down delighted with you for two hours, and on average have 15% of them buy something for $1,000. Not only do you get an actual video of the process, you get the letters, the scripts we use on the telephone, you get the follow-up, you get the closing techniques plus you get 60 days to try it out and if it doesn’t work for you, as long as you sign an agreement saying you’ll never use any derivative, we’ll give you your money back.” It’s pretty powerful. What you would sell for $80, I would sell for $500. Why charge me $80? I mean, what’s it worth? That’s the question. What’s it worth to you. I’ll give you another concept. I don’t know if it’s do-able because of the regulatory implications of your business, but , you could also try half of them on a percentage basis, if you could monitor it. What if you sold distributorships for financial planners who are regional managers and they actually got percentages? Your selling proposition is pretty powerful. “What would it be worth to you to have a technique that’s proven itself to be able to bring 30 teachers a week in a room at a cost of whatever.” It costs you $35 to bring them in? Will: It costs nothing. Jay: “It costs you nothing to bring them in. You can bring 30 teachers a week, every week, 52 weeks a year. They will be delighted to sit attentively for an hour and a half.” I mean, little blurbs like that and you can write all kinds of little ads in the trade magazines, and say, “For details write on your letterhead or call, and we’ll send you complete details.” You know—no risk. That’s very powerful. You can repeat the same essence of the offer or the ad, you can almost tear the ad out and have a facsimile on the outside of the envelope you send and say, “Remember you asked for this information and here it is.” It can be a lot of fun. After you cream the market on that, you can even compete against yourself on a more variable basis and have another company that offers the planners the deal at so much a sale. I mean if they won’t buy it on a fee basis, say, “Well, will you pay me $25 a sale, or $10 a sale?” And then you can compete against yourself. I’ve got a lot of clients who do that. We create a high road and a low road, and after we cream one market , doing a service, we go after them with another. I’ve had insurance agents for three years, I’ve had different ones. I had Allstate on my car. I had State Farm on my house. I had Manufacturer’s Life, would that be the one out of Canada? —And never did anyone try to cross-sell. I was amazed. Never did the State Farm guy who I insured my house with, and lived three blocks away, ever say, “Look I’d like to pitch you on your car.” I used to be really into cars, 6,

7 cars. I had almost no accident rate for 10 years, so I’m really a nice preferred . . . it’s amazing, they’re not very ambitious. Will: Yes, well, they’re not thinking. Jay: They’re not very logical. Will: No they’re not. Now I want to ask you about newspaper advertising. We have a unique IRA that’s paying 9.5% interest now for 1 year guaranteed, 8% for the next 2 years guaranteed, and a lifetime of 6%. Never pays less than 6%. Well, if you go to any bank today and get 6% on your IRA, you’re doing great. We’re saying 9.5% today, 8% for 2 years, and never will it ever be lower than 6. Jay: That’s fabulous. Will: Now, my thought was, I was just going to use that information, but I’m not sure about newspapers, what to do in newspapers. Do you want to give them more story? Jay: You’ve got to educate them, and then you’ve got to tell them exactly what you’re telling me, and not assume that they understand, because they don’t. I’m shaking my head, yes, but I’m not very familiar with the fact that that’s a fabulous yield and you might even take the time to call around and get yields, and say, “By the say, we went to this bank and they offered that. We asked three other insurance companies what their offer was. We went to Merrill Lynch and they said we can’t guarantee it.” And show it. “Before you even respond, why don’t you pick up the phone and verify if for yourself? Here are the numbers to call.” The newspaper may not print the ad, but it would be very powerful, don’t you think? You tell them on the phone, “By the way, we can do everything including transferring if for you. All you have to do is sign a Power of Attorney.” People have an aversion to doing all the work. “Call us for all the details. We can handle all the transactions for you, including approaching your banker, your insurance person, all you do is give us whatever, and we can do it all for you.” Will: Great idea. Now here’s another one: Parade Magazine. Do you know much about Parade Magazine? Jay: What do you want to know? Will: Do you think it would be good to use Parade Magazine to market a network where, through the use of the computer, we can provide your resume and information about you for employment agencies all across the United States? So that if you indicated on your resume that you lived in Spokane, Washington, but you wanted to move to the L.A. area, or the San Diego area, we’d see to it that the employment agencies in that area would have information about you. For $15 or $25 you will send us your resume and you will complete a detailed form of the additional information we need. Jay: Articulate in a paragraph or less the essence of what your offer would be. In other words, tell me what the headline would be or what the offer would be. Will: We would help someone provide their resume to employment agencies throughout the United States. So if you have an employment agency who needs people to fill jobs, he calls me up and says, “Gee, we need 3,000 plumbers in our area.” Jay: It would be good for something like that if you could do regionals. You understand that? You wouldn’t buy a $50,000 or $60,000 national ad. You’d find the smallest, localized ad that would be indicative and you don’t care if you make money. If it’s a $2,000 ad, you’re better to lose money on it and find out doing it small. Then if it works in the test, you don’t want to go from one $2,000 market to the whole $60,000 run, unless you got 25 times your money on the test. Then yes, but if you get a little bit more than a break-even, or double, it’s too marginal. Walk your way through and revalidate it in a little more expansive market. Even though it costs more this way, you’re always saving because you’re cutting

your risk each time. The idea is, I tell you where I want to live and you’ll take my resume and see that it goes to employment agencies all over that state, city, whatever. That’s very powerful. That’s a neat offer. Will: We want to gear our advertisement not to the person who is unemployed. Jay: I’ll give you a suggestion. If you get an ad that works, generally you can enhance it by customizing it. In other words, if it says “How to Move from Portland to the City of Your Choice.” You know—just that little thing of customization for every city you run it in would make it very, very powerful. It could increase response by 30 to 40% because it adds more personalization to it. My philosophy is that you’re better off losing money testing something before you put all the money in the methodology, the infrastructure, because more often than not, with things like that which sound very good, for some reason you and I get excited about them, but the marketplace doesn’t always. You’re probably better off before you go to the trouble of putting together the computer programming and the software and spending $25,000 on it to spend $5,000 having the ad tested. Then if it doesn’t work, give the few people who responded their money back. It’s cheaper to know from the marketing. The marketing is all important. Without the marketing validation, you just waste your money. Does that make sense to you? Will: It does. Jay: One consultation that I did yesterday was really interesting. A man has an idea for a batty product which is like a pet rock, except I think it’s very marginal and I don’t think it’s going to do well. He’s hell bent on it. He wants to produce 40,000 of them to have in stock when it takes off. I said to spend $10,000 on a TV ad for mail order, even though you may or may not want to sell them that way. See what it’s like. If it doesn’t come close to breaking even, and you’ve done two or three versions of the ad and you articulate it as clearly as you can, you’re better off losing $10,000 than you are spending $70,000 for materials and never selling them. The stuff sitting in a warehouse won’t be worth a penny on the dollar. I underscore that analogy to you in anything you want to do. Sounds like a neat idea, but I would recommend so strongly that you get someone to write the ad as if the product exists, and then you test the ad as conservatively as you can in the smallest readable and meaningful market you can—and one that is representative. Then if it shows great life, stop for two months because no one is going to produce it that fast, and then go forward. If it doesn’t fly, you will have only lost $10,000, instead of $50,000. You’ve got to be very careful, and I always recommend that you concentrate your money on the marketing values first. I hope that makes sense to you. Will: It does. We were talking about seminars. When a lot of people think about a seminar, they think they have to stand up and be the speaker. Jay: What you can do is hire somebody. Hire somebody who is a great speaker but can’t sell his way out of a paper bag, and say, “Hey, I’ll give you another way to make money. You get commission from all the people who buy after you speak to them.” There are all sorts of things you can do. Monex is a very interesting point. Do you know who Monex is? Will: No. Jay: Monex is one of the biggest, multi-million dollar leverage gold companies in Newport Beach. Monex built their business by hiring a bunch of economists who were great economists, but who couldn’t sell worth a darn, to go around the country and speak for them strictly on contingency. They’d run the ads, the economists would come in and speak, at the end they would direct the people to call their reps the next day, and the economists would get a percentage of the sales. There are all sorts of fun ways to do that. They built a multi-million dollar business doing that. The speakers, who had been probably making $30,000 beforehand were now making $300,000 on a percentage and they loved it. There is always some way to manipulate that and convert that. In seminars, there is so much you can do.

Will: For our mailings we used high school students to lick the stamps and feed the envelopes through the laser printer. The only thing that we couldn’t do very well was to get a stamp that says “Important” or “Rush” or “Open Immediately” on the front of the envelope, instead of having it printed. Jay: You didn’t buy one? Will: Oh, we did, but when we did 10,000 mailers at one time, the stamp quality was poor. When they stamped it and it said “Rush”, maybe the “R” was missing. Jay: I’ll tell you a little technique that a friend of mine has used and it’s pretty powerful. It’s a little dangerous using it for bulk mail, because you’ve got to forward date it. It’s hard to find an example of it. In the corner of the envelope at the bottom is “time and date.” The automatic typewriter dropped down two lines and said “Time: 12:48 P.M. Date: January 15.” Just to make it look more unusual. Will: Another point: I think in your marketing reports you were saying, “Don’t use inserts, don’t use a 3 x 5 card, for them to fill out and send in. Instead put the card right in your material, perforated so that they rip it off the page and send it in. Otherwise they open up the letter, and the 3 x 5 card falls out, and all they do is look at the letter which says $195. Jay: What I also recommend irrespective of how you do the card is that you make absolutely certain that you reiterate powerfully and clearly in a really compelling way the essence of the offer. Focus heavily, heavily, heavily, on the wonder of the risk-free guarantee in the body of the coupon, because people do look for that. They want to make sure when they get to it that it says, “Please, give me the chance to take advantage of being your licensee in my city for 60 days totally at your risk, and if it doesn’t work, and I don’t make at least 25 sales in that period of time, and the average sale is not at least $500 commission to me, I get to send it back and I owe you nothing.” It’s very important to do that. Will: I’d like to ask you about a problem we have. There was a company in our city called Mortgage Plus. It was a mortgage company. Mortgage Plus not only bought contracts at a discount, but they also got into the loaning of money. Well, when you start loaning money and people don’t start paying it back, all of a sudden you’ve got a lot of bad debt. So they went under. Just before they did, we started our own mortgage contract business. So now when you say quality mortgage, everybody says, “You’re not going to get my money in your account,” thinking of Mortgage Plus. We can advertise contracts if someone comes in with a contract they want to sell, we don’t have the money to buy it, but we can try to sell that contract in a newspaper article: “Contract for Sale—House. Earn 11% on your money.” So, we have a real problem. What do you suggest we do in order to overcome that problem? Jay: Do you have two problems, one finding the source of the money and the other finding the contract? Or is someone to sell it to no problem? Will: Yes, we have both problems. We have a problem in finding the investor to buy it, and then we have a problem in the image in the community that says, “If I invest my money in that contract, will I go broke? Or, are you guys going to go broke?” Jay: What is your retort for that? I mean if somebody asks you that, what do you say to them? Will: Well, we tell them we don’t loan money. How Mortgage Plus got into trouble was that they started loaning money to used car dealers here in town. They did financing on automobiles and got hurt. When you do investing with us, we buy real property, houses, duplexes, whatever, therefore your money is more secure because it’s backed by real estate. We always have 20% equity built into the property. So, we want to start a mailer. Jay: Who do you want to mail it to?

Will: We want to mail it to the upper crust of the community. Jay: Looking for what? Will: We’re looking for investment money. We’re looking for the guy who has bucks that wants to put it into something and get better than 6%. Jay: What do you have to offer that the other brokers don’t? What is your Unique Selling Proposition? Will: Greater return. Jay: Yours is better? Will: Yes. Jay: Why? Will: Well, because we’re a small company we don’t have the overhead. So we can go out and buy select pieces of contract and give a bigger percentage just to develop a market. Jay: Let me ask you a question on the other side. When you’re buying the contract, why would somebody want to sell you the contract, instead of selling it to someone else? Will: Well, we might pay them more for a contract, number one. And mainly people who are selling contracts are hurting for money. That’s the bottom line. Jay: Is there some recorded list of who’s got second and third mortgages? Will: You can get them, but they’re a lot of work. Jay: How much work? Will: You have to go down to the courthouse, and go through all the back listings, and you’ve got to know what you’re looking for. What you do is find out the excise tax. Then you’ve got to find out who paid the excise. What property was it? Is it real property? Is it a vacant property? Is it farmland, a lot? You know, there are a lot of variables, and then you never know whether or not the guy has already sold the contract when you send a mailer to him. What we need do to is develop an image that we’re okay and our contracts are a good thing. Jay: Okay, how can you indemnify? What can you do? Can you get bonded by Lloyds of London or something like that? Investment Rarities had a contract with Lloyds of London. They had a $2 million dollar bond against any employee, not necessarily against them going broke from a real reason, but against any employee going broke from fraud or something like that. It was a highly improbable scenario, but it was a very comforting thing to offer people. Will: It was a bond? Jay: Well, a Lloyds of London is pretty powerful. Don’t you think? Will: Yes. Well, we were trying to get an insurance company to insure our contracts that we bought. Let’s say we bought a contract from a person that you’re making payments to now. We buy him out and you’re paying us. All of a sudden you go broke and you don’t have any money to pay. We get the house back. Jay: What, the insurance company wouldn’t do it?

Will: Well, no they really wouldn’t. We had a couple of nibbles on it, but it got to where it was just too expensive. They wanted too much of the profit in order to insure that. If we did a huge volume, you know it might be worthwhile. We need to develop the credibility behind our contracts. Jay: You can get a spokesman. You can be the first ones to articulate what you go through. You can run better ads than they do. And you can tell the story of why you can offer a better yield. You could position yourself uniquely. You could be the little company that gets the creamiest yields, that you only do onetenth of the deals of the big company, but your criteria are more discerning. “We only want it if it’s in season this long. We only want it if we can give you a minimum of this kind of yield. We only want it if it’s in a neighborhood that is considered by the ABC Realty Association to be turning three times faster than the industry average, or something. So, this is how we protect our clients. Quite frankly, we turn down four out of every five deals that are offered us. Granted we give up some profit, but we want clients who come back over and over.” That may be a way to do it. Most people do things wrong. The best way to figure out whether you can sell is to make a deal with somebody where you take the risk. Because if you get somebody to take it unproven, and it doesn’t sell, they are going to shove it down your throat. Will: One question I had, what’s a hot item for the year that you see in mail order? Jay: One of the hottest areas of fascination is telemarketing in-call upselling, where you either do direct mail or space ads and you get people to call in, on probably an 800 number, for a specific offer or information and you upsell them. It’s becoming very, very big. A lot of people are doing very big business with some of these 900 numbers too. I think they’re getting a bit old, but they use them as devices to qualify somebody on a self-liquidating (break-even) basis and then they upsell them to something else. I’ll conclude this consultation with my most vivid realization on how to make gobs of money. I used to get paid just big fees. I had two or three clients at a time. But in 1980 the recession was horrible and all my clients got in such trouble and I had been making so much fee-based income, that instead of looking at me as their salvation to extricate them, they looked at me as their most lofty expense and they wanted to cut me down. If I made $50 grand a month and somebody said we’re going to cut you down to $25 grand, where most people were only making $10 or $5, I wouldn’t do it. So I, shrewd person that I was, told everyone to forget it and that I would find some other client. I found myself knocking on doors, trying to make $50,000 in fee-based income in the middle of the recession. The people laughed me out of their offices. I was sitting, morosely watching my bank balance dissipate and the stack of impending bills accumulate, and a vision came to me: taking the essence of what a personal injury attorney does, modifying it and adapting it to cover other areas. My feeling was if I could make money or save money, increase the yield or decrease the cost, increase the residual or decrease the selling expense, or whatever way I could find to enhance what you would make on a customer, or an old given up prospect, or some kind of franchise or intangible resource you didn’t know you had, I would make a lot of money getting 25% of the enhancement or savings for as long as I could do it. I would like siege and claim to the proprietary ideas I’d come up with and covetously say that I’m leasing them to you. You can’t have it forever. You can only use it as long as you pay me the lease payment. If you didn’t want to put the money up, I’d reverse the tables and say, okay, I’ll finance it, you do it. Let me have it and I’ll give you 25%. I made $200,000 or $300,000 a month some months doing that. It’s very abstract, but it’s very powerful. If you can understand what you’ve got, then you can figure ways that people can do it and either pay you 25%, or if that’s too threatening, then say, “Okay, then give me $20 a sale.” Or $5 a sale. If you have 1,000 guys sending you $20 a sale, and they’re selling 10 people a week, you’re making a lot of money. Granted, control can be difficult. I get jilted by at least 60% of my clients out of at least 20% of what they owe me always, because I rarely go and monitor them or peruse the books. But it’s funny, if I can sell you an ad where if the market value to get an ad written is $7,500, I won’t charge you $7,500. I want either $85,000 cash, which you don’t want to pay, or 25% of the profits for as long as you use it. And if I can take

it back anytime I want, and I can sell it in other non-competitive applications tomorrow morning, I could make $150,000. You see what I mean? My pitch, by the way, is I never want to supplant a dollar you’re going to make yourself. I don’t take a dollar out of your pocket. I only want to augment, and I have a no-risk offer: If I give you a dollar you didn’t have and wouldn’t have had, I only want back a quarter or a dime, or 50 cents, whatever we agree. If you don’t want to take the risk, I’ll put up all the money and give you the smaller share. The sky is the limit. That’s how you’ll get much richer than only a little bit, I think. I usually don’t take start-ups because they’re too much trouble. I want somebody who has momentum. I don’t get anything for the base. I get it from the enhancement, the increase I make them, and the greatest example I think I showed in one of my marketing reports. I had a gold dealer who was doing bank leveraging on gold purchases, and they ran this ad when gold was $300 an ounce: “2/3 financing on gold and silver.” That was the headline on the ad. They were pulling an adequate number of leads who were qualified and they were converting an adequate number of those leads that they pulled to make money on the ads. They were spending $20,000 a month. The first thing I did when the ink was dry on the agreement was change just the headline. I said, “If gold is selling for $300 an ounce, send us $100 an ounce and we’ll buy you all the gold you want.” It was a much more powerfully articulated headline and it produced 5 times more yield for the same dollar, and I started making $30,000 a month. My suggestion to you is to do the same kinds of things. Reflect on it. I always recommend you try to build. Don’t try to do it with a single concept. Even if you’ve got one great concept, every concept has a saturation, every concept has a visibility level where competitors try to either plagerize or emulate you. The smartest thing in the world is to try—conservatively, don’t get promiscuous—but try a plethora of programming concepts concurrently, and the best thing to do is build the broadest spectrum of legs. If you can build your business by adding 25 legs, you can’t kill the business. But you could sell off part of the business any time you needed money. I hope, besides giving you value, that I’ve opened up horizons. It would make me very, very excited if a year from today, you wrote me a letter and told me that you made millions. I made $2 million on these concepts last year, the derivatives of what I’m telling you. It’s all here, and you have to be fiercely covetous over what you’re worth, and the person you’re trying to entrust it has to revere it too or it won’t work. You’ve got to demand that they respect the inherent value of something that’s very abstract. It’s very difficult, but you have to keep a tether on it. If the tether gets too loose you lose control over it. *

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Here, in brief, are the concepts I articulated in this consultation: 1. Give people free information that’s of value to them. They’ll reason that if you give so much for free, they’ll gain many times more if they take you up on your offer. 2. If your product or service really helps people, you should have no qualms about offering a liberal guarantee that minimizes the risk to the customer. 3. Don’t give up on people who don’t buy, or who buy and return. There’s almost always a way to resolict them successfully. 4. Don’t be afraid to just break even on the initial sale if you can generate a large volume of back-end business from the same people later on. 5. Whenever you find a concept that works, package it and offer the package to other people in your industry. Have them pay you based on the amount of money your concept makes them or saves them. 6. Try things in a small way first. Do your market testing before you spend a lot of money to produce the product. 7. In your ads and mailers, don’t just make your offer. Explain why you are making the offer. This adds dimension and makes everything you say more believable. 8. Don’t just use one marketing approach. Use many. A company built on 25 legs has less chance of failing than a company whose entire future is riding on a single concept. Review this list, reread the transcript, and make these concepts part and parcel of your marketing thinking. Then, as new situations arise, you’ll have the ammunition you need to generate maximum profits for minimum expenditure. Leverage is what it’s all about.

Dentistry William had a dental practice of about 1,700 patients and wanted to make it larger. In this consultation, I showed him how to boost his business by doing unique kinds of personalized direct mailings to current and potential customers. I also suggested that he look into becoming the official vendor of dental services for local businesses, who would get his services at a discount. This approach has doubled some dentist’s practices. Similar strategies could do the same for your business. Finally, he was considering hiring a biofeedback specialist to work out of his office. I showed him how to set up that kind of host relationship on a variable basis so that both parties get the maximum benefit. *

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Jay: If you’re offering a free first visit examination or cleaning or whatever, don’t offer it to more than 5,000 people until you can analyze what it costs you. Analyze over 6 months or a year. Constantly experiment. Don’t analyze just the front-end response, because that may be misleadingly negative. It may be that the cumulative effect is powerful. Also, a lot of programs may pull a lower number of responses, but the quality in terms of their profitability and perseverance may be so handsome that it’s worth doing a letter that only pulls 14 people, because 9 of them stick. See what I’m saying? You’ve got to experiment. William: Should the letter be personalized? Jay: I recommend that if you’ve got a choice of doing a mass mailing or doing a quasi-personalized letter, always opt for the latter. Even if you only do a fraction as many, the effect will be much better. Another suggestion. I’ve been getting a lot of people to experiment (very successfully) with what I call “the assumptive letter.” In the assumptive approach, you don’t ask whether they’re interested. Most people will send a letter that’s preprinted on blue, cheaply offset paper and say, “Are you looking for a new dentist?” On the assumptive approach you’d assume they are. The only people this will appeal to are in fact those people who have the need. Take the premise that they’re going to read it. The letter will say something like, “Robert S. Goodson, 321 Central Street. I am told you’re looking for a new dentist. I don’t know why, whether it’s because your former dentist retired, or because it’s hard to get an appointment with your dentist when it’s convenient for you, or, perhaps, because his style wasn’t gentle and pleasant enough for you and your family. Whatever the reason, I’d like to offer my services if we’re philosophically and geographically compatible.” Start going into the philosophy, the convenience. Then, “I am 5 minutes from your home.” Tell them exactly where your office is. Tell them you take this street to that one and turn this way and it’s easy parking. “I’m easy to talk to if you have a problem. If you just want to find out whether I’m gentle enough and useful to you, you can call and talk to me or come in. I’ll see you and won’t even charge you to talk with you. We’ll schedule at your convenience. If you have a difficult schedule (as long as you keep your appointments), I’m willing to be flexible. I’ll come in a little early or we can schedule a little later. For emergencies, I’ll drop everything, and you can call me in the middle of the night if it’s a real emergency. I don’t like to be bothered any more than you do, but I’m sensitive and dedicated, and making money isn’t the only reason I went into dentistry.” You tell your story and then you make them an offer. This is a very powerful approach.

William: Okay, that sounds good. Jay: I can’t tell you which one or ones will work the best for you, but I can tell you that you’ve got the rest of your life to do tests. I mean, there’s no urgency to do it tomorrow. You could start doing them all, but just don’t spend more than you have to on a given one until it’s validated or invalidated. 5,000 pieces is the most you need to test. Now let me go to another area while it’s on my mind. You mentioned that you have 1,700 or so active patients, but you have thousands you haven’t seen for awhile. I suggest you put their names on computer. If you don’t have a computer, rent, lease, or borrow one. William: We have one. Jay: What kind of printer do you have? William: A laser printer. Jay: Start drafting experimental letters to them. The letters should say something like this: “I haven’t seen you in my offices for quite some time, Mr. Mitchell.” Drop down after that and leave a lot of white space between lines so that it’s easy to read. Use a lot of short, crisp, paragraphs that are written in a very folksy style. You write very nicely, but I don’t know if your letters are folksy enough. That style tends to be powerful. Anyhow, you go on with the letter: “I don’t know if you haven’t come back because you moved, because you found another dentist you prefer, or because you’re procrastinating. Like a lot of people, you may have fear of the unknown, or your fear of the pain has got you putting it off and putting it off. I hope it’s not putting it off, because I worry about that. There is so much that can go wrong, that you can get yourself into problems like...” Then list three or four things that really scare them about putting it off. I don’t know the specifics, but you know to interject that into your letter. “Did you know, for example, Mr. Mitchell, that if you don’t get the plaque cleaned off your teeth regularly, such and such could happen? I’m sad that three times as many people have to go to that expense just because they don’t have such and such done. “Nevertheless I’m writing to say that if you have another dentist, that’s fine, I’m glad for you as long as you’re taking good care of your oral hygiene. If you don’t have a dentist, please call my offices and schedule an appointment. If you’re afraid, you might remember from the past that there is no reason to be, but if you have any problems call and get it taken care of.” Just invite them back. You can do it a couple of different ways. You could send a letter saying that you worry about them: “Where have you been? I haven’t seen you. Sure, we miss you, but I’m worried about your teeth. I’m hoping that you’ve found another dentist that you prefer. I don’t like to lose your patronage, but I’d much rather it be that than letting your mouth fall into ruin.” Then you can tell them something that happens in the worst-case scenario. Then invite them back and remind them, “Even if you’ve found another dentist, I’m there for you if you ever need me. If your dentist moves, if your dentist becomes unable to handle you in a convenient way, if you have an experience which is negative, don’t be afraid. I’ll be glad to have you come back. We appreciate you and we miss you.” That’s a neat approach. William: What about offering a money-back guarantee if they’re not happy with the initial visit? Jay: That’s very powerful. Have you ever experimented with that? William: No. Jay: My response to every question you ask me is not going to be a definite yes, no. It’s going to be, “Test your supposition with a large enough sample audience to give you the answer. If the response is enough that it makes money for you, keep doing it.”

However, I will give you some suggestions. I’ve had very good success with a couple of dentists doing derivatives of the following. If you have any businesses in your proximity, hire somebody part-time, perhaps a college student, on either a contingency or an hourly basis. Have him or her visit those businesses to offer your services one night a week to people working in those offices for whom it’s very difficult to make an appointment during the day because they may not live close to your office. Make yourself available for emergencies as the official dental service of the such and such office where you’re available for them. You can even have a special preferred rate, like a corporate rate. Have a nice, charming, wonderfully pleasant young man or woman who basically is dispatched as your consumer education officer or your information director whose job it is to just inform these people. Inform them of the fact that your offices are down the street, that you’re there and that you do a lot of emergency work for people on the run. You’re willing to have flexible hours for people who aren’t available earlier or at lunch time. You’ll schedule specific hours for them. Making different overtures and having a designate going out in the marketplace for you can be very powerful. I’ve seen dentists who when they became affiliated with offices literally doubled their practices in about 9 months. Just dispatch somebody, build it, find the niche they can build the most, depending upon A) their locale, B) the hours they want to work, and C) the needs of the community. If you had 5 office complexes aware that you were available, that you were there for emergencies, and that this was a service that you rendered the business community there in the course of any given month, you’d probably get 10 or 15 people. William: Okay, that sounds good. Jay: Again, all you do is you experiment. You dispatch somebody, you pay him or her a modest amount. You have them try one approach on one articulated premise for a week. You stop and you analyze what emanated from it. You have them try something else for another week, you stop and analyze what emanates from it. One time I had an employee who I thought had terrible oral hygiene. I had a dentist appointment I couldn’t make, so I called the employee and explained that I would like to send him in my place because I thought he needed to get his teeth cleaned. We had a very nice relationship, and I said, “If you like it, I’m hoping this will get you started.” It did. There are a lot of people who are almost flagrant in the way that they put off oral hygiene. I’m sure you know that. So you might just offer any office that you want to (and do this as an experiment) a wonderful service they can use as an employee benefit. They can offer everyone that comes to work for them a free examination and x-rays or whatever at your practice. They can offer that as a benefit worth $50, but you do it for the company for free. Just try it. So you give away whatever you can afford. Maybe it’s only 10 that you can justify doing because the cost is prohibitive, but you do it and you analyze how many come back. That’s a very powerful and simple approach. William: When you do direct mail test marketing, how many pieces do you mail? Jay: Between 1,000 and 5,000. William: What about sending more than one piece to the same person over a period of time? Jay: Sure. People fail to understand that. Different people respond to different stimuli. You take the one that’s most profitable and that’s the one you continue with first, because it will either produce the most profit per pieces mailed or you’ll have to mail far fewer pieces to fill your office time. Let’s say there are 30,000 people in the marketing community you want to mail to. Let’s say you find out that by mailing 2,000 pieces a week you’ve got all the business you can handle. Well it’s going to take you 15 weeks to mail to 30,000 people. That’s a long enough period of time that you can probably go back and mail the same letter again one more time before you have to change letters.

But it’s possible that in the period when you’re experimenting to find what I’ll call your control letter, some of the less effective ones will still be useful. The most effective one might pull 2-4%. That means that it didn’t evoke a response from 96-98% of the people. Keep in mind that different people respond to different stimuli. Some respond to fear, some to logic, some to a specific offer. You’re mailing to a moving parade. At any given time, of every 1,000 people you’re going to be mailing to, chances are that a finite number are having some discomfort, some pain, or their mouth is starting to smell. Something which is symptomatic is probably occurring, don’t you think? What if one of your letters says, “I have a sneaking suspicion that some time in the last three days you started having irritation in the back of your mouth. Let me tell you what might be the cause and what will happen if you continue to let it go unchecked.” The probability is that of the 1,000 people reading your letter, 100 of them actually have some irritation. Again, it may not work but that might be a really powerful approach. William: We plan on incorporating biofeedback into our dental practice in the next five years. How should I do that? Jay: A couple different ways. You’ve got roughly 2,000 customers, patients, or whatever you want to call them. The kind of services you’re talking about are highly residual—biofeedback can be a perpetual thing. It could be 10 or 15 or 25 treatments before somebody hits nirvana and gets enough discipline that they can do it themselves. I have found that it also enhances your prestige as a dentist with patients. If you send a letter to them saying nicely (not just formally but personally), in a very human way announcing that you’re doing this and because they’ve been one of your valued and favorite patients, and you’re in the process of building this and experimenting, you’d like to buy them a complete session. Why? Two reasons: “1) I need feedback (no pun intended) on our approach and the value. It’s like a research project. 2) To be very honest with you, the reason I set up the biofeedback center is that I’ve taken it myself and I know that once you experience the wonder of being able to control whatever, you’re never going to want to go back to the old way. If I get you started on it, you will be hooked on it forever and my practice will grow. You’ve been a wonderful and valuable and appreciated patient, so the least I can do is buy you a session and let you try it for yourself. Also, if you’d like, I’ll buy one for your friends. If you have somebody you think could really use it and would like an instant reduction in their stress or increase in their self control by probably 20% overnight, refer them to us. We’ll buy them a $50 session. Or we’ll give it to them in your name.” That’s pretty powerful. If you do that, I think you’ll fill it so quickly you won’t need to do much more. Does that help? William: Yes it does. How do I approach the biofeedback expert? I’ve talked to him, and I’m going to get together with him. Jay: What’s your deal going to be with him? William: Well, that’s what I want to know. Right now he’s a test worker at the main clinic at the local hospital, and he is controversial. Jay: What are his fees right now? William: $68 a session. Jay: What you do is the following. You agree to put up all the money to set him up. He agrees to a longterm arrangement that says if you build the practice for him and anything goes awry, and he leaves and takes any of the patients you have given him, he’ll buy those patients from you at a price which is contractually specified. Maybe it can be paid over 2 or 3 years, but it’s clear going in. The spirit of the thing is you’re going to build him a practice. It may play off your customers, it may not, and that’s to be defined. His job is to just perform the service, your job is to build it. You are acknowledging in this contract with him that you have proprietary rights on the patients you’re entrusting to him. If for any reason you have a falling out or if it doesn’t work and he goes on his own, retains any involvement with these patients, and realizes any revenue, any income that emanates from your practice or

your marketing efforts or anything else, he agrees to compensate you at the rate of 50%. If he goes on his own for the next 3 years while he’s in your employ, you give him X share of the revenue brought in and my recommendation would be no more than 50% and no less than 25% unless his involvement is inconsequential. They’re going to keep coming back based on his conduct, not yours, so he’s got to have inducement. You’re basically going to build him a business, so the most I’d give him is half and I don’t know that I’d give him that much. Are you comfortable enough financially to underwrite him for awhile? William: Yes. Jay: What you might even do is give him an option. The price one pays for security is reduced opportunity. The variable income is always reduced if somebody needs fixed income up front, so if the guy needs $487 or $512 or $600 or $1,000 a week to live say, “Okay, I’ll give you that, but that is a draw against your commission as it accumulates.” Tell him, “You have to understand that it’s imperative for you to really and truly impress those people and to cause them to realize such perceived and real value immediately from the service you render. If so, they’re going to come back frequently. Also, we have to be in harmony on how we articulate what we are doing, and have to give patients a strategy to adopt.” I would give him the incentive that he gets more as the practice builds. He’s got an incentive to really get these people enraptured with him, because right now he gets 25% for the first $10,000 in monthly billing, but it goes — retroactively — to 50% if he gets it up to $30,000. So he’s got an incentive to build it quick. He should agree, also, that if you put on seminars (and that’s a wonderful service you can offer free to all the offices), he’ll give everybody an hour of biofeedback. If it works, you get the offices and ask them, “Are there demonstrable enough results from it that you can see an increase in productivity?” William: Good idea. Jay: You can do a lot of experiments. You can go into an office and say, “Look, I’ll put every one of your people through a 2-week program at my risk and if you see results that we can quantify, pay for it. If you don’t, don’t.” Particularly when you’ve got this guy on sale, you can do a lot of experimentation. Does that help you? William: Yes. Jay: A couple things I want to say in summary: First, what happens normally after a consultation like this is that it gestates all sorts of ideas over the next week or two. No idea is better or worse than another. The critical thing is trying it and once it works, then taking the validated tests and implementing them on an ongoing basis into your practice. If you don’t bring the idea to fruition and then perpetuate it, it’s of no use to you. Second, I have instructed a lot of clients to bring somebody into their practice full or part time who has the responsibility of permanently doing the marketing—overseeing it, perpetuating it, and experimenting with all sorts of pilot programs. Give them almost no fixed salary, but an incredible variable reward based on the increased profit you make from those things that work. For example, if you’re doing $400,000 right now, and they can raise it to $600,000 (and there’s 90% profit in the extra $200,000) give them 10-25% or whatever you feel comfortable giving them. You can’t believe how this technique can emancipate an enterprising person’s potential. *

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Could local businesses benefit from having your product or service made available to their people at a discount or with particularly easy access, in exchange for having a formal relationship with you? If so, the strategy I explained to William, or a variant of it, might work to increase your sales. If you do direct mail, experiment. Test different approaches to see which bring the best responses. And remember, “best” doesn’t just mean the most responses. A lower number responding could be better, if that lower number is from customers who take what you offer more seriously and spend larger amounts on it.

Real Estate Sales I could call this transcript “A Short Course in Lead-Generating.” Hal’s problem was a common one. In an area saturated with competitors, how could he stand out? The strategy I gave him is so powerful, yet so simple, that I cautioned Hal not to let other realtors in his area know about it - it would be too easy for them to apply it themselves, and then Hal’s advantage would be lost. This strategy could be equally powerful for you. *

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Jay: Tell me a little bit about where you get your clients, what you really focus on, what you’ve done the best with, where you see the opportunity, and where you’re most frustrated. Hal: In this market, the greatest opportunity lies in getting listings. If you have a listing, it’s almost like money in the bank. It will eventually sell, even if it’s marketed at what most people consider too high a price. Jay: How do you get listings right now? Hal: That is the frustrating part. There’s a lot of competition for the listings. The best way to get them is referrals, and I have probably had on the average two or three listings a year referred to me. The others I’ve got as a results of working with buyers. Someone calls the office, and if I happen to be on the floor, I take the call and try to help them find a home. Jay: And they have a house they want to sell as well? Hal: Ideally. If I can find them something to buy, then I can list their own home too. Jay: The key question you have to answer is: “What is my Unique Selling Proposition?” In other words, “What do I offer a prospective lister above and beyond what my competitors offer?” There are so many competitors, Lord knows. Hal: Everybody and their dog. Jay: So I’d like to give you a strategy that can double or triple your earnings. It hinges, again, on your Unique Selling Proposition - what benefit do you offer that is above and beyond what anybody else can offer? Hal: Well, that has been the main problem. I’m not really sure how most people make their minds up about where to list their home. But I think that people want to list their home with an agent who, they’re convinced, is really interested in their best interests. Jay: I agree, but do you think that they’re discerning enough to know which agents those are?

Hal: That’s the question I have. First off, they have to feel comfortable with the agent and feel that he is capable of marketing property in such a way that it will bring the best price in the shortest amount of time. To me those things are intangible.... Jay: Let me ask you about legalities and qualifications. Are you allowed to solicit people? Hal: I am not allowed to solicit listings that are with some other realtor. Jay: But you can absolutely send a letter to anybody’s home saying something like this: “If you’ve contemplated selling your house, but you haven’t yet put it on the market because you’re apprehensive, or procrastinating, or have not quite made up your mind, and you need answers to questions before you list with anyone, I’d like to try to straightforwardly answer any question you have. Hopefully, in the process, I’ll garner your trust and get the listing. Give me a call.” If you send that letter out, is that breaching anything? Hal: No, that’s totally legal. Jay: Okay. Do you make mailings, and if so, to whom? How many pieces do you send, who writes them, and who pays for them? Hal: I have not sent any mailings out since last December. Up until that time I was sending one every 6 to 8 weeks. I sent them to my “people farm” - my mailing list of friends, acquaintances, people who are already somewhat acquainted with me - just to keep them reminded that this is what I’m doing for a living, and that if they have any real estate needs, they ought to think of me. Jay: Somebody must have available a mailing list of all the heads of households in whatever zip codes you want to be reaching. I think you should get that list on computer, or on disk, or on printed galley. I think you should sit down and write a number of different experimental letters to be sent out to segments of that list. Are there 25,000 homes in your area? Hal: Who knows? Jay: Somebody knows. Let’s presume there are 25,000 homes. What you should do is sit down and try drafting five or six different quasi-personal letters that would seem like they emanated directly from you. They would not be the typical trash that most realtors dispatch, which are quick-printed and of absolutely no lead-generating value whatsoever. Hal: That’s an appropriate description. Jay: Yours will seem like personal letters. Now I’m going to teach you how to be leveraged, how to have a vehicle working for you every week, every month, every year, accumulating and accumulating, accruing residual goodwill. The first thing I’m going to show you is that different hot buttons evoke responses in different people. People want to move for different reasons. They want to buy for different reasons. They want to sell for different reasons. People are apprehensive, and yet they’re silently begging to be led - as long as there’s a justification to make them feel like they’re doing an intelligent thing when they favor somebody with the opportunity to lead them. You should find what hot button evokes the best responses in the market you want to reach. The way you do that is by experimentation. If you try five or ten different letters, each to 1,000 different households, you will find that certain letters evoke better responses than others. My background is very analytical - lead-generating for investment firms - so I’m going to give you a quick course in lead-generating as it applies to real estate. You’re in luck - I have a client whose business we’ve tripled by doing the very things I’m going to tell you. It’s been validated. Very few people understand it. But I’ve been working with him for the last year.

What you want to do, first of all, is get the mailing list of household heads. Then you find somebody who either has a computer with a laser printer, or you go to mailing services that specialize in laser-printed computerized letters. You don’t do form letters, you don’t do quick-print letters. As I was saying, you try 1,000 at a time. Each batch of 1,000 is to try one of the different tests you’re going to play around with. You don’t have the right to decide what letters the market will respond best to. Instead, you have the obligation to try out a lot of your suppositions on the market, and then let the market tell you which ones hit their hot buttons. You’ll know that by seeing which letters get the biggest response, but there’s an important subtlety to remember here: “response” can mean different things. Certain letters are going to evoke more front-end response, but that alone isn’t the determining factor. You’ve got to analyze front-end response, but also look at the other factors. How many of those who respond convert to listing with you? Also, among people who respond and list with you, some may buy and sell costlier homes, so the letters that pulled them will bring you the biggest commissions. Some letters may pull fewer inquiries, but 100% of those people may be superb prospects for buying or selling at a much higher price level. And you have to do some experimenting to find out, because every situation is going to be kaleidoscopically unique. Try different approaches - experiment to find out which ones are going to be the best for you. The letters should be trying to find buyers and sellers, but at the same time letting the market tell you the best ways to promote your services. I don’t know what your budget is. I’m going to assume that if you can spend $1,000 on me, you’re willing to reinvest in yourself. By the way, all you have to do is reinvest for a short period of time. After a while, the payoff will be so gargantuan that you won’t believe it. For example, one Monday morning you send letters to 1,000 selected people in one zip. I recommend an assumptive approach, where you assume that the recipient wants what you offer, as opposed to a question approach, where you ask whether they’re interested. And it should start with a headline - I like headlines above the salutation. The letter could say: “I know you’ve been thinking about selling your residence but haven’t yet made the decision, Mr. Smith. You’re probably afraid - afraid that you won’t find anything else, afraid that you might not be able to sell your house for the top dollar, afraid of a lot of things. My name is Hal Janis. I have been selling residential real estate in this area for quite some time. I specialize in (the kinds of houses that you think they might be interested in). Every year I sell a number of fine houses. Last year, for example, I sold a house in this and this and this. More importantly, one of my skills is counseling clients on how to list their house for the maximum sale in the shortest period of time. There are techniques that many realtors are not very familiar with that enhance the perceived value, that cause houses to sell close to or right at listing price, that enable the sellers to minimize the time the house is on the market. I’m very experienced with them. My clients find that their houses listed with me sell, on average, 2.5 times faster and for 50% less price reduction than most houses. I’ve got the statistics to prove it, but I’m not trying to get your listing right now. “What I’d like to do is offer to serve you. I’d like to spend an hour with you, either in person or on the phone, whichever you prefer. When we meet, I’d like first to give you a little education on techniques you should know irrespective of who you list with or of whether you list it yourself. I’d like to give you some serious advice on ways you can profoundly enhance the perceived value of your house, and dramatically shorten the time it stays on the market. I’d like to give you a way to analyze and evaluate the difference between one realtor and another. And I’d like to tell you about the services we provide, and give you ten questions that you should ask of anybody you’re contemplating listing with. At the end of the hour I’ll stop, and we need never talk again. You can decide to favor me with your listing, or favor me with helping you find a house, or neither of the above. But I think you’re making a critical mistake if you don’t get this information before you favor anyone with your business. The mistake could cost you $10,000-$20,000 in lost selling revenue, or it could keep the house on the market for an unnecessary extra 3 to 6 months. And finally, it could cause you to lose out on the new house of your dreams. I think I can help. I can’t promise, but I think you owe it to yourself to at least talk to me.” That’s a pretty non-threatening letter, isn’t it? Hal: Yes, I think that sounds good.

Jay: Again, it may work, it may not. But you have to try. That’s just one approach. But I’d try that on 1,000 people. And I’d add a P.S.: “If you’re not ready to talk, send me back the card, and I’ll be glad to send you out a short report I’ve prepared for my clients. It will be an evaluation form with questions you yourself might want to ask.” By the way, so that you visualize direct mail in the right context, let me say that I’m not talking about the printed blue and white and red pieces of mediocrity that people throw together. I’m talking about something that looks as if your secretary typed it. Again, I’m suggesting an assumptive approach rather than a question. Most people say, “Are you interested in selling your house?” Yet the people who are going to respond are interested anyhow, right? So take the more intimate position. “I know you’ve been thinking about selling your house. I know you’ve been thinking about buying a new house. I know you’ve been reading the Sunday real estate listings. I know you’ve been going to open houses lately, or at least thinking about them. And I know you probably have no idea about the market yet. You don’t know where the real values lie, and where the market is overpriced. You don’t know how your house may stand. Sure, you may know what houses are listing for in the neighborhood, but do you know what they’re really selling for? Would you like to know? Would you like also to know how best to market your house for the maximum sale in the minimum time, at the minimum expense? How to cosmeticize it for less than $1,000, which you can pay for after the sale, and which will increase its perceived value and its ultimate selling price by up to $20,000? The difference one color of paint, interior or exterior, may have over another in compelling a prospect to buy?” Things like that are pretty exciting, aren’t they? What I’m all about is getting people information. All of a sudden, you’re rendering a noble information-based service, which no one else in your area may do. If you give people information that no one else will give them, it becomes implicit that you must be so superior to anybody else in effectiveness and competence that prospects would be afraid to go to anyone else. They’d be afraid not to favor you with their business. The only way you’re going to do it is by trying a lot of letters and constantly sending them out. Let me tell you what will probably happen. You have to try 10-15 different approaches. One letter might say, “I’ve heard from a friend that you’re thinking about buying a new house.” Or “I’ve heard from an associate that you’re thinking about selling your house, but you’re not really sure. I provide a unique service to my clients; maybe you’d be interested in it. What I do is sit down with them, normally over breakfast, lunch, or coffee at the end of the evening, and I help them evaluate and determine whether or not it makes sound sense to sell the house and buy a new one - whether the market conditions are right to maximize profits now. I help them understand in advance what it’s going to cost them. I give them a candid assessment - not a salesman assessment, but a candid, analytical, financial assessment - of the opportunities and the pitfalls. And frankly, half the people who come to me I talk out of it. Half of them I help focus on certain locales they hadn’t thought about. Some of these areas are perhaps sleepers that they would never have thought of looking at. And a few clients I convince to go a little bit higher. But it depends on what your needs and objectives are, and the dynamics of your financial and family situation. I don’t think anyone can really make the right decision until they have all the answers. I don’t think they can have all the answers until they ask themselves all the correct questions. Frankly, most people are too busy raising a family, working full-time jobs, to ever really know all the questions to ask. “There are a lot of very competent realtors in our area. But there are a lot of people who don’t have the competence, or the conscientious attention to educational detail, that I think you need when you’re going to commit the fate of your house to somebody’s hands I may or may not be the right person for you, but I know this much: I’ve helped a lot of people, and I’ve talked more than a few out of making a decision even when helping them in that way hasn’t benefited me. I would like to give you some answers to some very probing questions you either have been asking yourself, thinking about, or having difficulty focusing on. I think we would both enjoy the time. There’s no obligation. I have a busy schedule but either I or my assistant will call you in the next couple of days to see if you’d like to get together for breakfast or lunch. We can do it close to me, or close to you, or by telephone if you prefer. Again, I’m not in a hurry. I have

more business than I can handle. I find that the best way to grow my business is to help you clearly make the right decision for you and your family. So if I can help you, give me a call.” Those kinds of approaches I think are completely unlike what any of your competitors do. And if you can do them, you’ll be getting a huge influx of people - people who are already set up for you, if that makes sense. Hal: Yes, it does. Jay: What I’m all about is simplicity and logic. Human beings want information. If you give them information and you give them candor, even if it doesn’t always make you money, it becomes implicit that you can be trusted, and people favor you. People want to know how they can enhance their circumstances. So you answer one key question for them: How do they benefit by listing with you instead of with somebody else? If you can answer that, you’re in. One important principle you should understand is something called “pre-emptive advantage.” The first person to tell the public something - even something that every other competitor is doing - if the public doesn’t know anything about it, it sounds like a profound revelation. Does that make sense to you? Just tell them in some of the letters about all the things you do for them, even if it’s things that you and every other realtor take for granted. The public doesn’t take it for granted, and they’ll think you’re the first to do all that for them. So what I suggest is to try several letters. I don’t have the answers - the market’s response will give you those. Some letters are going to evoke great response, some letters aren’t, but you can try many different things. Again, I strongly urge the assumption rather than the question because the question sounds like an ad. Instead of “If you’re looking for this or that,” the assumption focuses right on me. If I haven’t been interested I wouldn’t respond to you in either case, but if I am, the letter that assumes I’m interested is more powerful. Keep in mind what I call “the moving parade.” People always change. That’s why you keep mailing your letters over and over again, changing them and playing with the headlines. I used to live down by the grass church over by Portuguese Bend, and I had a little house off the street that’s called Arrow Route. I bought it . I’m unlike most people you deal with, in that I don’t like mortgages. I owned a house down there that I bought for $250,000 or $300,000, and I bought it all in cash, and I was very happy making a couple hundred grand a year. Then, all of a sudden, my business buoyed. Well, the people who sold me that house never followed up on me. No one ever really tried to apprise me of anything. One day, all of a sudden I had a really great year and I made something like a million dollars, and I had it sitting in cash. And all of a sudden I went from the bottom of the barrel in that neighborhood to the top. People who had solicited me before thought I wasn’t even in the market because they didn’t think I could afford it. So remember, people’s circumstances are constantly changing, and that’s why you can keep trying different themes on the same person over the years. Remember that from each prospect, you’re accruing forever. While it’s true that you have to worry about tomorrow, you have to worry more about next year and two years from now. So don’t be afraid to nurture these people. True, there are some flaky people out there who are going to take advantage of you, but you have to factor that in just like spoilage and pilferage are factored into retail business and grocery business. Some people are going to take advantage of you. You’re going to educate them and they are going to go to somebody else, or may negotiate commissions with somebody. But they’re few and far between. You’re going to get the quality people with the approach I’m suggesting. I’d try a whole spectrum of different letters. For example, I think you should make a list of all the ethical tricks, not chicanery, that can help a buyer get a price down or seller get a price up. You should have different headlines on every letter before the “Dear whatever.” Each headline is basically an ad for the letter, it gives the essence of what the letter’s all about. You should experiment with different ones, because certain headlines will produce 5 or 10 times the response of others, and I can’t tell you which ones they will be. I can recommend books that will help you understand them, because each situation you’re

involved in is unique. There are no clear answers, but I can tell you how to find out everything you need to know quickly and very inexpensively, by letting the market tell you exactly what it wants. And once you get the answer, you can keep purveying it to them forever. One approach might say, “I’ve been selling real estate for many years in this area. I’ve participated either directly or indirectly in hundreds of sales. I have developed an uncanny knack for two things: (1) Helping my clients buy homes at substantially less than they are listed for, and (2) Helping my other clients sell their houses for the maximum price possible. This has been accomplished by 10 basic techniques. I don’t know why everyone doesn’t use them, but I seem to be one of the few who have mastered them. I’d like to share my techniques with you, and tell you about some case studies and how they’ve applied. I’ll talk to you seriously about your situation, whether you have a house you want to sell, or a new house you want to buy, or whether you’re trying to get the top dollar or trying to move a house quickly, or trying to find the absolute best value both in dollar and appreciation potential. Or, you may just want to get acclimated and start developing a strategy to focus on later. I’d love to help you sell your house, and I’d love to help you buy a new house. “I’m committed to future service, and I find that too many realtors worry only about the present. Many of my clients just start out with a gnawing desire to move up or sell the house they’re in, or find a higher appreciating house. Or maybe the investment isn’t their major concern, maybe they’re just looking for a wonderful value on an ocean-view property. Maybe you want to move to an estate and don’t realize that there are a handful of wonderful estate values that pop up every so often. You have to know about them - they very rarely even make the market because a handful of people are vying for them. I know about all these things. I’d like to go over some of the other possibilities and see if perhaps your needs can be filled by the kind of unusual service that I render. At least we ought to talk a bit. I’m in my office weekdays from blank to blank, I have a lot of clients, and I do have a busy schedule, but I’d be willing to make time for you. If your needs are critical, I could do it very quickly. If they’re not, we can do it at a convenient time next week or next month.” Hal: Do you always include a response card? Jay: I think you should, for two reasons. Some people will pick up the phone and call you, but some people will feel intimidated. If they won’t call, offer them something you can send them that has very high perceived informational value. Not brochures, but a report. Distinguish yourself above all your generic competitors. Again make everything personalized. There are mailing services that will do it. Instead of mailing 10 million pieces of occupant/ resident pink offset letters, if you only send 1,000 personalized ones that look like you actually drafted it to the recipient, and the outside of the envelope is personalized, and the letter is personalized, the effect will be infinitely better, believe me. But returning to the response card, maybe add a P.S. to the letter, which might say, “If you’re uncomfortable calling, or you’re not ready to call, and I’ve touched a responsive chord, but you really don’t know where it’s going to take you, or you don’t really feel like you want to get committed to anyone even just in a conversation, I’ve prepared a wonderful confidential report called ‘The 10 Best Local Areas for Both Value and Growth Potential, and Why and How to Get the Best Value From Them.’” I don’t think anyone else has ever done anything like that. “I said it’s confidential, because it’s actually for my current and past clients, but I would be willing to send you a confidential copy as long as you promise you wouldn’t share it with anyone else.” Are you starting to get the trend of what I’m saying? Makes sense, doesn’t it? Let me go through the dynamics so I can really excite you. You have to reach in your pocket and seed it, like anything else, but if you work it right, it will stop costing you money and start earning for you. If every week you send out 1,000 to 5,000 letters it will cost you the price of renting a mailing list, printing, and so on, and you can send them out bulk rate if you want. Just have it metered, instead of saying “bulk rate.” Most people don’t look at the meter on it if it’s personalized. Don’t cut corners, make the letterhead look personal. It could say . . . . maybe it would be better if it just had your name. Just because you’re a realtor. . . Hal: I’m a realtor associate. Jay: You might have just your abbreviations on it. Try different approaches - different approaches effect different results. It’s going to cost you in the vicinity of 40 or 50 cents a piece - if you mail 1,000, it will cost $400. You will probably get a response of between 2 to 5% - that means you’re going to get 20 to 50

people who are qualified, marginally or highly. What I recommend you do, if you have a lot of money, is try 3 or 4 or 5 or 6 or 7 or 10 weeks worth of experiments with different letters, which will cost you 2 or 3 or 4 thousand dollars. If you can get your office to co-op the expense, that’s good, but only if you can make absolutely certain that it’s warranted as confidential and proprietary. You don’t want the other brokers imitating it. You may want to be very discreet about it so that everybody in the marketplace doesn’t pick up on it. And direct mail, by the way, is wonderful, because few people know what’s going on. They can’t tell if you’re mailing. I wouldn’t talk about it to other realtors, because you’re talking about an industry of emulators and plagiarizers. This is so simple, but it’s so powerful that I wouldn’t make it readily available. It’s going to cost you $400 to get at most maybe 50 responses. Imagine if every week you could do that and accrue 50 people who you could put into the loop of on-going viability. What is that worth to you? You only find that out by working them. If you change your letter systematically, you can find little trends. Sometimes you’re going to want more listings, sometimes you’ll want more buyers, sometimes you may want to approach residential or income property - and a specific approach that you discovered by experimenting with your letters may produce exactly the response you want. You can try all sorts of different approaches, but not using the question, “Are you looking for this?” Make the assumption! Have the letter say, “I’m told you are interested in investing in income property. You probably know that it’s a polka-dot area. There are some really fine properties that can throw out a decent cash flow, and some that give a very meager negative cash flow, and some that break even and then appreciate like mad. Those are few and far between. What I try to do is find people wonderful prizes that will achieve their cash flow needs and also give wonderful growth appreciation. Property like that is not just sitting on trees, but I know how to look for it, and I also know how to counsel my clients to restructure certain deals that don’t seem to be lucrative so that they become very lucrative. We’ve done it for a lot of people. I’m not promising I can do it for you, but at least I’d like to tell you some of the case studies that we’ve done and how we’ve turned lemons into lemonade, and maybe see if a technique applies to you. If you’re looking to buy a few really good income properties, I may be able to help you.” The point is that if you mail 1,000 letters a week, 52 weeks a year, and get 25 solid prospects per letter, you’re going to have spent $20,000 annually, which should produce for you around 25 x 52 = 1300 prospects. What’s the average commission you make on a sale? Hal: Right now it’s about $10,000. Jay: All you have to do is sell two of those people a year and it’s paid for itself. That would be wonderful. My master strategy for you is to be information-service oriented. Craft a number of letters that offer valuable information, so that even if the prospect never talks to you again after that, they would be so well armed with knowledge that they would get more for their house, they would be able to buy at the most astute price, they would know how to get the best mortgage rate, etc. You have your clients because they feel you serve their needs better. You give them better strategy, you’re willing to talk them out of mistakes. You’d like to sell a house to them, but not just to get a commission today, because frankly you have clients who keep coming back every four or five years as their circumstances change. Maybe they have more kids, or their kids grow up and move out so they need a smaller home. You’re committed for the long haul. You’re there as an adviser, not just to make a quick buck, and you’ll give them information that will be useful to them whether they ever use you or not. You’re hoping, and it’s been borne out, that by giving this knowledge, it becomes implicit to the client that they can trust you. They feel that you can counsel them better and in the process save them money and point out values that are overlooked by the marketplace. You can provide them with negotiating recommendations and techniques that will bring the price down. Most people don’t understand this, but frankly, most realtors - their objective somewhat contradicts their client’s. Hal: Slightly.

Jay: If you point that out to them, it would be interesting. It’s implied, but why don’t you say it: “I’m not saying all realtors, but most of them don’t want to get you the lowest price. They want to sell for the most because they get the highest commission.” Show them why it makes better sense for you to really help them, because if you help them and save them $20,000 they’re going to give you 10 or 15 referrals, which will make you more than the $3,000 you would have made on the $20,000 you saved them. The kind of clients you seem to get are the ones who are growing. They’re not going to stay in the house. They’re going to go from the $300,000 to the $600,000, and from the $600,000 to the millions sooner or later, and they’re going to be worth three or four sales over your lifetime with them. Hal: That’s right. Jay: I probably gave you recommendations you didn’t expect, but though they’re so simple, they work. A lot of people I’ve helped in the insurance business have done this sort of thing. They’ve found that it works so well that they had to bring in operatives and share commissions with them, and bring in secretaries just to work for them and keep advancing the relationships, because they’ve become so busy. Once they get the programming I’m talking about, it’s like a money machine. It really works, Hal. Hal: That’s what I want. Jay: The first letter may not work. Different letters evoke different responses. You have to find the right hot button. But what I’ve just given you is very powerful stuff. Hal: It’s great. Jay: It’s very powerful stuff, but it’s very simple, and you’re going to find that the most powerful stuff in the world is logical, obvious, understated, and simple. It’ll amaze and delight you. And I hope that the seed I’ve planted will gestate in your mind. If you mail 1,000 letters a week, you’re going to get back 20 to 50 responses if the offer is right. You may find a letter that pulls 150 responses. All you have to do is start working them. And then, if you want to be huge and you can’t work them yourself, bring in an associate under you. Believe me, what I’ve told you is how to double or triple your income, but it’s a long-term strategy. When you get all those inquiries, you have to keep advancing them. Let me give you an epilogue, and then we’ll go. If you start doing this regularly, you’re going to be bringing in all these prospects, so you’ve got to keep advancing the relationship. If you can’t do it yourself, bring in someone to keep sending them information, not just garbage, but really profound stuff. Send them information repeatedly. When you have a great accomplishment, tell about it. Chronicle a case study, how you got a million dollar house for a client at $850,000 through. . . , or how you got a client an extra $20,000 off listing by giving them a couple of different techniques. Keep advancing your image. It works so well, it’s scary how much you can do with it. But good luck to you. Thank you. Hal: Thank you. *

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Let me briefly summarize the strategic points I gave Hal: 1.) The essence of any marketing program is identifying your Unique Selling Proposition - what you offer the public that no competitor does. Identify that, in your own mind and the public’s, and you have a solid basis for garnering new customers. 2.) Don’t try to impose your preferences on the market - let the market tell you what it wants. Experiment to find out which approaches bring the best responses. 3.) In your experiments, systematically vary one element - headline, text, picture, etc. - of your direct mailer or ad, keeping everything else constant, to see what kind of effect each element has. In the long run, this strategy will increase your returns by many times the cost of the initial experiments.

4.) Analyze responses for quality as well as for quantity. Analyze not only front-end response to a promotion, but also how many of those who respond convert to a sale, and how much the average sale is in dollars. 5.) In most mail promotions, it’s wise to include a response card for people to send back. People may be shy to phone you, or afraid to make a commitment. The response card makes it easy for them, especially if their response doesn’t involve committing to anything. 6.) People crave information. Give people valuable information as part of your promotion. Your generosity in sharing knowledge implies that you must have much more to offer than what you’ve shared and also much more than what your competitors have. 7.) People appreciate candor. Explain your strategy. Explain that you could make more on an initial sale if you wanted to, but that you’re concerned about the long run - about return business over the years. Say, “I find that if I really give customers the best service at the lowest price, both the customer and I benefit in the long run.” 8.) Don’t underestimate the “pre-emptive advantage.” If you’re the first to tell the public about your industry’s standard, behind-the-scenes services, they will consider you to be the one among all your competitors who looks out most for their interests. 9.) Remember that life is a “moving parade” - people’s circumstances change constantly. Don’t lose contact with a former client or lead, and don’t be too quick to pigeonhole him or her. Someday a poorer prospect may strike it rich, or a wealthier prospect’s circumstances may change. In either case, you may suddenly find you can offer exactly the product or service they need.

Product Licensing Ted was an experienced marketer, so in our consultation I was able to bring out some advanced marketing concepts. I showed Ted how to turn a 20-cent piece of material into a million dollar a year income. I showed the best ways to approach an existing business with a marketing concept, and how to choose which business to approach first. I also showed how to set up a binding license agreement that’s risk-free to the licensee, and how to maximize your return from the arrangement. *

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Jay: Review for me how you make your livelihood. Ted: First, I share a car dealership with my two brothers. I own a minority interest, and handle the financial affairs for the operation. I don’t keep books per se; instead, I’m sort of a consulting financial advisor. I deal with the banks and with the auto maker about the financial area. We do very well with this dealership. We took it from last place in this metro area to number one in five states in about seven or eight years, so it’s been very successful. Jay: What is that growth attributed to? Ted: The management. There are three of us involved. We happen to be brothers, but we have very diverse talents, and we’ve learned to work with each other and with each other’s areas of expertise. As as result, we’ve done extremely well. Jay: So that’s really your bread and butter. Ted: That’s my cash cow. The second thing I have going on are the seven joint ventures I run in gas and oil. I work with operators, and take a percentage from the profits of different wells. Jay: In exchange for what? For putting it together?

Ted: Well, it started out basically as family and friends. I put it together, then we all put our money into it. After I put it together, I get a percentage of the income. Jay: Are those seven ventures passive income for you, or do they require a lot of management? Ted: It’s pretty much a lot of management. I go out and book the projects that we want to get involved in, and I analyze the operators and the actual projects themselves. I’m trying to get a couple of major ones going right now. I’m also being set up with a trust in the area of gas and oil. A very experienced friend and I will be the trustees. Our objective will be to go out and find the projects. Jay: Is that a very lucrative area? Ted: Well, it can be. Right now, it’s getting set up so I don’t know what I’m going to get out of it. Jay: What do you foresee will happen? How’s the economy going to impact it? Ted: I think that right now is really a good time, but that depends on the project. The projects we’re looking at cost roughly $1 to $1.50 a barrel, plus finding and recovery costs. I can make money on that at almost any resale price. Jay: I agree. What does it cost to buy reserves right now? Ted: About $6.50, roughly. Jay: You still have to really know what you’re doing. Ted: Oh yes, in that one. I also have investments that I handle for myself and my family. Jay: But you have the financial acuity. I sense that you’re skilled. Ted: Yes, my area - numbers - has always been a natural for me. I can look at a situation and project what things are possibly going to be like, so that we can take actions today to be prepared at the right time. That’s my talent. That’s what I did for the car dealership. We were able to more than double our income simply because of the way I structured it. Jay: For example. . . Ted: In that particular operation, we started in a Dealer Development (DD) program. We were extremely successful, doubled sales, and of course the cash flow we had coming in from the profits was enough to handle our working capital. But at the end of the year, we would have had to distribute it to the auto company for their share, and then we wouldn’t have had any capital left. Jay: When you do the Dealer Development programs, what interest do they retain? Ted: Initially, you have to borrow 20% and they put in 80%. They sometimes take more than that, but 20% is the minimum you have to pay. Jay: But do you have the buy-out privilege? Ted: Oh yes. Here’s how it works. Of the 80%, they take half in notes and half in stocks. And the money you earn you’re allowed to re-invest in the stock that they bought, at the original price you sold it for. But they share directly in the profits - the profits get distributed. Well, because we grew so fast, our working capital requirements went up. With their deal, we would have ended up back where we started. That’s because what they like to do is recap, start all over - put more money in and get a bigger percentage of the stock again. So this can go on for quite a while. Well, the first thing I did was work with our bank so that we could avoid the recaps. We were able to buy out in two years or less.

Jay: That’s fabulous. And almost all of that was internally generated. Ted: Yes, plus I got the auto company to loan us the money we needed without recapping. That’s something they had never done before, but I talked them into it anyway. That was one point. The other was in how I structured our bonus arrangements so as to avoid double taxation, so that we’re able to take the money as earned income before the event as opposed to after the event. Jay: Is what you’ve done unique for your dealership? Ted: Yes, I don’t know anybody else that’s ever done it. And of course, if I hadn’t gotten involved with my brothers, they would have ended up with half the money that they have now. The other half would have gone to the auto company for recap and Uncle Sam for taxes. Jay: Would that same technique work for any dealer on a Dealer Development program? Ted: It very well could, yes. Jay: If you could show a dealer how to pull $2-3-400 grand, you could have a major market there. I’ll give you a technique that is so obvious, no one even thinks about it. It’s basically contigency stuff . . . . Ted: I don’t do anything unless I have financial interest in it. Jay: That’s the only way to do it, but the point is, if you find something that works well for you, more often than not you can go to other people outside of your marketing sphere and sell them your techniques. In other words, you find 50 other Dealer Development people, and maybe even 500 dealers from the other auto makers, and show them that by implementing your methodology, they could pull an extra $100-200 grand out. You ask for 25-50% of the net savings, or the retention, and nothing if it doesn’t work. Maybe you don’t even have to sell it yourself - you could engage somebody strictly on commission to go around the country, or do telemarketing, one way or the other, and every time they sold one, they’d get 15-20% of what you got. But by doing it on contingency you might instantly put $1 million in your pocket or more. Was it hard to get them to let you out? Ted: Well, it was unprecedented - they’d never done anything like it before. I told them that it was in their best interests as well as ours to help us get out as quickly as possible. And if they didn’t want to help us, the banks would, but we preferred that they did. They said no way, and we said we’d think about it, and they called us within two days and said that they would do it. Jay: And that was unprecedented. Ted: Yes. We knew one of the best people in the business, and when I told him what we did, he said he never would have even asked because it’s unheard of that they would do something like that. Jay: So you’re saying that it’s not really teachable or replicable? Ted: No, but it required a few things: the circumstances, the ability to see that it could be done, and the ability to communicate and sell it. The other aspect of it, though, is that it’s more difficult to do with a single individual. We had three people involved, so I could structure the income part from a bonus point of view. . . . Jay: Let me make just one more suggestion. If you could run an ad, or you could just do a preliminary qualifier to find Dealer Development programs owned by more than one person that had scenarios like yours, and if you could find 50 of them, I still think you could make a lot of money. You could have other people do it for you, you could do it through a letter, and just say, “If your dealerships are on this kind of

plan, and you satisfy this criteria, I could put a quarter million dollars a year in your pocket. If it works I want half, if it doesn’t, I want nothing. If you’re interested, give me a call. I’ll tell you how we did it.” Ted: Yes, well, I could probably even find out from the auto maker. Jay: It may also be applicable to the other auto makers, wouldn’t it? Ted: Well, yes. I have contacts with all three from that point of view, as far as DD is concerned. Jay: Or you can pre-qualify, if you need certain criteria. Either have someone on the phone, or send a really interesting personalized registered letter, to tell them all the criteria. “In order for me to be able to work it for you, you have to be on this kind of program, you have to have this many principals, you have to have. . .” I know that it’s not what you came to talk to me about, but if you have the technology anyhow, by spending 5 hours a week helping a different dealership, you could accrue for yourself $50-200 grand over a year or two - and that isn’t so bad! I’ve taken the technologies that work for me, and licensed them or sold them by teaching other people. In one year, I generated 7 figures out of it. It’s audacious, but if you’ve got something, then with a company this big, 20-30,000 dealers, there must be100 of them that satisfy your criteria. If you could help 50 of them, and on the average you’re going to put in their pocket $100,000 through this device, and you get half, that’s $2.5 million. And most people would consider it fair to request that “If I win you a buck, you give me back half of it.” Ted: For us, in the first ten years, we were able to keep an extra $250,000 that we would not have been able to keep. Jay: It’s not what you’ve engaged me to talk about, so I’ll drop it, but the point is, if you know how to do that, if you did a mailing to all 35,000 dealers, the maximum that it would cost you would be, if you did it right, maybe $10-15,000. And you wouldn’t have to do it all at one time. You could experiment by mailing 2,000, 3,000, 4,000 or 5,000, or getting on the phone. If you saved them $1/2 million and you kept only 25%, which is absolutely an easily embraceable proposition, and you could do it for 50 people, that wouldn’t be bad money! So anyhow, think about that and let’s go to the points you engaged me for. Ted: I’ve got three projects; two of them are similar in nature because they’re items that we want to license. And the other one comes from a product we marketed in the late ‘70’s, a portable 6-pack cooler for hikers and campers or the beach. I’m thinking of selling that product’s mailing list, which has 4500 names. Jay: Let me give you the easiest response first: I’d forget the mailing list. The mailing list’s viability is going to be so minimal at this date that it’s probably not worth getting terribly excited about. 20% of the populace moves every year, so over the course of 5-10 years, almost 100% of the people could have relocated. To clean up that list would cost a fortune. Ted: But wait. Everybody I’ve talked to that had the cooler thinks a lot of it, and I’ve had a lot of people write in since then trying to find it. What I was thinking about doing was to purify the list. I would need to mail out to that list to find out what’s undeliverable. In the course of doing that, since the product hasn’t been on the market for awhile, and people seem to like it. . . Jay: You’re going to mail them another offer? Ted: I was going to mail them another offer. I have some inventory anyway sitting here, and by mailing them another offer, I could sell my inventory, get my money back out of that, pick up some money, purify my list at the same time, and then I’d have an up-to-date worthwhile list. Jay: Again, in response, it’s not a bad thought. But I’m afraid you’re going to find that much of that list is undeliverable today. Did you do it all over the country or just locally?

Ted: All over the country. Jay: So much of that list is undeliverable that you will find that you won’t even make a profit on the mailing. And what you’ll end up with is perhaps 25% or 30% of the list you can get good addresses on, which is going to bring the list down from 4,000 to 1,200 or 1,500. A great list rents for a dime a name; a lousy list rents for $50 per thousand, which is a nickel a name. A good list will generate a $1 a name to $2 a name per year. If you’ve got only 2,000 good names, it’s such a tremendous waste of productive energy. You’ll only make a few thousand dollars off it per year. Ted: I heard that it was $10-25 per name. If can I get $10-25 and I have 4,000 names, then it would be worthwhile. Jay: You can make a lot of money on names if you sell something that identifies a prospect for something very expensive and very vertical. For example, if you had people attending a seminar on tax planning or investments, they would tend to be making at least $50,000 or $80,000 or $90,000 or $120,000 a year. These are people with half-million dollar portfolios who are interested in growth-oriented/speculative investments, so if you produced a list of 5,000 of those people, a ton of people would spend as much as $25-50 to get those names. I have a newsletter I started a few years ago called “Marketing Genius at Work,” and we spent hundreds of dollars to find each customer. Those people are very valuable and we can sell their names for a couple dollars each. But the point is, a list of $6.95 people wanting a recreational, leisure type of product - that list’s not qualified enough, it doesn’t tell you enough about the person. What you might do, if you have a lot of inventory, is take the ad you ran, reduce it down, run it fullpage in TV Guide, or see if you can do it half-page and beef it up. Maybe you can sell the product profitably again. If you can sell profitably on a test, sell the ad and the business to somebody else on a variable payoff. That might be useful. If you have the product, and you have the dies, and you have everything else, and you have an ad that sort of worked, offer the business for inventory costs plus 10% of the gross forever to somebody else and let them run it. Advertise it in the newpaper. If somebody could make $50,000 a year working out of their house or a little warehouse, running that ad every summer and working deals with the grocery stores on consignment, if you could show them where they could make $50-100,000 and you’d get $10,000 a year forever from it, it wouldn’t be big money but it would pay for mailing those letters to all the other car dealerships. Ted: I didn’t want to get back into that one to that extent, unless I’m working with somebody else who is interested in buying it . . . Jay: Why don’t you take the ad that originally worked - do you still have it? And if it worked and broke even on its own, and you have a marketing program you could sell to somebody and tell them to repeat, it might be worth pursuing. You probably make so much money that the idea of making $50-75,000 running a business isn’t terribly exciting to you, but somebody who’s making $35,000 and who has a family that’s growing would probably love to buy that business and run it. All you have to do is sell them the concepts, sell them the material, and have them sign a binding arrangement. It doesn’t even matter if you get nothing down except for your inventory when they guarantee to run a minimum number of ads. If you know that if they run 25 full-page ads in regional TV Guides, they’re going to generate at least 25,000 units not counting the store sales. . . . Ted: Well, it was such a break-even thing in the late ‘70’s. Jay: Sometimes if it broke even, it’s possible that just by changing one of a couple of variables, for instance, the headline, or the price. . . Ted: Well, what I did first was test 3 different headlines, and regional stuff, and then we zeroed in on one that significantly outpulled the other two. And that’s the one we ended up going with. But even that just broke even.

Jay: Usually if something breaks even, you can do something with it. You might do a deal where, say, if $6.98 was the single offer, you sell a double-pack for $9.95. You might find that all of a sudden, the incremental profit would make a big difference, since every order averages another $2.00. Maybe test it in TV Guide, and then run it in National Enquirer 2, 3, or 4 times in the summer and generate $200-300,000. Ted: It’s possible. Jay: I would experiment with price and with multiples. Also, what you might want to do is this: as soon as you send the cooler pack out to people who ordered it, you also solicit them for something far more expensive of a kindred nature. Maybe a $40 cooler, or a picnic set or something else that was similar, that was expensive, that had a high margin. . . Ted: Right now, Jay, I can’t. I see where you’re leading to, the back-end buying, but what I’m getting into in my overall operations doesn’t lend itself to that direction. I was just thinking I had some names, so. . . Jay: The names are probably so close to worthless, it’s not funny. However, if you have the ad and you have the knowledge, you can probably sell that. Right now you’re doing nothing with it anyhow. If you got somebody to put his or her own money up to try to revive it, and you told them what I just told you, and you said, “Here’s the deal. I want my money out of the inventory, I want a royalty on the sales” and somebody could turn that into a nice business, you might make $100,000 over 5-10 years on it. Ted: I haven’t used that particular approach by mail order. What I’m doing instead is working with the guy whose company made the coolers for us. He makes larger coolers and those kinds of things, and my six-pack cooler would fit in with his basic products. I could also try to come up with a hard-shell version, and tool it if I can. I will sell it to them, to take care of all my inventory and the tooling, and come out with some kind of royalty. Jay: That would be good but you could concurrently retain the rights to sell it by mail through them, and then sell that right off to somebody else for a royalty. Ted: Okay, now I have all that in mind. The other two projects are also critical. I have these two products, and I have an idea of what to do with them as far as possibly licensing them. I have never done any licensing myself, though, so I don’t have hands-on experience with that. I’m not sure that what I’m thinking is the best way to go about it. Jay: I’m looking right now at the drop-ceiling installation tool. Tell me a little bit about it, its origin, and what results it can really produce. Ted: Are you familiar with a drop-ceiling? Jay: I know what they are, but I have no knowledge whatsoever about how they’re installed. Ted: Okay. You have a metal frame that is hung from your existing ceiling by wires, and that’s the dropceiling part. Now those wires are pretty good size, and have to be put through holes in the joist above and then through pre-drilled holes in the frame itself. They are then bent up and twisted around to make sure they don’t change. Today they don’t have any particular tool for doing it, so they use a screwdriver, and that’s not very easy to bend with. It’s cumbersome, and since the working quarters are tight, it takes a while and it’s pretty fatiguing to do it that way. Now, this fellow has a tool that’s specially designed to make it very easy to twist the wire and put it around the other wire. It just brings it with it and ties it in a nice neat knot. So it requires a lot less effort and it allows you to do it easily in tight quarters, so installation can be done a lot more quickly. Jay: Now, can you quantify what that means, “a lot more quickly”? Would it save you 10% in labor? Ted: In here I’ve said it’s an approximate 20% labor savings.

Jay: And labor is the biggest cost? Ted: It’s one of the biggest, yes. It would probably be one of the major costs involved in having somebody do it on a commercial basis. Plus you get the reduced fatigue factor, so those are two key things. Jay: There’s nothing like it in production? Ted: Not to my knowledge. Jay: It will cost pennies really, dimes to make? Ted: He’s got a whole box of them. Jay: And how many people, how many installers are there right now? Ted: The market is limited, but if I sell it to commercial installers. . . Jay: For example, when you buy a dozen of the ceiling tiles, you get one of these free? Ted: The key is when you buy a box of the hardware, or the frame material and so forth that you’re going to be using, this would come with it. And since it doesn’t cost very much, you end up with a lot more pieces than you would the other way. Jay: There are two ways to do it, though. If you can really show that this silly little piece can save on a typical job, $200, you might want to just charge a lot of money for it and not worry about volume. Ted: Well, the one thing I didn’t want to do, Jay, is get into the manufacturing business itself. Jay: You just want to license somebody else to do it. Ted: Yes, as I indicated in my letter to you, my Unique Selling Proposition is to develop products that can be sold or licensed to another business. Jay: Okay, fine, then we’ll address that. I’m just saying that it is possible to do the other approach instead. I’ve tried it both ways in activities I’ve engaged in. One approach I’ve found very, very lucrative is to charge a premium for something, but sell it on a results-predicated basis. Let people test it for a certain period of time. If it works, they agree to buy it at a certain rate. If it doesn’t, they return it. Now, you’ve identified the five ceiling tile manufacturers. You haven’t approached them yet on this because - is there a patent pending on it, or what’s the status? Ted: Well, basically it hasn’t gotten to the patent pending stage. On one of the products they’re researching the patents - that’s the other one, Project B - but Project A we haven’t even gone to that point yet. I remember that when I sold a major convenience store on the cooler packs, I got hold of the name and address of the president and sent the product to his home. Jay: With the right cover letter? Ted: Oh yes. And then I ended up selling him the product. Jay: And did you make a lot of money on it? Ted: I made some good money on it. Jay: That approach is very wise. I find that when you’re selling something like that, you’re selling the result. A cover letter to the president of the ceiling company or tile manufacturer would say something like, “I’ve devised a way to give your ceiling tile company predominance in a commodity-predicated

market. My concept, without revealing it to you exactly, Mr. Smith, is simply that we’ve devised a component you can add to your package for less than 10 cents apiece for every dozen tiles. That component will produce such a profound savings to the user in time and labor that when pitted with the choice of spending $25 a dozen on tiles from us, or $25 a dozen on tiles from our competitor, by giving us that $25, you’re saving $10 a dozen on installation. No one else has anything like it. The product is so simple, you’ll laugh when you see it, but it effects that result. It’s patented. I’m looking for somebody to give an exclusive to, a non-competitive environment. It will require a lot of volume, but that shouldn’t matter because you can test it very easily. If it tests out, you can go ahead. If not, you can relinquish your option. I want to reveal it to you, but first you have to sign the following agreement, warranting (a) that the idea is mine, you have nothing like it in process, and (b) that if you use it, you will do it through me, etc.” But you’re selling the result. You could go on: “Let me say it in a different way, Mr. Smith. While I’m sure years from now somebody will come up with some kind of competitive device, I believe that what I’m offering you is a short-term opportunity window, where for 18 to 24 months you could double or triple your market position for an increased expenditure of maybe 0.5%, which is only required after you’ve validated that it works in a test environment. I’ll organize and collaborate with you, I’ll mastermind the entire test validating it. It’ll validate on the criteria that you agree to be definitive. I’ll furnish the material and the test on a deferred billing basis, where you only pay for it if it tests out. If it doesn’t validate, if I don’t augment your sales, it’s not worth paying me. And I’ll give you an out on the contract.” You’re making them a risk-free proposition. Ted: Yes, the only part about that is the follow-up. As far as providing them the parts, fine, but I didn’t really want to get into the manufacturing or the marketing concepts per se. Jay: Let me tell you, and please don’t take this in the wrong way, that if you drop the marketing and let them do it, they’ll mess it up and you won’t realize the profit potential. You have to get involved, at least to the point of coming up with a pilot they can replicate, or they’ll foul it up. You’ve got more to gain by being successful. You’ve got the chance of selling a million of these things? Ted: Yes, possibly. Jay: But it has to be executed properly. If you just hand over the marketing to them, they may not execute it right. All of a sudden, your chance of making a half million dollars by turning over the rights to them will be lost forever. If you don’t want to do it yourself, bring in somebody, and give that person 25% of your royalties for masterminding it, for living with it, and working strictly out of his or her pocket. Give him or her no front money, so that they have to get impassioned about this silly little piece of metal. Ted: Do you think it could be sold? Jay: If this product does what you say, and there’s nothing like it, yes. Ted: Any idea how much we could get for it? Jay: You have to be more specific about what basis you’re selling it on. Ted: There are two things. One is I’d like to get something up front, and the other is I’d like to get some royalty based on how many they use. Jay: What will it to cost to make it? 20 cents? Ted: Yes. Jay: And what does a package of tiles sell for? Ted: Maybe $100.

Jay: How many tiles for $100? Ted: It’s not done by tiles per se, but by metal frames. I was figuring somewhere that we’re talking maybe 1-2% of sales. Jay: Here’s what you do. You ask for $100 - is that enough framing to do one room, or a whole building, or what? Ted: You may need more than that for a whole job. You just end up with more tools, that’s all. Jay: For them to take it on, you would dictate that for a a specific quantity of units of their sales they would include one of your tools. That’s the condition for taking a license on. If a room is, for example, 10 x 10, and that translates to 10 square feet of metal for the frames, you’d state that they have to agree that for every 20 square feet of metal sold, or for every 100 square feet, or whatever, they’ll commit to including one of your tools. You don’t care one way or another whether they send it out or not, but the deal is that they have to get it exclusively from you. You’re willing to give them exclusive rights, but they have to agree that for every documented 100 feet or 50 feet or 20 feet of metal that they manufacture and sell, they include one of these. That’s the criterion. It has to be across the board. And they have to give you a warrant for exclusivity. Also, I would go to them with a really interesting proposition of a variable rate based on their having increased sales. If they test it and see that by offering this, they increase sales 30%, your formula is a base of 20 cents a unit plus an increase factor if it doubles or triples unit sales. Something where you end up getting half a buck apiece for them. They shouldn’t mind that if it makes them $10 million more than they would have been getting. It’s a catalytic value, if that makes sense to you. But the time to do that is before it’s borne out, because if they go in the market and see that this silly little enclosure doubles sales, and all of a sudden doubling sales makes them $10 million, you can’t go back to them and re-negotiate. What you have to do is have the proposition seem risk-free on their part and be variably-based. You say, “What I want as a base is a royalty of 15-20 cents a unit, and for you to agree to buy 1 unit for every 100 feet of metal you manufacture. I want you to test it at my risk in a reasonable test mode for a finite period of time. Depending upon how that test does, I want a bonus factor equal to the market enhancement this produces.” If 20 cents is the base you want, but it doubles the sales, then you want 40 cents a unit, or something like that. And you want them to agree to all those things before you go in to test. Because afterwards, you aren’t going to get it. And that’s how you can turn something that may be a 20-cent piece of material into a million dollar a year income for you. Ted: What I had intended to do was either go to the number-one guy in the business, or give all of the top people an opportunity to bid on it. I can give the drop-ceiling manufacturer exclusive rights to a product that will enable their customers, the installers, to install their products in 20% less time with less effort. It could be given to them at a cost of approximately 2% of the sales, which I would figure is a couple of bucks. In essence what I was starting with . . . . Jay: I think 3/4 of what you’re saying is good. I would leave the cost of this to last, and I would talk about it in fractional terms. By introducing the formulas I suggested, you can disarmingly move it up to the dollars you want, without it being a negative to the person. Ted: Would you suggest selecting one prospect to start with? Jay: Yes, I would. The most probable prospect is the guy who’s number three in the market. Number one doesn’t care; number three would be the best one. Tell him why you selected him, be very personal. Be very honest in your letter. “The reason I’ve selected you is that you, more than anyone, could appreciate what it would be like to gain triple market share in 9-12 months and sustain it.” By the way, I’d make them warrant that they will vigorously protect your patent for you at their expense, because if it works, everybody will try to copy it. To have an advantage, they have to agree in writing that they’ll spend

whatever it takes within reason to ruthlessly protect and tenaciously honor your patent, because that’s going to be the key to you getting the stream of income forever. Ted: Would you suggest that the initial contact be via letter or via phone? Jay: I think the right kind of letter gives you a better way of steering it. I think that the first thing you should state are your credentials. “I’m a part owner of one of the largest auto dealerships in the country. We make $20 million a year gross. I have invested in something that I think is very wise for you, and I have a proposition which is risk-free. Here’s the essence of what I . . . .” Then talk about results. “Here are the results I can produce, here’s what it’ll take to produce it if it works. Here’s what I’m willing to do, which is finance the entire validation process with no risk on your part, except for your warranting your obligation if it works - that is, when the item achieves the minimum objectives we both agree upon. I’m offering it to you first because I think you, being number three in the market, can get more out of it. Of course, finally, I can make more out of it from you than I can from the other two. “This letter is valid and binding on me for the next 10 days. At the end of 10 days, my exclusive offer to you expires, and if I haven’t received back the intellectual rights agreement with your signature, I’m going to go to the next person, who frankly is such and such and such. Again, I’m a businessman like you, but I’m not interested in the short term. If my product can catalytically double your sales and give you market dominance, and can do so for the next three or four years, and it costs you pennies for every extra dollar you make, and I can make it so risk-free that I, not you, will finance the validating test as long as you’ll make a certain minimum marketing commitment, you’ve got nothing to lose and everything to gain by letting me prove that I can double your sales in the next two years and give you market dominance.” Ted: I have to back off to one point, Jay, when you say, “We’re going to finance. . .” Jay: It’s your way in on a contingency. What’s it going to cost if you do 25,000 of them? $5,000? Ted: Probably not that much. Jay: The deal is, if it works, they have to pay for them at the formula you agree on. If not, they give them back to you. And you can find somewhere else to sell them. It’s disarming. What you’re going to get them to do is put up ads, put up promotions to the salesmen, all sorts of flyers. They finance that part, but you lay in the product. Believe me, their investment is going to be infinitely more than yours. Ted: I know, that’s what I was worried about. Jay: I’m just talking about financing the product. There are certain subtle ways of disarmingly - I’m talking about the way you present the offer. What I’m suggesting is more powerful than what you were proposing, I think. Ted: I agree. Jay: You know what I would do, really? It’s a little more expensive, but the best way to get a letter like that really working is to put it unfolded in a legal envelope, sealed with drawstrings that go like figureeights around it. I would send two or three copies of the letter concurrently to the president, to the marketing person, to sales - wherever the decision makers would be - and indicate on the letter, “I’m sending a copy to all these other people, and they’re all getting it at about the same time.” I would have a dispatched messenger deliver it and refuse to convey it unless it was signed for by the designee. And have it not even be folded. Have it be an unfolded letter in a legal envelope. And spend $150 for the theatrics. I think its impact would be much greater, don’t you? Ted: The concept of, if they know there are two or three other people who are going to get it. . . Jay: And I’d just lay it all out, I’d validate that you’re not some crazy. . .

Ted: It causes them to. . . Jay: Yes. I’d tell them exactly. I’d tell them that you’re not some crazy dreamer. I’d tell them you have a very well-thought-out pragmatic plan. You only want to sell it to them if it really does the minimum that you expect it to do, which is such and such. You don’t want a dime from them until they validate it. In fact, you’ll finance the inventory strictly at your risk, not theirs, as long as they’re willing to test it in a reasonable and expedient test environment. You’ve chosen them because you think they have more to gain by its effectiveness and by the pre-emptive blocking. They have 10 days to get back to you, and if they don’t, you’ll offer it to somebody else. I think that’s a very powerful approach. Let’s focus on the next question you have. Ted: The other one is Project B, which is an 8-pack handle for carrying soft drinks. Jim: And does it work well? What does it cost? Ted: It depends on which one you’re talking about. You can make this out of strictly cardboard with nothing on it. . . Jay: Cardboard is strong enough to do it? Ted: Yes. But the one we sent you is in plastic. Jay: And there’s nothing like this either? Ted: Not to my knowledge. Jay: Is it patented? Ted: They started a patent search on it some time ago. So far it looks like, they’re checking. . . . . Jay: Ask me your specific question. Ted: We’d like to license it to the best of our scope, to use for promotion purposes. I’d send a letter saying something like, “I have a product to license, which provides your customers the following. It enables two cartons to be carried as one, freeing up one hand, and it stabilizes one or two cartons during transportation. It can double as a plaything for children, and offers limitless promotion possibilities such as two cartons sold at a special price, or a higher-cost version, we’re guessing 15 to 50 cents. It can be given or sold as a premium with two cartons at purchase. The product can be used to promote your soda for sales and also provides you the opportunity to offer accessory items as part of follow-up promotions. Those are the values we see.” What we talked about regarding the ceiling tile tool as far as following up with. . . Jay: The same thing. You have to find out who the decision-maker is at Pepsi, or at Coke or at... Ted: Would you go the Pepsi route because they’re the ones that are still trying to become No. 1? Jay: Well, your product is a summertime promotion, and they all do such promotional stuff in the summer. What you want is for this thing to be turned into TV commercials showing people carrying them around. You might also, as a fall-back, get a deal with 7-11. It’s a wonderful way for them to promote - buy cartons, get one of these things free. Ted: I haven’t done business with 7-11 for some time. I don’t have my contacts anymore. Jay: But the point is, what you want to do is mock it up. Just keep in mind, one of the underlying. . . . Ted: I don’t want to produce this one either. I want them to take it. . . .

Jay: That’s fine, just show them what it is. You’ll find the most logical way to do it. One thing I strongly advocate is finding somebody who has infinitely more to gain from it than you do - let’s say a small-time manufacturer who manufactures the materials that this could be made out of, whether it be cardboard or plastic. License him, in exchange for which they - maybe with no front money - agree to put $25,000 over the next six months into a full-time marketing person who would develop the product and license it other people. Find somebody who has more to gain than you by having it succeed. For example find a small to medium sized manufacturer who, if this would go for them, could produce 2 million of them, or 10 million of them. And 10 million of them would make them $4 million. Your royalty may be only $400,000 but they have a chance to make $4 million. You want somebody who’s more motivated, because you have only a finite amount of time. Ted: That’s true. Jay: And you don’t want to put any more money into it. So the thing to do is find somebody who’s got ten times more to gain than you do by this concept being successful. Once it’s patent protected, get them to sign a non-competition agreement. Offer it to them for nothing - in the sense of money in your pocket because they’re not going to give you a lot. Instead, get a warrant that this will put $25,000 or $30,000 or $50,000 on somebody for a five-year period, who will full-time be deployed in trying to bring it to market. By selling it to 7-11, by selling it. . . that’s what you want, isn’t it? $25,000 in your pocket will do nothing. $25,000 in a person who could sell $10 million worth could make you $400,000. Ultimately, win, lose or draw, it’s only going to succeed by selling through. But that’s what you want. You can sell it to somebody for a summertime promotion to Coke or whatever. In order to do it, you have to bring somebody on fulltime and lay out the money. You’re better off analyzing who in the manufacturing arena would have the most to gain by having the rights to this product. Have the contract go to that person, offering them the rights for no front money, but rather for a commitment that they’ll spend whatever minimum amount you think is right - in a controlled way that you impose - to put on a full-time man or woman to go to New York to Pepsi, to go to Atlanta to Coke, to go to Dallas to Dr. Pepper, to find how to sell this in a way that they could manufacture. To force them to be able to generate $400,000 of royalties for you. That’s what I’d do - find somebody who has a lot more to gain by having it be successful. Offer it to them for no front money provided they put up a minimum amount of absolute guaranteed contractual marketing investment. Does that help? Ted: Yes, that helps. One of the other questions I had, whether this item would sell. . . . Jay: I think it’s a promotion item, I think it’s an item that you get somebody like Coke or Pepsi or somebody to tie in with a summertime promotion, or a picnic promotion. I think that it’s a hot, hot item. I think selling them to the ultimate consumer is a very difficult task and I wouldn’t even mess around with that. I’d go initially for the promotion. Ted: That’s my thought also. Jay: That’s where you’re going to get tonnage too. If Pepsi or Coke goes for it, and in the course of a summertime they produce I don’t know how many millions of 6-packs, but if they bought 10 million of these things or 5 million of them, and your royalty is a penny apiece, you still make $50-100,000. The trick is, again, to find somebody who has more to gain than you, and the person to find is a manufacturer who’s not that successful and who needs a breakthrough. He puts $10-15,000 into sending someone on the road. You might also do one other thing. You might tell them you’ll absorb on a non-recourse basis 1/3 of that investment against your royalties. If they put in $25,000, you’ll pay 1/3 of it or even 1/2 of it out of your royalty monies. What do you care? You want to bring it to fruition. Has this been helpful? Ted: Yes. Thank you very much. *

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If you’ve developed marketing techniques that work, think about selling them to people in your field who are in other geographical areas.

If you have a product idea you want to sell to other companies, make sure your approach to them is as professional as possible. You can even make it dramatic: Send your letter by a courier who won’t deliver it unless it’s signed for by the addressee. The letter itself should, like any marketing piece, make the benefits of what you’re offering obvious and graphic. If possible, create a sense of urgency by giving the person a one-week option to act. Your proposal should be as close to risk-free for the recipient as possible. One way to reduce their risk is to license the product on a results-predicated basis. They can test for a specific period to see if the product sells; if it doesn’t, they owe you nothing. It’s to your benefit as well as theirs to structure a variable rate - the more your product sells, the higher the percentage you receive. Structure this at the outset, because if sales turn out to be higher than the licensee expected, it will be too late to convince them to give you a larger share. The first business to approach with an idea should not be the industry leader. The number two or three competitors will have more to gain, so they will be more likely to give your product the attention it deserves. Remember, your product will always be more important to you than to anyone else. If other people or companies are selling your idea, don’t leave the marketing to chance. Make the marketing program an integral part of the licensing arrangement.

Insurance Sales Stuart had built a good business selling accident insurance to high schools and colleges in three states. He knew his potential was even greater, but insurance and school regulations, along with underwriters’ economic constraints, seemed to prevent experimentation. In this consultation, I showed him how to get around contraints, open new marketing avenues, and “upsell” existing customers. When you market anything, little twists - slight changes - can make a profound difference. You’ll see what I mean when you read this transcript. *

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Jay: Do you have a good organization of operatives out in the field? Stuart: Yes, but they don’t have any real allegiance to me - they only need my product. They work for other insurance companies or for themselves, and my service is simply something they use to accommodate the school districts they insure. I provide fire insurance, liability, bus insurance, etc., for schools. This is something the agents don’t want another broker to come in to their clients with. But they don’t make any real money on it either. The end result, of course, is that they do this as a sideline, not to earn a living. Jay: How did you build the business? How did you start it? Stuart: It started around 28 years ago. I was the vice president of an insurance company, and the president of another insurance company said, “Stuart, get out of management, and go back into sales.” And I said, “Okay, fine, I’ll do that.” And he said, “Start selling some student insurance, too, while you’re at it.” And I said, “Okay, fine.” So I got one school district, and it became two, then it became ten, and then fifty, and then one hundred, and so on. Jay: Interesting. Tell me, before we get started, what you want to accomplish out of this conversation. Stuart: Basically two things. A better way to build my mousetrap than what I’m doing now. That’s the first part. And the second part, how to take off with the dental accident policy, which is a sleeper in the industry. Nobody really knows how to get that off the ground. I’ve talked to presidents of other companies in the accident business, and they said, “We’ve thought about doing something like that, but we don’t know how to get started.”

Jay: You have a great attitude. You seem very open-minded and very effervescent. Stuart: I would have to say that I am, I agree. When you’ve got it, you flaunt it! Jay: There’s nothing wrong with that - it’s wonderful. Let’s take the existing business. Do you just market to your own state? Stuart: We actually sell in two neighboring states too, but I have so little business coming in from them, that I don’t even count them. Jay: Why do you do so much business in your own and so little in the other states? Stuart: The student population is the key. We go where the population is. Actually, the school districts in the big Northeastern states would be a lot better than those two states. They have a larger student population. Jay: Are you inclined to want to expand that facet of the business? Stuart: Oh yes, definitely. Jay: What does it require? Stuart: A company that’s willing to take the chance on losing money upfront, because they do lose money. Unfortunately, with this end of the business, all it takes is one good claim and all the profits go down the drain. Once in a while the company gets smacked with a terrible loss. Jay: But they compute that actuarily into the whole thing, don’t they? Stuart: Yes. You see, Jay, I basically give them a turn-key operation. They’re going to earn anywhere from 4 to 10 points. I’m going to simply use their name. I’m going to do all the work. I’m going to file with the insurance department, I’m going to do the advertising, I’m going to provide the marketing, everything from soup to nuts. I’m going to take claims, I’m going to print the claim forms, I’m going to do everything and anything. All they have to do is sit back and pay the premium tax to the insurance department. Other than that they do nothing. In case real sticky situations come up on a claim, I know that they would want their own legal department to handle it. Jay: The typical claim might be a kid breaking a tooth or an arm, right? Stuart: Exactly. That’s typical. Jay: It would be an especially bad one if somebody broke their neck. Stuart: That’s right. That could come from anything. These 3-wheeled vehicles - these all-terrain vehicles - were causing tremendous amounts of claims. Jay: Are they exempted now from the policy? Stuart: Yes. Jay: But they weren’t originally? Stuart: That is correct. It’s the old story - tell me what’s going to happen, and I’ll tell you what you should be insured for.

Jay: So right now, the people who are underwriting you in your state don’t want to underwrite more expansion. Stuart: No, they don’t. They’re a new company for me. I generally stay with a company 3 to 5 years, depending. Jay: Because. . . Stuart: Because they get smacked with the claims. Jay: And one claim is all it takes for them to want to get out. Stuart: Right. This is my second year with this company right now, and if this is a bad year, they won’t be able to live with it the following year. They’ll tell me to get another carrier. Jay: But what is the maximum claim, a million dollars? Stuart: A million dollars for sports, and $300,000 for student coverage. Jay: And how does that compare to what they take in from premiums? Stuart: Actually, the break-down looks like there are about 1.1 or 1.2 million dollars in premiums. Jay: Is that what they get? Stuart: No, actually, they get about 70%, and I get 30% roughly. And they pay out about 62% of claims. The rest of it is mine. Jay: Which would be just wonderful if the claims conformed to the actuarial tables. But if there’s one abberation. . . Stuart: I do all the actuarial work, too. Jay: That’s impressive. You must be an incredibly good salesman. Stuart: I am. I’m also modest. Jay: No, you’re delightful. But is there a more profound application of what you’re doing in a different arena, which you can get someone to underwrite? Stuart: Yes. That would be the dental accident policy. Jay: Let’s talk about that for a minute, but let’s not abandon the first. You want to expand, but you’re limited in expansion by who will underwrite it. And getting underwriting for expanding into a state - and bringing them $3 million worth of policies - is difficult. Parenthetically, who is underwriting your competitors? Stuart: I brought my competitor into the business and taught it to him. He didn’t actually work for me. I taught him the business - I was Mr. Good Guy. One of the companies asked me if I wanted to go into 20 or 30 states, and at that time I wasn’t interested - I needed to play as hard as I work. They found someone who was interested. I said, “Okay, I’ll help this guy get started.” Which I did. And now he’s my biggest competitor and he’s made a zillion dollars because he has a nation-wide firm. And he’s stayed with the same company now for 14 years. Every time they were about to bounce him for lousy loss ratios, the people who were in power, the management, got fired themselves because they weren’t doing an expert job. He’s very lucky.

Jay: Is there any other company that wants that business? Stuart: Yes, but they don’t offer as broad a program as what he and I are both offering. Jay: And so anywhere you went into a competitive market, you’d be competing against him. Stuart: Yes I would. But I can compete against him because I have a few insurance tricks I don’t share with anybody. Let me take that back. He doesn’t choose to sell that type of coverage. He sells a policy that exceeds the parents group insurance. I sell that policy, but I also sell a policy that is what we call primary coverage. Primary pays in addition to anything else you’re covered by. In effect, the parent could double dip. Jay: Yes, and that’s perfectly legal. Stuart: Yes, absolutely. Jay: Okay, as long as you have the coverage. Stuart: The carrier that my competitor has been locked into for14 years does not want that coverage, but actually it’s good coverage. It is a money-maker. Jay: Yours? Stuart: The primary coverage, yes. Jay: It makes sense. It’s simply more appealing. It has a better sell to it, doesn’t it? Stuart: It has a better sell, but the benefits are less. In other words you have a built-in lid on the amount that the insurance company would have to pay out, whereas on the excess plan you are wide open. In that plan, if the parent has no coverage at all, you could pay out $700 a day on the room, and 3 or 4 thousand a day on hospital expenses. Jay: Interesting. Let’s see how to expand that facet, if in fact, it’s expandable. Stuart: Okay. First, remember that we are third-party administrators. Jay: Okay. You have somebody who will underwrite all the business in your state and in the two neighboring states. You have 50-55% of your home state’s market already, right? Stuart: Yes, I do. Jay: What does it take for you to stalk more adroitly in the two neighboring states? Stuart: I would prefer going into New Jersey, New York, and other states that have much larger student populations. Jay: Will the insurance company who is underwriting you now agree to underwrite you in New Jersey? Stuart: If, after this year, there are no heavy-duty losses, they will for the following year. That’s no problem. Jay: When you go into a market, what is your strategy? Stuart: Simply contact the schools, find out who is handling their student insurance now, then contact those carriers, because they’re a special breed unto themselves. It’s a world within a world.

Jay: Now, the student insurance rate at this moment, would that be a blanket policy that the school would have, or is it from a specific carrier? Stuart: A specific carrier. They usually have the same agent that has been handling their account for the past 10-15 years. They want to continue doing business with that particular agent because business managers are basically lazy; they don’t want to make changes. As long as the phone isn’t rattling off the hook with insurance calls, they’ll stay with the same broker forever. Unless you force them into doing something strange, such as looking real hard at your proposition. Jay: Yes. So, you contact the agent that’s catering to the school, and you say what? Stuart: “Guess what? I can give you better commissions and a better product. I can do more for you. In other words, you handle the claims procedures, we handle all the claims.” Jay: You’ll turn-key that for them and give them more commissions to boot. Stuart: Exactly. Jay: That’s appealing. Does that basic premise entice most of them? Stuart: In some instances it does, in some it doesn’t. It depends upon the loyalty the guy has, and the block of business he has had, and the length of time he’s been there. And the kind of treatment he’s received from my competitor. Jay: Next question: Is it a seasonal thing? In other words, if he says, “Yes, I’ll do it,” do you have to wait unil the next school year to implement it? Stuart: It’s very seasonal. In other words, our selling season starts in April, and we go right through until the end of July. By the end of July the game’s all over. Jay: Is your season really a matter of selling the agents or selling the school? Stuart: Selling the school. I already have the agents. Jay: So the agents are set up, and then the school blitz is all the way through July. Does it basically correlate with the sports season? Stuart: That’s exactly correct. The sports start in August, so the school has to make up their mind what plan they’re going to buy. Some schools buy sports insurance, some don’t - most don’t - and those that do buy have to pay for it themselves. They can buy coverage just to cover the football players, or they can cover all the athletes participating in any interscholastic sport. Jay: When I go out for any kind of a team sport, do I have to pay money to be on the team? Stuart: No. But the school either will ask students to sign a release indemnifying the school in case of personal injury - because the school doesn’t carry coverage - or it will furnish coverage. Jay: How many times a year do you promote your product? Stuart: Once. The teachers buy sports insurance in August because that’s when the football players come out, as well as everything from track to weightlifting to whatever. It’s the interscholastic sports, as opposed to intramural sports, that need coverage. Jay: Okay. But why would I not be interested in it again come late January when a new season starts?

Stuart: Well, the school has already signed up for that. We’ve covered all the other interscholastic sports, whatever the season. We have one season, not two. There’s one full school year that runs from September through the end of June, and there’s a mix as far as the various sports are concerned. 85% of the schools that buy coverage buy it for football. It’s there that the most serious injuries could happen, they feel. Jay: I would agree, sure. Stuart: They don’t worry about the tennis kid or the kid on the swimming team as much as they do about the football players. Jay: So football’s the peak season. Stuart: As far as the student accident insurance, which is another part of the program, that covers the child up to $300,000. There are two programs that they can purchase. Plan A is for school time only and Plan B is 24-hour coverage. Jay: What percentage chooses what? Stuart: The greater percentage buys the 24-hour coverage because of the take-home letter that accompanies the student accident brochure. Jay: And have you experimented with different letters? Stuart: I have to be very careful, because this letter is on school district stationery signed by the business manager himself. 80% of the business managers will use my letter. I write the letter for them; they in turn just retype it and put it on their stationery and send it home with the child. I couldn’t get a letter like this approved by a state insurance department, but business managers can say whatever they please. We can’t say things like, “The greatest plan, offers wonderful coverage. . .” Jay: But a third party can tell it any way they want. Stuart: Exactly. So I’ve refurbished this letter over and over again. It’s been done and redone again. Jay: I have it in front of me. But this is, in your estimation, the most powerful letter you’ve come up with? Stuart: So far, yes. Jay: And how often do you experiment? Stuart: We can only send it out one time, remember. The school will not give us the names and addresses of the students. Therefore, the teachers have to pass this out. Jay: Is it passed out by the athletic people or in every class? Stuart: Every home room teacher. But the teachers say, “Look, we’re not in the insurance business, we’re here to teach. We don’t want to get involved in this.” The teachers’ unions are very much opposed to this. Jay: So it’s a very understated promotion. Stuart: Yes, exactly. But the thing promoted is the brochure itself. That’s all the parents get. Jay: So they get the brochure and the letter. Are they enclosed in an envelope? Stuart: No, it goes home with the two items loose.

Jay: And you’ve never experimented with putting it into an envelope? Stuart: No, we never have. Jay: Try it, just for the impact. In any season, how many of these are distributed? Stuart: For a student population of 378,000 children, I printed probably about 1.2 million. Jay: Because. . . . Stuart: Distribution. Some schools have 28 children to a class, some have 35. The class sizes are unpredictable. When we go to stuff homeroom envelopes, we assume 35 brochures - we have to estimate high. This is the brochure that has the $300,000 student accident policy on it. That brochure is stuffed into an envelope. The school in turn prints the take-home letter. The business manager instructs the teachers to give out 1 brochure and1 take-home letter to each child. At that point the child brings the brochure home and says, “Daddy, the teacher wants this in by next Monday, or two weeks from now.” So it’s the child’s influence, and the school’s influence. Where we’ve sent the school’s letter directly to the parent with our own letter, we’ve done poorly. Jay: Let me ask you another question: you can’t share commissions with the school, right? Stuart: Right. It’s called rebating, and you’re not allowed to. It’s against the insurance laws. Jay: Okay. Can you do anything for the school to induce them to let you do a second promotion? And by the way, do you have experience with any schools that let you do it twice? Stuart: No, the teachers’ unions are very, very much against even handing it out the first time. They’re doing it now with an attitude of “Okay, it takes us 10 minutes to do this. We’ll do it one time, but that’s it.” Now most schools don’t even want to collect the money. They want people to send the envelope directly to us. They don’t even want the envelopes coming back to the school. Jay: Interesting situation you face. Stuart: 25-30 years ago, we used to get 55% participation at a school. That was not unusual. Today we’re lucky to get 6%. Participation has fallen off. The price has gone up. It started at a buck when I began in this business. Jay: But your net business is rising, right? Stuart: Yes, basically. Jay: And you don’t think it’s worth experimenting, right? I’m just trying to play back what I think I’m hearing. You don’t think you can experiment very much with different letters signed by the business managers? Stuart: I have experimented, and I’ve refined it to where it is at this point. There’s only so much I can say, because they’re only going to print one page. Certain directions to the parents have to be there. You’ll notice for example, “If you have a question, don’t call us, call the broker. If you’re insuring more than one child, you need a separate envelope for each child.” I could take out the listing of different coverages, I suppose. One paragraph really is incidental and could be changed, though the business managers seem to like it in there: “There are two plans available, school-time coverage and 24-hour coverage . . .”

Jay: Let me ask you a question: Once the student signs up for whatever sport, is there no way the athletic department would send a letter out saying, “This is the last alert. If you haven’t signed up now. . . “ Some kind of an urgent, timely, last notification that they somehow turn-key and you pay for? Stuart: It all depends. Some athletic directors say to students, “Hey, look, you have to bring in your letter stating that you’re letting us off.” I say to those directors, “Why don’t you hand the student the release letter, and also the take-home brochure?” Some athletic directors will do that. Jay: What if you, through some kind of a telemarketing organization, and with the support and the endorsement of your agent, were able to call the athletic directors and arrange something that was done under their auspices, not feigned, but genuinely? Your approach to the directors could say: “This is your last opportunity, before this season’s insurance promotion is terminated, to have us put together for you another specialized letter.” Let me tell you something interesting. In direct marketing, if you mail to a list, any mailing list, with a certain offer, and that offer pulls X, if you remail that list immediately, even tomorrow, you’ll get additional responses. We mail to list A today and pull 150 orders. If we mail to list A tomorrow with the very same piece, it would probably pull a low of 40 to a high of 80 more orders. Now, what if you could go to the athletic directors within 3 weeks and arrange for them to let you mail to people who didn’t sign up - or, if they won’t do that, to redistribute a different letter, which you submit to them for their signature, on their letterhead? The second letter would say, “Dear Parents: A month ago (or whatever), the school sent you information on insurance coverage. A lot of parents took us up, some didn’t. You’re one of the ones who didn’t. I’m writing to tell you once more that this insurance package is available only for a limited time. Thereafter, we don’t expect anything to be available. We’re just trying to alert you to the fact that you still have one week left to avail yourselves and have your child covered by the basic plan or the expanded plan. The benefits are . . . . Last year, many parents missed out on it and were angry afterwards, because they thought they could send it in anytime. It’s very strictly time-dated, and the enrollment period expires in 10 days. So we’re re-alerting you as a courtesy. If you’ve already signed up, or you’ve already made your decision, please throw this away. If you haven’t, please review it. In particular, look on page 6 of the enclosed brochure, that’s my . . . (make some kind of an involved statement).” My gut feeling, Stuart, is that if your main promotion brings 17,000 orders, you can go right back through that list and pull at least 40% of that again. Stuart: I understand that, Jay, but I am handicapped to the extent that this is coming out through the homeroom teacher - the first take-home situation. The second one would have to go through the athletic directors, and most of them couldn’t care less. Jay: But, and I’m not trying to question your assessment, but is it worth experimenting. . . . Stuart: I would be more than pleased to do that. Jay: Do you have telemarketing? What kind of staff do you have in your offices. Stuart: We have 3 ladies in the front office. We have a vice-president - she runs things when I’m not there. Then we have a bookkeeper. And basically that’s all we need. And of course my wife and I both help out in the office when we’re there. Something about this business is that it’s only really a 5-month business. Jay: It sounds like a wonderful business. The only problem you have to contend with, probably, is formidable competition. Stuart: Well, there’s a lot to learn about this business, for sure. A lot of people have failed at it, naturally. There are many avenues to follow in this business, but certainly anybody can make a living. There’s plenty of room.

Jay: Let me summarize what I’m saying. If you are acclimated to my thinking, you’ll know that little twists, half turns to the right, can make a profound difference. I strongly encourage you to experiment with the athletic directors. Imagine the results if you could boost sales 35-50% by that technique. Stuart: Yes, it just means printing more brochures, that’s all. Jay: One different cover letter, that’s all. Stuart: And a different cover letter, right. Jay: But if you could coordinate it with the school, the athletic director, and either your agent or your staff person - and I think your staff person would be the one to faciliate it, because the agent probably doesn’t give a darn - I think it could be very, very powerful. I think it’s surely worth trying in one or two applications, and if they work, going big. But again, basic experience tells me that if your first round pulls X, you can go right back two weeks later with the last-chance orientation, and with the cooperation of those athletic directors, add at least 35% and maybe as high as 60-70% to the yield from the first letter. Just by reminding them and giving them a sense of time urgency, and implying that they thought they could get in any time, and just didn’t realize that they can’t. Just put some rationales in the parent’s mind so they can justify their initial procrastination. . . . Stuart: I see what you’re saying. Jay: That I think would be very useful. Next, what can you offer besides that policy? Is there any other, for example, the dental policy, that you can offer through the school? Stuart: Yes. I’m already offering that policy. It’s in the brochure itself. Jay: Can you offer that separate from the others? Stuart: I haven’t done that yet. Jay: But that’s what you’re talking about - offering the $20,000 optional student dental accident policy by itself? Stuart: Correct. Jay: Not necessarily just for students? Stuart: Right now it has to be for students because of the way it’s set up through the state Insurance Department. Jay: And it’s $6 a year on its own? Stuart: That’s all. It covers any accidents, except those that are exempted, such as accidents occuring in all-terrain vehicles. Jay: What do you make on the $6? Stuart: It depends. If it’s a stand-alone policy and I’m doing everything, net on that is 30-35%. Jay: That’s not bad if you can book enough people. Stuart: I can. I’ll have no problem booking $4-5 million of premium. I’ll do that within 4 years. I’ll have $1 million of commissions in 4 years coming in.

Jay: And you’re just now starting. Stuart: I haven’t done it yet. I haven’t found the carrier. Jay: Is it hard to find one? Stuart: Let’s put it this way. I’ve been working on getting a carrier for the student high school business, and another carrier for the college business. Again, because of the industry going through some tremendous problems, a lot of companies have been, up until now, reluctant to get into this. Jay: It would seem like the demand should be there. I have 3 children, and every one of them has fallen and broken a tooth, though that’s happened over a 22-year period. Stuart: You’d spend $6 a child. . . . Jay: If you ran an ad in the right place, I would send you my money immediately. I wouldn’t even think about it. Besides that, I would give you my charge card and say, “Bill me automatically every year.” You’re very bright, but it seems like you’re hamstrung by two problems: one, the regulators; two, the underwriters. Stuart: Yes, exactly. I can come up with a carrier. I have no problems with that. But getting the kind of deal that I want from the carrier is not going to be easy. I want to give them a turn-key operation. Jay: Why would they not want you to do that? Stuart: Because no one’s had any experience in it. No one’s done it yet, Jay. Jay: But there’s no illegality in it, is there? Stuart: No, absolutely not. It’s a dental plan, and the loss ratio on this stuff runs an average of 15%. Jay: It sounds like it’s a concept that would mint money. Stuart: It is. The insurance company will earn, instead of 4-10%, an average of 20-25%. Jay: What’s the next level? You’re not an insurance company yourself, but if you started an insurance company of your own you could do anything you wanted, right? Stuart: Exactly. Jay: But that requires how much capital? Stuart: Lots and lots of money. But I wouldn’t want that. I gave that thought up 28 years ago. I had a cashier’s check in my pocket for $25,000 as a deposit. I was driving to this guy’s office to buy the charter for this insurance company, and I said, “What do I want to do that for? I’d have to be in an office at a particular time every day.” Jay: I understand. When you’re at your vacation spot, what do you do? Stuart: Play tennis, go to shows. Jay: So the business doesn’t require that much of your time. Stuart: Maybe 15 minutes 2-3 times a week. A half hour at the most.

Jay: You make an extraordinarily good living from that. Stuart: Yes, I make a very comfortable living. It’s just that a decision had to be made - what does one want to give up? For the time I put in, it works out to about $5,000 a week. Jay: That’s very adequate, particularly where you live. Believe it or not, in California, that would be marginal. But there, it’s a wonderful income, particularly with the ability to live. . . Stuart: I maintain two homes. Jay: That’s wonderful. Stuart: I’m on a lakefront. It’s very tranquil, and I can do a lot of thinking. There’s just so much to do here. I can’t believe that the time has elapsed. I’ve been here since around the first of December, and I won’t go back until around the end of April. Jay: Let’s talk about the dental plan. I want to give you some wonderful concepts that you can make hundreds of thousands of dollars on. I love programming that’s low priced, highly repetitive, and needs crisp, clean articulation. Right now, the option is that it’s sold on this policy that I’m looking at, your Exhibit 1. Who is underwriting that? Stuart: The same carrier as for everything else. Jay: But that carrier is not willing, or . . . . Stuart: Is not interested in doing anything unique and different. They’re not interested in going into other states. They just want to see how things go for the first couple, three years, and after I prove to them that they’re not going to lose, then and only then will they give consideration to moving into other areas. Jay: Does that typify the mentality of most insurers today? Stuart: In this particular end of the business, yes. You see, Lloyd’s of London took a bath two years ago for $40 million on this kind of insurance, because they had an administrator who was giving them a huge block of bad, bad business. Jay: What delineates good from bad business? Stuart: There are school districts that, because of where they are, may have kids that are like mountain men. They’re 6’3", but they may as well be 8 feet wide and 10 feet tall. The kids that they’re playing are normal everyday wimps, and those kids get wiped off the field. The result is that we know that those kids, the wimps, are going to have a higher incidence of accidents. So we don’t really insure them. I will only write for them at a much higher premium. But in most instances I walk away from business like that, because I will know from past experience that the loss ratio has been horrible at those particular schools. Jay: You have the names of all these insured clients. Do you sell them anything else by direct mail? Stuart: Yes I do. I sell them life insurance. I have 17,000 leads for the salesmen who want to sell for me. But they don’t work them - they do a lousy job. Jay: Why don’t you telemarket them? Stuart: I have tried telemarketing without success. The product I want to sell happens to be a policy that costs $2-3,000. People are not going to buy that over the phone. Jay: No they’re not, they’re not.

Stuart: They’re not even going to buy a $300 or $500 policy. Jay: But how about some kind of an accumulating program? If you had 30,000 - 50,000 parents sending you whatever, $30-40 a month, or $20 a month - modest amounts - if they continued for a predictably long period of time, wouldn’t that produce something tangible? Stuart: Oh, absolutely, no question about it. We’ve done mailings to the parents who bought the student accident insurance but who didn’t buy the dental accident. Also to those who bought one of the accident policies but not the life insurance. Jay: With what kind of success? Stuart: The return worked out to about 1-2%. Jay: But it was profitable? Stuart: Oh, absolutely. Jay: But then did you telemarket it? Stuart: No, I didn’t. Jay: Every year when you do the promotion, do you automatically mail again to last year’s people? In other words, I know you’re going to distribute it to me through school. However, I wonder what’s the incidence from year to year of cross-pollination. What would happen if two weeks before the school distribution, a letter went out to me - you have my address and number since I signed up, right? The letter would say something to the effect of, “In two weeks, we’re going to be promoting this insurance. Last year you took advantage of the basic plan. This year it’s expanded - we’ve added this and this and this. Your children will bring a brochure home, but in case it gets lost, we’re including an extra one here with. . . .” You can just experiment with that. A pre-announcement to the people who had the policy last year nothing inflammatory, nothing you can’t legally say, but very simply recommending going to the maximum plan, expanding it. It could have something that they could send right back to you, too. Stuart: It’s an interesting idea. Jay: Try 5,000. Don’t go broke. Here’s a second idea: The moment everyone comes in, what if you have some kind of a bump for everybody who doesn’t take the whole extended plan? How many policies do you sell, again, every year? Stuart: They have a choice of five different programs, and they can take up to three. Jay: How many insureds do you pick up a year? Stuart: 17,000 in the student accident, another 8,000 from the dental and the student life. Jay: Are those going to be the same people? Stuart: Oh yes, they’re the same people. Jay: So the 8,000 are part of the 17,000. Stuart: Yes, but they’re buying another policy. Jay: I understand, it’s a separate entity. But you could send 17,000 letters - and of course you wouldn’t send all 17,000, you’d try 1-3-5,000 people with different versions. If you sent those people a letter within

days or weeks of their signing up for a basic plan or some incomplete composite, suggesting that they could add another feature to it, and you can make it retroactive for no extra premium - all they have to do is sign the following waiver, or whatever, and send a check for $12, or fill out the charge card information - that would seem very compelling, wouldn’t it? Stuart: Now that’s interesting. Jay: I’d try that too. Stuart: The problem is that we don’t have it all on the computer, the names and addresses. Jay: But you could get them there. And in the meantime, you could manually do 1,000 of them. You could experiment by photocopying the names and sending them to a service that sends out computerized letters. And if you found when you mailed 1,000 that 200 of them came back for an average of $25, of which you made $10, you’d be making $20,000 on every mailing. It would more than warrant going fullscale on it. Maybe you could even get around to doing it this year. Then you’d know next year that there’s an extra $200,000 to be made in the back end by bumping up. What other products can you sell them that are low priced, by mail or telephone? You have 17,000 qualified prospects that you culled out from the 400,000 students you solicited. Again, I tend to believe you’re going to find that working the athletic directors will turn the17,000 into 22,000 and the 8,000 dental into 9,000, even before you try to bump everybody. And that’s going to cost you very little, because you already have most of the work done. What other products can you sell them throughout the year? Stuart: I don’t know of anything else. Jay: What are the age groups? Stuart: They go from kindergarten to 12th grade, in both public and private schools. Jay: Well if you had some kind of inexpensive policy a parent could start by mail, without ever dealing with an agent, so that they’d be amassing money for college, and if it was affordable, it would seem quite do-able. Especially if they were charging it to their credit cards. One of the most successful things I’ve seen in my own businesses is the advent of the automatic chargecard debit. It’s very successful. In the newsletter business they tripled and quadrupled the quantity, the level of perseverance, by getting people to automatically sign up for a non-threatening $10 a month, automatically charged on their charge card. Or $25 a quarter. This was for subscriptions, but I think it would work for insurance too. Stuart: No, it can’t be used, because the law is very specific again. The insurance company says you cannot pay a claim until you have the entire premium. If there is a claim, we want to get that claim paid as quickly as possible, so by charging the full premium when the application is dated, the kid is covered. Jay: So even if he pays it in installments, it’s not legal? Stuart: Oh, it’s certainly legal, but we have one annual premium. In other words, we don’t let them take a year to pay it. Jay: I’m suggesting, however, a different kind of product. I’m not talking about catastrophe insurance, but about a cash-accumulation product. Stuart: Okay, I see that. Jay: I’m suggesting you a find a more modest approach to it. Parents want to make sure that they have basic policies to give their kids a little bit of cash, and a guaranteed insurability when they get older. You can’t be all things to all people, but if you can assure them that if any health problems occur later, the kid

will be insured, and will have some money for college or trade school, or for a down payment on a house when they’re adults, that would have a broad appeal. Because you have the perfect age group and you have their trust. There’s an implication, even though the school is not endorsing it, through association, and that’s a plus too. Stuart: There’s nothing wrong with that; there’s no question about it. Jay: I think that would be wonderful. I don’t know insurance dynamics, but you could end up with 10,000 people in 3 years paying $50 a quarter. Again, I don’t know what your retention would be on that. But if it was a low-end product, low insurance and high savings, you probably would keep a large portion of the customers in the first year or the second year. You know your products better than I do. I’m just suggesting that long after you have customers for whatever they normally use, then whatever else you can sell to them is all “found money” anyhow. Stuart: There’s no question about that. And I have given thought to that, believe me I have. It’s just a question of coming up with the product. Jay: It sounds, and I laud you, as if you don’t really want to get into terribly cumbersome business facets at this point in your life. Stuart: That’s correct. But I would come back for “work” for the next year to bring this family dental policy into realization. Jay: I think that policy could be sold almost anywhere. It could even be sold on TV, in concert with the schools. Stuart: Absolutely, and it has never been done. Jay: And if you have the kinds of margins now so that you’d be willing to invest in this - though the best thing would be to get your insurance company to subsidize the acquisition costs in year one - would you have a good perseverance rate? Stuart: I’d have a wonderful perseverance rate. Jay: If you made nothing in the first year, though you’ve invested every dime in marketing to get yourself policy holders, it would seem like you could build an incredible national position. There’s nothing like it anywhere, right? Stuart: Right. The only problem is that most people, when they hear the phrase “dental accident insurance,” forget the word ‘accident’ and figure, they go to the dentist for all kinds of routine things. $29.50 a year, they think, covers all the dental costs of mom, pop and all the kids! Holy cow, they think, that’s such a bargain, I’ll take it. They’re forgetting that it’s not going to cover a toothache - it isn’t going to cover anything unless there was an accident to the mouth. Jay: But the point is, I don’t think people realize the propensity for that kind of thing to happen. Again, it’s not convincing from an actuarial standpoint, but I think almost everybody knows somebody who’s had a tooth chipped or broken or knocked out. Stuart: Exactly, or anybody involved in sports. Remember the catcher behind the plate when that guy swings the bat! How many catchers have had their teeth knocked out? So we’re talking about adults as well as children. Jay: Right. Okay, are we going to assume that you already have a carrier? Stuart: Yes, let’s do that.

Jay: What’s your gross spread on a $29 sale? How much is there in profit? Stuart: Okay, I would say that 40% of those are going to be $6 sales. But on a $29 product, we’re talking about a $10 profit. Jay: Okay. So I would do the following. First of all, if you can use your same leads, you could do it as a separate program at another time of the year - if the teachers would do it. If you could distribute it as a different program, it would give another cycle to your sales year. Stuart: I can’t. The teachers won’t do it. It would have to be a direct mail piece, or a telemarketing situation for those parents who already have the program but didn’t buy the dental. Jay: It might be that even cheaper than focusing it on them would be to run it on TV. You can run ads in TV Guide and certain other places. You’d be selling it nationally - you can sell it anywhere, right? Stuart: I can sell it only in the states where the insurance company is licensed. Jay: Which is no great problem. In any magazine you can probably buy regional coverage. But moreover, I would think that it would be graphically demonstrable. On TV, I think you can make some really interesting visual demonstrations, don’t you? Stuart: Oh, no question about it, definitely. Jay: You can show the incidents and you can also talk about the expense. “Do you want your kid to have a broken tooth? I hope it never happens, but if he falls, if he gets hit in sports, he falls off his bike, whatever, if you’re in a dangerous job or extracurricular athletic activities, you’re covered.” I think that it would make for a wonderfully graphic approach. The most compelling products or services to sell are those which are demonstrable. I would think TV would be fabulous. Stuart: This is absolutely such a winner, Jay, there’s no question in my mind. Jay: Are there guidelines from the Insurance Commission? If you had an insurance company underwriting it, if you said to them, “Look, I’ll take no profit for the first year,” would they be willing to spend more than the $10 to subsidize the first year, or is that something outlandishly. . . . Stuart: It would all depend upon the carrier. I would say that in most instances the answer would be no. I’d either have to come up with the bucks myself or find an angel. Jay: Are you personally willing to spend all your profit on the first year? Stuart: Oh, absolutely. Jay: So you’re willing to spend $10 an order? That’s not horrendous? Stuart: No, definitely not. Jay: Let’s take a look at who else you could do it with. You could do it through dental offices. Who else could you syndicate it through? Stuart: Insurance people, they’re into this. . . Jay: Make a list of all the resources you could easily tap. Make a list of the rigors on advertising and marketing and third party endorsements - what you can say and what other people can say. And explain all your points more expansively. The only problem I have with your brochure is that when I try to read it, it isn’t confusing, but there are so many things you’re selling in it. Show that policy by itself.

Stuart: Okay. Jay: How long would it take you to find a carrier for it? Stuart: Oh, probably 3 months. I know that the potential is there. Jay: If you have somebody for one or two or three states, would they be willing to carry this, or are they very slow to progress? In other words, if you do one state with this and it works, and they don’t have a high incidence of claims lost - they actually make double the industry profit, and they make half a million dollars and you make a million - would that result in their being more willing to go into three or four or five states or the whole country thereafter? Stuart: I would find a carrier that would be willing to do it on a nationwide basis from the beginning. They would know we’d be going in and doing advertising and everything else, on TV, direct mail, the whole 9 yards, using mail order houses, telemarketing . . . Jay: Can you handle that from your office adequately? Stuart: I would have to hire more staff. Jay: But it could be done as it grew. Stuart: Yes. Jay: What I would do is put together a comprehensive program. I bet that this product could be easily presold. I mean, what would customers have to sign - would they have to sign a very encompassing application? Stuart: The application is down on the same page. All they do is put in their name and address, and check off $5.50 total cost per year per student. It’s so simple, that’s the crazy thing about it, it’s so simple. They have to have an accident to the mouth in order for the teeth to be covered. They can’t just have a bad tooth; they have to have had an accident. Jay: What you’re advertising would have to be passed by the insurance departments in every state ? Stuart: Unless we do it on another basis. Jay: But what if you do it through somebody else? Or somebody endorses you? Stuart:

I could go for an endorsement too.

Jay: I think you should find some way that somebody could endorse the thing. It would be fabulous. Good luck - I think you have a great product here. Stuart: Thanks very much for your help. *

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When you do direct mail, try multiple mailings. Later mailings to the same list usually bring additional responses. If you get a 5% response to a mailing, a second mailing to the same list might bring an additional 1 or 2% . What’s often easier than getting new customers is “upselling” - inspiring old customers to buy more. After all, existing customers have already shown their disposition to buy your product. One way to “upsell” them when offering a basic product is to simultaneously offer a more advanced or luxurious product at a discount.

When you market anything, give the prospect a rationale, a good reason, for buying now, such as a special deal that will only be available for a limited time. Never stop thinking up new avenues for selling your product. The main limitation to your marketing possibilities is your own imagination.

Finance Company I really got revved on this one, as I think you’ll see. Greg founded his finance company 20 years ago. He operates 12 offices, most of them in cities of about 50,000 population. A lot of the loans they make are “sales contract loans,” which means loans used to purchase, say, a TV or a car. Greg’s company does a lot of direct mail to people who they consider potential borrowers: schoolteachers, nurses, postal employees. Greg has found that a good source of prospects is people who have already borrowed, so he has his staff go to the county courthouse and collect from the public records the names of people who have taken out mortgages. Greg has no trouble getting customers to repeat — that is, to borrow from his company again. His main goal in consulting with me was to explore ways to increase new business. Greg’s son, Don, was also on the phone. Don handles company advertising. In this consultation, I gave Greg and Don not just a flock of powerful marketing concepts they could use, but numerous examples of actual wordings for direct mail, newspaper ads, radio, and TV. As you read my suggested wordings, I suggest you be looking for ways to adapt the specifics to your own marketing. Jay:

Well, what would you say your unique selling proposition is?

Greg: I think we have two. One is that we’ll give refunds. If a person comes in and borrows $600 from us today and then within 5 days decides he doesn’t need the money, we’ll refund the whole amount at no charge. Nobody else is doing that right now. Jay:

And the other?

Greg: It may sound silly, but we give a free ham or turkey to our borrowers every Christmas. It’s a tradition we started around 8 or 10 years ago, and our customers enjoy it. We send out a letter every November to customers - and prospects too - telling them about the free ham or turkey. We think it builds business. Jay:

Are your rates any better than other finance companies?

Greg:

No. About the same.

Jay:

Same as the big ones like Beneficial and Dial?

Greg: No. Same as smaller ones like us. The big ones offer much lower rates than we do. Sometimes half what our rates are. Jay:

Then why would someone go to you?

Greg: Most of our customers are not that cost-conscious. Our managers are extremely qualified, and we not only know the lending business, we know other things we can help the customer with. Jay:

For instance?

Greg:

Well, financial planning, budgeting, that sort of thing.

Jay: Okay, here is what I suggest you do. I think you should take the fact that you guys are a family business and you care about your customers and your commitment is ongoing, and you should develop that more specifically into your USP. I think the essence of what you might want to incorporate into your letters or ads is that your company isn’t like everyone else. We’re a family-run-business, we’ve been here for the past 20 years, we know your needs, we’re there when you need us - and not just for money, but for other help as well. I think once a month, once a quarter - whatever your budget will allow - you should send a letter to those people who have taken out mortgages. A very personal letter. Say, “Mr. Smith, we’re committed to grow with our customers over the decades, so we try to be more sensitive to people’s needs than any of the big chains. For instance, at Christmastime, we make turkeys available when you borrow money. If our payment normally comes due on the 16th and that time becomes inconvenient, we can easily schedule a different time for you. If an emergency arises and you can’t honor a payment, we’re sensitive to that. If you borrow money from us and end up not needing it, we will cancel the loan with no penalty at all. We’re there to talk out your problems not just for a loan, but to help you with other things as well. You might meet me on the ball field - we coach and sponsor a team. Give dimension to it. Talk about how the business started. Tell them how you go to greater lengths than other companies and how it’s a labor of love. Greg:

In other words, give it a personality.

Jay: Exactly. It’s giving a personality to an otherwise one-dimensional business. Develop the personality of the branch manager - if the managers are stable and aren’t going to leave. Develop yourself, or Don, or whoever is the most developable personality. Greg:

Well, the thing is they don’t deal with me personally.

Jay: That’s okay. You can write a letter saying, “I started the business 20 years ago, and back then people were not so anxious to make loans to folks in small towns...” Greg: Could I also tell them that Bill Jones, the manager of their local office, is 55 years old and has lived there 15 years and tell them a little about him or me? Jay:

Yes, that’s the idea. You don’t make it sound like business - it’s more like being a friend.

Greg: I get a lot of letters in the mail selling investments and financial newsletters and stuff, and they’re usually long and drawn out. I figure mine should come out to about 3 paragraphs or one page. Jay: Let me answer that, Greg. If you guys are profit-oriented, you don’t have the right to predetermine for your market what they will respond to. Rather, you have the obligation to try a lot of different approaches - short letters, long letters, informative letters, Greg:

Four pages, do you think, might be good or not good?

Jay: I think there is no answer to that. It’s not the size, it’s the content. It may be that 10 page letters are fascinating if they teach the reader something useful. One of the most disarming techniques I’ve used is to educate the reader. I give help. I answer questions. I give free reports. People may not respond if they feel you’re trying to slam-dunk their wallet, but if you educate them, they see you as different. Do you understand that? Greg:

Yes.

Jay: So what I am going to suggest is that you guys start trying lots of different letters, all geared to being very personal and very service- and information- and assistance-oriented. You could say, “Mr. Such and Such, I know you’ve probably borrowed money in the past, and I know, as you probably do, that the

occasion will undoubtedly arise again in the future that you will need to borrow money again for some worthy cause. I just want to tell you about my company, about myself, about the branch manager in your community, about our philosophy. “What we believe is that we should be there when you need us. We believe we should be sensitive to your problem. We believe we should be flexible. We believe that a customer’s value is over the long haul, and we’re there to help you in other ways besides loaning you money.” In other words, you try a lot of promotional things. Have you ever thought of offering a service where you help them with their tax returns for free? Greg:

Funny you should mention that. We were just talking about it.

Jay: I think that’s good. You have this core list of prospects that you just work the daylights out of and you also mail to your customers. Tell them, “If you need to borrow, great, but if not, come visit us anyway. We always have a pot of coffee on for our friends. At Christmastime, we have a little ornament we’d like you to have as a present - or a tiny little gift for your children, all wrapped up. At Eastertime, we have chocolate bunnies. If you get a chance to stop by, please do.” Are you married, Greg? Greg:

Yes.

Jay: You could say, “My wife Sue and I were looking for furniture for our house the other day. We remarked how expensive everything seemed to be. And she said to me, ‘You ought to tell people that your finance company will gladly loan new marrieds or other folks the money they need for new furniture or a new refrigerator or stove.’ And I said to her, ‘Gosh, I thought they knew that. She said, ‘Maybe they don’t.’ So I wanted to tell you about that - and also to tell you about some of the new furniture styles.” Greg:

Would you try to put a kicker in there to try and make them act now?

Jay: Yes, but every situation is different. What works like gangbusters in one application may bomb in another. Don’t presume you know the answer. Try 5,000 letters with one approach and 5,000 with another approach. Analyze not only the tangible results, but also the intangible results - people coming in and talking with you and smiling. The marketplace will always give you clues as to what to, do next. Try a letter with a Post Script: “If I’ve touched a responsive chord in you, and if you and your spouse have been thinking about buying a new living room suite or dining room suite or putting in a swimming pool for next summer, give us a call. We’ve got money to loan you - and moreover we’ve got good advice about furniture, about where to buy appliances and so forth.” If you guys are a mecca of information - and you must be, with all the knowledge you have from all the loans you’ve made and all the different fields you’ve been involved with - you could publish booklets for your customers and prospects. You could take the categories you specialize in - auto financing, swimming pools, furniture, and whatever else - and make a little booklet up each one. Then write letters saying, “If you are interested in buying something new, or adding on to your house, we know quite a bit because we’ve financed 10,000 of them in the past 20 years, and we’ve put together a little booklet or a little report which contains everything we think you should know - like warranties and value and durability. A copy of it is yours free. Obviously we hope you will favor us with a loan application if you buy it, but even if you don’t, we are not here just to loan you money, but to be more than a finance company. We want to help you.” Do you understand? Greg:

Exactly.

Jay: You might do some real fun things if it’s a small city. You could buy out the local movie theatre on an afternoon when it’s normally slow, and tell your prospects that you’re offering a free ticket and free popcorn to the first 500 who call. Little things like that may seem like nothing, but they accrue value and appreciation, do you know that? Greg:

Yes. Do you have more ideas for us about direct mail?

Jay:

How big is your prospect list at any one time?

Greg:

About 5,000.

Jay: Let’s say you mail to those 5,000 people, and let’s say it costs you $2,000 for the mailing. How many loans do you have to make to make that up? Greg:

Well, if we can make a new loan and it costs us $50, we’re delighted.

Jay: So 50 into 2,000, you have to do 40. If that’s too many to expect, you don’t have to mail. You can telemarket. You could have a whole fleet of people who had the title of customer assistants and their job would be to do other things besides loans. They could call people all the time and extend invitations to the movies, extend tickets to ball games, tell people about your booklets, tell them about a lending library you can set up with books and tapes on how to do things. And if it works, you make this your unique selling proposition. Everything you do, it’s you or someone else talking to them and it’s sort of cute - you talking about your wife and making her the charming, caring sort of woman. I think that could be very powerful. Greg:

I think so, too.

Jay: You also can do a lot of good public service. You can rent a hall at the local library and every Tuesday night can be free seminar night sponsored by your company. One night you can get a guy who will teach people how to build their own house, another night can be on how to knit or crochet, and you could get all sorts of helpful community projects going. Greg: We know a psychiatrist who probably would be delighted to talk to a group of people about solving family problems. Jay: If you see articles or reports you like, cut them out and send them to people. Buy the reprint rights, or ask for the right to reprint for free. One time, there was a wonderful book on investments that someone had published. It became outdated, and the publisher had 25,000 left in inventory. I bought them for a quarter each, and sent them to 25,000 people with a cover letter saying that the concept was so good and the guy was so accurate that I thought they just had to read the thing, and I knew that if they did, they would really see the merit of the particular kind of investments we advocated. But whether they favored us with their business or not, I thought it was so important to get it in their hands that I was sending it to them with no strings attached, and we only hope that since we spent a not inconsequential amount of money getting it to them, they would take two or three hours to read it and we hoped it would help them. What if you bought the rights to a discontinued book on how to choose a vacation spot, and sent copies to people telling them if they choose a location and need money for the vacation, you’ll be glad to loan them the money. Greg: Great idea. Could we also get onto something else now? We’re finding that 70% of our customers are people who have had loans with us before. So we must be doing something right. Jay: When you know you’ve got that kind of residual business, maybe you should be willing to spend more to acquire new customers, because they’re worth so much to you forever.

Greg: Even so, maybe a word or two from you on how we can keep existing accounts and make them happy - do you have any ideas on that? Jay:

Why do you think you’d lose them?

Greg: Well, some of them outgrow us. They get better jobs or they can deal with a bank and don’t need to borrow from us. Jay: For that kind of person what you can do is write a neat letter in which you say, “Maybe you have out grown us, but remember the service we rendered to you when you were younger, maybe your children or your relatives could benefit if you were to direct them to someone who is sympathetic to their needs. And you know we’re there when you need us In other words, turn that negative into a positive. Make them feel good for outgrowing you, but at the same time ask them for referrals. Does that make sense? Greg:

Yes, it does.

Jay: You want them to know they’re a valued customer and always will be and any time they need you ... and if there’s some other person they like, love, or want to do a nice thing for - you know, ask them to give the person your card, or to tell them to call you. Now tell me: what areas of borrowing are most lucrative for you - what kind of borrowers? Greg: Public service employees like schoolteachers or lunchroom workers or postal employees have always been the best. Jay:

How do you reach those people? Do you have mailing lists of them?

Greg: We do on some of them, and that leads to the next question. Where can we get the lists? Because compiling a list is the most expensive Jay: There are compiled lists. Get your hands on a copy of the Standard Rates and Data Service List Directory. It’s a big reference volume. Actually, there are two. One is consumer and subscriber lists, and the other is compiled lists within specific categories - such as all the postal workers or lists of government employees or hospital workers, and you can rent these lists by locality. Greg:

All these are our type of people. Where do we get this?

Jay: They may have a set at your library. If not, the Standard Rate and Data Service is in Skokie, Illinois, which is near Chicago, and you can call and subscribe to the list directory. When you subscribe, they send you updates all the time. You’ll probably find 20 different lists you want. Also you can find lists of people who subscribe to different kinds of magazines, and all you’d have to do is rent those names in your marketing locale. When you mail to the lists, you could have a standard insert along with a cover letter saying, “Call the nearest office. Here’s a list of their locations and phone numbers.” Or you can customize it for each branch office. But either way, there probably are tons of lists worth your trying. If you could reach every postal worker, if you could reach every nurse... But don’t send each kind of recipient the same letter. For example, schoolteachers are unique and have their own unique problems. You could say, “Believe me, Mr. Schmidlapper, we know, we understand your financial problems, because we’ve been serving schoolteachers for the past 20 years. In fact, we’ve probably made more loans to more schoolteachers for more worthy purposes than any other loan comp any in the state. We understand what it’s like at Christmastime, your money is tight, and we understand emergencies ... and we appreciate the job you do.” Acknowledge them: “We appreciate the fact that you help mold our children, we appreciate your dedication, and the best way we can show you this is by telling

you we’re here to loan you money in any reasonable amount, and we can do it fast, discreetly, we’ll do cartwheels ... If you can’t come in, we can handle everything by phone or mail.” I don’t know how flexible you can be on the specific terms, but that kind of letter is pretty compelling. Greg: Real compelling. Now, let me ask you another thing. On envelopes, we normally write, “Strictly Confidential,” and simply have our return address. Jay: You should test “Confidential” and you should test a statement on the outside, a headline. What’s the typical loan size? $1,000, $2,000, $3,000? Greg:

$1,000.

Jay: So then: “If you’re a teacher in good standing, we’ve got $1,000 available for any time you want it in the next 30 days. Details inside.” That’s just one possibility. Another might be: “How to borrow all the money you need conveniently, discreetly, immediately details inside.” Or, “How to get your Christmas paid for this year and not pay for it until next year ... details inside.” “How to get a new stereo installed in your home by Friday and not pay for it until next year” ... Do you see what I’m saying? Greg:

I do.

Jay: What you have to realize - and this is important, Greg - is that you guys are in the business of loaning money, but that’s not what you’re really doing. You’re really solving a problem for people, aren’t you? And therefore you should spend time analyzing your records and identifying the 10 or 15 or 20 most frequently voiced reasons people are borrowing money. And then you should address those in headlines and copy. Test 20 different headlines: “If you need money for car payments,” “If you need money for a new stereo,” ... Just try them individually. Or try them all in one headline - just list all of them on the envelope, why not? - and then analyze (a) which ones bring in the most response, and (b) how many are qualified enough that you can make the loan. I don’t have the answers. You have to test. When you address the envelopes, you can use labels, or address them using a word processor so they don’t look so much like a mass mailing, or there are mailing houses that can take a computer tape and have the envelopes addressed with a laser printer. A friend of mine goes one step further: He has the envelope personally addressed and in the lower left corner he puts the time and the day, like 11:16 am, January 16th. Why? Because it gives more personalization. Try a number of different approaches, and analyze not only responses but costs - the cost of getting someone to contact you and apply for a loan, the number of these that convert - in other words, how many applicants you actually give loans to - and then finally how much the average loan is and how much you make on it in profit. From what you’re telling me, you should be willing to spend a lot of money to acquire a new loan customer because if for every 10 people who come on your books, let’s say you still have 6 of them four years from now, and you make $6,000 or whatever on the over that time - you see what I mean? Greg:

I sure do.

Jay: If you know that the backend is your main market, you might even be willing to spend as much as the whole profit for the first year in order to get somebody new. Greg: 30% of our new borrowers are recommended by our customers or by someone else. How can we utilize this to get twice as many? How can we get more people to recommend? Jay: You could try lots of different things. Give them something for bringing in a new customer. Send them a letter: “I was talking to my wife” ... if you want to use that approach ... “and we were discussing how expensive it is to bring in a new customer. We have to run ads in the paper and typically spend hundreds of dollars trying to bring in someone, but it’s worth it because when someone becomes a customer they usually stay with us for years. And my wife said, ‘Greg, maybe instead of spending hundreds of dollars in the newspaper; which is impersonal, why not spend the money on some nice gift for

our existing customers if they brought you a good new customer.’ It sounded like a good idea, so we’re trying it out. If you bring us a friend who needs a loan and we make the loan to them, we’ll give you X” ... and give them a choice of 3 different things. Nice things. By the way, every idea like this that I give you or that you come up with yourselves, you should never promiscuously or capriciously try to do 100%. You take 100 customers and try it with them, so if it backfires maybe you lose $500 or $1,000 but not the whole ball game. And if it triples the number of new customers, it’s worth it. If it only increases the number by 10%, maybe it isn’t. If you test it in a controlled environment where your risk is minimal but you can expand quickly if it works and cut your losses if it doesn’t, you’re never out too much, are you? Greg:

No - and we could try it one office at a time.

Jay: By comparison, when you look at trying an ad, you’ve got to spend $1,000 or you have to spend $1,000 for a salesperson to try something new - but here you can try it for a fraction of that cost. And you should put a time limit on the offer - “It’s only for the next 30 days.” Greg:

Okay, I’ve got it. Now can we talk about other avenues like newspaper, radio, or TV?

Jay:

What do you do in the newspaper right now?

Greg: Sometimes we put an ad in the personal column that says, “Working women - housewives - need a confidential loan? Call…” Jay:

And does it work?

Greg:

It does work. We get a lot of calls.

Jay:

Why don’t you put the same ad in as a display ad?

Greg:

You mean not in the personal section?

Jay:

Yes.

Greg:

I don’t know. I guess I thought if you keep it personal

Jay: Maybe. But it might be worth trying. Make up your mind how much you can spend - $1,000 a month or $500 a month or $100 a week - on trying new things, knowing that some of them won’t work but when you find a winner you can roll it out and expand it and replicate it so much it will more than make up for the losers. Why not try that “Working Women” ad, making it basically the same but larger so you can tell more of the story. And you would be wise to do a demographic analysis of your business and get it categorized. If you knew that 90% of your business came from 10 categories of customer, you could address them specifically in your ads.- You might find that working women works, postal workers doesn’t, nurses do. Jay:

What about radio and TV?

Greg: Same thing there. You have to know what the marginal net worth of a customer is - the profit over his lifetime with you - and then you know what you can afford to spend in gaining them. If you know the average customer is worth $3,000 in revenues in their lifetime, and you know it costs you $1,000 in overhead and everything to service them, then you could spend anything under $2,000 to gain them, and if you could finance it you’d make a profit, wouldn’t you. I know that’s oversimplified, but you understand what I’m getting at? Greg:

I do.

Jay: It’s important that one outcome of this interview is that you and Don spend a heck of a lot of time analyzing your data every which way, and if you can’t do it yourself, spend $5,000 of your marketing budget hiring someone to do it for you so you can do some pro forma scenarios: What if we spend $40 to get a new customer, or what if we spend $30 but we get a higher-ticket, more repeat kind of customer, or whatever, and see what you can afford and what it’s worth to get each new customer. Greg:

It’s not that easy to find out what an account is worth to us.

Jay: I understand. It can be hard to figure. Let me give you a quick fix suggestion: Try to come up with some conservative assessments. Let’s say you’re certain that a customer is worth at least $200 per year on average, and that they stay with you for at least 3 years. If you made no money in a new customer the first year, but you knew you could bring in 1,000 of them, would you be happy? Greg:

I guess I would.

Jay: Okay. If that’s the case, and if those customers would normally bring you $200 apiece the first year, you have a $200,000 marketing budget - if you can make it pay off, and if you can keep your cost to $200 a sale. Think about it. Now, do you currently have a regular mailing program to customers? Greg: We send them statements from the computer a week before the due date and it tells them when their payment is due. Jay:

Do you stick something in with that?

Greg:

Our computer prints a little message on the statements each month.

Jay: I’m going to focus on what you just said there, and that’s “little” message. People need to be hit on the head and educated. Sometimes you can be so abbreviated you don’t get through. Maybe the person is wondering, “They just gave me a loan. Will they give me another one this soon?” and your brief computer message just isn’t going to reach him. Do a moderate size letter, and say, “Just because you’ve been with us only six months doesn’t mean you’re not eligible for more money if you need it. Since you’ve been paying your bills on time, if you have a legitimate reason, ...” Only send it to people who have warranted this. But make it long enough to tell them the offer and what’s available. Greg:

We’ve got about ten minutes to go, I think.

Jay: Here’s another idea that can be extremely profitable for you. Probably 80% of your loans are to help people do five special things, like buy a TV or furniture or whatever. Find out what those things are, and make deals with vendors who sell them, where you get a commission. Then tell your customers, “We’re doing something we’ve never done before, and we may never do it again. We have buying power and can provide you with financing, and if you’ve been thinking about a TV we’ve made arrangements with the biggest TV dealer in the area, we can sell you a Sony 18" ... or with furniture, make a deal with a retailer where they give a discount only if you finance it. And if you do that, let’s say you generate a million dollars worth of sales and if your profit is 20% that’d be another $200,000. That wouldn’t be so bad. There are many things you could do. You definitely ought to do income tax preparation, don’t you think? You could send a mailer that says, “Our office will do your taxes for half the going rate, and if you owe the IRS money, we’ll loan you the money to boot.” You could do a different promotion every month. And if you mail to 8,000 people, let’s say each mailing costs you $3,000 all told, and let’s say you got a 1% response. That would be 80 orders, wouldn’t it? If 80 people bought something and you made $50 per sale, you’ve more than paid for the mailing, right?

And if those 80 people bought something under the stipulation that to get the good price they had to finance it through you, you’d get 80 loans to boot. Greg:

It takes a lot of time and trouble and you have to hire people to do all this, see?

Jay: But if you could add a profit center that could make you $250,000 more, it’d be worth hiring someone on a contingency basis to manage it, wouldn’t it? Greg:

Absolutely.

Jay:

It wouldn’t cost you much to validate it. Give it a shot.

Greg: Okay. Another thing we wanted to ask you about is that we have two kinds of customers: fairly well educated and not well educated. The kinds of letters you’ve been talking about are to fairly well educated people. How can we get on the right level for the other kind? Jay: Get a book called, “How to Read, Write, and Speak More Effectively,” by Rudolph Flesch. It should be in most bookstores, and he has three or four other books, too. What he teaches is the basic thing that a very simple vocabulary is still very powerful. Not a lot of adjectives. What I do in my letters works for me. I just get fascinated with a little more flowery eloquence than is always necessary, but it’s just me ... You can say what I said, convey the essence of it, but simply. It doesn’t have to be a long letter. Just remember, human nature is the same whether people are well educated or not. Everyone is dying to be made to feel important, they’re dying to be acknowledged as special, they’re dying to be let in on a secret, and they’re dying to be led and told - charmingly and without pushing or making them feel dehumanized - what action to take, how to respond. You asked me about TV, Greg. I think the same things could be tried on TV. You could try one market. And try appealing to your different categories. “If you’re a teacher, if you’re a postal worker, if you’re a nurse, and you need a loan fast, ...” There’s no reason you can’t try the things we’ve been talking about. Be specific, not general. Would you be comfortable doing the commercial yourself? Greg:

No.

Jay: Really? It would work well with these letters if you also were the spokesperson on the commercials. But if not, you can ask someone else ... Try a lot of different approaches, and analyze which ones work. Greg: How do you feel about our giving customers something free like the ham or turkey? I’m positive it’s helped our volume, but I don’t know whether it’s helped us enough to cover our costs. Jay: Whatever approach you try - you could even offer to buy them this week’s groceries - you should do it in an analytically thorough way, and every week Don should come to you and say, “Dad, we tried these things, and here are the results, here’s what the market tells us.” Let the market tell you what works and let it tell you what to stop doing. You don’t have the right to tell the market. Greg: I think our time is about up and we don’t want to take advantage, but if there’s anything else you’d like to throw at us real quickly… Jay: Great concepts transcend mediocre copy. Great copy will not transcend mediocre concepts. I spend gobs of time listening to the radio and reading newspapers and magazines. I’ll read the classified section for half an hour sometimes, and I’m not just reading, I’m gestating and distilling concepts. Most people worry about great copy. But what I care about is articulating a great concept.

Greg:

I believe this is the best $1,000 we’ve ever spent.

Jay: Please review what I’ve said and try a lot of things. Don’t try to tell the market. Let the market tell you. *

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This was an exciting consultation for me. If you want to increase new business at your company, you might take the main concepts I articulated and use them as a checklist: Be personal. Ask yourself: When I communicate to my prospects, do I sound warm, friendly, understanding, and real? Be specific. Am I speaking in generalities or in terms of concrete benefits and offers? Educate your prospects. Am I giving them enough information about my company and my product or service? Am I giving them clear and compelling reasons to buy? Be helpful. What kinds of information or assistance or outright gifts can I give to people that they will perceive as valuable and useful? Is my company perceived as a mecca of useful information? Be appreciative. Am I showing enough appreciation to my new and existing customers? Try a lot of approaches. Have I identified the different types of people who buy from me? Have I identified the different reasons they buy? Have I created mailers, ads, offers, etc. that target those types of people using those appeals? Let the market tell you what works. Am I going by conjecture, or am I testing and measuring everything?

Real Estate Broker Tricia is a real estate broker in a small town (pop. 16,000) in a very scenic part of the country. At most, there are 8,000 homes in the area. In a given month, fewer than 3 homes are sold through listings, and there’s a lot of competition for these among the Realtors. Approximately the same number of homes are sold directly by the owners, which means, as Tricia puts it, “there is a market that none of the Realtors are catching.” Tricia had been advertising in major newspapers in Southern California to try to attract out-of-state buyers. The ads included an 800 number. Over the four month period she ran the ads, response was 8-10 calls per week, but none of them resulted in a sale. In the course of this consultation, I showed Tricia a variety of ways to create a strong unique selling proposition, and also suggested several rather audacious concepts - including getting leads from competitors, and getting commissioned salespeople to help pay for marketing. *

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Jay:

How much did it cost to run those ads in Southern California?

Tricia:

About $100 a week, plus the cost of the 800 number.

Jay: get them?

So it cost you about $126 to generate 10 prospects. What do you do with prospects once you

Tricia: I assign them to the agents in order, and they send out a “Real Estate Buyer’s Guide” we prepared, plus a cover letter and sometimes a brochure from our Chamber of Commerce. Jay:

Any other follow-up?

Tricia:

The agents wait a week or two and then they would follow up with a phone call and that was it.

Jay: Lead generation has so many component parts, not the least of which is acquisition costs. You can make it too easy so the person’s level of qualification isn’t high enough. That can be as bad as making it too tightly qualified. How about your local marketing activities? How do you garner listings right now? Tricia:

We get them mostly from friends and acquaintances, contacts, people we have known.

Jay:

Just the accumulation of good will?

Tricia: That’s about it. Occasionally my agents call the expired listings and the people who advertise “For Sale By Owner,” but they don’t get too much that way. Jay:

What else do you do?

Tricia:

That’s it.

Jay:

How much do you spend on marketing per month, and how do you spend it?

Tricia:

About $25,000 a year. And we put about 50% of that into the local daily.

Jay: Do you pay attention to the ones that pull the most inquiries? Do you track very closely so you can see which kinds of homes pull the most inquiries? Tricia: Yes, but oftentimes we’ll get only 1 or 2 calls off the whole ad for the whole week, so comparing numbers doesn’t mean much. Jay: Are there certain ads that you have run that are absolute killers as far as pulling - say 10 responses? Tricia: We’ve had a few where we’ve said, “Foreclosure sale,” or “Real steal - going through bankruptcy,” and those do make the phone ring. Jay:

But you can’t do that ongoing, can you?

Tricia:

Not really.

Jay: Let me tell you about this delightful fellow, Charles Schultz, who advertises in The Wall Street Journal. He has a dealership in St. Louis that sells used Rolls Royces and used Jaguars and used Mercedes and all sorts of exotic used cars. He uses some really interesting advertising techniques. He’ll list and describe the product, and then he’ll talk about some comparative reference point. For example, he’ll talk about what a brand new one lists for, he’ll talk about what the replacement value is, he’ll talk about how the engine alone is worth $10,000. He gives incredible value to his used cars - points out the value in the minds of his readers. Can you take a derivative of that and talk about how much a comparable new house would cost to build? I’m trying to give you a unique selling proposition. Everyone is going to skim the ads, and all of a sudden your ad pops up talking about comparable houses on the same block going for $35,000 more or the houses you’re selling are going for 20% less per square foot than anything else in the neighborhood. Is that a doable experiment or is it hard to do? Tricia: We certainly could try it - although some of the older homes are so high priced that it’s sometimes cheaper to build a new one. Jay: Let’s move on then. The letter you sent me to look at - the one that goes to out-of-town people who inquire - was basically a neat letter. What I’d do is take a little more time to talk to the people. Use

specifics: “Maybe you’d like to know why there’s so much interest all over the country in our town. Well, it’s because the air is so pure and the water is so clean and we have a lake you can swim in and you can boat for 10 miles up and down the river and the lovely downtown shops are just a short stroll away and we have the third highest scholastic average and the crime rate is 1/4 that of anywhere else within 1,000 miles and yet it’s just 20 minutes from a major airport ..” Do you see what I’m saying? Tricia:

Yes.

Jay: You might love the area yourself, but don’t presume that others will know what you take for granted. You have to educate them. That’s just one way to strengthen what you’re already doing. Now here’s a completely different idea: Outside your area, other Realtors are advertising out-of-state property also, places like Hawaii and so forth, right? Tricia:

Yes.

Jay:

You might send them a letter and offer to buy and share names with them.

Tricia:

How do you mean?

Jay: Those Realtors are spending hundreds of thousands of dollars running ads and identifying people who are interested in buying and moving out of state. After some time if a lead they get doesn’t pan out, they give up on it. You can say to them, “If a lead doesn’t pan out, we’ll buy it from you.” If they know that those leads cost them $10 each, then they should be willing to take 60 cents or a dollar for them. Or you can make the Realtors an offer that you’ll reciprocate your leads with theirs. You could play off the leads that other Realtors have given up on - and you can access the leads for a much lower rate than if you advertised yourself. Believe me, with the knowledge you’ve gained from my marketing reports, you’re 10 times savvier than the people who run those ads. Chances are they just send a packet of information and nothing else. Or maybe one follow-up phone call. Tricia:

Right.

Jay: You could say to them, “Long after you are done with your follow-up, give us the leads. We’ll buy them from you in one of 3 ways: We’ll trade you leads, or we’ll give you a share of the commission for any leads that result in a sale, or we’ll give you 60 cents or a dollar per lead provided you give them to us at reasonable timely intervals.” It’s no good to get leads that are 3 years old, but leads that are 30-60 days old shouldn’t be a problem because those people aren’t going to buy and move instantly - it takes time to make a decision like that. Let the other Realtors spend the hundreds of thousands of dollars getting the leads. You make a deal with as many Realtors as possible who run ads in USA Today and The New York Times and so forth. Not all of them are going to go for it. But I bet some of them will, and let’s say you’ve suddenly got 1,000 leads coming in each month. If this works, you have to send them out a letter, or a series of letters, and that’s where we have to talk about allocating and experimenting. Let’s say you have to spend $2,000 or $3,000 on getting leads in this way over a four month period, and you sell one house. You’ve made a profit, haven’t you? Tricia:

Yes.

Jay: And if you sell two, it’s a really neat deal. If you sell none... Well, the way you grow exponentially is by trying a lot of things conservatively and testing all along the way. If we come up with 5 or 10 concepts today and you try them and the first 3 or 4 fail, don’t let that get you down. Just say to yourself, “There is a certain amount of money I’m going to spend trying things.” You commit a pool of experimental money.

Tricia:

Yes, I was thinking of putting about $10,000 into it.

Jay: That’s probably a good amount. Then you try, say, $1,000 on a test. If the test is a dog, you take your losses. If it’s a winner you roll it out in a bigger way. If it’s borderline, you evaluate and say, “What can I do to improve it?” and if you got most of your money back you try over again. The irony of this is that there’s nothing profound about it -there’s no brilliance. It’s just very logical. Experiment. Expand. Experiment. Expand. It’s so analytical - you just go by the numbers. You try something and you analyze the numbers, and it’s so funny how easy it is and how few people do it. Tricia:

Yes, they’re always looking for that magic thing.

Jay: They’re looking for hi-tech, sophisticated, convoluted panaceas, whereas what we’re talking about is just going along trying a lot of logical things, always remembering that the marketplace doesn’t have the slightest concern about what you’re in it for. All they care about is how you can serve them better, how you can meet their needs, give them information that will make their lives better, happier, more fulfilled. And as long as you understand that and just concentrate on serving their needs, you’ll come up smelling like a rose. But it’s very important you don’t give up the first time. A very good example is this other man I know about who also advertises in The Wall Street Journal. Do you ever read it? Tricia:

Yes.

Jay: There’s this man who runs little ads continuously on behalf of his PR firm. I called him once, and found out he runs the ads about 100 times a year. He told me that he may have to run the ad 7 times before he even gets a good prospect. And I seem to remember that the ad costs him $500 each time. So he has a $3,500 investment to get just one prospect, and let’s say he needs prospects before he gets a sale which in his case means a new client. Sounds very expensive until you realize that a new client is worth about $65,000 to him in fees. You see, sometimes you have to play things out a long time to let the dynamics work. In other words, your first follow-up letter may not do it. You might have to send another one. The second one could say, for example, “I sent you a letter, Ms. Coddlesham, a month ago telling you about our charming little town, and I thought you would like to know that we just had our annual rafting contest. It’s quite fun. I thought I’d share with you what happened. All the kids and some of the adults and even a lot of the older folks get together and we build rafts and we float down the river and we all end up at this lovely place where we have a barbecue and we all swim and the kids play on the sandy beach, and I thought you would like to see a picture of it ... By the way, I don’t know if you’re aware that you can buy a lovely house here that would cost $400,000 in Los Angeles for about $125,000, and financing is really easy to get. And right now we have some excellent listings. If you like, I’d be glad to ...” That’s a second letter you could send. Tricia:

I get the idea.

Jay: It’s always serving and informing. Informing and serving. Now, on another tack: If you’re going to run an ad in the L.A. area, let’s see what distinguishes you. Instead of saying what everyone else says, why don’t you create a $20 valued book and offer it free? I’m trying to think of a title for it that would appeal to people wanting to move. Tell me more about your town, the kind of community it is. Tricia:

A warm, friendly, caring, beautiful, easy-to-make friends community.

Jay:

Is it a retirement type community?

Tricia:

Yes, it is. Retirement is our major industry. Tourism is second.

Jay: Well, maybe you should write a book or a booklet called, “How to Select a Retirement Community.” You could try it two ways. You can offer it free, and you can offer it for $3. If you offer it for $3 and it self-liquidates - if it pays for itself - you could run it everywhere and you could make enough money to pay for 7 different pieces of follow-up mail. Or you could offer it free. Either way, if you run the ad under Out-of-State Real Estate, you will know that everyone sending for the book is looking for outof-state real estate and is retirement oriented, and these would be more consistently viable prospects than people looking for a vacation home, right? Tricia:

Right.

Jay: Let’s talk about getting you more listings. Is there one area in town that has more buying and selling activity than other areas? Tricia:

Probably more houses are sold inside the city limits than scattered around.

Jay: I’m trying to have you concentrate your efforts. If one area is more likely to generate listings, that is where you should concentrate your tests. I’m suggesting that you take 2000 or 4000 of the best homes in the more probable areas and send them a neat personal letter. Do you have a word processor? Tricia:

Yes.

Jay: You get someone to put the names and addresses on computer, and you send them a personal letter. And if you can only do 200 a week, or 200 a day, or whatever, that’s okay. One approach would be to have a headline that says, “Seven Important Things to Know Before You List Your House For Sale In [name of town].” I like a headline - even on personalized letters - a headline that tells them what it’s about, and then personalized nevertheless. And then you say, “Mr. Gramvogel, you may be thinking about listing your house for sale in the near future. Before you do, I think you should know a little bit about the problems and opportunities, and about ways you could improve your chances of having your house sell five times faster and closer to the asking amount. We’ve just completed a survey or research project. It’s taken us 2 years and 500 man-hours. We’ve researched 28 sales and we found out the best ways to advertise a house and little cosmetic things you can do to increase its value. We’ve put it all together in a report called ‘Seven Important Things to Know Before You List Your House in ... , If I were selling the report to you, I would want $39 for it, and I think it would be worth every cent, particularly if it allowed you to sell your house 6 months sooner or if it allowed you to get $15,000 more for it than your neighbor could. But because we are in the business of extending service to the community - and, frankly, because I’m hoping that if I can show you ways help you sell your house faster and also make more on the sale, you will favor our firm with the listing - I’m delighted to send it to you free. All you have to do is give us a call, and ask for me or whomever. Or, if that’s inconvenient, send back the coupon and I’ll see that a copy is sent to you the same day, along with some other useful surprises.” I think that might be a neat letter. What do you think? Tricia:

I agree. It would be.

Jay: Another approach might be just taking the report and sending 500 of them unsolicited, and say, “We heard you were thinking about selling your house...” And the ones who aren’t interested will throw it away, and those who are interested are going to wonder how you knew. You could say, “We heard you were thinking about selling your house. We’ve not heard that the house is listed. Before you list it with anyone, we thought you would be doing yourself, your family, your net worth a profound service if you read his report we just prepared. Quite frankly, we were thinking about asking you to work a little bit and send for the report, but we decided that we would be giving you the best service whether we got the listing or not if we got the report into your hands right away. If you’ll sit down and invest a mere 30 minutes of your time with your spouse you’ll probably have a good chance of selling your house 6 times faster and for ...” Do you get the idea of what I’m saying? Tricia:

I sure do.

Jay: And then you could say, “After reading it, if you have any questions, call our listing coordinator. She does nothing but help people who are thinking of listing their house. She sits down with them, gives them a review, gives them suggestions for cosmetic modifications, works together with them to craft the promotional ads that will appeal to the greatest number of buyers of the right kind, drawing the most qualified people to come see it.” Do you see that you’re giving these people just what they want? Tricia:

Yes.

Jay:

One listing that sells is worth the whole mailing, I would think.

Tricia:

Yes, even if the other firm sells it, we still get 30% of the commission.

Jay: You put together a compelling case that makes listing more practical than not listing, and you do it in an educational manner. You tell them, “What would it take, Mr. Jones, if you had to devote full time for the next 3 months to selling your house? What’s your time worth? Do you want to reach in your pocket and run ads every Sunday for $400 or whatever? Will you be able to find a copywriter who understands those little phrases that make an ad 10 times more appealing? Would you be willing to pay him?” See what I’m saying? Tricia:

Yes, I do.

Jay: If you can make enough of a case, then it’s worth it even if you have to have a college student or a housewife drive through the community each week and record all houses for sale by owner. You send a letter to them along with another report ... I’m turning you into a report writer, aren’t I? Tricia:

That’s okay. I like to do reports.

Jay: And you send a cover letter with it that has the headline, “Should You Sell Your House Yourself - An Objective Evaluation of the Hidden Costs of Selling Your Own Home.” You do some statistics, and then interpret them in paragraphs - not just grim and boring graphs. “Mr. Jones, I notice that you have your house for sale yourself. That may be a very wise decision, and it may not. We just completed a study of home buying over the past 5 years, and let me tell you what we found out. First of all, we found that of the 100 homes we studied that were offered for sale by the owner, 80 of them took an average of a year and a half to sell. Second, we found that of those 80 homes, the average final selling price was 13% less than what the owners had offered them for. The other 20 homes never sold at all. “At the same time, we found that similarly priced homes in the same neighborhoods, offered for sale by Realtors, promoted, open-housed, marketed professionally and attended to by full-time professionals sold 3 times faster and, on average, sold at only 2% under listing price. “I point these out to you for a reason - not to upset you, but just to alert you to the fact that it may be costing you thousands or tens of thousands of dollars plus incredible amounts of time by trying to do it yourself. I’m sure you’re a very fine person, Mr. Jones, but it takes years of experience and a lot of knowhow to market a house properly. If you’d like to reconsider the possibility of listing your house, we would love to talk with you and answer your questions. We’ll look at your house and discuss your situation and we’ll be objective and tell you whether we think our services make economic sense or not, and we won’t hold anything back.” That’s a powerful offer, don’t you think? Tricia:

I think it is.

Jay: There are other fun things you could do. This one is rather daring, but it might be worth trying 2 or 3 times. If a person lists with you, if they need a paint job, maybe you could front the paint job. Maybe it costs $500 and you try it and risk it on two houses to see if it works. You could pay for the paint job up front and tie it in to some other contingency that could bring you some benefit when the house sells. Tricia:

One thing that helps to sell a house is to fertilize the front lawn, to make the lawn look beautiful.

Jay: What if you went to a landscape guy and said, “You lay in landscaping and we’ll have an agreement that it’s like consigning until the sale. Put it in the escrow.” You tell the landscaper, “How would you like to wait six months but make double your usual fee?” Try that and, who knows, it just might work. Tricia:

You know, it could.

Jay:

And the fun part is that everyone benefits.

Tricia: I have a question. My salespeople are paid on commission and get 50% of whatever comes in. If I do all this extra work, should I still be giving them 50%? Jay: This takes some guts, but I’d give the salespeople a choice. Tell them they can go along on their own, or they can participate in a program you have financed and conceptualized. If they wish to participate, they have a couple of choices. They either have to buy the leads from you in the form of a debit. In other words, since they probably don’t have the money to pay for the leads outright, you’ll advance finance them. If you figure out that the cost of a lead is $100, and a salesperson wants to work that prospect, that salesperson starts off with a $100 debit - or a $50 debit - against his or her commission. Or they can agree in advance to take a reduced commission - say, 40% - if you furnish the leads. Or they can joint venture with you, and share the costs of marketing. In other words, you tell them that you’re going to do a mailing and that it will cost $2,000. If they want the leads it will generate, they pick up half the costs. You offer them alternatives. If they say no, you give the leads to a salaried person or you work them yourself. Does that sound democratic? Tricia:

It does, yes.

Jay:

Offer them a lot of fair options.

Tricia: Yes, I understand the concept. Another question: On our little local ads, should we give more details, more benefits? Jay: I think you can come up with more specific hints. Tell about beautiful double doors, private courtyards, little things that might appeal to people. And then watch and analyze and track the response. Even if you waste $50 or $100 a week for 4 or 6 weeks, again that is part of your test budget. Try testing different things that people’s imaginations could go wild with, Why don’t you get a copy of the New York Times on Sunday and the L.A. Times and the Chicago Tribune, and sit down with your computer, and put every good headline you see into a disk file called headlines, and every good description you see that gets you excited - that sounds charming or exciting or really beautiful - put it in a file called descriptions. Why recreate the wheel? Tricia:

Right.

Jay: Then next time you’re writing an ad and you need a headline, you punch a button and you get a thousand headlines and you’ll see which one is best. Is that something you think you could do? Tricia:

Yes, we could do that.

Jay: Even the For Sale By Owner ads in New York might be very interesting because they may be written by copywriters and business people who are creative. They may have some innovative twists you might not have thought about.

Another thing you might do is save the ads that look good, and besides recording them, put them aside for a month and a half, and call the people and see which houses sold. Keep in mind that this kind of research lets you leverage off people who are spending a cumulative total of millions of dollars in trying all these things. All you have to do is follow them and observe them and emulate what works. Tricia:

Beautiful. I’ll do it. *

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After reading this transcript, you might try three things: 1. See if there is some way you could buy up “old” leads from your competitors. (Whom will you contact? What will you offer them?) In addition to competitors, are there other sources of good leads that would cost you less than the leads you’re getting now? 2. See if there is a democratic way you could get your salespeople to help you pay for your marketing, either up front or on a contingency basis. If not, then think about people outside your company whom you could interest in joint venturing your marketing efforts. Find ways to make it appealing to them, then contact them and make a proposal. They won’t all go for it, but if you land even one co-investor, it could be well worth your effort. 3. Set aside time each day or each week to look through ads - both inside and outside your industry and write down headlines and phrases and concepts and ideas that excite you. Also schedule time to call the advertisers to see how well their ads pulled.

Dentist Mitch had sent me a lot of materials he was using to promote his dental practice. The materials were cute, but they hadn’t been working for him. His main problem was that when he first came to town there were only one or two other dentists, but now there were fifteen. What Mitch needed wasn’t cute materials, but an entirely new and fresh approach to communicating with the public. I began the consultation with a series of rapid-fire questions. Jay:

Which of these materials has been the most effective for you?

Mitch: Every month, our main thing has been the Welcome Wagon letters. We’re the only dentist represented through Welcome Wagon. Jay:

How many new patients do you get that way?

Mitch: Well, the town is divided into districts, and we were doing one district and getting about 4 or 6 patients a month. That’s the only thing we were doing well on, so I signed up for 2 more districts. Jay:

How do they charge for that?

Mitch: $3 per call. And when they go out and call on people, they leave one of those little magnets that you put on your refrigerator and also a little pocket mirror, both with my name and phone number on them. Jay:

And what do those cost you?

Mitch:

About 60 cents each.

Jay:

So each call costs you around $4?

Mitch:

Yes.

Jay:

How many new patients can you comfortably accommodate?

Mitch:

We can easily do 60 to 70 per month.

Jay:

What’s a patient worth to you in any year?

Mitch:

That’s a question I can’t honestly answer. I’ve always thought around $600.

Jay:

In gross revenue or profit?

Mitch:

Gross revenue.

Jay:

Would it be right to assume that your profit is half of that or more?

Mitch:

Let’s say 40 percent.

Jay: So a new customer could be worth $200 or so per year if they stay with you. Do you do a lot of other things besides general dentistry - orthodontics or the like? Mitch:

It is more profitable for me to do general dentistry things.

Jay:

Are you by yourself, or do you have associates?

Mitch:

I practice by myself.

Jay:

What can you allocate to a marketing budget?

Mitch: If I had to come up with a figure, $500 to $1,000 a month is tolerable. My Yellow Pages ad right now costs about $500 a month. Jay:

And can you track that your Yellow Pages ad earns that much?

Mitch:

It doesn’t earn anything. It’s a total flop.

Jay:

And you’re obligated to keep paying that until the new book comes out?

Mitch:

Unfortunately, yes.

Jay:

Now, of your new patients - where do most of them emanate from?

Mitch:

Mostly from my area.

Jay:

And what motivates them to come to you?

Mitch: Up until the last two years, my practice grew mostly from patient referrals. I do good work, I have always been highly visible in the community, my office is in an excellent location, and I have a quality reputation - which is why I am reluctant to offer $10 coupons or a free cleaning like some of my competitors do. Jay: I don’t think you should do that - at least not in a blatant, “bargain basement” way. I get the idea that you’re in a position higher than that. Mitch:

I am.

Jay:

How many existing patients and past patients do you have?

Mitch:

I think about 5,000 are on our records.

Jay:

Do you have them up on computer?

Mitch: We probably have 1,000 of them on computer. These are the ones I consider active within the past 18 months to 2 years. Jay:

The ones that are inactive, why are they inactive?

Mitch:

I don’t have an answer for that. In other words, they just didn’t come back.

Jay: There is an approach in mail order that is translatable to you. I am going to give you some ideas that are first, logical, second, cost-effective, and third, will give you a profit that you can use for further experimenting, much of which may not work but it will be your slush test fund, okay? Mitch:

That’s the reason I’m here.

Jay: Your customers are your best lists. You should have them all up on computer first of all, if you don’t already. The ones that are inactive are your second best lists. Take your customers first. I think you should draft a letter and come up with a way to personalize it, even if it takes you a very long time to do it. And with the letter you could send them a booklet... By the way, I’m going to give you a lot of examples, and I am not going to advocate that you use verbatim everything I suggest. If something doesn’t seem to fit exactly, then use it as an analogy, okay? Mitch:

Okay.

Jay: About the booklet. A friend of mine publishes a newsletter called “Tax Avoidance Digest.” He has a promotion piece in the mail that’s very successful, and it’s about a booklet called “199 Loopholes They Didn’t Close Up With The New Tax Legislation.” Mitch:

It so happens I have a copy lying here on my desk.

Jay: If you went to him and bought 1,000 copies of that booklet, it would probably cost you 60 cents or dollar apiece. What if you sent 1,000 of your customers - or all 6,000 a copy of the booklet with a letter saying, “I have been your dentist for the past 6 years, and I very much appreciate you as a patient. I care for your welfare - including your financial welfare - I just finished reading a booklet that was so innovative that bought several cases of them for my patients and I am sending one to you. It’s called, ‘199 Loopholes, etc. After reading my copy of the booklet, I sat down and realized that in my own business I could save myself perhaps $10,000 a year. Moreover, I found another $5,000 or $6000 I could save my wife. And I figured that anybody in your bracket might be able to benefit as well. So, with my compliments, please read and enjoy the booklet, and consider it a gift from me as a thank you for the past visits you’ve given me. By the way, if the occasion arises, when you talk to any friends who either are dissatisfied with their dentist or looking for someone who has a sympathetic and gentle appreciation for their dental problems, give them my name. I would be delighted to give them one of these booklets as well.” That would be a nice letter to receive, don’t you think? Mitch:

I do.

Jay: Another thing you could do is once or twice a year send a letter to your customers simply asking them to help you. It might be as follows: “Can you help me solve a problem? Every day in my practice I have an hour or two that is unfilled, and because dentists are also businessmen, I am trying to figure out what would be the most intelligent, professional way to fill it. Some people come to me and say ‘advertise, advertise,’ but to me that is not very professional. Or they will say, ‘Yellow Pages, Yellow Pages,’ but I’ve tried that and it doesn’t work. The best way I’ve found for getting new patients is word-of-mouth referrals, but that tends to happen almost by accident. After all, how often does someone walk around with a

toothache and someone says, ‘try my dentist’? I would like to ask you, as a valued patient, that on the next occasion you have, or the next time you are at a party or out with friends, you tell them about me. Ask them if they would like to know about a good dentist, and if you can in good conscience tell them that I’m gentle and kind and sympathetic, that I’m priced very fairly, my work is good, and I care more about the patient than about their wallet - if you would like to tell that to a friend, I would be ever so appreciative and it will help me.” Did you ever see that kind of a letter? I think it would be a very powerful letter, don’t you? Mitch:

I certainly do. In other words, you are saying to use a personalized letter?

Jay:

Absolutely.

Mitch:

And that it is more effective than an impersonal newsletter?

Jay: If I were to send you, when we’re done with this consultation, a printed form letter saying, “Thanks, I enjoyed it, good luck, I hope it works well,” or I sent you a personal little note saying, “Mitch, I really enjoyed it. I think we came up with some very fine ideas, particularly the one (I would put in a reference to the one I thought was best). I think you have a lot of promise. Seeing a dentist like you with a marketing flair is a rarity, and I think if you incorporate the ideas we talked about, you could see your business double or triple over the next year. I hope that I gave you good value, and if you need to ask me anything, please call and I won’t charge you for answering 2 or 3 questions.” Wouldn’t that ingratiate you a lot more than a form letter? Mitch:

Oh, absolutely.

Jay: Human nature is immutable. Everyone has a need and desire to be acknowledged as being a special individual, and you can convey this much better with a personal or semi-personal letter. And you are better off sending out fewer at a time and doing it high quality so it looks like a real letter than spending less money but getting one that looks like it was done on a computer. Mitch:

You should use top quality, then?

Jay: Don’t you think so? Think out this: If you can send a letter to 1,500 active people and you get 100 of them to start talking about you, what do you think it’s going to do as far as referrals? If there’s no urgency getting it out and you do it bulk rate, it’s going to cost you 50 cents or 60 cents per piece at the most, if you do it right. For 6 or 8 hundred dollars - far less than a newspaper ad might cost you - you have your whole satisfied patient base working for you and telling people. Doesn’t that make an efficient, logical first step? Mitch:

Yes.

Jay: That should generate enough in referrals to get the referral ball rolling. Concurrently, I would draft a letter to all the inactive patients, and I would say to them, “I’m troubled, Mr. Jones. You’ were a valued patient of mine and you haven’t come in for a visit for many months. I truly would like to know the reason why. Either I offended you, or I caused you some pain, or you were dissatisfied with the work I did, or you’ve not tended to your oral hygiene, or you are in a financial bind and you don’t think you can afford to have your teeth looked at. In short, there must be some problem. The first thing I want you to know is that if I have in any way offended you or dissatisfied you, I would like to make it right. If that means I have to give you free dentistry for two months, or do your children for free, or whatever it takes for me to regain your trust, I’m willing. If I caused you any pain, I surely would like to make that up to you as well. And if you don’t have the money right now, I - would like you to know that if you need dentistry, I can always offer very, very flexible and affordable terms. Getting paid is not as important to me at this moment as taking care of your dental needs. I just want to tell you that I value you and would like to have you back. I am willing to make it up to you and work with you so you can continue to have good oral hygiene.” Just tell me that wouldn’t reach a lot of people. What do you think?

Mitch:

I think it would.

Jay: You could also have a P.S. that says, “By the way, if it is none of the above, please schedule appointment for a checkup.” If if doesn’t cost you much to give a checkup, you could even buy them one. It’s a judgment call on your part. It may be worth saying, “As an indication of my sincerity, if you would like, come in for x-rays and a cleaning for free.” In lean times, you could probably schedule one or two of these a day, and it will not really kill you. It’s not taking away from yourself. It’s not supplanting, it’s augmenting. And if your materials cost $10, say, then for every $10, you may be accruing $200 in future business if they reactivate. Do you see? Mitch:

I do. So I should start first with the active customer base and then go to the inactive?

Jay: Right. Stop everything else and try those first. Also, you might split your inactive list. Send half of them a letter, and send the other half a book or something, saying, “I was going to give this to you next time you came in, but you never came back.” It could help ingratiate you to them. And maybe it would be best if the book had no relationship to dentistry. No offense, but dentistry is not always palatable to people. Mitch: You mean something not health-related? It’s better to stay away from health-related items even though I’m in a health field? Jay:

It’s better to stay away from medicinal things.

Mitch:

What about things on healthy lifestyle or exercise or diet?

Jay: If it’s real sterile or is written with a medicinal bent, I wouldn’t do it. If it’s a really neat book and it taught you diet and told you what exercises were safe and what weren’t, and told you about calories and vitamins and nutrition and it was really fun and interesting, that would be fine. You want things that are so enjoyable that people will really look forward to it. What better thing could you do than to get something into my hands that I would refer to 6 to 7 times a month, and every time I referred to it a smile would come over my face and I would correlate that with you. What would you pay for that to happen? How much would you pay to be in my home for 2 hours every night and have me be positively thinking about you on a subconscious level? Think about what that’s worth. Do you see, Mitch, how the things I advocate are not high tech megabuck, but they’re so logical and simple they are almost embarrassing? Mitch:

I do. I see what you mean.

Jay: And the idea is continuity. You don’t just do something one time. You make it on-going. When a new customer starts, you write to him about referrals right away. And then a few months later you write to him again about something else, and also mention referrals again. You can try a lot of the techniques I’m suggesting, and you are not obligated to extend them to everyone. Try 100 people and if it doesn’t work, stop doing it and try something else. If it works, do more. Another twist on the idea of the free checkup is to say, “If you know someone who is looking for a good dentist and you would like to recommend me, I will give them a check up and x-rays for free, only you can tell your friend that you are paying for it, or that I’m doing it for them because you are a valued customer of mine.” That’s a neat gesture you could make. Mitch:

I hadn’t thought of that.

Jay: I am trying to give you different ways to look at things - different things to try that are going to cost you $5 or $10 but they get someone in your chair who has the potential to come back 2 to 5 times a year. It’s a more effective way to spend your money as opposed to spending $600 on a nebulous ad. Here’s another idea: Are you a member of any community groups such as the Chamber of Commerce? Mitch: No, I am not involved. I tried that once about 10 years ago, but I got lost in the shuffle, and I feel there is no real business benefit as far as bringing in patients. Jay: All right, then. You could try this instead: You might hire a delightfully professional young college girl or part-time housewife to go to office buildings in the nearby area and visit businesses and say, “I am Dr. James’s assistant, and so often when you move your office to a new location, it is hard to find a new dentist. A lot of our business comes from people whose office has relocated, and we want to introduce ourselves to you. Dr. James would like to pay you for your first office visit, if you would come in at your convenience at lunch time or after work. That means free x-rays and cleaning of your teeth. This would give you a chance get to know each other, and if you like his style, perhaps you will come back. If not, you will still have this free visit.” Or your assistant could talk to the owner or manager of the business and tell them they can offer the free x-rays and cleaning as an employee benefit at no cost to them. It’s not a bad approach, is it? Mitch: Going out in the community like that - it’s sort of what Welcome Wagon does, but carrying it a step further. Jay: Just because people do something, they don’t necessarily do it correctly. Posture is so important - the way you revere a concept, the way you present it to somebody. In other words, I could give you a coupon for a free consultation or something. But the impact is nowhere as significant as if I call you up and say, “Dr. James, I’ve been doing so well in helping dentists market themselves, I would like to buy you a 15 minute consultation with me, and I hope that if I spend 15 minutes and open your eyes to a lot of really profound possibilities, I will get more consulting business with you and I am willing to do that at my risk.” That has a lot more power than just giving a little card, don’t you think? Mitch:

Yes.

Jay: Draw an analogy to your own situation. If instead of Welcome Wagon, you sent someone into new people’s homes, or have them call, and if you spent $5 or $10 on each call, you probably would get better results if the person were representing just you. Mitch:

So I would be better off to hire somebody on my own to take the place of Welcome Wagon?

Jay: Yes, with a caveat. There is no definitive yes or no answer. You owe it to yourself not to predetermine, but to try things out conservatively. Hire someone for 2-week period and have them get a list of all the new households. You orchestrate for them a script, where they say that they are your assistant and that you’ve asked them to call the person to tell them what you do, your specialty, that you have a rather compassionate attitude as opposed to most dentists. You know they probably have a dentist, but you don’t know if the dentist is still easy to get to, now that they’ve relocated. They may have to drive too far. Maybe they have not gone to a dentist for a long time. It is an appropriate time to at least visit one. You have an offer that you would like to pay for their first visit, including any of their children they’d like to bring. It’s easily worth $100, but it is your way of introducing yourself to them. You want to get them acquainted with your technique, your style, your manner. If you let people in on why you are doing things - but in your case, do it with a little more sophistication because of your profession - I think you’ll be surprised with the results. Mitch:

Would it be better to do it by phone rather than in person?

Jay: It would be more efficient, and I think people might be put off if your assistant went to their homes, and you might also run into the problem of people not being a home during the day. I think a

charming phone call would be good. If I got a call, at first I might be put off, but if the person on the other end is ingratiating, pleasant, and disarming, I would listen. You could try both a man and a woman assistant, and you pay them hourly or maybe a commission or a combination of both. And after the person came for the free exam, the phone workers would follow up and call, and they could say, “The doctor just wanted me to call and say he really enjoyed meeting you, and he hopes you like his style and manner and he hopes you will come back, and again welcome to the community.” It’s a pretty neat way to approach it, don’t you think? Mitch: Yes, and I think you just answered another question. My wife sells real estate in town, and she sees a lot of people. She always makes it a point to drive them by my office and tell them that I am a dentist, but we’ve always wondered - how do we get those people to come in? If she told them they could go in for a free checkup on her, that answers the question right there. Jay:

I agree.

Mitch:

In other words, she could give that as part of her service.

Jay: And you could get other people to take the same approach. If you have any friends who are merchants, you can go to them and say, “Frank, I have a proposition that I think you’ll find really neat. Any time you have a customer that you think would benefit from my services, if you would like, I’ll let you buy them their first visit. In other words, I’ll give them a free check-up and tell them it’s from you.” What do you think of that idea? Mitch:

I think it’s a tremendous idea, and making it free is much better than offering it for 60% off.

Jay:

Yes, the prestigiousness of it is 10 times as much.

Mitch: And I think it should include not only x-rays and exam, but also a cleaning. Dentists who give out coupons usually want $10 for x-rays and exam, but they leave out the cleaning because it’s so timeconsuming. Jay: There is no way to find out if it will work except to try. Try 60 people, and maybe you are going to expend 3 times as much effort initially if you include the cleaning, but that’s only more expensive if you don’t get results back from it. Hear what I’m saying? Mitch:

Yes. And during the cleaning, my hygienist could talk to them and get to know them.

Jay:

What does a hygienist cost?

Mitch:

$100 to $130 per day.

Jay: It might be worth bringing one in for one day a week just to do your free ones. Keep in mind, you in are not locked into it, but just try it and see what happens. If you do 160 of them and you think, “oh, this is not worth it,” it may be that it will be some time before you will see the residual aspect. But if you see that after 5 or 6 months, for every 100 you do, 26 come back, that’s a pretty impressive figure. Mitch:

Yes, it is.

Jay: You just have to know where they emanated from. If their friend supposedly bought them this visit, you have to be able to say, “Yes, he is a good person and he told me to take really good care of you,” or whatever. It could be a lot of fun, don’t you think? It’s a lot better than trying to compete with advertising. Mitch:

I agree.

Jay: Try all sorts of ideas. One idea I gave you is how to quickly get referrals from your active customers, and also how to do them a service. A second idea was how to reactivate inactive patients. A third is how to go outside, without advertising, using the concept of service, extending yourself to them. And now a fourth idea is this: You should have the philosophy that whenever you get a new customer, and for the duration of their active life with you, you should have a regular communication program - not just the little card you send out reminding them of their 6-month appointment. I recommend that professionals use little monarch-size letters and envelopes. Mitch:

What is a monarch size?

Jay: It’s about 3/4 the size of a regular envelope. It’s more of a note size, and looks more personalized. How many patients do you see on an average day? Mitch:

I would say 20 patients per day.

Jay: If every day your secretly sent those 20 people a little note from you saying, “I enjoyed seeing you today. It was nice talking with you. I’m glad to see that you are well and have no major dental problems, and I just wanted you to know that I look forward to seeing you again.” Just a little note to show them that you care, but I think it would go a long way towards solidifying your relationship with them. Mitch:

I think so too.

Jay:

Do you send Christmas cards to everybody?

Mitch:

No.

Jay:

Why?

Mitch:

I don’t have an answer for that. We did ten years ago.

Jay: Keep in mind something: everybody desperately wants to be made to feel that they’re special, and that you appreciate them not just for their money. If you sent a semi-personalized, typed little monarch note saying, “I was going to send you a Christmas card and I sent my secretary out to look at some samples, and do you know what, Mrs. Applegraf, I was thinking that Christmas is such a personal time that I thought I would take the time to sit down and write a little note myself. I just want you to know that we appreciate you as a patient, we care about you as a human being. We feel very fortunate to have had you as a patient for so long, and to have the opportunity to serve and care for the dental needs of your whole family, and we wish you a very Happy Christmas and a very bountiful New Year.” You can’t tell me people wouldn’t just love that letter. It probably would only cost you a few hundred dollars to send it to everybody. Mitch: Looks like we’ve been passing up some obvious things. Let me ask you about another problem. During Christmas time, dental work is the last thing people are thinking about. People are out shopping and all that, but we need to keep our office running. I will grant that 3 days before Christmas we can quit, but what about the weeks before that? How to we encourage people to make appointments? Jay: That’s a hard one, Mitch, but I see a couple of possibilities. One is to not try to fill the office then, but use the time for building new business through speaking engagements or doing free clinics for schools or businesses. Another possibility is to send a letter out to your active customers saying that during the holiday season people are so busy that if they want to attend to their dental needs it’s hard to find the time. Normally your hours are 8 to 5 or 9 to 6 or whatever, but to accommodate all the people who have indicated that they would really like to come in and have their teeth cleaned for the holidays, you are keeping you office open til 9 pm for just two weeks. You might also try a letter saying, “My Christmas present to you is that if you need any dental work done in the month of December, come in and have it done and I won’t send you the bill until January.” Or you could tell them that if they want to send any friend to you, as your gift to your patient, you will pay for that friend of their choosing to have an exam and cleaning. Christmas might be a good time of year to try that approach.

Mitch:

Yes, that would keep the chair filled.

Jay:

And it could bring in a lot of repeat business.

Mitch:

Which means I’d be busy in January and February.

Jay: Right. One other thing that comes to mind is this: I think it would be worthwhile to sit down at your convenience with a word processor - or have somebody who is very talented in written communication do it for you - and draft a whole series of letters or notes that address all sorts of dental problems, so that whenever somebody leaves, when the nurse is done with their chart, she would give the chart to a typist, and the typist would send a note to the person based on their chart. She would send a certain form letter depending on what was on the person’s chart, and the letter could say, “Mr. Jones, I just wanted to go over the fact that your teeth are in pretty good order. However, you do have a nasty whatever that looks like we might have to do a root canal and I think it is very important to monitor it. I just want to remind you that to make sure you don’t have a serious problem, keep in touch and get back in so I can check it in 3 months.” Do you see what I’m saying? Mitch:

Exactly.

Jay: You know that probably 80 of the situations could be handled by 10 form letters, but personalizing letters will tend to ensure that they take it seriously. It will convey to them that you have a high regard for their welfare. Mitch:

So the letters we send out should not be done on a cheap dot-matrix printer.

Jay: No, I believe not. You need top quality. And make sure you get feedback from your receptionist and office manager as to how much your customers are talking about what you’ve done for them, and whether they’re talking about the letters you send, and whether they’ve called to say thank you. And keep track of how many new patients you’re getting and how many old ones are coming back, and in this way you’ll know if certain letters are working. Mitch:

I sure appreciate your help, Jay. I can’t wait to get started. *

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Whenever you communicate, make it as warm, as personalized, and as service-oriented as possible. Out of all your competitors, be the one who is best at giving people the feeling of being special. Use this personal approach when you write to your active customers to get referrals. Use it when you contact your inactive customers to reactivate them. Use it with prospects when you make them offers they can’t pass up. (Even if these offers cost you something up front, you’ll more than make up for it by earning their repeat business.) And once you start communicating in this way, don’t stop - do it continually. This does not require expensive advertising. Use direct mail, use the telephone. Try lots of different ideas - in conservative ways at first - and keep on using the ones that work. This entire approach is so simple it’s ludicrous, but it can multiply your profits many times over. Try it yourself and see.

Export Consultant Thomas is an independent sales rep for an international freight forwarding company. He receives a percentage of whatever business he brings in. Over the years, he had developed a series of seminars on exporting, and was using these as a means of generating leads. What he wanted from his consultation with me was a way to expand the seminar business so it could become his main source of revenue.

The seminars themselves had always been successful, but as is often the case, Thomas wasn’t articulating his unique selling proposition properly. The real benefits of attending his seminars were buried in a sea of generalities. The advice I gave him was twofold: (1) I showed him how to restructure his brochure to give it many times more impact, and (2) I also gave him a number of straightforward but powerful marketing ideas designed to fuel his expansion through many channels at once. See if you can’t adapt these same ideas to fuel your expansion as well. *

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Jay: So you’d like to turn it into a full-time endeavor? Thomas:

Yes, I would.

Jay: Does anyone else offer a comparable seminar? Thomas: The Department of Commerce gives a course, but it only covers one of the categories I cover, export licenses. Actually, I offer 6 different seminars. I make all 6 available in a single weekend, and people can take one or two or all five. One is on export licenses, one is on letters of credit, and so forth. Jay: You know, the Department of Commerce material is probably in the public domain. You could probably tape record their entire session and they would have no right to stop you from adding that as a bonus to anything you did. Thomas:

I’ve seen their session, and I do a better job, Jay.

Jay: Right, but if you ever wanted to offer a bonus of any kind - and this is just a suggestion - you could offer a taped version of their course. That would be an answer to anyone who was thinking of availing themselves of the Department of Commerce course instead of yours. They could take yours and get the DOC course free. Thomas:

I understand.

Jay: Just a thought. Now, how do you distribute this brochure you sent me? Thomas: The distribution has been by getting directories from Chambers of Commerce and identifying companies that export. I’m probably 80 to 85 percent accurate in identifying the ones involved in exporting. That’s what I do in my own part of the country. Elsewhere, in a couple of major cities, I have part-time instructors who give the seminars, and I let them select prospects since they’re more familiar with their area. Jay: And have these other instructors done a good job for you? Thomas: Some of them have. But attendance in some areas has been low. My strong hunch is that the seminars there haven’t been properly marketed. Jay: I have a feeling you’re right. Is there a magazine or a newsletter or other publication that people who are actively engaged in exporting would be subscribing to right now? Thomas: There are a variety of trade magazines. There’s one right in my local area. I advertised in it one time. It was either the wrong magazine or the wrong ad. Jay: Was the ad a full-page ad? Thomas:

No, it was just a small ad, maybe about 30 or so column inches.

Jay: Did it sell or get inquiries?

Thomas: It produced exactly one inquiry - from a company at the other end of the country - and they didn’t attend. Jay: The promotional brochure you sent me - the four-page one that has the breakdown of the 6 seminars is this the basic promotional piece that is distributed to everybody? Is it mailed out? How do you distribute it? Thomas:

I just simply mail it out.

Jay: With a cover letter? Thomas:

No. Exactly as it is.

Jay: Is the seminar recorded? Could it be packaged as a mail order course? Thomas:

I have thought about that Jay.

Jay: What’s the negative on it? Thomas: There’s actually no negative. I would have to rewrite the manuals in a way that would enable people to actually study them at home. Keep in mind that the people the seminar is directed to are people who have a chance to apply the material on the job. Because otherwise it becomes a very abstract subject. Jay: What you’re saying is it only has direct application to somebody who is practicing their job function in the field of export, and not someone who aspires to be an export worker or supervisor? Thomas: Exactly. Let me make another comment about that. In every major city in the United States, there is some kind of training going on of some type, right? Now, if a guy has a choice of taking instruction face-to-face with an individual versus a mail-order course, if I were in their shoes, I would probably take the face-to-face instruction. However, the mail course would actually be useful in smaller communities in the United States where they don’t have speakers or seminars or anything like that. It seems to me that that would be the main use of a taped version of the seminars. Jay: Yes, but there’s another use. It’s a great hedge for you financially if you can say to somebody, “If you cannot attend the live seminar but can use this information in the execution of your job, we have a version available by mail. You can send for it. You can do it in your spare time. You can focus immediately on the parts that seem most applicable. It’s categorized. You can listen to it over and over again.” For every one or two people who can and do attend, there may be five or six people who might be interested if they could do it at their leisure and at their convenience in their own home. Thomas:

Yes, I think you’re right about that.

Jay: Let me ask you just a couple more questions. If you wanted to reconstruct the promotional piece to be a little cleaner, more clear, and a little bit more specific in content, could you come up with a list of 100 bulleted items - you know, specific things you’ll learn if you come to the seminar? Thomas:

By all means.

Jay: Also, you’ve got some good testimonials here. Do you have a lot of other ones? Thomas:

I have hundreds and hundreds.

Jay: Okay. Let me give you some possibilities. First possibility is you could run ads in major cities, and you could have operatives in all those cities who are just basically registrars or liaisons. You would take all the responsibility or advertising, and they would simply process the registrations and all that.

You could run a national type ad. I’m not talking about a half-page thing, but I would run a two-page spread in the trade magazines, three-quarters of which - 1 1/2 pages - would be the promotion for the course, and the last quarter of which would be a listing of all the different cities it would be in and the dates. And at the bottom would be a registration coupon to send back to you. And you could have a parenthetical comment that if they can’t attend but want the information, a mail order version is available. That’s a possibility. All you need is operatives to set up the hotels and meeting rooms, etc. where you’re going to conduct the seminars. That’s one thing. Second is to try marketing, separately, a version of the course mail-order on only. To do this, you rent lists of people who are subscribers to the various trade magazines. You would have a letter - not elaborate, but very forthright, because you’re talking to business people - and you could say, “We are the only company we know of that puts on intensive, extensive, daytime courses for executives and senior employees in major corporations engaged in active export trade. Our clients include ... etc. We focus on and here you talk about all the kinds of specialized things you teach people - like those hundred different bulleted items you said you could list. You could then go on to say, “We have courses going on twice a year in all these cities, and in fact, I’ve enclosed this year’s schedule and a registration form. But you know, we’ve found that many of our clients need the information and can put it to use right away, but find that their schedules and their executives’ and employees’ schedules don’t lend themselves - to getting away to attend the course. We’ve just finished a home-study or study-at-work course that includes everything the live course includes, and is formatted for the busy employee or executive who wants to focus on a specific area right away. Maybe a quick fix or an update on an area they’re weak in, and they can do the rest of it later...” That would be a very powerful offer, don’t you think? Thomas:

Yes, I had even thought of something like that. But…

Jay: What’s the negative? Thomas:

I don’t know how I would structure the letter any differently from the brochure I already have.

Jay: All right. You’re paying me to be constructively critical, so don’t take what I’m about to say as an affront. Take it as a learning. Thomas:

That’s the purpose of this. If I didn’t want that, I wouldn’t have this consultation.

Jay: I’m trying to show you how to make a lot of money from it. Thomas:

That’s precisely what I want.

Jay: Okay. Your brochure is devoid of a couple of things. One, it’s devoid of a lot of bulleted focus on specific things you teach. You’re very general. You know all the kinds of things you teach. They don’t. You probably know it like the back of your hand - so well that you could probably give them a list of techniques and insights and little twists and quick fixes and things you could give them, any one of which could probably save them hundreds of hours and thousands of dollars. You might just want to say that. I mean, you could say, “This could save you hours a week or month, or save you ten thousand dollars in fees, or save you from having something get caught in transit and not clearing customs, or save you from expensive insurance claims” - you know, whatever it is. don’t know enough about the industry. Thomas:

I know what you’re saying.

Jay: Also, your testimonials are very good, but here again, the truth of the matter is they’re very general. Do you understand that? Thomas:

I think so.

Jay: What you want them to say is “I learned a technique at this seminar that helped us save $25,000 in packaging,” or “I learned a technique that saved us $287,000 in insurance claims,” or “I learned a silly little overlooked way to get a package through customs 7 days faster than normal...” You see what I’m saying? Thomas:

I do.

Jay: It’s nice if your quotes say how professional you are and all that, but what if they say, more specifically, “I took the course, and I didn’t think it would be worth an entire weekend, or I didn’t think it would be worth the time listening to the mail order version, but what I found was ...” You understand what I’m trying to say? Thomas: Yes. This is actually my own doing, because when I ask for testimonials, I just say, “Will you give me a testimonial about the seminar?” I guess I should be more specific. Jay: Exactly. I’d get on the phone right away. I’d talk to everybody who has taken the seminar, and I’d record them - with their permission. Say to them, “Jack, you took the seminar. Tell me some of the things that happened for your company afterwards as a result.” You have to focus them. Ask, “Did you learn anything? Can you tell me the biggest single thing you learned? Tell me how much it represented in money making or money saving.” Or you can ask indirectly - not in money terms, but, “Did you use less packing tape, fewer crates, lower airfare? ...” Do you understand what I’m saying? Thomas:

Yes.

Jay: And get a hundred of those. Because that’s really what you’re selling. You’re not selling a course. You’re selling a savings. You’re selling specific solutions to problems they don’t even know they have. It’s nice your testimonials say that your course structure is wonderful - again, don’t be offended - and it’s nice that your materials are professional, it’s nice that the seminar clarified some issues, etc. But I want you to know what you’re really trying to accomplish with this brochure. You’re trying to bargain with the person or with his company for their money and a lot of their time. These are day-long and weekend-long seminars. The person wants to know, “What are you going to teach me? How am I going to go to my company and justify not only the $69 fee, but the 2 or 4 or 10 man-days we’d have to spend?” That’s what you’ve got to understand, Thomas. Thomas:

I’m beginning to see.

Jay: Tell me, are you guaranteeing it? Thomas:

No, actually I don’t.

Jay: Let me ask you this: What is the incidence of people who have said to you, “I think your course is terrible. I want my money back”? Thomas:

That hasn’t happened yet.

Jay: Well, if that’s the case, can’t you say in a covering letter, “No other exp ort course we know of comes with a guarantee. The reason we do it is that after running 1,000 people from 100 of the biggest export corporations through our course over the last 10 years, we have made them so much money, we have saved them so much money, we have taught them how to maximize the use of their time, to expedite the shipping process, etc... and not one person has ever asked for their money back. Consequently, if you’re on the fence and you think it might not be a justifiable expense, we are only too willing to extend a money back offer. Go to one of our seminars, and if you don’t think it’s worth your money, stop right there and we’ll give you a full refund.” Something like that. Thomas:

Okay.

Jay: I don’t recall any kind of multiple enrollment offer in your brochure. Thomas: Yes, it’s in there. It’s in the front where it gives the tuition per person and says each additional student from the same company will receive a discount of $50. Jay: What is the incidence of multiple enrollment from a company? Thomas:

Probably about 10%.

Jay: You might experiment. You could try a different offer in different cities. You might experiment with the second tuition for half price just to see whether that reduction brings in so many more people that it makes you more profit than the $50 reduction. Only the market will tell you. You might find to your fascination that you’d get a lot more multiple enrollments if you include a little box in your brochure that says, “Our recommendation is that you send everybody possible who is currently involved in or could progress into a position of importance and critical control of your company’s export function, because the money you will learn how to save, the money you will make, whatever it is, will be so valuable to your company that you will want everyone possible to understand these procedures. One idea that is picked up and implemented throughout your system can pay for the course a thousand times over. We’ve priced the course in a very preferential manner that encourages you to send all your employees ...” You’ve got to give people the why and the wherefore and show them you’re making it advantageous for them. “And with the money back provision, you really have nothing to lose.” You see what I’m saying? Thomas:

Yes, I do. In addition to the contents of the brochure, could you also comment on the layout?

Jay: I would suggest you totally redo it. It’s very hard for me to focus on page one of your brochure for three reasons. One, the letterhead is too predominant. I think you should subordinate your letterhead. I would reduce it down to about half the size. Second, you use a lot of italicized words and that’s really hard to read. And when it’s hard to read, my mind skips and my eyes go from the top, which is hard, down to the name of your company - in other words, I tend to skip over some important material. Third, I think you should have a headline that tells the reader what it is. “This is the only professional course for export managers and their employees operating active export departments designed to teach them to be more efficient...” etc. I think you should not use a headline that says, “We are pleased to announce...” I would just tell them what it is. I would use a headline that encapsulates the whole thing, so when the reader looks at it he knows what it’s about - instead of presuming he knows what your company does just from reading its name. Do you understand that? Thomas:

Yes.

Jay: Again, don’t take it as affront. I would get myself 100 new quotes that are so powerful ... I mean, it’s neat you have this quote here, but you might want to put underneath it or above it 4 or 6 more quotes from people who are really powerful. You’ve got all these people who have attended from all these big companies. What if you got somebody from FMC or from Bank of America or from Xerox, etc., and they say something like, “I thought we knew a lot about export procedures. We spend 1 million dollars a year, and I am both delighted and embarrassed that the $696 we spent on your course is saving our company a minimum annual estimate of $287,000. Moreover, it made the department 28% more efficient and cut our insurance bills ..., etc.” That’s pretty powerful, don’t you think? Thomas:

I see what you mean, Jay.

Jay: Also, regarding format: You should use subheads categorizing each section of the brochure. People are not going to read it all anyhow, and if you make your subheads powerful, if they skim read it, they’ll get the main points and get very excited about what you’re offering. Right now, your brochure is too static. Subheads will help a lot, but don’t make them hypie, because the market you’re serving is more sophisticated. And always remember, what you’re really selling is a solution.

Thomas:

Yes. That’s an important point.

Jay: Also, I would send a cover letter sometimes. I’d try both ways - mailing it with a cover letter and without a cover letter, after you’ve redone the whole thing. And the cover letter would be just the essence of what’s inside the brochure. It would tell them, “My name is Thomas Smith. I am the founder and director of ... In case you’ve not heard of us, we’re probably the only organization of our kind - an educational organization that focuses on one thing only: We teach existing export trade professionals people who are operating export departments for medium to large companies all over the world, how to operate more efficiently, more effectively, more economically, with fewer people, save money, get the materials through channels more quickly, easily ... You’ll see on the back of our brochure that we’ve given over 700 courses in the last 10 years. Almost every company you can think of that’s engaged in major and expensive and complex export trade has had executives or export managers or management personnel who have been our students. While I’m sure you feel - as they did - that you know much of what there is to know about export, we make it our business to know more about it all the time. We focus on it, we study it, we learn it, we’re experts at it. We’re experts at uncovering for you avenues of opportunity, avenues of saving, avenues of efficiency that oftentimes you just are not aware of. We’re talking about techniques that can represent savings and added profits to your company in the tens or hundreds of thousands of dollars a year. The best testimonial I can say to you, in addition to the dozens you’ll see printed in the enclosed brochure, is the fact that out of the more than 7,000 people who have attended our not-inexpensive course, not one ever asked for their money back.” And you tell them about your money-back guarantee. Then you could say, “We think you will be very impressed with the knowledge and information you will learn. I hope you will at least take the time to read over the enclosed brochure, which will tell you all about the course, the information that it covers, specific techniques you will learn - many of which I feel certain you are really unaware of right now, because the people at Xerox didn’t know about them, and they are pretty knowledgeable and they’ve got a 12-man department. The people at Bank of America didn’t know about these techniques, and they have a 60-man export department.... And finally, if the information sounds useful to you but you find that your schedule can’t accommodate the seminar, we’ve come out with a home study version which addresses everything and is less expensive. If you like, we’ll be happy to send you a complete set to review at our risk for the next 30 days.” It’s a powerful offer. Thomas: I agree. Let me ask you a question. On the first page of the brochure, where it says tuition, see where it also mentions private consultations that I do afterwards as part of the seminar fee. Jay: You charge nothing for them? Thomas:

Right. It’s to help convince them to come to the seminar.

Jay: I understand. And you’re asking me how to turn that into a more powerful value, right? Thomas:

Yes.

Jay: I’d asterisk that, and at the bottom or in a box I’d say, “One of the added services you and your company receive as a student is reasonable consultation by phone free.” You can go into it a bit more to explain the value you’re giving them: “Most people get what they need from the seminar itself, but on the more complex issues, the ones that can make you or save you so much money, sometimes you need a few clarifications or refinements. Any specific clarification, interpretation, or counseling you need after you’ve completed the course curriculum is available free as part of your enrollment.” Asterisk it and embellish it. Something else: You’ve got all these students from all the previous times. Do you ever call those people up and invite them to send any of their employees? Thomas: What I’ve been doing is sending them an invitation to the next seminar so they naturally will pass it on to others, or they may themselves want to come for a review on a certain portion of the course which they don’t feel too comfortable with, which I make available to them. They can come back.

Jay: At no charge? Thomas:

Right.

Jay: I’m going to make a suggestion to you. First of all, let me ask: Do you have money to spend on marketing? Thomas:

Yes.

Jay: Okay. I’m going to suggest that you engage a knowledgeable professional who has fundamental export knowledge and a lot of sales ability to be a telemarketer. Have that person call all the places regularly that you have sold to in the past, and solicit them to send all their other employees. In return for doing this for you, you offer them a percentage. Let’s say that out of the $696 you get for the seminar, you may have about $100 worth of costs and $600 worth of gross profit. It would seem worthwhile to give somebody 10% of that if he or she can get on the phone and nurturously, on a regular basis, call everyone and say, “Mr. Schmidlap, last year or two years ago, you attended ... I’m sure you got a lot out of it ... We have another course coming up ... We’re calling specifically to extend to you a group rate, and I think you should send at least 2 or 3 of your employees, and we want to suggest that you book it now because it’s a special advance group rate and a limited class size. I want to give you the exact schedule now so you can see which of the component parts you might want to brush up on ... So I’m basically calling for 3 reasons. One is to tell you about the new group rate. We know that you appeared to have gotten an awful lot out of the course, and we feel that given the savings and/or profit enhancement the knowledge seems to have for a company your size, it would seem prudent to send as many of your employees as possible. Two, we now have a special all-day version that we can do on your premises just for your people.” That’s a possibility, isn’t it? Thomas:

Yes, it is.

Jay: “And three, we want to tell you that we also now have a home study course, and we thought maybe it would be wise for your company to buy two or three and have them for all your employees to take home and listen to.” If you hired a person, you could give him a draw of $300 or $400 or $200, or whatever you want to give him, against 10% of sales, and let him work your customers. You should be able to work those customers over and over and over again, and in the process do them a profound service. And you will be able to make hundreds of thousands of dollars a year on residual sales to them. But you’ve got to educate them. Don’t expect them of their own volition to see the logic of sending their people to see how much it would save them for each employee who came to the seminar or listened to the home study course. It’s up to you to tell them. No one will ever see the benefit of your product or service as well as you will, and it’s up to you to educate and explain and inform people and bring to life and give dimension to the possibilities. Does that make sense to you? Thomas: Yes, very much so. What do you think of the idea of the home study version being literally a recording of a live seminar? Jay: What I would do is just tape everything that goes on, including the questions and answers. And in a promotion, when you talk about the course, you might have a P.S. saying that the home study version is a tape plus a complete written transcription of the entire seminar as given live, including the most frequently asked questions posed by attendees, plus an indexed reference guide. Thomas: We recorded the last seminar, but I didn’t discipline myself to repeat the question so it would get on the tape.

Jay: Yes, that’s very important. You’ve got to repeat the questions clearly. You can say, the young man or the woman from Xerox (it gives more impressiveness to your product this way) wants to know...or something like that. And then you have a product you can do a number of things with. Don’t be afraid to invest a little bit of money and try some different marketing approaches I’m going to suggest. Try selling distributorships to someone has a vested interest. You could run a little distributorship-forsale ad in all the export type trade publications, whereby they buy just enough course material from you say $10,000 worth — so they have a vested interest in selling at least that amount. For that, they come and get a two-week or a one-week training from you, and they get all the promotional pieces. You do all the advertising for them, and they can buy leads from you that you generate from the ads. Then they pay you a share from the people who buy the course. What if you could get 20 people to send you $10,000 each to buy an exclusive distributorship in their area - that wouldn’t be bad, would it? Thomas:

Not at all.

Jay: Concurrently, you could run small and medium sized ads in all the trade publications offering complete information about your home study course and live seminars. Just do it all the time, just run a little ad that costs you $400 a month. And when people inquire, have a wonderful letter that goes out telling about you, telling about all the courses going on around the country , but saying if you cannot attend any of the live seminars, we have wonderful home study version Thomas: A couple of questions before we run out of time. First, I’m having a problem on the format for the manual. Right now, it’s a 3-ring binder, so people can actually take pages out and keep them nearby for reference. Is that the best format, or should it just be a bound book? Jay: I think I would keep the same product, and just add a better explanation of how to use it, plus a little more reference as to which tapes are which. And have the tapes clearly labelled with an index, so if they have a subject they’re interested in, they could quickly find out it’s halfway through tape one. Start that way, and if you find that the mail order version becomes 3/4 of your business, then you might want to give it a more prestigious look. If you get a lot of people responding, and the product you send out is something you’re not totally proud of, send them a letter saying there is a new version coming out in 60 days, but rather than ask them to wait, you are sending them the current version, and they are going to get the deluxe one at no charge. But don’t worry about that as much as worrying about whether the market will respond to the offer itself. Do you understand? Thomas:

Yes, I do.

Jay: What’s your next question? Thomas:

The coloring of the brochure.

Jay: Coloring is not as important as making sure that it’s easy to read. Graphically, you want the reader to progress from line to line without effort. You want their eyes to flow smoothly from one thought to another. Again, you want to use a lot of subheads which focus on what the ensuing cluster of paragraph or bulleted information or testimonials are all about, so if I want to skim, I can focus on whatever area is most interesting. And you want to make everything clean, lots of white space. Thomas:

Thanks, Jay.

Jay: I wish you very great success. I’m delighted and I’m gratified that you sought out counsel with me. I hope that I gave you a lot of - inspiration and clarification. Thomas:

You certainly did.

Jay: It’s like owning the right to a field of oil reserves with a million dollars in it, but you need to know how to drill it, extract it, refine it. Just owning the asset isn’t enough. You have, I think, a very fine asset and a very fine track record. I think there’s a lot you can do with it and the best repayment you can give me is to make a lot of money and build a great business, and let me read somewhere that you did 3 million dollars and that helped you, okay? Thomas:

I’ll certainly keep you posted.

Jay: Good luck. *

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I cannot emphasize this enough be absolutely clear about your unique selling proposition. To make sure you’re doing this, ask yourself: What is it I’m really offering? What problems am I solving for people? Once you’re clear about your USP, you have to articulate it. Make sure your promotional materials convey your USP in a way that cannot be missed or mistaken. Educate the people. Don’t expect them to see the benefits unless you tell them. In written materials, use headlines and subheads to tell the story at a glance. Use graphics, white space, etc. to make things easy for the reader so he or she will be sure to get your message. Use testimonials citing specific benefits. In marketing your product or service, come up with as many channels as possible, and try them out. Give your prospects several options instead of just one. (In Thomas’s case, the options I suggested were not just the public seminars he had been giving, but a home study course and in-house seminars as well. What options can you offer to your prospects?) Finally, look for ways to get other people to have a vested interest in helping you with your marketing. For example, is there an equivalent in your business to selling distributorships to people whose business it would be to follow-up on leads generated from your advertising? If so, why not give it a try? It’s a way of multiplying yourself and boosting your profits with remarkably little effort.

Vitamin Products Richard has two vitamin businesses. One is a conventional one, the other—the newer one—is based on a technological breakthrough. The unique vitamin products sold by Richard’s newer business have come under attack within the industry—not because the products are ineffective, but because they are special enough to be a threat to existing product lines. That, however, was not Richard’s main problem. His main problem was that he was sitting on a gold mine and didn’t know how to go about tapping it. The same may be true for you. Read on. * * * * Jay: Let me start by telling you the following. Let me give you a compliment, all right? I am impressed with the approach you’ve taken in writing almost all your copy. It’s very consistent with the kind of philosophies I extol. How has it been doing and what kind of validity did you get with regard to your association? I read that letter. Richard: Generally speaking I’m making fairly good progress but not fast enough. Nothing ever goes fast enough, as you probably know. Jay: Yes, I do know.

Richard: Generally it’s making good headway as far as the problems with the association is concerned. It’s not that serious. Jay: You’ve been censured and your... Richard: That’s what they said they would do but they... I think when they thought about it twice they didn’t do it. Jay: You just told the truth. Why should you be reprimanded for telling the truth, for educating your customers? Richard: They cannot do anything legally because if they sue me and they cannot prove that I am wrong, they have to pay damages. Jay: Yes, I know, I am very aware. That’s funny. Well, give me a little background even though I’ve skimmed your material and I’ve read some of them. Tell me a little bit about the company, what you do, how you currently operate, where your distribution is, the size. Tell me about the background. Richard: We basically distribute this stuff by mail directly to the consumer. Jay: Are you manufacturers? Richard: We manufacture, yes. We do not make the original raw material. Jay: But you have it formulated for you. Richard: Well, what we do is we make the tablets, we package and things like that. Jay: You distribute to health food stores? All over the country? Richard: Well, let’s say at the moment we have about between 200 and 300. Jay: Out of how many in the market? Richard: There’s about 8,000. Jay: Now let me apologize in advance for the way I operate and it is as follows. I will ask very general questions, and as you answer them, if it trips a switch in my mind, rather than being polite and courteous and letting you talk for 5 minutes I’ll step on your thought. Don’t take that as an affrontery. It’s designed to probingly sort of focus the conversation. Why are there only 300 health food stores you are distributing to right now? Richard: The plain reason is this, our vitamins are so superior that it makes everything else obsolete, what the stores have on the shelf. At the same time, if they would have to explain to their retail customer why our vitamins are better, they would have to admit that what they’re selling now to their customers is really inferior. Jay: Are yours priced comparably, too?

Richard: On a daily basis when one takes our vitamins as compared to the other vitamins, ours are, let’s say 20% to 30% more expensive. Jay: Now, when you solicit...and I’d like to focus on health food stores and then direct mail and then multilevel last, is that all right? Richard: Yes. Jay: What sales mechanism, what sales complement, what sales force, what devices do you employ to get your distribution at the health food store level? Richard: At the health food store level, we use the consumer, we advertise mainly in regional and national health magazines. Jay: How many ads and how much money do you spend advertising a month? Roughly. Richard: A month, I would say between $5,000 and $10,000. Jay: So when you do that, are all those ads geared towards retailers as opposed to the mail order? Richard: Geared to the consumer. Jay: So there’s not a coupon on those ads? Richard: There’s a coupon on the ads, but the coupon is mainly for information. Jay: Okay, so the bulk of it, you’re directing them to turn to a retailer to get their vitamins. Richard: Right. The idea is that the consumer is interested and the consumer goes to the retailer and asks for the product. And if he cannot get it at the retail level, then he’s going to get it from us. Jay: Is there a lot of clinical documentation on your vitamins that will support your claim? If I took Tops in Vitamins and my fiance’ took your vitamins for 60 or 90 or 45 days, would there be any correlation, could you see any demonstrable difference in me as opposed to her? Richard: Well, it depends what your particular nutritional status is, you see? Jay: Yes. Richard: We have people that have fantastic results with our product and they couldn’t get any results with any commonly available vitamins. Jay: Is there documentation to that effect? Richard: Well, let’s say it’s mainly testimonial. Jay: You have what I call white mail. Testimonials. It’s good favorable correspondence from users. Do you have a lot of that on file? Richard: Well, in terms of written testimonials, we have 100 or more.

Jay: Are they very compelling? Richard: Some of them are, yes. Jay: So you run your ads in 3 or 4 regional and national health-oriented magazines. You have 300 stores right now. Do you have a sales force either on the phone or out in the field? Richard: Well, there are some people who have tried to sell the product, but at the store level they don’t get very far at this moment. Jay: How did you garner those 300 stores? Richard: Well, the main reason is the consumers have gone to the stores and asked for the product. Actually the consumer has gotten it into stores. Jay: Isn’t that amazing? That’s great. It’s quite rare that that occurs. That’s a great tribute to you, but even so it’s a difficult way to break into distribution. Richard: Well, I believe this is about the only way because unless the store owner sees that the consumer demands the product and he’s going to lose money if he doesn’t provide it, I think that’s the only incentive for him to get it. Because otherwise he doesn’t want to be bothered with it. Jay: Let me ask you a few other questions. You subscribed to my newsletter, right? Richard: Right. Jay: Okay, and how many issues have you gotten so far? Richard: I think about 14 or 15. Jay: Okay, so you’ve gotten the bulk of the subscription. Some of these ads look like they’re constructed along the lines that I have guided you, is that true? Richard: Well, I’ve read your newsletters, but I have to admit I haven’t read them all as well as I should have. Jay: That’s okay, you’ve got your lifetime to do that. Every time you reread them they should enhance your effectiveness. I’ll focus again because my goal is to be not only nurturing, but insightful, and you’ve got to be tough-skinned... I may be constructively critical of you, but you didn’t pay me to patronize you. Richard: No problem at all. Jay: I’m still trying to focus. Have you tried, have you made a mailing to all the health food stores and did you call them or what has happened? Give me some historical experiences. Richard: Well, I made a mailing a few weeks ago. I believe I have sent you a letter or a copy of the letter and it says, “Because I dare to tell the truth.” Jay: Okay, I’ve got it. That’s your letter to health food stores. Have you mailed that out?

Richard: Yes. That has gone to 6,000 stores. Jay: And what happened? Richard: Well, I got inquiries from about 100 stores, 100 new stores. As a matter of fact today we are answering all those 100 letters with some new information and giving them the facts. Jay: Let’s talk a little bit about what you are doing. I think that there are parts of that letter that are very powerful but there are also some negative parts and you’re not making a real specific powerful selling proposition. You are polarizing people which is not altogether bad, but you’re not melding to that a powerful sales proposition that makes them an offer that’s irresistible and offers a benefit and service to them, do you understand that? Richard: Yes. Jay: Let’s talk about... I know you want to talk about a lot of things. How long has the company been around? Richard: Well, I’ve been in the vitamin business for about 16 years. Jay: But have you basically formulated for other people? Richard: Oh, yes. In the conventional vitamin business I have been around for 16 years. But this new vitamin business is an entirely different animal. And that one is in existence only for 4 1/2 years. Jay: Okay. Go through again... I’m focusing again. Understand what I am saying: This is to help you, you’re very unspecific in answering. I want to know what you’ve done in the last 4 years to try to build those businesses. What have you done in the retail level to try to make overtures to the health food stores, make specific propositions. Give me some of the chronology. Richard: All right. For a year and a half now we are running under our own brand. A few months ago we started to name the other competitors by name. Jay: Yes, yes, and what happened? Richard: Well, businessmen... Jay: That’s when the industry threatened you? Richard: Right. Before that we did it on a more subtle basis and we didn’t get anywhere. Because the health food retailer is not interested in carrying a new product. He’s already got 10 lines of vitamins in his stores and he doesn’t want an 11th one. Furthermore, our product is upsetting his business. Did I make myself clear why our product is upsetting his business? Jay: It’s causing people to question all the rest of them, right? Richard: Well, you know health food retailers are in business because their customers think they are getting great vitamins. Jay: Yes, and they think if they buy a mega-vitamin or super vitamin they’re assimilating all of it, too.

Richard: And if each seller is supposed to explain to somebody why they should take our vitamins, he has to reveal at the same time that all the other stuff he’s selling is inferior. Which is going to destroy the business. Jay: Okay, there’s got to be a way to position everything, but let me switch over to another subject because it’ll answer some questions. Tell me about your mail-order business right now, the size of it, the substance of it, how many customers, how much business you generate, where it emanates from, what you do with ads, mailing pieces so I can get an idea about that. Richard: Well, there’s that ad you have there. Jay: Okay, let’s talk about it. How does that ad do? When you run it, how does it do? Richard: Are you asking me how many responses we’re getting? Jay: Well, let me ask you in an easier form. If you spend $1,000 to run that ad, how much dollar volume will it generate? Richard: We’re doing this now for well over a year, I believe, and the ad is creating maybe about between 2 to 3 times the business now. Jay: So it brings 200 to 300 percent back, right? Richard: Right. Jay: So when you get a customer, do you immediately start mailing to them regularly or not? Richard: When we get a customer we don’t start mailing to them, we send them all the information that’s in the mailing piece and we do not contact them after that. Either he buys or he doesn’t buy. If he buys, chances are he’s going to stay a customer. Jay: Can I gently, verbally, and conceptually slap your wrists? Richard: Of course you can and I know we should have... Jay: You’ve got to take a position. If you can’t easily break the retail market, what you’ve got to do is lay siege and be covetous as you can be to those customers, and when somebody comes in your door you want to do cartwheels to...you want to do everything in your ability, tenaciously and service-wise, to keep those people and not sit with an attitude of, “Well, if you come back we’ve got you for life.” People are inherently lazy, they’re inertia-prone. You want to make it as easy and as irresistible as possible for them to engage in a perpetual purchasing relationship with you. How many customers do you think you have active and inactive? Richard: Honestly, I couldn’t tell you. Jay: Are you set up internally to work the mail order as a real business profit center? Richard: Well, I’m not quite sure what you want to talk about. If you mean do we have everybody on the computer, we don’t. Jay: Okay. Do you have a computer you could put them on?

Richard: Well, not at the moment. Jay: Let me ask you a couple of questions, and I’m jumping around but I’m not trying to offend you, I’m trying to focus so I can draw some analogies, I’m trying to ask a lot of different questions. How much money does the mail order division represent on a monthly basis to you right now? Richard: Roughly I would say about $25,000. Jay: When I say this to you, you very probably are letting at least that amount again go every month by not working your customers with ongoing continuity mailings, proposals, offers, a regular quarterly mailing, information, a very specific type of information accompanying it, setting them up on a plan, a regimen, suggesting to them a buying pattern and... How many products in the line? Richard: Several dozen. Jay: I believe I can safely say you’re probably at very rock minimum allowing probably $350,000 or $400,000 dollars to go unharvested. It’s absolutely imperative that you buy or even lease an IBM PC or a Macintosh just to dedicate it to the mail order operation. Have somebody enter the names and have a regular sequential procedure where at certain times in the progression of the life of a customer another follow-up letter goes out or based on what they buy, a cross mailing goes out to them. Do you understand what I’m saying? Richard: Yes, basically, yes. Jay: What about direct mail—do you rent lists and mail them? Richard: No. Jay: You never have? Richard: I never have. Jay: Let’s leave multilevel for the last because I think that’s a very difficult and a very... It can be very lucrative, admittedly, but it requires a whole different hierarchy of people and gung-hoishness, and it requires a lot of work and not an inconsequential amount of investment to set it up and get the approval of the regulatory agencies. Sometimes the people in multilevel, even if they’re ethical, border marginally on the line of demarcation the wrong way, and reading your material it seems like you are fastidiously, you’re tenaciously in your ethics and I respect that. I think that multilevel can be a real mess. Richard: I wouldn’t want to start my own multilevel organization. Jay: Oh, you would just like to supply to others. Richard: Supply to somebody who exists. Jay: And give them your product to take on. That has merit. Let’s get back to direct mail. What is the average order dollar-wise? Do you know what it would be roughly?

Richard: A direct mail order can range anywhere from $12 to $250. Jay: It would probably average $25, wouldn’t it? Richard: Well, on the average I think it may be a little bit more. Jay: And on a $25 or $30 sale what do you make in profit roughly? Richard: I tell you the plain fact is, and this is the disturbing thing, so far this business isn’t making any profit. Jay: It’s losing money? Richard: It hasn’t been losing money, but it hasn’t been making any. Jay: Why? Richard: Because I’m spending so much money in advertising that with the advertising outlays, the mailing outlays, and all that stuff, it just hasn’t been making money. My other vitamin business is carrying this business and plainly the reason is... I believe it has a vast potential if we eventually are going to be able to tap the market. Jay: Let me point out something. If you just added a little, if you melded a little bit of service follow-up to what you’re already doing, you’ll probably add $300,000 in gross sales which is, let’s say, $100,000 worth of profit just by following up. It’s a very interesting, but not necessarily a very prudent position to take of waiting for them to order back from you. If you all of a sudden invested in a series of follow-up letters and you developed a personality for yourself and you became the spokesman explaining and teaching them about vitamins and assimilation and the differences and the extra effort you go into making yours...and you tell them while you can’t promise they should see a demonstrable difference in the way they feel, or whatever in 45 days, and while you respect their own individuality in whatever they ordered, you’re going to make a couple of suggestions of some other vitamins or something they might want to add to after they’ve seen evidence of how superior yours are. “So here let me tell you about our whatever and our whatever,” and you start working them. And when you send out packages, enclosed with them are not just... Putting material in doesn’t necessarily mean you put the right kind of material in, do you understand that? I mean, you’ve got a lot of material here, but you’re not really directing them on what to do. If all the material you sent me is indicative of what you... Do you include all that stuff in the box when you send it out? Richard: Yes, right. Jay: It’s interesting, but it doesn’t really come together in a...as a consumer, I’m begging to know why your product or service is superior, and then I want you to tell me what I’m supposed to do and then program me. Do you understand that? Richard: Yes. Jay: Let’s say you’ve been operating at a break even for the last 4 years. It sounds to me like you could have extended yourself by working your customers. When they come in, you go right back and work them with an acknowledging letter, maybe external to the package, and different material in the package, and sequential mailings at every quarter or every month. Try to induce them to buy it, try different offers. There’s a technique some people use where they get people to

give them their charge card number and they sign what I call a TFN, (‘til further notice) automatic charge document where they let you every 30, 60, 45 days automatically send them out another supply of the stuff and bill it to their credit card. And if you could see what that’ll do to your cash flow—it’s enormous. But besides that, take the ads you’re running inside the health food stores that aren’t making you any money, and you modify them over to a duality of purpose. Talk about the fact that the product is for sale and you can ask for it in your health food store, but if it’s not there, here’s an order form you can send in right now. You would probably generate another $20,000 or $30,000 a month just from that without really adversely impacting the business you would direct to your health food stores. Do you know that? Richard: Yes. Jay: You could just change those ads that you’re running. If your current mail-order ad triple grosses (brings in revenues equal to 3 times the cost of the ad), by changing the ad from one that supports the health food stores over to an understated mail-order ad—referencing very specifically that you can go to your health food store and ask for it, and if they don’t have it, ask them to get it, but if it’s more convenient, just mail this form to us and we’ll send it to you direct—you’ll probably come close to paying for that advertising. You can use that $10,000 or $15,000 a month for more mail-order advertising or more customer service or computers, do you see that? Richard: Yes. Jay: It sounds to me like you’re probably sitting on more of a gold mine than you realize and you might see it if you just understand how to step back and organize your assets. Do you have any idea how many past customers you’ve had by mail? Do you have thousands, hundreds? Richard: Probably a few thousand. I realize I have limitations— I probably do too many things. Jay: It sounds like you’ve got a natural marketing flare but you are so practical that maybe you’re too practical to see the opportunity in front of you. Constructive criticism doesn’t offend you, and that’s good. I also have another concept which is interesting for selling it on television and arguing your case on TV with a 30 minute or 60 minute informational show. There’s a technique that people have made millions of dollars using on cable television where they’ll do a 30 to 60 minute what they call documercial, where people will sit and they’ll interview people and they’ll give...basically it will be a mini-seminar of very valuable information, and in between they’ll have commercials for the same product. People have sold tens of millions of dollars. You sound like you’ll be very interesting as an interviewer. Have you ever been on TV or anything? Richard: Not on TV, no. Jay: Also there’s another thing, what is your time schedule like right now? Richard: What do you mean by time schedule? Jay: Do you have time to do various things? What do you do by day? In the course of an 8-hour or 10-hour working day, what do you do with your time? Richard: At the moment, what I’m doing in marketing is shuffling my plans. You know, working at finding some outlets... Jay: Let me give you a couple of tasteful...

Richard: All right. Jay: First of all, who runs the new business—do you do it? Richard: Yes.

Jay: I think what you ought to do is find a designate internally—somebody you trust and can imbue with knowledge who will revere the potential of that business and who can devote himself or herself full-time towards ethically exploiting the value. Someone who’ll try ads designed to pay their own way and bring back a profit even if you’re trying to benefit the health food stores. Someone who’ll take the names you’re sitting on and put them on computer and work up packages that will go in with the vitamins people buy the first time which will position you and orient them towards what you want to do and then set up a regular follow-up mailing. They’ll mail regularly to the health food stores a specific sales oriented offer melded with an irresistible proposition. Let me tell you about an idea I have on how you can get retail penetration. It’s very simple. You’ll find if you do an analysis that there are something like 2 or 3 or 4 million rentable names of people who subscribe to Prevention and have bought vitamins and other health-related products by mail all over the country. You could split them up geographically by regional designation, and then send a mailing piece to health food stores and particularly mini-chains and stores in geographically designated areas,and say, “We’re going to do a mailing to all the health food enthusiasts in your area whether it’s with or without your support. Quite frankly, Mr. Health Food Store Operator, what we’d like to do is have your support because instead of having the orders come directly to us, we will reference your store in the mailing piece. We’ll tell them they can buy it by mail from us but we’d just as soon see them go to Acme health food stores. In order to do that, you’ve got to agree to buy at least 300 bottles,” or something like that. Enough to justify the cost of mailing a thousand or five thousand letters. If you do that, and make the right pitch, I’ll bet what you’d get is 300 or 400 health food stores to take on a gross of the product or two gross of the product. Richard: Well, it’s a possibility there. Jay: All you have to do, Richard, is try it. You try it in a small controlled environment. You should have established a monthly budget which is... We’ll work backwards. Whether you’re making profit or not, it should be a percentage of the previous month’s or the previous quarter’s sales, and it should be split into programming to bring in new customers, programming to nurture and conserve and perpetuate existing or dormant customers, and a certain amount of the money should be used to bring on new health food stores and retail customers. If you’re running the mainstay business, if you’re supporting that concurrently, you’re doing this business a disservice and ultimately your cash flow and your net worth, because you’re sitting there with lots of assets that could be turned into profit. If you look at them in a different light you could see that by not expecting the retail customer or the mail-order customers to call you, but by guiding them and telling them what to do and reformatting the package you put in with the first shipment of the vitamins and subsequent ones, by sending external mailings out to them on a regular basis telling them, educating them more about your vitamins and about possibilities and usages of them, and making specific offers about what they should buy from you on a regular basis, you’ll generate gobs of business. You’ll get lots of business by taking the ads that you run to support the health food stores and making them more mail order oriented. You’ll probably have come closer to having them cost you nothing to generate, so that’s probably $10,000 more

you could spend a month in developing both the mail order business and/or getting more expansive penetration in health food stores. By trying to rent lists and mail them to people, you get better penetration than you can from magazines. But I think for you to try to do all that yourself, it’s going to be haphazard and you’ll be doing the business a disservice. You’d be wise to hire somebody, give that person a subsistence. I would find somebody who wanted to learn the business and you could teach them. Give them just a subsistence salary or draw, in exchange for being the manager, and have them focus on developing the marketing aspects and then give them a tremendous percentage. Give them 20 or 25% of the profit. Why would you mind, if the profit is deemed above what you’re doing right now? Richard: I think this may be good if you can find the right person. Jay: Yes, I understand. You’re saying it’s theoretical. Richard: Because if the guy is not capable then you have to start all over again. Who knows how long it could take before you find someone who is capable of doing the job? Jay: And yet if you’re going to go forward... I have what I call a “3 month or 3 year from now” philosophy, and that is you’re going to be shackled with the same problem if you don’t find him. Sometimes you’ve got to keep looking until you find the right person. Richard: That’s why I’m better in manufacturing than marketing. Jay: It sounds like you’ve got the raw ingredients, you just don’t know how to put them all together. You don’t know how to recognize your resources. Richard: Okay, now if I could specialize in one area and let somebody else do the other area, that would be the ideal situation. That’s what I’m saying. If I could find an organization that can market this stuff and I manufacture it, both aspects could do fantastically. Jay: Maybe you ought to take what you’ve got and put it together. Maybe what you ought to do is sell one-half of that business to a marketer and put it together in a way where you restate the assets so that somebody’s who’s an opportunist can see the potential. When you sell to somebody, maybe their investment is just in the marketing dollars. Maybe that’s what you need. I don’t know very many multilevel people, I think that for you to go to a multilevel company, you’re going to give up so much and it’s going to be a marginal venture. I think you may be better off trying to expansively develop what you’ve already got. You’ve already built the foundation for a profitable business, you’re just not...it’s like you own hundreds of acres of fertile land and right now you’re only raising one crop. Do you understand that? Richard: Yes. Jay: And you could raise three on the same land without diminishing the viability of the soil, but you don’t yet see that you could. Now you’re a bean farmer, you don’t see you could raise corn, wheat, and watermelon the 3/4 of the year you’re not using your land, and you don’t know yet how to do it. Jay: How big is the other side of your business? The one that’s supportive, is it very large? Richard: Well, it’s not very large. But three times larger than this one, that’s for sure. Jay: Do you do vitamins for people all over the country?

Richard: We export and we sell to the United States, but we export more than we sell in the U.S. Jay: Who would buy it overseas? Richard: Our largest export company is Holland. Jay: Is the concept of the natural vitamins even bigger there? Richard: Well, no, it’s not bigger there. We were the first ones to get started there, that’s why we are doing well over there. Jay: Let me conclude. I think it’s critically important—critically, vitally, urgently, immediately important—that when you put this phone down you get somebody to take all your customers and put them on computer even if it’s an external computer company or you buy or lease an IBM or lease an IBM PC. Richard: The computers are cheap, that’s no problem. Jay: And get a program that will let you keep managing your customers and I think you should immediately get 100 to 500 new customers a month. You should immediately sit down and draft a cover letter that goes with all the material you use that positions, postures, and directs the people as to what it is you want them to do. The way you write is pretty good, but you should break it up. It’s very hard to read for two reasons: 1) your paragraphs are too long, and 2) you have no breaks between paragraphs. Richard: This is just a rough draft. Jay: That’s okay. I just wanted to be sure you’d make it easy to read. I want to give you some food for thought. You’re going to find you could also solicit your own customers. I’ll tell you a funny story. Years and years ago I was involved with a company called the J.W. Gibson Company. The J.W. Gibson Company sold a product by mail called Icy Hot. It was an analgesic balm like Ben Gay or Mentholatum, but we sold ours for twice what their’s sold for. We gave our product a Unique Selling Proposition, which was higher quality and more effectiveness, and we melded it around a personality. The owner of the company was a young man, so we used stock photos of an old 70-year-old gentleman who people related to. It was an analgesic balm for arthritics. We also had about 100 different products on the line, and we wanted distributors. Along with reordering information, we would send out distribution material with every packet telling them they’d get a great break if they’d buy 6 or 12 or 25 units. About 20 percent of our customers bought in multiple quantity, half of whom never did anything more than use it themselves, the other half actually distributed. There are lots of possibilities. Did you get anything out of this conversation? Richard: Yes, well, I think that you are telling me a couple of things. Basically I should be paying more attention to the customers I get. I’m well aware of that. I should be doing that. As I said before, I’m in too many different things at one time. Jay: But you’re committed to the business. You got the business going whether you like it or not. Richard: Right, and I have to do what you said, turn the marketing over to someone else. That may be the best thing.

Jay: You ought to be able to bring somebody in who’s got integrity and vision and show them that basically it’s not like a start-up company, you’re giving them something that’s got all the momentum going. All you have to do is figure out how to put it together and perpetuate it. Somebody who’s got vision and a keen marketing acuity would be able to see how to instantly make you $100,000 or $200,000, and if you give them a modest salary and 25 percent, they ought to make themselves $70,000 or $80,000 which is probably a nice living. All you do is give them the same budget which you are already spending. You don’t give them anything you’re not spending. You give them assets, you entrust them with assets and it’s very important... I know I’m stepping on you, but you’ve paid me and I want to make sure I give you as much value for this time as possible. It’s imperative if you solicit somebody—whether you’re going to hire them or make them a partner or let them buy in on performance—you’ve got to revere your business. You can’t talk about how you’re spread too thin, you’ve got to talk about how much you’ve invested and how you’ve spent 2 million dollars over the last three years and how you’ve got momentum going and now it’s time to harvest and emancipate it. You’ve got to revere it and they have to understand that you’re entrusting them with a business that should make a quarter of a million dollars a year now and you’re giving them a chance. All they have to do is harvest it. It’s like hiring a tenant farmer and you’ve already planted the seeds and the ground has been fertilized and all he’s got to do is nurture it for the next few years, harvest it, make sure it doesn’t get too wet, take it to market and sell it. If they can do it every year for you, they’re going to make themselves a wonderful living. That’s the way you should posture it if you’re trying to bring somebody in. Richard: I think that may be the best thing. Jay: I wouldn’t try to abandon it. You’ve worked too hard and my observation is you’ve got a huge profit just lurking there. It’s just waiting to be harvested. I hope I’ve given some clarity or illumination to what you’re sitting on. Have you gotten anything out of this? Richard: Yes, I’ve gotten something out of it. How much I’m going to be able to fit into the particular circumstances, I don’t know yet. Jay: A lot of it is the attitude. A lot of it is the attitude, you’ve got to understand that. Richard: Yes. Jay: Let me use an analogy that’s close to home. You’ve got a child. It’s growing, it’s going through its puberty, it’s growing but it’s not getting enough subsistence so it’s being stunted. I doubt if you have to spend any more money than you already are; it’s how you utilize it. It’s a function of perspective and how you look at the business and how you nurture the business, and if you can’t—either because of time or because of your particular orientation which is more in manufacturing—then you owe it to that child, to your progeny to entrust it to a nanny who will nurture it, and teach it, and expand it, and develop it. That’s about as graphic an analogy as I can give you. * * * * Your best prospects are your existing customers. If you’ve been putting all your marketing efforts into acquiring new customers, stop and divert some of your resources into reselling, upselling, and cross-selling to those same customers. In every way possible—through package inserts, regular mailings, special offers—stay in touch with those customers and get them used to buying from you.

If this is too much to handle by yourself, hire someone with a marketing orientation to do the follow-up for you. Proper follow-up can transform a marginal business into a spectacular success.

Beer and Beverage Distribution Derek is a distributor of a name-brand beer in a small, rural area. In recent years, he has also begun to distribute fruit juices, soft drinks, and other beverages. However, his business remains in the downslide. He has had to let some of his people go and has cut back operations in the past year. Derek’s biggest problem, as he sees it, is that the brewery he does business with is not giving him proper support. They refuse to pick up the tab, or even part of it, for any local advertising Derek wants to do. His sales have also suffered from the increasingly successful advertising of competing brands. In this consultation, I probed into Derek’s business, examined his USP (Unique Selling Proposition), and offered him one key strategy to help overcome his problem. * * * * Jay: I read your material last night. Derek: Good. To really get to the crux of the matter, where I’m getting beat is this blitz Anheuser-Busch is putting on with their advertising. Other breweries are not dealing with it, especially the one who we have our main products with. They’re just not giving us the support. Jay: What are they doing? Are they in a lot of trouble or are they just not putting their money into marketing? Derek: They can’t be in much trouble. They bought another major brand about five or six years ago, and they’ve already paid for it. But once they acquired this new brand, they suddenly stopped advertising. Jay: Why? Derek: We feel they bit off a bigger piece than what they figured, and they had to retain a lot of people from the new brand. In other words, they took the problem and put it on themselves. But, you won’t get them to listen to that. Jay: So bring me home relative to your exact situation right now. Derek: This television advertising with “Spuds MacKenzie” is beating me to death. We can’t get our brewery to do any advertising. I’m going to have to dig deeper and do a lot of television advertising on my own. Jay: They won’t co-op it? Derek: They’re going to be forced to with what’s happening. They’re going to co-op some. Jay: Is the co-op typically 50/50?

Derek: Normally, but here the last few years, they came to us and said, “Look, we want you to quit all your local advertising. We’re a big company and we know what we’re doing. Let us do the advertising.” Jay: Were you creating your own advertisements? Derek: Right. Jay: Were they good? Derek: We’re starting to be good now. We have a cable company, and we’ll be running ads locally on ESPN, USA, and CNN. Jay: What’s the spot say? Is it a 30- or 60-second? Derek: It’s a 30-second. Basically, I’m just taking a commercial that they’re running in other markets, and I’m going to show it locally. Jay: Why won’t they give you an allocation? Derek: That, Jay, I don’t understand. Jay: That’s amazing. These are weird times. It doesn’t seem like the sanctity of franchises and affiliations means a lot to people anymore. Derek: It doesn’t. Jay: It’s got to be very tragic when you put the life of two or three generations into it. Derek: I’ll show you their thinking. They ran a promotion here last summer where they sold bonus packs, such as 8-packs, 15-packs, 30-packs. When the promotion came out, it went great. We started getting feedback from the brewery, “Well, this package is going to be cut.” But why? Because the big distributors didn’t really get behind the program. This is just an example of what I’m up against. I’m a small distributor. We’ve got less than 300 accounts. Jay: What’s the population that you distribute to? Derek: 100,000 roughly spread out in two counties and parts of four others. We’re rural. The advertising is the only way to reach our audience. Our product line is good, our pricing is excellent. We have brands that are very reasonable. The only way I can see we’re getting beat is the advertising. Jay: What do you distribute? Derek: In addition to our four lines of beer, we carry orange juice and soft drinks. Jay: Are they amounting to anything significant? Derek: Yes. Again, it was something where the profits would be made locally, priced below the national brands. I’ve been trying to add new products. But I’ve looked at everything we’re trying to do, I’ve looked at our personnel, and the only thing I can see that they’re doing better is when it comes to national advertising.

Jay: They have some really good ads. Derek: This stuff with the dog is ridiculous, but it’s working. Jay: A lot of times in TV, it’s a different animal. They want to get your mind aware. Derek: I’ve got to take my hat off to them. They’re doing an excellent job. Jay: What does it cost for you to run your ads? Tell me about the TV market. Derek: OK. Our cable advertising is something new. We rotate 30-second spots on different cable channels. We usually do around 90 spots a month. We’ve also got radio advertising here at an excellent price. Jay: Do you reach many people? Derek: Oh, yes. My area is rural. There’s very little recreation in the area, so they watch sports. Cable is very big. We studied this for about a year and a half and watched different people advertising. It’s the only thing I have left to do. Jay: When you try to bargain or negotiate with the brewery—if you were to go to them and say for example, “I’ll fund ‘x’ amount of advertising non-participatory, but as soon as I demonstrate that we’ve gotten market share or tonnage up to ‘x’, you’ve got to come in with 50¢ of the dollar. If we get it up to a certain amount, you’ve got to pay 100%.” Are they amenable to that? Derek: No. What they’ll normally do is come in and say, “We want you to do this,” and you go along with it. I’ve gotten to the point where they just mail me contracts. We just got a bid from a cable network and we said we’re not going to do it. We’d rather spend the money on billboards and newspaper ads locally. Jay: Besides the big guys, the people who have the bigger franchises in the bigger cities, are the other guys nice? What kind of relationship do you have with them? Derek: We all know each other. We all get along. It’s not a day-to-day type thing. We might not deal with them for a month, and then call them up and say, “We’re running a little low on this.” Or they might call us up and say, “We’re running a little low on that. Can we borrow it?” But as far as day-to-day type things, there’s just no reason. Jay: Is their business down too? Derek: Not all of them, because some distribute beer from more than one major company. Jay: How many trucks do you use? Derek: We put out four trucks per day, three with beer products and one with juices and soft drinks. Jay: On the juices, are you calling on the same kind of stores? Derek: No, this is the beauty of the thing. With my beer, I touch maybe 10% of the population. With soft drinks and juices and things like that, I can touch 100%.

Jay: Are the margins good on this stuff? Derek: Oh, yes. Jay: The repeats are probably better, aren’t they? Derek: It depends on the price. For instance, Coke and Pepsi—I don’t know if you’ve heard about the contracts that they have. They’ll come in and say, “Look, we want you to sell nothing but Coke products. We’ll give it to you at this price.” The little man sometimes gets left out because he can’t afford to buy much. Jay: So do you have a product that’s good for the little man? Derek: We do, a very good one. We’ll take the juices and we undercut, we’ll come in maybe 50¢ or 60¢ per case under. Jay: Really! And do the retailers appreciate that? Derek: Oh, most definitely. Jay: And are you now in the first legs of getting this off the ground, or have you been doing it for a while? Derek: We made quite a lot last year in juices and soft drinks. One of our products is just sugared water and it sells like you wouldn’t believe. Jay: Do you have the master distributorship for the area? Derek: No, they won’t give you a franchise. Jay: So you’re distributing along with other people. Derek: It’s like this. Normally, a grocery company brings something to the front door, and they drop it. It’s just one of 100 items of grocery. With us, we take the product, price it, put on the shelf, and rotate it. This is where we offer a little more service. Jay: Are your prices competitive? Derek: We’re very competitive and give good service. Jay: By attending to the products on the shelves, are you enhancing the amount of tonnage that the product will generate for the retailer? Derek: One thing I noticed was that the juice shelf was always empty. They were cooling 50%60% empty space. So I said, “If I get juice and bring it in and keep your shelf full, will you buy it from me?” Sure, and with that, it worked. All the new products are doing what I want them to do. They’re putting a few more dollars in my pocket. Jay: Are there other products that you are entertaining bringing on line? Derek: Absolutely. I sell coffee, soft drinks, juice, and I’ll be selling bottled water before long.

Jay: I think you’ve got to look at yourself and say, “What am I?” Instead of saying, “I’m a beer distributor,” say, “I’m a distribution source who can bring products with more service and attention. What does the market want?” Derek: Exactly. Jay: And I think a lot of people look at themselves in a very compartmentalized and myopic context—and that’s wrong. Derek: When I started this, we weren’t a beverage company, we were a beer company. Now, little by little, we are becoming a beverage company. But with a lot of these products, I have had to pull my hair a lot. Jay: Are most of the big distributors doing so well because they have major breweries behind them? Derek: Sometimes your main product declines and the lesser-priced products do better. What happens is that the price sells those packages. Jay: Are you given any promotional backing? Derek: They cut the price back, so that’s their contribution. They tell me they don’t advertise so they can keep the price low. They’ll cut prices back two or three cents. I’m telling them we need to spend this money right here. What I need to find out is, do I go ahead and do this thing on my own? Jay: If you were to really try to dominate cable—if that is the niche you’re going to stalk—think of what it would cost for three months, six months, or a year to make the most meaningful impact. Would you be comfortable making that financial commitment? Derek: Yes, even though our business has fallen off considerably. The problem is, we’re still doing things pretty much the way we did before. Our service is our keystone. The only thing different that I see is the advertising. Our competition’s advertising is excellent. Jay: Let me make some suggestions and provide some answers. First of all, will your cable TV spots be good? Derek: Yes. Jay: You’re comfortable with saying that? Derek: It’s a rotated-type basis, so the commercials are not on every time you’re looking for it. One might be on at 2:00 and the next one might be on at 3:00. Jay: And they would be done by whom? The same person? Derek: The commercials are produced by the brewery. Jay: Are they good commercials? Derek: Yes. What they’re running now, we’ve seen in other markets.

Jay: They have been demonstrated to move and impact the market. So, for a relatively small price, you can make a real impact on the sports-based segment of your TV market. You can’t get the brewery to give you a dime towards that? Derek: So far, we can’t. When I talked to them about commercials, they said they didn’t know if they wanted to do any advertising. I said, “Look, I want to see my business grow.” Jay: If you go ahead and commit and tell them, “I’ve just committed and we’re going to advertise on cable for the next 3 months—with or without you. But it would sure extend our ability to impact the market, and it would sure be an affirmation of your commitment to us and the brand for you to be part of that. “We’ve already gone ahead; we’re not asking for your request. We’re going to dominate sports cable in the market area, and we would like you to affirm your commitment to us by picking up 50% of the hard cost.” What will happen if you take that approach? Derek: Jay, to be honest, I’ve pretty much already done that. I’ve talked with the cable station, and I’ve already bought billboards. Jay: Are the billboards up yet? Derek: No, all of this starts in May with the hot weather. I want to go with this regardless of whether the brewery goes with us. If I have to produce the commercial myself, I will. We’ve sat back long enough and watched. Jay: Have you ever sat down and written a fervent letter that encapsulates your thoughts, makes your position known, and throws the gauntlet down to them, not as a challenge, but to say, “Look, we’re committed. We’ve got so many years in this business and you may, for whatever reasons, not want to run national advertising. But we need to nurture the market. We made the commitment, but relatively speaking, you will be as much a beneficiary as we would. We should be in on this investment together.” Just put it all in writing and tell them, “We’ve done it. The spots are going to start on such and such a date, and I would like to receive affirmation that you’re behind it and your agreement to collaboratively finance the $10,000 we’re investing.” Sometimes on the phone the relationship is so easy going. A lot of people take others for granted and bully them over the phone. But, all of a sudden, you send someone a formalized letter that’s factual and lays out the points other people can’t see. You send a copy of that letter to everybody concerned. Send a copy to the guy who owns the company and say, “You took the bonus packs off the market. We were doing well with them. We understand you have different imperatives on a national scale, but we’ve got to protect and expand our market position. We made a decision. We’ve asked you nicely, and we’ve asked you informally on the phone. Basically, you procrastinated in giving us a commitment. It costs us money. We’ve determined that inaction is too costly to us. “It may be something you can entertain. Our business can’t afford it and since we’re inextricably involved, it seems only appropriate that we should collaborate financially to try to help both parties maximize, optimize, or realize the optimum distribution and market

penetration possible in our area. We need to improve the awareness and the image. We need to advertise. We’ve got good ads and it seems ludicrous not to expose them to our market. We made a decision. We are going to do that with or without you.” I think it might be very powerful to get them to recommit and put money into the marketplace by giving them some expedient, but more compelling reason. I’ve paid a messenger as much as $200 to sit in the lobby, wait for the man to show up, and deliver the letter to him in person. Sometimes the theatrics are important if people take you for granted. Sometimes just making a statement fervently and passionately lets them know this guy is really serious. But don’t necessarily be negative. Make your case so they understand it. You’ve committed, you’ve built the market without them. They’re in a downward erosion and you’re growing. They seem to be immersed in a mental miasma and you don’t quite understand why—but the point of the matter is, they’re suffocating and strangling your distribution business by not keeping the lifeblood and not advancing the image. It seems grievous, it seems cruel, and it seems almost masochistic. It seems almost ludicrous for you to single-handedly be the champions of the product line and brand in your marketing area. It seems only fair, prudent, logical, and reasonable that they would want to collaborate, since you’re doing it for the welfare of both sides. You’re not asking them for 100% financing. But it seems grotesquely unfair for you to finance them 100%. Derek: Well, this is something we talked about for a long time. They started to go into other markets in major cities, but forgot about this area. Jay: People take everything for granted. They are only worried about what they can get and about what’s new. Sometimes it’s a matter of just getting their attention, and the way to do that is a powerful letter. It’s not only written powerfully, but presented graphically. When I want to make an impact on somebody, I usually send a two- or four-page letter that is very carefully written, but it’s also meticulously and graphically done. I have one-sentence paragraphs that make a very powerful statement. I have two and three lines between a paragraph, so it’s easy to read. I’ll sometimes have a sub-headline that’s underscored preceding an important paragraph or cluster of paragraphs. I think what you might want to do is formalize your fervor and frustration into a very powerful letter and an ultimatum. “We have just committed so many dollars as follows: We’re going to own ESPN. We’re going to do collaborative promotion in the stores. We’re going to finance it with or without your cooperation. It seems rather ludicrous and inequitable that you wouldn’t be willing to subsidize or co-venture the attempt, since we’re trying to grow both of our businesses. “If and when this effort demonstrably evidences it’s ability to increase market share and improve consumption of our lines by a minimum of “x,” you automatically agree to continue it with us for at least two or three more quarters, so we could see how high is high. If it works, you can consider other entertainments with other people in other removed and unique marketing areas.” That kind of letter, properly written, typed, dispatched, and presented, is really going to shock them into saying, “Hey, this guy is dead serious. We’d better give him a commitment.” Or if they “pooh-pooh” you, at least it’s a confirmation of how you stand in their eyes.

Derek: When it comes down to advertising, they look at price per barrel. My question always has been, if they can advertise, if they’re willing to spend this kind of money to advertise, why aren’t they going to commit to that? Jay: And what’s their response? Derek: I get none. Jay: Is there any strength amongst all the distributors? Are the other local distributors’ attitudes similar to yours? Derek: The other local distributors are smaller. They’ve more or less just gone along with it. The brewery tends to go along with it. Jay: Who are the big stores? Are they package grocery stores? State liquor stores? Derek: The liquor stores. Jay: Do the groceries sell beer? Derek: Grocery and carry outs. They buy a license, but all of them do. Jay: What other promotion besides TV are you able to do? Derek: I’m going to do billboards this year. Jay: Are you using their stock layouts or are you doing your own? Derek: No, these are things the brewery furnishes. The problem with billboards is that there are billboards and there are billboards. There are billboards you drive by and don’t see. Jay: Are you doing spectacular boards? Derek: I’ve got hold of a couple of good ones. Jay: You can’t really promote with the dealers, right? Derek: We do. We run specials. The brewery will mark down so much money. This is something we used to do for 180 days and now we do it for 30 days. We mark down the price for 30 days and then bring it back up. Jay: Do you still make money while you’re doing that? Derek: Oh, sure. The brewery normally pays half. The only thing that we ever sell at cost is something that we will discontinue. Jay: What are your opportunities on the non-alcoholic beverage side? Derek: The opportunities are unlimited. Jay: How are you making deals to acquire lines?

Derek: I’m approaching different companies. But the opportunities are there with people we don’t do business with now. The majority of the places we sell to are people we’ve never sold to before. Jay: Do you have to worry about credit, or can you set them up instantly? Derek: Oh no, we just walk in and set them up. Instantly. Jay: What’s the next step you can take? What are you looking at right now? Derek: Last year we started with juices and fruit drinks. Now we have a selection of soft drinks. Everybody does soft drinks. We haven’t had to buy any franchises. Jay: What does a franchise typically cost? Derek: I’m talking to a man who has a franchise with a convenience store. He probably has to pay $50,000. Jay: Just for the right to distribute his product? Derek: Right, and it will be well worth it. Jay: Does he do a good job? Derek: He’s bitten off a huge area to distribute in. Jay: So there are a lot of people who are distributing, but it’s like a satellite. They’re doing a mediocre job. If you took it over, you could probably double or triple the volume. Derek: Exactly. Jay: What’s in it for them if they don’t pay a franchise fee? Derek: We buy the product from them. Most people are bottlers. They produce the product and distribute it for themselves. Jay: Can you get the list of all the non-beer producers who subscribe to whatever beverage publication you guys read? You could send them each a neat personalized letter offering to take on their products in your area. Give them the dynamics of why letting you buy from them may be infinitely more lucrative than just distributing from their main source. We could mail 100 letters and maybe get 10 or 15 people to offer you their products. Derek: It’s possible. They might have two soft-drink lines under franchise. They might sell me one. It’s taken me a long time to get the few franchises, or the few products, that we have. It’s very, very hard to get into the soft-drink business unless you have the money to go in and buy out Coke or Pepsi. I’ve been at this now for two years and I have very few products. These products take up a lot of my time, because the bottlers are very protective. Jay: Once you get the line, are you necessarily assured that you’ll make any money?

Derek: Yes, especially if you get a decent price. Coke and Pepsi are interested in selling Coke and Pepsi; that’s why I went after flavored drinks and root beer. Coke and Pepsi don’t really seem interested in selling those products. It’s not something that I just jumped into. Jay: You can’t argue with the results you’re bringing in. Derek: This summer I expect to do quite well. Jay: In a year or two from today, do you think you’ll have ten trucks doing soft drinks? Derek: I can see us with two trucks on the road every day doing pretty well. Jay: Are there any other beer lines you can take on? Derek: No. All the major beers in my market areas are aligned right now. The only things left are the lesser brands. The only other way is if you could acquire one of the lines. Jay: That’s pretty expensive. Derek: Not only that, but the major players are in it for the long term. Everybody is aligned. That leaves the products we have. I’ve been maneuvered into a corner. Jay: Well, here’s the first step I want you to take. Draft a very powerful letter that explains your frustration and what you’re trying to do. Hopefully, you’ll get them to commit $10,000. But also get a warrant from them that if your advertising produces a minimum mutually agreed on result—a certain number of case increase or something that you can both agree on—they are automatically going to commit, or renew the commitment, for two more quarters. Derek: Sounds good. Thank you. * * * * If your company is dependent on another company for support, you must find a way to keep the channels of communication open. As in Derek’s situation, you may be at the receiving end of a one-way channel. However, there are strategies you can take to break through the obstacles you’re faced with. First, try to bargain or negotiate. Find a risk-free proposition. If you can demonstrate that you can increase market share or volume, they will usually be willing to provide additional help. Next, try to clarify your unique selling proposition. In Derek’s case, he was able to offer competitive prices with better service. I also pointed out that he was not just a beer distributor—he was a distribution source who can bring products with more service and attention. He was already becoming aware of this with his moves into soft drinks and other beverages. Just by taking the time to think through your situation, you can come up with creative marketing approaches or discover new opportunities to expand your business. Finally, if you’re still not having any luck getting increased support from your backers, and you feel you’re being maneuvered into a corner, send them a powerful letter. Better yet, send the letter to the president. Use the guidelines I gave Derek as to format, paragraphing, etc. Clearly express what you have to offer and what you want from them. Be direct, but be friendly. Let them know you’re serious. If they still refuse, at least they’ll know where you stand. Chances are, they will wake up and provide you with the support you need.

Building Signage/Business Software Tim started selling signs six years ago. He’s a middleman who buys signs wholesale and sells them to architects, end users, developers, and commercial builders. He’s doing well, but wants to expand from being a one-man show to being a major force in his area. The problem is that his competition is already well entrenched. If you’ve ever found yourself in that situation, be sure to read the suggestions I gave Tim. Tim is also marketing a software system that is designed to help computer-ignorant business people keep track of their customers. I gave him an audacious method of breaking in to a super-crowded field. * * * * PART ONE: SIGNS Jay: Tell me about your staff. Tim: There’s myself, a secretary, a secretary’s assistant, a salesman, a sales manager, an installer, and a part-time installer. The salesman and the sales manager are new within the last 3 months. Jay: What is a typical job worth? Tim: I’m embarrased to say that I don’t have an accurate number. It’s about $2,000. Jay: Out of $2,000, what do you walk away with? Tim: The average is 30% gross profit. Jay: Are you very price competitive? Tim: Fairly. Jay: How many bids do you do a month? Tim: That depends on the month. If we have a large project where we are working on a high-rise office building, that contract may be $40,000. Jay: In such a building, what would that contract entail? Tim: It would include a directory in your lobby, all your bathroom signs, all your stairwell signs, your fire control room sign, your tenant signs, all the different floors, and all the different suite numbers. It would include any lettering outside the building. If it’s in the contract, the garage signs, too. Jay: And this is usually done in stages? Tim: Usually it’s done in stages, in terms of the basic building itself. After that is built, then the building management takes over, and as it moves tenants in, it hires someone to do the tenant sign work.

Jay: And are these projects profitable or do they basically just break even? Tim: They are profitable if we come into them at the beginning of the building. If we come in halfway done, then no, it’s not worth our time. Jay: The architects, designers, contractors, and developers are obviously your marketplace, but how do you establish, nurture, and sustain your relationship and positioning among them? Tim: Mostly by word-of-mouth, because up until a month ago, I was the prime mover behind everything. It was real scattered and mostly responding to requests rather than having time to go out and promote. Jay: Requests from past people or people who were referred to you? Tim: Both. Jay: For example... Tim: We walk into XYZ contractor, who’s putting up an office building, we bid for the sign work for that building, and we get the job. Once we do the job, we call up every once in a while and when they have tenant signs put in it, we bid. We win some and we lose some. Jay: Do you frequently call on them to sustain the relationship? Tim: I used to, but I no longer have the time. That’s what I have the salesmen for. Jay: And are the salesmen doing that? Tim: They’re beginning to. Jay: Any evidence that it’s working? Tim: I’m not sure. Another scenario for our getting a job would be from an architect or designer who has used us in the past. He’ll put out a package of specifications and plans and drawings, etc. We bid the work, and we either get it or we don’t. Or they don’t remember us and they got our name from a referral from somebody else. We did a high-rise office building, all the tenant signs, etc., and a major corporation is moving into that building. They got our name from the building owner, and we are now doing their interior office spaces. Jay: Is that a big job? Tim: It will be a good job, $10,000. Jay: Would you say your business is currently more reactive than proactive? Tim: Up until recently. Now with our salesmen, Mike and Larry, it’s becoming more proactive, and that’s the point we want to take it to, while also covering the reactive stuff.

Jay: Can I ask you to review something? Tell me what Mike and Larry actually do during the course of a typical day. Tim: Mike’s sole job is to go out and visit contractor’s plan rooms, to bid work that he finds available in their plan rooms. Jay: Is a plan room where they have all their work in process? Tim: Yes. Jay: And how many plan rooms do they have in your marketing area? Tim: About 14 zillion. Jay: And do you have almost all of them covered, or have you identified them all? Tim: No, it’s almost impossible to identify them all. There are too many of them, and many of them don’t even list in the phone book because they go on a referral basis. Jay: Are the developers listed? How do you find all the developers? Tim: You don’t. Jay: A suggestion that has worked for a lot of people I have counselled: Get copies of all the magazines, periodicals, and newsletters that the people that you would do business for subscribe to. Contact the publishers, and ask them if they would rent or sell you a list of subscribers for internal use only. They may not give it to you on as tight a geographical base as you would like—maybe they’ve got 50,000 subscribers and you’ve only got 20,000 of them in your area—but if you give them enough of a premium to make it worth their while, and enough of a written warrant that you’ll only use names for your own work, you can identify probably 90% of the hidden people that you want to know. Then, when you get them, if you do it on computer, Donnelly has a service where they’ll pass this list against their Yellow Pages and White Pages telephone directory and produce phone numbers if they’re not available. They should actually be available through the trade publications, so that’s probably a better way to get to them. It’s an instant way to identify who they are and where they are by a specific address and then really optimize your effectiveness. Tim: So Mike calls exclusively on contractors. Jay: What’s Mike’s background, please? Tim: Light sales. Jay: To contractors. Tim: No, actually he had an Amway business before. Jay: So, he’s very tenacious. Tim: Yes, he is tenacious with things.

Jay: Personable? Tim: Yes, likeable guy. He’s picked up very well on reading plans and doing takeoffs from drawings. Jay: Do you guys give customers and prospects a lot of suggestions and recommendations? Tim: Back and forth all the time. Jay: And then what does your other salesman, Larry, do with his time? Tim: At the moment, he’s doing a lot of direct sales, because we need to increase the volume before we can increase the staff at all. Jay: How do you get immediate sales? Tim: You take a set of plans and determine which of the needed signs the contractor himself is willing to build. Jay: If you’re aware of 100% of the jobs, and you’re bidding on 100%, you guys are competitive, innovative, or unique enough that that alone gives 33% of the business, from what you told me in the materials you sent me. If there are 100 jobs going on every month and you get 33 of them, it would seem you would be doing about 400 grand a month extra. Tim: That’s exactly right, although the typical job is not 10 grand. When you do this kind of stuff, you’re going to pick up a lot of smaller jobs. The other thing that this does is on the long term it brings work with the architects, planners, developers. By doing this, this will put me in contact with those very people because I have to relate to them. Jay: How are you accessing those people right now? How do you know who they are? Tim: Many different ways. I didn’t mention that I have a huge list of the people I have done business with in the 6 years I’ve been operating. Jay: Is that list worked frequently? Do you send letters? How many people do you have on that list? Tim: 300 Jay: If you have something informative to say, some information you can impart to those people—some way to save money or enhance the visual or graphic effect, something you can keep teaching or imparting—you should every month send a computer-printed personalized letter. Tim: Almost a mini-newsletter type of thing. Jay: Yes, but for example: “Gregory Post, Post Construction Company, 123 Main Street. We just completed a very interesting job we thought we would share with you, Mr. Post. The reason we want to share it is because we perfected an interesting technique that had a visual effect the owner/developer loved, and we thought that maybe the device might lend itself to something

you’re currently working on,” or, “We came up with a way to save 35%. Here’s what we did. We’re telling you this now as a suggestion, so that maybe you could incorporate it as a service to your client on projects you may be working on. If you want more specific advice or counsel, and you want us to chronicle what we did, give us a call.” Tim: We changed the name of the company about 6 months ago, and I don’t believe a notice has gone to all the previous customers. Jay: I wouldn’t just send a notice about the next change. I think too many people are foolhardy. They send what I would call vacuous correspondence, when, for a little more, they could send something people would really value. You guys in your business have done so many jobs that you probably know all the interesting ways to enhance something and get more durability. I think everything you send out should be information sandwiched between information. You don’t know what they’re working on, but if you save them money, people will love you. I believe in giving people knowledged-based information, samples of your wares before they purchase, so that it becomes implicit that you’re concerned about making and saving them money and enhancing their effectiveness and their value to their client. If every month you send, not another newsletter, but a seemingly personalized letter that tells of techniques you’ve used in the past, or ways you’ve saved clients money that they were able to pass on to their customers, and explain why it had a better effect, or explain a typical way of doing this with a tough job and a tight budget, this might be something you want to consider. You’ve got to work your list always, because there’s this moving parade—everyone’s situation is constantly changing . So try a whole plethora of approaches. You’ve got to experiment. Every time you send specific information or an anecdotal or case-study-based letter to your group of prospects, you’ll be able to gauge, by the response, which approaches hit the best. You can do derivatives of the good ones and you can purge out the ones that don’t seem to effect anything. Tim: You have to analyze all their endeavors. Jay: And you save those letters, because when you bring somebody new on your prospect list you can start with some of the same ones. They should be timeless letters that can be personalized when you get somebody new. Tim: Does it have to be computer-based to keep track? Jay: Yes, it should be. It’s not that hard. You can know which ones got what just by coding them, don’t you think? Of 300 people, if 10 or 15 of them have a job in process, it can throw $10,000 or $15,000 your way. If 50% of them have jobs in process, then you just have to be aware of them by giving them the accurate impression that you possess knowledge-based ability to help them enhance their service to their client. Either you’ll come up with better ways to spend the dollars or come up with ways to save money if they are on a tight budget. If saving them $5,000 is what’s going to get you the job, who cares, as long as you’re making 30%. What you want to do is ingratiate yourself by looking out for their interest, not just saying, “Hey, we’re here to sell you our wares.” The way to ingratiate yourself is by constantly purveying to them incredible knowledge and information that could help them to be better informed and better skilled in utilizing all the capabilities inherent in your particular field. Am I being too abstract?

Tim: No, what you’ve given me is a way to translate, “Load your product with information.” We can’t load a brass letter with information, and we can’t make it more technological than it already is, but we can educate our customers. Jay: Right. Every customer of yours is interested in two things: first, visually having their building or their project look its best, and second, spending the least amount of money possible. I would imagine that it’s not infrequently that they go over budget. If you can show a contractor how he or she can get even better visual impact for $5,000 or $10,000 less, by doing these little things, and you’re there not to just to sell competitively but to show him ways they can save, I cannot imagine that you wouldn’t be high in his esteem. Tim: We have a little bit of a problem, though. In many cases, the contractor is not interested in the dollar cost of this particular aspect of the project, because it all ends up coming out of the customer anyway. Very often, I’m going on cost plus. Jay: It’s still not a problem. The point is tendering them the regular monthly information-based personalized letter, not an imprinted newsletter. Who cares if they avail themselves of it or not? You’re just trying to get a posture in their minds. One of your letters might say: “There’s been a change in our industry. A lot of people are calling us ahead of time not just to bid on a spec, but to come up with multiple suggestions on ways they can enhance the visual effect for the dollars they’re budgeting.” I just think that by showing them all the possibilities, and giving them knowledge that they can use to beat all their other competitors too, you’re going to stand out much more favorably in their eyes. I think you’re going to be thought of as being more on their side of the desk as opposed to the other. For whatever it’s worth, by doing that kind of approach on an ongoing basis and making it part and parcel of all the continuing programs that you and Larry have, the cumulative effect after three or four or five months will be very, very, very powerful. Tim: There’s a certain percentage of the jobs out there that go in a single bid period. I mean there will be one bidder and that bidder has it. Jay: And if you’re on the top of their mind, you’ve got it. Tim: Yes, and that’s the market that I’m shooting for. In that market you’re not bidding, they’ll just say that this is what they want, not “what’s your ideas and how do you do it?” Jay: The way to do that is to tell them, “Yes, one approach is just to get the most I can out of a job, because I might not ever work with you again. But the other one, which is the one I’ve adopted, is to make a fair profit, but do everything in my power to maximize the benefits to your client. I help you render the best value and the best aggregation of benefits to your client, where the benefits mean better visual perception or better cost savings or longer endurance. For example, there are certain materials you’ll recommend that will last ten years instead of five, and probably cost no more, and you’re doing them a service and the building still looks good. Sometimes, if you guys know what you’re all about but the client doesn’t, it does you no good. So you’ve got to say it in a neat way, not just philosophically, and the best way to do it is in a bunch of letters. Tim: So this is not a request to the client to do anything at all, just unique information for them to use.

Jay: Right. However, tactfully and discreetly at the end you make a wonderful offer: “If you have a project in the works, and you want ideas in advance for it, and you’re looking for a quick education, and if you want it explained to all your designers and your architectural staff, and if you want us to do anything to help you get a broader and better comprehension of the possibilities and of some of the more innovative developments or graphic and cost-saving options available, we’ll counsel with anybody. We’ll dispatch people, they can come to our offices, we’ll schedule a tour of all the things we described here so you can see it visually, whatever you need is available.” Start creating and accumulating those letters. What also might be very interesting is you could sponsor a “sign day”; take a Friday and hire a bus and reps to take them around and show them all the signs you’ve done, and you contrast and talk about techniques and have lunch at a nice place. Under the auspices of a charming, non-threatening educational service you could accomplish more than hard selling, you know that? Tim: It would be hard to work out, but it’s very interesting and it doesn’t mean that it can’t be done. Jay: A lot of things I suggest should be construed as conceptual, because I don’t know your business. So you’ve got the customer base you’re going to work. I would suggest that once a month you sponsor or put on, if you can, information-based activities. Do you have marketing monies? What is the status of your promotional offers? Tim: I don’t have a particular budget. Whenever the whim has struck me in the past, I’ve just sent out a letter. Jay: That’s not the best approach. Take, from your sales volume, a percentage that you can live with and reallocate that every month or every quarter, and then have regular marketing programming going on all the time. Identify and enumerate. For example, every month a personalized letter goes off. That means it’s going to take $2.00 each to do it nicely, to send it off first class. And you might experiment sometimes with different types of delivery. For example, sometimes you might deliver it by Special Delivery, and if it costs an extra 60 cents, the impact may be profound. The favor that people have in their hearts for you is probably more important, all things being equal, don’t you agree? One of the greatest ways to do that is to understand that people’s needs are so much more expansive than those related to your product or service. For example, people are overweight, underweight, unhealthy, unhappy, or whatever, suggesting all sorts of other services that you can render, all of which have a way of ingratiating themselves. For example, for 30 of my past clients, every time there was a good utilitarian book on the market that was hot like “Eat to Win” or something, I had the client buy 500 copies of them at a special discount and send a copy to every one of their prospects with a cover letter saying, “I was a nervous wreck, I had no energy, I couldn’t lose or I couldn’t gain weight. I read this book and it has changed my life. I’m working an extra four hours, I have more energy, I sleep like a baby, I lost weight, my eyes glisten. I don’t know if you feel the same way, but I thought that most harddriving executives might find it interesting, so I thought I would pass it on to you. I bought you a copy; I don’t know if you’ll like it or not. I suggest you read Chapter 14 on energy boosting. If it does you any good, great, if it doesn’t, pass it on to somebody who it might help.”

Tim: As an example, we might also want to make available to the contractors that kind of material, so that they can send it out to their customers, correct? Jay: You can experiment with all sorts of different things. Both. I’m talking about the contractor who gets a book from you one day with a note saying, “We usually talk to each other about signs.” Or you’ve read an article that you know is applicable to the industry, and you go to the publisher and say, “Can I get reprint rights and send it out with a cover letter saying, ‘I was going to draft my letter to you this month and tell you this or that, but I was sitting at home at 2 in the morning reading Psychology Today and I saw this article and I thought that this application is probably so overlooked in the contracting business, and I doubt that many contractors read Psychology Today, and I could write you a letter suggesting you get a copy of the May 30 copy of Psychology Today, but by the time you got my letter it would no longer be on the news stands, which would frustrate you, so I went to the trouble of calling the publisher, John Schmidlapper, and asking him if I could, with his permission, reprint this and send it off to the contractors in my area. He was delighted, so now here it is. I think it would help you in your dealings with your clients or whatever.” Don’t you think that’s powerful? Tim: I think that’s tremendously powerful. I’ve been selling to contractors for many years, and most of them came back to me not for what I did for them directly, but for the rest of the relationship that was developed. Jay: And the best thing to do every time you lose a bid, by the way, is to have something really neat to send them. You should plant a seed, when you lose a bid, the 66% that you don’t get. What if every time you lost a bid, a letter goes off saying something like, “Greg, I’m sorry we lost the bid, obviously, but I think the people you hired are fine people. Something you might consider next time you do a job is that there’s a way to cut your costs by 50% and have the result enhanced at the same time, if you know about this and this.” Instead of being mad, be a great loser, and still try to get on their side of the desk. Tim: Maybe we could give them something that would be useful on that job that we just lost. Jay: The things I advocate, you won’t see their profound effects tomorrow morning. It’s a cumulative nurturing, but the posture it will give you vis-a-vis all your competitors is incredible. Tim: I want to redirect the company from a one-man band to a significant force in this area, and these are the kinds of ideas that we have been batting around. Jay: What I’m suggesting does not work if you do it haphazardly. You don’t throw it together and do it at the last minute. What you do is you spend every weekend writing form letters. They will be personalized scenarios. Have them in the computer, with a different series of letters going to different kinds of situations. The person you lost the bid on, maybe that person every couple months gets a different kind of letter, one that talks about how “there’s a great project we saw, and we’ve got a technique of doing the same thing that cost Bank of America $80,000. We see a way to replicate the same visual effect on an easy-to-install sign for about $22,000, which is about 60% less. I don’t know if that would work for you, but next time you go to dinner, take a look at the Bank of America sign.” See what I’m saying? Tim: “Be specific.” Jay: Yes. You want to build your image around the recommendation and education. Tim: You’re right, because the market we’re after is that non-bidded market.

Jay: Exactly. And the way you get it is by people thinking, “Hey these guys care about me when they lose, and they’re worried about me making every dollar I spend optimally effective not only in a pure commodity value but in a visual and graphic.” But I sense that you understand what I’m trying to say. How do the other people market? Tim: Most of theirs is large Yellow Page ads. One has been around for 110 years, and they’ve probably done business with, or for, almost everybody at least once. Another has 3 or 4 salesmen out. All these people have large Yellow Page ads, and they’re right there in town, which is a tremendous help to them. Jay: What is the ad listed under? Signs? Tim: Yes. Jay: And do you have an ad? Tim: No. Jay: You don’t want that business, right? Tim: I don’t want the Yellow Pages business, no. That’s a conscious decision I made years ago, and I think I’ve been borne out, because I had an ad one time and all I got was shoppers. I’m not interested in shoppers, but I’m interested in starting an ad on a personal basis based on the kind of things we’re talking about right here—service, knowledge, information and different product options—rather than just being the third guy they called to find out how cheap they could get it. Also it’s a different section of the market; the people looking through the Yellow Pages are usually the people that want one or two signs. We’re after entire buildings. Jay: I understand fully. Is there a big re-signing business? It would seem to me that cosmetically by changing signs you would give a building a face lift. Tim: Yes, you would and there are a lot of buildings that could use it, but I’ve never tried it. Jay: It might be interesting to rent names and lists of all sorts of different building managers. What you might do is get a list of all different owners and managers of different commercial and office buildings. The way you do it is by getting a list of all the different magazines that they would read— Office Management, or whatever they would call it. It would be interesting to draft a letter and say, “You know, there are a lot of different ways to attract more tenants or justify increased rentals. Probably the easiest one is cosmetic improvement. One of the ones that can make the most visually positive effect for the least amount of money is to redo the signs.” That might be a fabulous way of approaching the whole market and that’s where the numbers will work. You’re not really competing with anybody, you’re just stocking a whole niche. You’re mailing 1,000 people a month and you get maybe 4% or 5% that want you. You send Mike out just to talk. The idea is that, “You’ve got a lot of ways to improve your building. While you’re going about it building by building, renovating and putting carpeting down for $10,000 dollars, you might be able to change the whole visual impact by doing new front numbers and it costs almost nothing”.

Tim: There’s one market we hadn’t even begun to crack and that’s leases. Whenever a major company moves in, there’s $27,000 in signs with every one. Jay: How do you do identify the origins of that? Tim: We look at the trade magazines—so and so is moving in—and then I give a call. Jay: Who would be the most appropriate person to know? Tim: That’s a question I don’t know the answer to. Jay: I have a philosophy on found business. My philosophy is that it is a function of my capacity to do it. We’ve all got a finite capacity for performance. I’ve only got X hours a day. Suppose you had a legitimate and ethical relationship with every management company in town, so that they had an understanding that they could refer you to people and that for any business that would emanate they would get 10% right off the gross—an average for them of $4,000—just for giving you somebody’s name and giving that person an introduction to you. You go to the management company and say “Look if you guys churn a 100 leases a year and the average lease is 10,000 square feet, we probably could put $10,000 in your pocket before the year is up and this would pay all of your advertising expense every Sunday for the next 3 years, or it would pay your rent for the entire floor that you’re operating—including electricity and all the other sundry things and your office equipment—for the next 2 years. Or let me put it a different way, there are 12 people in your office and you could pay half of their salaries just in the money you’d make by helping us, and it’s not taking a dime out of your pocket.” Does that give you guys any ideas? Tim: That gives us some real ideas. We’ve done that in another business. Jay: It works. You may only make 20%, but as long as you’re going to sell it off anyhow, and it’s not taking any capacity in your factory, who cares? Tim: As long as you’re making over and above expenses. If you have the volume to justify it, you can end up with more dollars and it doesn’t matter. Jay: One of the most overlooked areas that people miss out on is host devices. There are certainly people who are positioned perfectly to have the inside track. There are people who you’re probably not competing with at all. They’re kindred with you, but you’re not supplanting a dime of their revenue. If it’s too much trouble for you and Larry and Mike to do it, I would bring in a man or woman and give them a tiny set salary with a fabulous variable one based on how much they sell. Their job is to set up and make host relationships and put them in a package. By the way, what I just showed you is an essence. You don’t just talk about a deal, you’ve got to reduce it down to graphically illustrated example. “How would you like to have $10,000 in advertising subsidized every month? How would you like to have your rent paid by us instead of yourself? How would you like to have half your staff overhead covered by our check?” It gets real crisp, with money blazing in their minds. Tim: You mean the fundamental of what capitalism is all about. Any last thoughts or ideas as far as the sign company goes?

Jay: Are there other companies who would be involved in selling kindred products to new sign buyers and who would be ahead of you, who could be in a referral capacity? Who would be there ahead of you who would know about the need for signs before the bids would ever be let? Tim: Everybody—the carpet man, the painter. Jay: If you brought that same person on who I said would work on a variable rate developing relationships with the rental agent, what if he or she also developed referrals? You go to a carpet company and say, “Look, you’re going to make $5,000 on the carpet. You could make $10,000 by just putting us onto the sign bidding.” Have everybody and their brother be birddogs for you. What you want to do is you bring in an operative who brings on those relationships and works them. If you have 150 other subcontractors who are always in there ahead of you, and each one of them knows that just by getting you the job, they make $2,000 for the referral, and there are 100 deals going on that they could refer to you a month, and you’ve got 80% of the contractors, even the competitive contractors working for you, what do you think that’s going to do? Tim: Quite a lot, I would say.

PART TWO: BUSINESS SOFTWARE Tim: Let’s talk about our software. Jay: Is it compatible with IBM? Tim: Yes, IBM. Jay: Tell me what it’s going to do. Tim: Basically, a year or so ago a friend who is a programmer came in, and I told him, “I need you to computerize my sign company. I need to computerize my ability to address and calculate quotations to customers. I need the computer to change the database into requests for quotations from my vendors so that I’ll find out what prices are. Then I need to change that into order confirmations to my customers when I’ve quoted them, and change that into a purchase order to my vendors. Then I need to change that into an invoice to my customers when we’re done with the job. And I also want it to be done so it doesn’t look like a computerized accounting program that you get down at your local business store.” Jay: And this does all that. Tim: Yes. It’s a giant word processor with number crunching capabilities. The entire purpose of it has been software written by a small businessman for use by a small businessman who happens to be a techno dummy. He doesn’t want to learn to talk computers, but wants to pick the thing up, plug it into the machine, and be able to use it right away. Let me add that I’m a techno dummy myself, and the software is being designed so I can start it today, do the entire program, and do everything it says in there, and never open a manual. Jay: O.K., now what would you sell it for?

Tim: I have no idea. Off the top of my head, $500. Jay: Do you own it outright or does the programmer? Tim: I own it. Jay: O.K., so you bought all the rights. Tim: Well, the programmer and I are partners actually. Jay: What businesses would this program’s most likely users be in? Tim: Any business that either provides a service or does custom fabrication. It has no capabilities for inventory. Jay: O.K. The best way to do it is not dissimilar to the way Howard Ruff sold you on me: Give a clear, illustrative example of the benefit the product will produce; and more importantly, allow the intended customer to avail himself or herself of your performance in their actual application for a finite period of time before they are obligated to own it. It doesn’t mean that they won’t send you the $500. The longer the trial period, the better: “Try it for 90 days.” In my opinion, you live or die in most capacities by performance. If you can really perform, you have nothing to lose and everything to gain by giving a strong guarantee. When you have something that cost $10 and sells for $600 you have such large margins that you’re not going to get burned very many places. You create an ad or mailing piece, personalized to the user if possible. I would craft my mailing pieces more specifically toward each vertical market. I would go to different categories of service companies and talk to them, so that you know the kinds of uses they would get out of the software and you can be closer to home in the application. You can tell them how automobile service companies can do this, how insurance companies can do that, so you understand and so you show you can draw very vivid, empirical, relatable application examples that are indigenous to their businesses. Tim: What you talked about is exactly what we talked about this morning, putting a 90-day offer on it, mailing the actual program to them with a program “time bomb,” and in 90 days it will actually erase itself. Jay: Try this: You buy a list of 1,000 people and you send them the actual software. It will cost you maybe $5,000 including the material, the mailing, the postage, and the packaging. Go to great lengths to explain what you’ve done for them. Say, “Everybody asks you to send $500 or $600, and if it doesn’t work in 30 days you can have your money back. Most people don’t even have a feel for it until 60 or 90 days have passed. We’ve decided to take a totally opposite tack. Enclosed you will find a complete operating set of our software. It will do this and this, and it’s a piece of cake, and it’s fully explained. We have a number you can call weekdays for all the help you want, and more importantly, we’re buying you the next 3 months’ use of our $600 software with no strings attached except the following. We believe frankly that if you honestly and earnestly apply and integrate it into your system, within 90 days you’ll be operating—so that it’s visibly and analytically evident—at least 48% more efficiently. You will actually save your business a minimum of $4,000 a month in productivity or waste or loss or scrap or whatever the application, that you would be a fool not to want to buy the perpetual version of it in 91 days. You give specificity to it: “You’re getting an actual operating system that will destroy itself in 90

days if you start tomorrow morning. If you’re doing at least the minimum amount of volume, this software should be worth at least $12,000 savings in 3 months or it should be worth at least 87 saved hours or preserved hours. It should be worth it.” Tim: An introductory statement would be, “This program is going to...” Jay: Or better yet, you can say “I just saved you $12,816, plus $5.98 and let me explain. To get this to you, I must seem either the craziest person in the world or one taking a very calculated risk, but actually it’s neither. Our only concern is whether you use it or not, because we’re certain you’re going to see such and such achievement...” Tim: It’s a crazy idea, Jay, but it just might work. Thank you for your help. Jay: I’ve enjoyed it. * * * * People value information. Can you provide your customers with information they can use? If so, providing it for them in a personalized format will show them that you care about their needs and their well-being, not just about their dollars. They may not believe you if you just told them that, but if they see you actually demonstrating it, you will win a lot of repeat business. Think about whether there are creative ways for you to provide a sample trial of your product so that it sells itself to the customer. The more concretely you can convey the benefits you offer, the more you’ll sell.

Chiropractic Products Isaac is an experienced physical therapist who has developed an innovative piece of equipment that helps strengthen the spine and back muscles. His product, which sells for $600, also trains a person how to exercise—something he feels no other similar product offers. Isaac came to me looking for ways to break into the market in a big way. In this consultation, I gave Isaac no less than seven effective strategies he could use to make his breakthrough. * * * * Jay: I am going to use what I call a CAT-scan theory. I’ll throw a bunch of different fragmented philosophies at you. Then we’ll hit the mark. Here’s an idea: Go to a lot of people on a joint-venture basis, and agree to finance the marketing test pilot if they’ll agree concurrently to manufacture a certain amount of units to fulfill the orders. Then, if the test produces a certain minimum income, they’ll supply the units for the roll-out. This way, if it’s not successful, you aren’t going to lose your shirt paying for the

inventory. The worst you’ll do is lose some of your front money, and they get to call all their products back. I’m going to give you a derivative of this. You go to a catalog company and get them to agree to carry you for one-third the cost of a full-page ad, in return for a percentage of sales. Then you go to a manufacturer and get them to agree to put up one-third the cost. You put up the other third, but on this condition: The ad is registered to you, and unless the catalog company wants to make an exclusive purchase for a certain number of units, you have the right to take the ad and syndicate it to other catalog people. Let’s say the ad normally costs $90,000. You go to a manufacturer and say, “I have a proposition where I’m going to put up all the dollars for the marketing. If it works, you’re going to sell a bunch of units. We’re putting up $30,000, the catalog company is putting up $30,000, and you’ll put up $30,000. You’re getting three times the leverage on it. If it works, you could make a large profit. If not, we’ll have joint use of the ad, which we can then take to all the other catalog houses.” Tell them, “We’re putting you in business. All you have to do is back us up for onethird the money. For virtually no downside, for $30,000 down, I’ll let you plug into a million unit business. We’ll do all the work. At the very, very least you’re going to get a leverage three times greater than your investment.” That’s an interesting way to start. Here’s another variation: You get another person to put up 15 of the 30, so you’re putting up 15 for basically a $90,000 leverage. Another thing: You could go to somebody who does these cable TV infomercials. Your product is perfectly suited for an infomercial. You could even bring the price down to $100 or $200. On the show, sit and talk for about an hour, or rap about your background. Don’t laugh. I did this with somebody and we grossed a million dollars in two months. Talk about back pain and bring in people who have used your product. You say, “I can’t make a claim, I’ll just let you talk to John.” John says, “My back was bothering me. Now I use these products all the time, and my back is fine” Then you go with an offer that is more educational. Your product is demonstrable, it’s wonderful for TV, but the offer basically is, “If you buy it, keep it for six months. If your back goes out during that time, try it. I only want you to keep it for six months and try it out. My recommendation is that you use it for five or ten minutes every day. If you don’t need it now, put it under the bed until the next time your back goes out. When your back goes out, use the product for three or four days. If in six months you don’t feel it’s worth ten times the value—not just in savings at the doctor or chiropractor, but in blessed relief—send it back.” That’s a powerful offer. You put up the money to do the show. You go to somebody who’s going to manufacture the product. Same deal. “I got the show, you put up the money to buy the cable time. If it works, you run the rest of it and you get half the profits.” Isaac: What kind of cost are you talking about for the show? Jay: Five to ten grand to do a half-hour to an hour show. You can get other people to put up all the money, but you’d probably have to give up too much. It depends on the deal. There’s a guy I do deals with where he’ll get 60% of the gross and I’ll get 40%. I have a couple of deals where I’m giving people 100% and losing two or three dollars per unit on it because I want the backend. They’re elated about the arrangement, because no one’s ever done that with them. But you have to offer the right kind of a deal. For the prototype, if you don’t have the money, you can say, “Keep 100%.” Later, when it works, you can let them take all the risks and

keep 60%. Try to get a manufacturer or somebody who can back you up with inventory. They don’t have to be anything but a manufacturing partner. You’ll give them a chance to do all the work and make the manufacturing profit if they’ll just invest 25 or 30 grand to make enough units for the test. You can also do a test on a small network with a viewer-related product if you cover the cost yourself. If your ad doesn’t work, you’ll send back their checks. If it works, you send a note saying, “The manufacturing tooling is a little slow. We’re not going to deposit your check until it’s done.” You then take all the results to somebody else and say, “Here’s the deal, here’s the market.” My point is, rather than waiting for somebody else, you validate it yourself. One of the things I do is keep proprietary ownership of all my pieces. It’s real easy. One of my newsletters made two million dollars. That was empirically validated. I took those and two weeks ago I sold them to four other people with powerful results. It is easier to sell when you’ve got a track record. You’re promoting from a position of much more negotiating strength. Does that make sense? Isaac: Well, the only problem with everything you’re saying is the subject that we’re dealing with: consumer-oriented companies. Jay: Consumer? I think that’s the easiest market to crack. Isaac: I do too, but let me tell you, we have been advised that’s not the best way to go. Rather, I need to go out and establish the medical credibility to get product validation. Jay: What do you want to do? Give me an idea of what your long-term goal from this really is. Isaac: I would like as many of the products that I’ve developed to have a chance to eventually compete in the marketplace, be successful, and run longer than their normal five-year cycles. I expect, as a result, that I will make a substantial amount of income, but income is not my first goal. Jay: What better way to really touch people and get a positive cash flow than to get a million consumers with your product under their beds. I believe you should exploit concurrently as many different markets as you can control without getting diffused or going broke. If you build your base on about twelve tiers of complementary and broadly expansive marketing, if one tier gets saturated or knocked away, it’s not going to be the end of the world. You basically go to people, and the whole gambit is, “I’ll validate the marketing for you at my risk. If it works, you can take it over. If it doesn’t, you’re out just a backup supply of products. Maybe they’re going to make them for $300 apiece and they could be made for $30 in quantity. You only want them initially to back you up so you can validate. You do a test pilot, and they might see that when you put up 30 grand, you produce $100,000. When all the dust settles, I’m sure they’ll be motivated. I’ve always done that, rather than waiting for them. Another idea: Get your manufacturer to put up the product, then go to a distributor and say, “If you’ll run a full-page ad every month in your books, we’ll give you an ongoing exclusive perpetual percentage of the sales in all the sporting goods stores.” If they say, “Well, it sounds good, but I don’t know if it will work,” say to them, “Okay, let’s do a regional ad, or let’s do an ad focusing on whatever. Neither of us will make any money on

the test, we’re just trying to validate the concept so you see that it’s worth your taking on. Let’s focus on one chain store that’s in one region or whatever. We’ll provide each chain with three or four units. Let’s just see if our concept works. You’re out one ad, but if it works, you may make a million dollars on ad copy that may cost you $50,000 out of pocket.” The problem with most people is that you expect them to see what you see. They don’t. My feeling is, “I’ll do it for you. I’ll validate it for you. Once it’s validated, you run with it. So you’re out 30 grand— but talk about leverage! If you put 30 G’s out and it works, it’ll make you a million.” If it doesn’t work, your reasoning is, “Hey, if it works you’re going to make a million dollars with a $30,000 dollar investment. The least I should do is get you the product back, if you don’t want to be any part of it.” You always have to hedge. I think it’s a neat concept, don’t you? Isaac: O.K., go ahead. Jay: I’ve given you a way to go to the catalog people. I’ve given you TV infomercials. You have another option where, once you’ve tried and validated it, you can sell distributorships. You could do seminars in every city. “If you’ve got back problems,” or whatever. You could give seminars at hotels, either half-hour or ninety-minute seminars. Videotape it. Get operatives to give seminars; they basically became distributors. They just buy the merchandise and sell it off. Sell distributorships in magazines such as Entrepreneur. Give them a great education. Tell them 10 other things they could do that would be helpful if they buy your product. Demonstrate the product. Have everyone go home and try it. Then you have some people who tell others their story. If you can sell through, not just sell in, you can be in a profitable distributorship situation tomorrow morning. All they have to do is basically buy material. You just care about them buying the product. If you’ve got the marketing down where you know it will sell, you don’t even care if you’ve given a guarantee—you’ll buy it back if it doesn’t sell. You want operatives to be doing the work for you without you having to pay employees and everything else. A distributorship is infinitely easier to do. You might or might not offer them exclusive deals. They aren’t obligated to buy everything from you. Isaac: What about multilevel marketing? Jay: No, no. I don’t like it. Most of them are sloppy, and I’m not sure that the ultimate beneficiary really is the consumer because of markups. Offer your product seminar through a newspaper (let’s say you run an ad every 4th Sunday in your local paper) or in association with a group sponsor (where they have a physiologist). You have to get the ad with the right pitch. You could run an ad in Physiology Today and make an extra $100,000 a year selling your product—and in the process build your practice. I believe you could get a lot of people interested in that. Isaac: Medical people, including physical therapists, are very difficult people to get to resell a product. Jay: You also don’t yet know how this would work with chiropractors. You think they would like it, but it’s hard to sell them on buying one for $600 or whatever. Here’s a thought. Why don’t you put a meter on your product somehow to measure the usage. Give ten units to chiropractors and give them your whole pitch. When they use it, they don’t owe you anything except so much for usage. The idea is for them try it for three or four months. You check the meter every so often, and get paid so much for every ten minutes of use.

Once you get that down, and if it works, you take the marketing and sell it to one of these medical people and say, “I’ve got it down. I know how to sell it. You’ve got to front this. Here’s the thing. We’ve already proven it and we’ll sell you the rights.” You prevalidate, then you’re selling or leasing the marketing technique. Isaac: Who are we metering, the chiropractor or the customer he sells it to? Jay: You’re metering the usage. It’s a risk-free, irresistible thing. I think you’ll hook people. You’ll get more usage from their office. Tell them, “I think you’ll make an extra $100 a week—I don’t know. Rather than me telling you that and putting the risk all on you, I’ll take the risk. Try it out. Here’s the idea. We’ll come back once a month and read the meter. Every ten of these measurements equals 50 cents. We’ll collect from you, and at the end of three months, you have a choice. We’ll either take it away, you can continue using it under the same arrangement, or you can apply what you owe towards purchasing the unit.” See what happens. It could be very powerful. What I’m suggesting is that you just do prototypical marketing validation and invalidation. And you test. Some chiropractors will say it’s worth a dollar every ten minutes, some will say it’s worth whatever. You don’t care. You just want to experiment and find out what works and what will sell. You take this product to one of those manufacturing guys and say, “I have a proven way to market. Ten guys did this and...” You see, most people go to somebody and expect them to do the manufacturing, marketing, and breakthrough. Why worry about that? All you do is figure a way to sell it through. It may take you $10,000 to do that, but you can leverage that $10,000 to somebody else, get a million dollars out of it, and do the same thing in five other instances. That’s pretty exciting. Isaac: I have to agree. Jay: Put on easy-to-do seminars that would be used to sell distributorships to professionals. Run a little ad in the trade magazines. Isaac: I see ads like that all the time. Jay: Offer them a distributorship. Tell them, “You’ve got to buy one unit. If you get fifty people at one seminar, you’re going to sell ten of them.” When they sell to ten and they only have the one demo unit, they’re going to have to quickly call you up and buy more. It’ll force them to. The whole thing you’re doing is forced sell-through. That’s the whole essence of what I’m suggesting. Isaac: I don’t understand that last concept. Jay: You get a commercially-minded professional, a physiologist or a chiropractor, and show them you’ve come up with a way that on a Saturday, Sunday, or evening, they can do a noble service, get free advertising in the paper for themselves, draw lots of people to a seminar—a number of whom will become clients or patients—and sell the product to a number of them right there. Every time they do that, you point out, the promotion for them is just gravy. They build patients for their profession, and they sell units. By the way, the thing can be twofold. They only have to buy one professional unit for their operation. That will be part of the pitch they can give to their clients. “I’ve got this in my offices, but you can have one at home. You can come in and use it at the office, but if you don’t, if you

have recurring problems, you can have one right in your own home.” And if it doesn’t work, they say, “If in thirty days it doesn’t work, I’ll buy it back.” Isaac: Do we have to have the units there to sell? What’s your experience with that? If we don’t physically have the units there when they’re purchased, will people still buy the stuff? Jay: What I would do is experiment. If it’s a local person who has credentials, it’s much easier to say, “It’ll be shipped to you in thirty days.” The best thing to do is deliver it to the office. The doctor can tell his patients, “It’ll be in my office waiting for you, and you also get a free spinal exam,” or something. Isaac: Would you ever set up exclusivity geographically? Would you have only so many people in a town who could be distributors? Would the first guy lock up a deal so that nobody else can sell units in his region? Jay: What I would do is quite different. I would take every dime’s worth of profit for the first three months of sales and put it right back into promoting the hell out of the product in their community. I’d run full-page ads in TV Guide, the TV magazine, or the calender or entertainment section of the Sunday newspaper promoting this technique and telling the whole story about it. You could offer the first therapy treatment free. I’d put every dime they give you right back into promoting it. You want the residuals. Once you do that, you should go to some manufacturer who’s got deep pockets and say, “I’ve perfected it. I’ll sell it to you. Here’s what I want.” You’re dealing from a much more solid position; you’re not conjecturing or speculating anymore. It’s a much more powerful way to go. Isaac: How would you do that if you’re going to take that idea and spin it off to a number of products? Let’s say I’ve got another five products. If you like this one, you’re going to want to buy one of everything I come out with. Just like your china—you buy a dozen, then you go back and buy more. How would you take your marketing idea and tie it into people wanting to buy future products? A coupon for future products? Jay: Through the posture. When you sell them, you sell them so they have a respect for the way it was delivered and the way it was conveyed. You have a card that you have them send to you not only for the manufacturer’s records but also so they can get your report—The Super Spine Report or whatever. Some way, you have to have their names, their addresses and phone numbers. Then, depending on your level of involvement, you could experiment and develop other sell-through programs for the back end. You could sell to them directly. You could bypass all the other people. You could perfect your concepts and sell those as back-end products just to the distributors. You have a lot of flexibility. The first thing you want to do is identify all your customers. Presuming you’re making a lot of money, I’d send out letters giving them a little pre-information, presenting yourself as a physiologist who developed this. You say, “I just want to tell you all about the product.” Or, “You know, you’ve probably heard all the stories about me. It’s quite true. Money isn’t my motive. My mother had a back problem, or I did, etc. It took a long time, but it helped them. Now I want to help you. And as we develop new products, I’m going to tell you about them. We may call you to let you participate in little surveys, etc.” Then all of a sudden you’ve got a half of a million customers, and you’re making a lot of money. Isaac: If I were going to spin off, these are some of things I see: seminars, books, tapes, home study courses, lectures, newsletters, consulting, slide programs, and videos. How would you do that? What order would you go in? What works best initially?

Jay: Well, it may be backwards, but you may be better off if you can come up with a report you could self-liquidate (break even) for $3 to $20 all over the country. You could sell a million reports and not make a dime, but end up with a million names of potential customers. That’s what I would do first. Isaac: What would be the ad copy I’d use in a magazine or whatever? Jay: “How to avoid, eliminate, or control back pain forever. Noted physiologist Isaac Jones, nationally renowned specialist in the treatment, correction, control, and elimination of back pain, has just written a special 58-page report that covers over 50 actual case studies. It tells you 20 proven ways to eliminate and avoid back problems. It gives you proven, effective, quick-fix techniques you can use when you throw your back out. And the report just came out.” Do that under an entity such as “The Institute for Studies of the Spine” or something like that. Offer the report for $9, $3, or whatever. The ads should be very informative, so even if people never contact you, you’ve really helped them. At the end I would say, “Thank you. I hope this will help you. By the way, this product we just came out with, you’ll read about it in chapter 9. If, after reading about it, you are at all interested, if you have some level of reoccurring or sporadic back pain, we’re always interested in letting anyone try the unit at our risk for six months. If you’re interested, the unit normally sells for $195, but if you’ll agree to not only try it out, but to report your findings to us, we’ll let you try it out for $95. If it doesn’t work for you, and you feel that it isn’t of unique benefit, you can return it.” That’s what I would do. Isaac: That’s a very powerful approach. Jay: You can run an ad one time and then analyze it. Have somebody else write the ad if you don’t want to do it yourself. You’ve got this wonderful option. You can put an ad in the paper or in a mail-order catalog. You’ve got such flexibility once you validate. People don’t understand that. They’re all sitting there trying to get millions of dollars on conjecture. I’d rather put up $10,000 of my own money and have my product validated, because you can make a much greater case when you have proven results. Isaac: I understand what you’re saying. Jay: Do you see the leverage you have if you do this? Isaac: Yes. How powerful do you think a book would be? I have an idea to come out with a book, but you’ve got books like I do—stacked everywhere. I’ve never seen a book that has a pictorial description, cartoon style, of what to do for back pain. My book would be 100 pages with mostly cartoons and very little ad copy. It’s written with the idea in mind that the picture says it all, and with just a small reminder at the bottom of the page. It takes 10 or 15 minutes to go through it, and it’s really entertaining. Jay: You can take it a couple of steps further. Go to chiropractors and offer them the book for cost. If they sell or give away 100 or 500, the book will be a way to sell your product. Tell the chiropractors to do a test. If they give the book away to 500 people and don’t sell at least 4 or 5 units, you’ll refund their money. And if it works, you then go to somebody else with another book. You can do all sorts of fun things like that. If the book has real value, if it’s not just an obvious setup and self-aggrandizing promotion for your machine, you can use it in a dozen ways. You can sell it. You’ve got to be careful, if you give something to someone for free, it’s got to be clearly evident why. Do you subscribe to a lot of newsletters?

Isaac: Yes Jay: Years ago I used to run a publishing company and we used to rent a lot of mailing lists. And one of the mailing lists we often rented was that of Personal Finance Magazine. The guy who owned Personal Finance years ago was a fellow named Robert Kephart. Christmastime comes. I get in the mail this most magnificent thermographed rich-cream envelope. I opened it. There was this beautiful card thermographed with gold leaf, quasi three-dimensional-like picture frames. In the middle, beautifully thermographed, it said, “Robert Kephart has purchased in your name a 12-month subscription to Personal Finance as a Christmas gift. I hope you enjoy it.” The thing cost $3. If I just got a letter that said, “Here’s your complimentary subscription,” it would mean nothing. But his card had such an impact on me. It made me very aware of posture. Don’t just give somebody something; you’ve got to set them up for it. You’ve got to explain it; you’ve got to have the chiropractor tell them, “It’s a $10 book, but I’m going to buy it for you because I know you’ve got pain. I think you’ll really get some help, and learn a lot of techniques. By the way, in chapter 5, there’s also something we occasionally sell that might be of interest to you. Read all about it.” But make sure they know it’s normally a $10 book. Posture is as important as the action. Isaac: Ideally then, the book would be expandable so new products could be added as chapter 13, chapter 14, etc. I can just add on chapters as the products go out. Jay: Absolutely. And you can use the book in many different ways. You can sell it. You can offer it for free. The point is, all you do is validate it. Once you get it down pat, you go to somebody who’s big and say, “I’ll sell you something that’s already proven. You run with it. Here’s the deal.” And make sure you get it back if they don’t follow through. If they mess it up, the worst thing that will happen is they’re still going to build the business for you. The possibilities are exciting. All you have to do is validate first. You can also sell it to somebody with a proven performance record—not necessarily in terms of sales as much as effort. Tell them what to do. The marketing to them is more important than anything else. At the very worst, if it doesn’t work and you’ve got a lien against it, you can get if back if they don’t perform. You can offer it to them under those conditions. You could get 5,000 people who would want to do this. It’s very important to remember to make it easy for them. I’ve thought very seriously of doing another newsletter, and I’ve thought, “Maybe it’s worth getting my name really well known.” So I got hold of a couple of people I know who are very close with some publishers and said, “See if you can find a publisher who will give me a lavish advance. I’ll relinquish the whole advance as long as they will put that money in marketing for me. I’ll relinquish all the money I get in royalties as long as they’ll put it back in marketing that I control.” People don’t understand that. You’re the beneficiary. I’d rather have $100,000 worth of ads in the Wall Street Journal than I would $100,000 in my pocket—and no promotion. I’ll make a whole lot more on that even if I don’t get any royalties from the book if I promote myself properly. People don’t understand that. Try to focus on that when you’re making deals with people. The performance I would want would be marketing performance—with the understanding that if they don’t hit certain goals, you get the product back. So you’re getting them to finance you. The worst you can do is get a lot more back than you gave them—with some profit to boot. You get all the test results. You can leverage a $5,000 or $10,000 test into a million dollars worth of business. It could be a lot of fun. I think it would be wonderful. I know it’s theoretical, but a lot of it’s theatrical, too. You have to educate them. You have to go through the whole procedure and say, “Here’s what I did. Here’s the application,

etc.” You have to show them what they can do with it. You have to illuminate, because most people don’t see things the way you think they do. It’s important that you reserve the right to have collaborative control of the marketing. You have to get involved because you’re going to be learning all sorts of things. If it blows apart, you’ve learned things from them in three weeks. Always try to understand what else you can get out of a relationship in a worse-case scenario, and what else you can get out of the knowledge bank. And revere that knowledge because it’s worth a lot. Isaac: But how do you convince them to do it in the first place? Jay: You have to revere the concept yourself. I once hired somebody and paid him a fortune for something that was such a darn setup for him. One day I thought, “My posture is wrong, I’m trying to beg him, he should be begging me.” It’s all in the way you present your case. I’m saying this truthfully, it’s no charlatanism or chicanery, but it’s the greatest arena for thespianism imaginable. It’s so much fun. And it’s just a way of looking at something. Isaac: You’re using your position as leverage. Jay: Exactly. I’ve done lots of subscription deals for newsletters, and they’re back-end oriented. My client will lose money or break even to get a subscriber because they make it on residuals and things like that. I’ll get all the profit, but then I’ll say, “By the way, I want 25 percent forever on the renewals.” And it sounds like nothing when I ask for it, but if it works, all of a sudden it’s hundreds of thousands of dollars. When they gripe about it afterwards, I let them buy it back from me for $25,000. By laying siege in the beginning to little seemingly insignificant things—like the right to buy the thing back, all the technology and the ad rights they use, the sales, everything—it doesn’t sound like anything at first. But it’s worth a lot if you take it back, because you can go to somebody else and sell it. *

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Here, in summary, are seven strategies I gave Isaac. If any seem viable to you, please—don’t just endure them. Try them. 1. Go to people on a joint-venture basis. Agree to finance a marketing test for your product if they’ll agree to manufacture a certain amount of the product. Then if the marketing produces a certain amount of income, they can take over the operation. What makes this appealing is the leverage you give them. If the arrangement works, you’ll both profit. 2. Try an infomercial with a powerful offer. You can buy the time necessary to explain your product in depth for a very reasonable price. You can also combine this approach with the first by going to the manufacturer and having them put up the money to buy air time—with a 50% cut of the profits. One important reminder: keep ownership of your product and marketing whenever possible. That way you can repackage or resell them at a later time. 3. Build a multi-tiered marketing base. If one tier falls, you’ll still be standing. With all marketing approaches, be sure to test the market, validate your approach, and then move ahead based on this validation.

4. Give seminars about your product if possible. Or get operatives to give seminars for you. One way to do this is to place small ads offering a distributorship for your seminar. Pick and choose whom you want to train or work with. 5. Send a free sample of your product to professionals who may have an interest in it or who have clients who may have an interest. These professionals could also be potential vendors or distributors. They could use your products in their office or sell it to their clients. Offer them a percentage of your sales or experiment with different offers to see which ones effect the best response. 6. Remember to put your profits, especially your initial profits, back into marketing. $100,000 worth of ads in the Wall Street Journal are worth much more than $100,000 in the bank. 7. Think of spin-offs you can create. Try books, tapes, home study courses, newsletters, consulting, slide programs, etc. One great way to create business and promote your product is to give away or sell (at a low price) a special report. Another way is to give books away to professionals; they can then sell or give them to their clients. You may not make money up front doing this, but in the long run, you could make a mint.

Health & Nutrition Supplements Oscar and his partner, Fred, own a small health food store and distribute high-quality nutritional supplements. They want to find ways to increase the profits from their store and to market their supplements nationwide. However, they don’t have much capital to work with. To date, they have been relying on an ex-partner to generate referrals for them through his nutrition seminars. However, the usefulness of this approach is on the downslide. In this consultation, I gave Oscar and Fred a “donut”—a powerful, utilitarian concept they can apply in all sorts of variations to their products. I reminded them that they are really in two fields—nutrition and nutrition education—and helped them see opportunities that, with a little labor, can bear great fruits. I also showed them how to create real value from a seminar, how to build and self-finance a large audience, and how to come up with an irresistible offer that can quickly close the deal on a profitable joint venture. Jay: Give me a quick background on your business. Oscar: The business started about 5 years ago as a retail outlet. We were basically just selling health foods. My old partner would go on the road and conduct small seminars. At these seminars, people would order the product. We would have chiropractors and maybe one or two health food store owners. After a while, we started to sell products wholesale and continued with the seminars to make contacts. Basically, that was our whole marketing strategy. About two years ago, I left that situation and went to work for Fred, my current partner. Jay: Running his store? Oscar: Yes. I pulled out of the other business and a year later it was going under. Basically what Fred and I did was buy it back. We bought the inventory, and we have been running it ever

since. One of the reasons we wanted to talk to you is that we have just had this one marketing strategy. My ex-partner is still out doing his seminars, and we pay him a commission for sales. Jay: What does he charge people for his seminars? Oscar: About $500 for five days. Jay: And what do you get at one of his seminars? Oscar: Well, it’s actually kind of a radical type of nutritional program—a radical type of thinking, New Age stuff. He’s never gotten any bigger, so he’s not very successful at marketing his own seminars. That’s why this business has never gotten any bigger. It’s breaking even, and it has been for a long time. We can pay the bills and... Jay: Okay, let me ask you a question. Is there anybody else in the country who gives seminars on a similar basis who you could engage to work for you? Oscar: There is. In fact, there’s the person who started my ex-partner’s program. We’re kind of in competition with him, although it doesn’t really affect us. Jay: Does he just sell enzymes? Oscar: No, he sells enzymes, some herbs, and vitamins. Jay: If you sell $200,000 a year, what do you make? Oscar: We make about 40%. Jay: So you would make roughly $80,000. Is that after expenses or before? Oscar: No, that’s net percentage. Our overhead is rather low. Jay: So you make a profit. Oscar: That’s right. During the first eight months, we ran the store out of a back room, so we had very few expenses. Jay: Yes, and now it’s got its own office. Oscar: With our salaries, rent, and everything else, we’re not losing money, but we’re only breaking even. Jay: How much of your business comes from your ex-partner’s seminars? Oscar: 50% comes from him right now. When we took it over, it was 90%. It’s fallen off considerably. Jay: What are you doing? Oscar: Well, I have developed a product folder. Jay: How do you use it?

Oscar: Well, we’ve just begun using it not too long ago. I mail it to people, but I haven’t really done any serious mailing because we wanted to wait to talk to you. This is something we are considering. We also just ran our first ad in a national magazine that has a circulation of 500,000. The magazine is sold at health food stores and is also given away free. Jay: How did it do? Oscar: Well, it hasn’t come out yet. It’s an ad to sell one of our enzyme products. Jay: Are you asking people to send you money? Oscar: No, it’s strictly an ad. At the top of the ad it says, “Replace Enzymes Destroyed By Cooking.” Jay: Okay, but the ad directs the reader to what action? Oscar: To go to a health food store to ask for this item. Jay: So you want the health food store to come to you? Oscar: That’s right. Jay: Right now, what kind of distribution do you have in health food stores? Oscar: Oh, we probably sell to 14 health food stores. We’re small right now. Jay: Are they reordering with frequency? Oscar: Oh, yes. In fact, all our customers are very frequent. We’ve got a high-quality product. Jay: Is your product price-competitive? Oscar: In fact, it’s a little lower. Jay: What kind of marketing budget do you have right now? When I give advice and formulate a strategy for you, I’ve got to know how much money you have available to deploy so I can give you various types of programming. Oscar: Right. As far as advertising, we’ve never really spent a whole lot of money, but with the private sales, we could probably start out with $750 to $1,000 for advertising. Jay: If you ran an ad in that health magazine, what does it cost? Oscar: $1,700. Jay: For one full page? Oscar: No, that is not a full-page price. It’s one-sixth of a page. A full page costs $15,000. Jay: How does your friend get his seminars? How does he promote them?

Oscar: Mostly mailings or word-of-mouth. He doesn’t have a good marketing strategy. Jay: Maybe you can make a deal with him where he gets a royalty in exchange for your recording and/or transcribing a portion of his seminars—the portion that is most applicable to your product. You could offer $95 seminar tapes or free transcripts when a customer buys a minimum of $19, $29, or $39 worth of enzymes, minerals, or herbs—with a money-back guarantee. They get to keep the seminar whether they ask for their money back or not. That would be a very powerful offer, don’t you think? Oscar: Yes. The problem is that he already tapes his seminars. Jay: Let me switch over. Can you identify a man or woman you could tape who is expert and articulate enough at a similar subject? Oscar: Fred is. Jay: Can Fred give a seminar to one person or to you, record and transcribe it, and make it of real value? And then I’m going to tell you how to build a fabulous audience and self-finance it. Oscar: He can do seminars. He’s been doing public speaking for some time. Jay: Then, why don’t you put on seminars all day long? Oscar: We have seriously considered it. Jay: But you have not because why? Oscar: This business has needed so much of Fred’s attention to get it to where it is now, but this is one of the avenues we are considering. Jay: Let me tell you what you can do. Did you read the material I sent you? Oscar: Yes, I read it a few times. Jay: It should provoke your thinking and radically alter your thoughts. Oscar: It really did get my mind rolling. A lot of the suggestions are new to me. Some of them we are just now implementing. The only question I have about the seminars is this: What’s always stopped me from doing them is that I could never find a good way to market them and get people to come to them. Jay: With your budget, which is not a whole lot of money, the best thing to do is joint ventures. What you basically do is go to anybody who has a mailing list, a customer list, an affinity group, or organization, and tell them up front, “We sell enzymes, vitamins, and the like. However, we also give wonderful, wonderful nutritional education information. We’ll put on the equivalent of a $500 seminar to your group absolutely free as long as you promote it for us and get a minimum of 25 people to attend. Some other seminars charge $100, $200, or whatever, and, frankly, offer less. It’s an all-day seminar, and at the end I want to try to sell them vitamins and enzymes and the like. However, it’s not mandatory that they purchase. If they don’t buy, that’s fine. If they do buy, that’s fine.”

Another strategy is to go to a bunch of different groups and ask them to sign and send a letter that you furnish. The letter would ostensibly emanate from them. Ask them to let you place an insert in their customer mailing, or ask them to furnish you with a list of their past or present customers and prospects. Does that make sense? Oscar: Yes. It would be like going after the retail market on a direct basis. Jay: Yes. You can go to women’s clubs, to organizations, to chiropractors, to anybody who will act as an endorser for your products. You can say, “I’ll furnish you with a sales letter, and I’ll foot the cost of mailing it out.” Oscar: I like that, but it’s still a limited market. Jay: It’s limitless. Here’s the point. Locally you do that. You record the seminars. You record the questions and answers. Once you have done that, you run ads nationally in that magazine. You do test mailings through rented lists. You do inserts with all sorts of people offering a transcription or a distilled tape that will cost you maybe a dollar or two each in quantity. That’s the idea. You offer to send people the whole $95 seminar on cassette or on paper— free, if they’ll order a minimum one-month supply of enzymes or whatever at half the normal price. And in the offer you reveal your motive. You tell them, “This offer is so up front, you’ll be surprised. We’re in two businesses. We disseminate and sell seminars on nutritional education and we also sell nutrients. Quite frankly, we found that once we educate people on nutrition, 30 or 40% tend to really want to buy our vitamins, enzymes, and nutrients. Consequently, we have this relatively daring promotional experiment. We’re going to buy 10,000 people a set or a copy of our all-day nutritional seminar, reduced down to its meatiest parts, and we’ll send it to you for free as long as you agree to try a 30-day supply of whatever, which normally sells for $50, at half price. “The reason we’re offering you this daring deal is that we think if we can get the information in your hands, ears, eyes—if you read it, hear it, and think about it—and at the same time we get you acclimated to using the nutrients, you’ll start feeling so demonstrably better that you’ll understand why and won’t want to stop. We’ll set you up on a regular buying pattern, and we’ll get our investment back over the years when you keep buying over and over again. “If you decide, however, that the material you’re reading is not for you, or you feel no discernible improvement after 30 days, all you have to do is send back the unused portion or the empty bottle, and we’ll give you your full $19 back. But we want you to keep the seminar tape just for trying our product and having faith in us.” That’s a very powerful offer, isn’t it? Oscar: That’s a real good offer. I like it. Jay: I’ve used it to build million-dollar businesses for many people virtually overnight. I’ve applied it to different businesses. It’s a very powerful approach. The next thing you do is run ads for associates who are good at public speaking, and you let them basically distribute your products the same way. You show them how to schedule free educational seminars to distribute your stuff, and you can get an operative in every city and every state. Think about that. Oscar: Yes.

Jay: You just basically replicate and perfect the methodology. If you do invitations to people, you have the letters. If you do seminars, you get the script down pat. You get all the questions and answers down pat. You get the transitional pitch into the nutrients down pat. You can make people a wonderful offer: “Try it for 30 days. If you don’t like it, we’ll give you your money back.” Oscar: Say we advertised in a health magazine. Would we direct prospects to us, or would we direct them to the stores? Jay: You could do both. The problem with a store is—frankly, if you want my honest opinion, you’re better off building your own customers than trying to sell your product through the stores, even though I’m sure they’re willing. Oscar: The customers’ demand will make the store buy it. Jay: The customers’ demand will, but the stores also have the option of doing a lot of other things. Oscar: What I like about this is if you’re going to a retail market directly, you can give them half off and still make a good markup. Jay: That’s exactly right. And you get repeat business directly. Oscar: Fred and I have talked about going direct to the individuals. Maybe somehow setting up other individuals. Jay: That’s a great replicate or a cookie-cutter approach. You can do as much as you can do, then teach junior well, so junior knows how to do it locally. You can have them be partners, employees, distributors, or the works. I wouldn’t do multilevel marketing. I really don’t like it. Oscar: No, we don’t either. Jay: I find it distasteful, and I also find it unwieldy. You have to find people who are willing. But if you have a concept and a great educational seminar, you ought to be able to go to chiropractors and say, “Let’s do a joint venture, and we will share the profit. Your customers will love it, because they’re getting information ostensibly as a gift from you.” Oscar: True. Jay: You could probably have five full-time people doing this locally for you in the next year. Oscar: Really? Jay: Well, think about it. Oscar: You know, we’re not far away from some major cities. Jay: Yes, but do you see what I’m saying? You go to groups and tell them everything up front. The thing you might want to do is allocate money to buy a supply of nutrients for certain people. If you have a great enzyme, if you have a great nutrient, something where someone would see pretty discernible improvements in 30 days...

Oscar: There is no doubt. I have been in this business a long time, and I can definitely see that all our products are of excellent quality. Jay: Imagine the following. Imagine you’re the director of a women’s group, or you’re a chiropractor, or you’re somebody who has an organization—either a profitable customer group, a charitable group, a service organization, or something—and you get a letter and a box. The box has a 30-day supply of whatever enzyme. The letter says, “Mr. Jones, my name is Oscar Pickering. I’m the president of Such and Such. We are a company that puts on very fascinating and informative educational seminars about nutrition. We also manufacture and sell a whole line of nutrients. “Recently, some groups have asked us to put on day-long, half-day long, and hour-long specialized nutritional seminars for their members, customers, or whatever, and tell them about our approach. The response has been so strong that we are interested in offering our seminars to groups that would be interested in it. We are also lowering our price so the seminars are easily affordable. “If you have an organization you think would benefit from either a luncheon, a breakfast, a dinner, an evening, an afternoon, or day-long nutritional seminar that has a value of $95 or more, we would be glad to put it on for free—as long as you have 10 or 20 people who would attend. And, at the end, we will offer them a very substantial discount on our products if they’re so inclined. “Before you say ‘yes’ or ‘no,’ we would like you to read the enclosed transcript of a short seminar we recently gave, and we would like you to try a jar of our enzymes, nutrients, or whatever for the next 30 days. We won’t call you for the next 30 days. If you try it for 30 days and read the enclosed information, you’re going to see such a demonstrable improvement in your health, attitude, and energy—in the way you look, feel, think, and perform—you’ll be so excited that I won’t have to sell you on letting us put on a seminar for your group. If you don’t feel better after thirty days, if it doesn’t make sense to you, just say ‘no’ and that will be the end of it. Either way, the enzymes are yours with our compliments.” That’s pretty powerful, isn’t it? Oscar: It sure is. Let me share with you an idea I had. It’s very similar. What we were going to do is have Wellness Day Seminars. We’d go to big corporations and give a one-half day Wellness Seminar to their employees. Jay: Why didn’t you? Oscar: At the time, the money needed was too great. Jay: But, right now, what does it take, a day of your time? You might bring on some people whose job would be to set up seminars, either in person, by mail, or by telephone. They would schedule the seminars and get paid only a percentage of the sales you generate. You might bring on two or three associates whose job it is to go to chiropractors, organizations, charitable groups, and businesses and set up all sorts of speaking engagements. Again, they would only get a percentage of the sales you generate. What you’re saying is that you’re available to do five seminars a week, but you don’t have the time to set them up. So you bring in help. If whoever is setting them up gets 10% of the aggregate sales, and you sell $25,000 a week, that person is going to make $2,500 just for setting

them up. If that works, all the time you’re doing that stuff, you’re creating methodology that could be replicated all over the place. Do you see that? Oscar: You think it’s a good idea to go to corporations and big companies? Jay: It sounds good, but as you’ll find out, there’s no right or wrong. Things may or may not work out, but you have very little to lose by giving it a try. Oscar: I think it would be to our advantage to get a professional in on it, like a doctor or something. Jay: It would be wonderful if you could. A medical doctor would be great. Oscar: There’s a possibility of that. Jay: I think it’s worth trying all sorts of things as long as they are manageable and affordable. I think you should experiment constantly, because some approaches seem so silly, logical, and obvious that they’re hokey—but they’ll make you great amounts, and you’ll be able to repeat them over and over again. Oscar: Do you think the bottom line is that the profit will be generated from our product and not necessarily from the seminar? Jay: I think it would be very, very interesting to experiment a lot of different ways and analyze. You might find that you’ll be better off selling the Wellness Seminar at $10 a head. You may find that you could sell it as a group deal. Have it so a group buys a minimum of $500, or, if not, they pay $10 a head. Try a lot of different approaches to test groups of 5 companies or 10 companies, 300 people or 500 people, and analyze which ones produce the best front-end and residual business. Keep in mind that what you really want, I think, is to start a lot of people using your stuff, so you can repeat over and over again. Sometimes the front-end profit isn’t really important. If you just break even on the front end, but end up doing a weekly seminar, for example, you could gain 500 new prospects every week. If only 20% of them became regular customers, then in one year you’d have more than 5,000 customers. Oscar: The problem now is the program my ex-partner teaches. Unless he keeps up his pace... Jay: That’s not relevant. You’re looking for a way to replace it. I’m saying you may have a school or you may have an ad. Learn how to make money putting on nutritional seminars. Bring in an associate and say, “We’ll pay your training expenses if you’ll adopt our techniques.” You give them a choice. If they guarantee to put on a minimum of 20 seminars a year, you’ll train them free. If they don’t, you’ll charge them $500 so they can go and do it. You make it optional as to whether they sell your products or not, so you go both ways. Oscar: That’s a good idea. How would you get those people? Jay: You run a business opportunity ad in the health magazines. “Use your interest in nutrition to make a wonderful full-time or part-time business putting on for-profit and free seminars. Send name, address, and phone number for complete information. $50,000 income plan.” You send them the plans on how they can do this part-time, by putting on weekend seminars, selling

seminars, giving free seminars, or organizing luncheon meetings. You show them all the possible ways they can make money. Oscar: You could actually send them instructional tapes. Jay: Exactly. If they’ll agree to put on a minimum number of seminars, you can wave or defer the charge. Every time they conduct a seminar, they get credit toward the fee. But you’ll buy them the whole tuition provided they put on a minimum number of seminars. If they don’t, they don’t get their money or some fraction of their money. There’s a lot you can do with it, don’t you think? Oscar: Yes, plus they could make a commission if they sell the product. I would say that’s a pretty good incentive program. Jay: I would say it would be great. What’s the hard cost for your product, say the least expensive one? Oscar: A bottle of 200 capsules for stomach problems costs us about $6.50. The bottle will last less than one month if they’re using it right. Jay: Will you see a discernible response from taking them, and how quickly? If I took it for a week, would I see an improvement? Oscar: If you have stomach problems, you probably would. Jay: What if you ran an ad that said, “If you have stomach problems, we’re so confident you’ll benefit from our products that we’ll buy you a two-week supply free, no strings attached, as long as you agree to read some literature we’re sending you.” Try running ads like that, and apply it to anything. You can apply derivatives to what I just said—say it in a bunch of different ways. Oscar: The one product we advertise is a great product—no one else has one like it. We had a nutritional counselor, and he was able to see what worked and what didn’t. Our products are all ones that we know work. The thing is, this counselor has a 10-state area and wants to be a broker for our product—but he wants to have exclusive areas. Jay: Well, let me tell you, the way you get distribution is to go the way of the retailer’s business. People can be foolish. They go to a retail store and say, “Give me the business you give someone else.” The retail business person asks, “Why?” Oscar: “I already have it, why should I...” Jay: Exactly. Let me tell you how I can build your business. You don’t even need distributors you can go to directly. You have to take the pilot. Take your own health store, for example, Oscar. Develop a mailing. You send a letter to every one of your customers and say, “If you’ll buy at least a 30-day supply of these nutrients, herbs, or enzymes from this manufacturer, they’ll buy you a $95 nutritional product absolutely free. If you don’t see perceptible improvement that you think is attributable to that product, they will give you 100% of your money back.” Apply that same concept and mail a letter to your customers, or have a sign in front of your store. If you find you can add $500 a month in new sales of the product, and the repeat factor is 20%, then you can go to retailers and say, “We’ll grow your business. All you have to do is try this out in your store for 30 days. Mail this to your customers. It’s a proven promotional

program. We’ll furnish everything, including additional customers. We can tell you exactly how many jars you will need. We’ll send you the jars on consignment. You have 30 days after you send out the letter before you have to either send the jars back or keep them and pay us.” You grow their business. Once you grow it for them, then they’ll repeat it themselves. Oscar: So you think we would be wiser to create it first at our store? Jay: Yes, if this idea works with your customers, then you have something you can replicate everywhere. What if you sent a letter to health food stores or ran an ad in the trade publications that said, “How I increased my sales by $1,000 a month in 10 minutes. My name is Oscar and I had a health food store. I tried a little experiment. I sent a letter out with 387 very specifically chosen words and a package for an unusual nutrient product. Thirty days later, my profit was up $500; moreover, the 212 people who responded will add, by my conservative estimate, an extra $7,000 in profits to my annual business. It worked so well for me, I decided to make it available to you too. Here’s the deal and it’s risk-free.” It might be very interesting, don’t you think? Oscar: It sure would. Jay: Where do you all get your products manufactured? Oscar: I contract different people. We’re very picky about who we deal with. That’s why we have such a high standard of quality, because we get everything from the finest national enzyme manufacturing company in the country. I do that with all our stuff. Our vitamins, our herbs— we get the best stuff we can. It’s very high quality. I have one more question about seminars for you. If a guy is out doing seminars and is having trouble getting people to come to them, what is he doing wrong? Jay: You’re asking a question very much out of context. I have to see how he’s promoting them. It could be the price alone. He may find that at $295 instead of $595 he may get twice the people. It may be what he’s offering. It may be the headline he’s using—maybe he’s not using a headline. Maybe it’s the guarantee. There are all sorts of different things he may or may not be doing in the promotion. Maybe it’s the list he’s using. Maybe he’s only mailing to 500 people when he should be mailing to 5,000 people. I don’t know. Oscar: Let me ask you this about our X-enzyme product in relation to headlines. If you cook food at 188 degrees, you kill all the enzymes. Your liver gets overtaxed and gets enlarged. This X-enzyme is really super for this problem and for your entire immune system. So what’s a good headline there? Jay: What’s the most prevalent thing that happens? Oscar: Several things happen. Your energy level actually goes up. Stress is taken off the liver. You digest food better, have better bowel movements—there’s a whole bunch of positive effects from taking that particular product. Jay: How long does it take to evidence it? Oscar: A week or 2 weeks at the most.

Jay: Interesting. Well you could say, “How to double your energy in 15 days.” That’s one approach. “Are you strangling your liver?” That’s another approach. You could try a dramatic approach. You could develop an advertising format which is indigenous to everything you do. The essence would be something like, “Why not test our product for this problem? Here’s the deal. Buy our product and try it out for 30 days. If you have more energy, if you have more this, if you’re no longer constipated, keep it and buy more. If you’re not satisfied, send it back. We’ll give you a refund.” That’s a risk-free proposition. “If the product doesn’t work, or even if it does work and you don’t feel as though it did, send it back. We’ll give you your money back.” That’s a powerful theme. You could integrate it into everything you sell. Oscar: Yes, in fact we’re doing that at our store with the only product we guarantee. We go through a gross a month, which is a lot for a little store. Jay: I’m giving you a theme, an articulation of a guarantee, which is very powerful. Oscar: If you had a product that no one else had, what would be the best way to get it into the marketplace? This isn’t a health product, but a different kind of product. Jay: You’ve got to ask me specific questions. What is the market? What does the product do? What’s the price? Oscar: Imagine this, if you will. A Star Trek-type communicator with a range of 20 miles. It makes the old walkie-talkies seem obsolete. But there would still be only one person on each end. It’s not like it’s an open line for everyone. Jay: What would it sell for? Oscar: You would have to buy a pair. They would probably sell for $400. Jay: You could do it for 20 miles? Is the sound quality really crisp and clear? Oscar: Yes. Jay: Do you want to promote it yourself or sell it to somebody? If it’s fabulous, you should come up with a theme for it and go to one of two places. Once you’ve got a working prototype, you should go to JS&A or to Sharper Image. Do you have a prototype now? Oscar: We’re working on it. Jay: I have an idea. If you have a small community, it could be an alternative to buying a phone. Most people place most of their calls to their home or office. You can take it in your car or anything, can’t you? Oscar: It’s the type of product we’re going to have to get patented. It’s got a revolutionary type of antenna that we also have to get patented. Jay: If you need help, if it works, there are people you can go to who could open up the market. Call Joe Sugarman at JS&A in Chicago, if it’s a really hot product. He might want to take it on and help you with it. Oscar: I’ve heard of Joe Sugarman.

Jay: And if not him, write or call Sharper Image in San Francisco. Call the mail order division and ask them how to do it. It may be hokey or not, but call and submit an idea for nondisclosure. Tell them you’re sure it doesn’t exist, it has incredible marketing potential, and give them, when you submit your idea, the suggested theme. It could be what I just said: a Pocket Cellular Phone or an alternative to that. Oscar: I think I would like to go with the Star Trek theme. Jay: I think that’s good too. What else do you want to ask? Oscar: I’m real interested in the seminars. Do you think that if Fred teaches these seminars, he should record them on the spot? And, after he does a bunch of them, put them all together in a condensed form? Jay: Yes. Also, you should record the questions. The marketplace will ask questions that you can incorporate into the theme and ad headlines. You can then modify the information from the transcriptions and redo it as you want. When you do the seminar, you can use the questions as titillating themes. Use them in any letters you send out to groups or in advertising copy. Make sure you record everything. Oscar: Do you think it would be a good idea to have other tapes available for a nominal fee? Jay: You could have a whole line. For example, “Do enzymes work? We’ve got a 60-minute tape we normally sell for $19, but you can have it free when you buy a jar of enzymes. Don’t open it until you listen to the tape. If you listen to the tape and you don’t think it’s good, we will send you a refund.” That’s a powerful approach. What I’m giving you are like what I call donuts—utilitarian concepts you can apply in all sorts of variations to your products. I am trying to help you see the opportunities that exist. You could do some wonderful things. Oscar: Thank you, Jay. Jay: Good luck to you. * * * * If your product or service lends itself to an educational or instructional seminar, try approaching affinity groups or organizations that have members who might be likely prospects for you. Offer these groups a substantial discount on your seminar—if they guarantee to furnish an audience of a certain size. Tape your seminars. Transcribe them. Edit a group of seminars and put together a package you can sell— it could be an audiotape, a videotape, a binder, whatever. Hire and train associates to do the seminars for you, and offer them a percentage of the sales. The profits you can generate from these residual sales can be much higher than what you make on the seminars themselves. Also try sending a sample of the product with literature to your prospects. Offer them a guarantee, such as, “Try this for thirty days. If you like it, you can buy more from us. If not, just send it back.” Experiment with your offer. Try similar approaches in different media, such as magazine ads or direct mail letters. You may not make any money from your initial efforts, but if your product works, you can build a marketplace with plenty of repeat business—based on the virtue of your product’s performance.

Electrical Contractor For many years, Spencer has worked as an electrical repair subcontractor for a major company in a rural part of the country. Now he’s ready to move out on his own, doing air-conditioning, heating, and electrical repair work for businesses and homeowners. So far, he’s done very little advertising and has relied on referrals from his prime contractor for his own business growth. Spencer feels he could make a bundle if he could get the right customer participation. However, he’s pulling out of a two-year stretch of financial trouble, and has very little money to spend on generating new clients. In this consultation, I gave Spencer some effective measures to use, as well as examples of powerful, detailed personal letters he could send to businesses and homeowners. If you want to reach a larger audience—and want ideas on how to word your message—you’ll enjoy this transcript. * * * * Jay: Tell me how you got affiliated with the firm you’re contracting with. Spencer: They were new in the area when I first went to work for them. Jay: Ten years ago? Spencer: No, 14 or 15. Jay: Were you out on your own then? Spencer: No. I went to work for them originally when they started off building boiler houses. I worked on their electrical and plumbing crew. When they decided they could subcontract all the work cheaper, they fired everybody except just a few of us. I then supervised the subcontractors and got the opportunity to get my electrical license. Then they offered me the chance to wire the new boiler houses. Jay: Is wiring really hard? Spencer: It’s a lot of hard work. Jay: Are you a certified electrician? Spencer: Yes. I qualify to work on unlimited wattage. Jay: I read your materials. Let me see if I can get a good summary on them. First of all, most of the prospects are 60-70 miles away, right? Spencer: I guess the average distance would be 40 miles. Jay: That’s a long drive. Who controls the market right now as far as repairs?

Spencer: We have had a pretty good cover on that, but within the last 6 months to a year, a few other people have started to move in. And for prospects who are really far away, it just costs us too much. Jay: I’m going to ask a question, and please don’t think this is a joke, but how does plumbing interact with electricity? Spencer: Well, every building usually has both. Jay: So you basically just do it because it’s kindred to what you’re already doing? Spencer: Right, but we really don’t do that much plumbing. Jay: I’m looking at your Yellow Page ad. It appears that half to three-quarters of your time is still occupied doing contract work for your original company. Spencer: At least three-quarters of my time. Jay: Do you make good money doing that? Spencer: It keeps the wolf away from the door. Jay: How many employees do you have? Spencer: There are 15 on the payroll now. Jay: That’s a lot of overhead. Spencer: You got that right. Jay: Tell me how big your prospect community is. Let’s take that 40 mile radius. How many homes are in that radius? Is 1,200 the number of people in a close proximity? Spencer: That’s the number of people within the city limits. This is the second largest town in the county. Jay: So the trading area you’re really accessing, the people who read your Yellow Pages ad, are just those 1,200 people? Spencer: No, it’s really larger. Do you have that map in front of you? Jay: Yes. Do you do all the towns shown here? Spencer: Yes, but they’re real small towns. Jay: So can you service all those areas? Spencer: Well, we usually service up to that big star on the map, which means it’s a big area. We’re picking up a lot of business there. Jay: OK, I see it. That’s a long way.

Spencer: About 18 or 20 miles. Jay: Do they read your Yellow Pages ad? Spencer: Yes. Jay: When does this come out again? Spencer: It just came out about a couple of months ago. Jay: Let me ask you a couple of questions. Did you read the material that I sent to you along with this questionnaire? Spencer: Yes. Jay: Did it give you some ideas? Spencer: Yes, I would like to try some of them. Jay: What is your Unique Selling Proposition? What do you think distinguishes you or should distinguish you from all the other companies in your line of work? Let’s look at all the things you do. Electrical, air conditioning, heating, and plumbing. You have four different areas. Is there any one of those areas where you can do something unique, such as make your prices or your guarantees great? You talk about maintenance, but you seemed apprehensive about doing maintenance contracts. Spencer: Well, there are so many unknowns. I’ve never done it before. Jay: What would you have to warranty? Spencer: The labor. Jay: Would you do business or consumer accounts or both? Spencer: Well, my maintenance work would probably be for boiler houses. Jay: Does anybody do that? Spencer: No. Jay: You said you were trying this experiment to see how many boiler houses there were in your area, and whether or not you had any competition. I tend to be very probing, so don’t let that put you off. I’m just trying to make your money go the furthest and not waste any time in this conversation. Spencer: I would say there are over 1,000 houses in my area. Jay; Of the 1,000, who services most of them? Spencer: We do. Jay: So that’s where your bread and butter is, no doubt.

Spencer: It’s a good market, but the contractor is getting ready to slow down building. They’ve about saturated the area. Jay: Most of the money is coming from new installations? Spencer: Yes. Jay: What about repair? Is it a big problem? Spencer: It’s not a big problem yet, but so far they’ve had little shorts, receptacles going bad, and repairs on switches and lights. Jay: And right now, they pay you just by the call or by the hour? Is it fair what they pay? Spencer: We get paid by the call. I get a lot of complaints about the prices being high, but most of the people don’t realize that when you’ve got a man earning $10-12 an hour riding an hour each way to get to and from the job, it will cost me $45 just to cover that man’s salary. Jay: Irrespective of spending 5 minutes there? Spencer: Exactly. Jay: If you went on a maintenance basis, would you lose your shirt or make a bundle? Spencer: If I could get the participation, I could make a bundle. There’s a lot of potential. Jay: If you’re wrong, could you afford the loss? Spencer: It would kill me. I’ve had two bad years in a row. This year I just made a profit for the first time in 3 years, but it’s been a struggle. Jay: I understand. What percentage of your business comes from your major contractor? Spencer: Probably 50%. Give me a minute to figure it out. I’ve been wanting to break it down so I would know. Jay: It’s O.K. if you don’t have answers for me. Just make certain you get answers for yourself. Part of what I’ll teach you is that you’ve already got a lot of the direction, and your own experience will sometimes tell you the direction you should go, if you can just sit down, analyze, and interpret it. So, how much of your business do you think is not connected to your contractor? Spencer: Probably 20%. Jay: Where does that 20% come from? Does a lot more of the volume come from the contractor? Spencer: More business comes from referrals. Jay: Almost 100%?

Spencer: Yes. We have done very little advertising because we’re in a small rural area. Most of the business we get is by word of mouth. Jay: Do the people that you’ve done jobs for respect your contractor? Spencer: Yes. Jay: And you do just electrical, or do you do plumbing and heating for them as well? Spencer: We just do electrical for them. Jay: O.K. In your area there are probably a finite number of identifiable businesses and homes that would be prospects for your services, right? Spencer: Yes. Jay: If you did a little research in the Yellow Pages or somewhere, you could probably find a list broker or somebody who rented lists of actual homeowners—not by residence, but by name of the head of the household. You could also get a list of the owners of respective businesses in whatever trading area you can comfortably handle, whether it be 15 miles or 115 miles. With that list, you could write them a really charming, personal letter offering the different kinds of services that you can perform. To get started, which of your services apply on a homeowner basis? Let’s break out your services and decide, for residential houses, which of your services are most frequently used, which are the most profitable, and which you would like to cultivate the most. Spencer: It would be heating and air conditioning, because we’ve got two seasons. When you’re through with one season, the weather changes and you’ve got the other one. Jay: What if you sent a letter to everybody saying, “We’ve got a special. Our electrical company, which does all the work for this large contractor, for the first time is expanding its services to the homeowner. As an introductory offer, we’ll do a complete overall analysis of your heating and air conditioning systems, change the filters, and check the wiring, etc.—all for some really low leader price.” If you did that, and you mailed out 100 or 1,000 letters every week, you would probably get back a 3-10% response depending on how well the letter was written, how great the price, and how appealing the offer was. It would cost you. How long does it take somebody to come out and do an overall analysis on the system? Spencer: Usually less than 1 hour. Jay: O.K. What does an hour cost? Spencer: $25, including driving time. Jay: Say you charged $35 and told them the regular price was $69. You really did a service to them: your guys were very courteous, they evaluated the system, talked about the possibilities, and gave an honest estimate about how long the system is going to last, etc. With this approach, you’re building a lot of future business. Of all the systems you work on, I can’t imagine you’re not going to find some that have problems. It’s like everything else. Most people put off repair until everything stops working or catches fire, don’t they?

Spencer: Most of the time. Jay: I have two air conditioning systems in my home. It was only after we really had some hot weather that I realized that, for the last two months, I had been using just one of them. People do that, don’t they? They’re just oblivious to things. Spencer: Yes, they put repairs off until the last minute. Jay: What we’re talking about today is seeding and accruing business. The first thing I’m going to suggest is that you start experimenting with sending personalized letters that introduce yourself. Find a mailing service. I’m presuming you don’t have a lot of money, but you’re willing to spend a modest amount of money on experimentation if it brings you a profit, right? Spencer: Sure. Jay: O.K., I’m going to suggest the following. One approach is that you do mailings to selected homeowners where you offer them a complete air conditioning and heating tune-up at a great discount. The reason for this offer is that you’re introducing yourself. For years you’ve been known to your contractor, but you’ve never really done a big job of servicing homeowners. There are a lot of charlatans around doing really poor work. You just thought if there was a real market, you could do a service. So, you’re trying to develop the residential division, and you’re not in any really great hurry. You know that every house needs something major done every 3 or 4 years. By doing the tune-up today, you’re probably going to prolong the life of their heating unit for at least a year or two. This service will save them precious money this year and next year as well. What you want to do is get a chance to introduce yourself, help them understand the longevity of their system, and make suggestions. If something is wrong—i.e., the duct is clogged, the filter is malfunctioning, or the flame is not set right—you’re there to advise them. Again, you’re not in any hurry. You’ve spent the last 15 years building your relationship with your contractor, and you’re willing to take the next 15 months building it with the homeowners. This is a wonderful way to get started in an almost riskless manner. When you come out again, you’re going to change the filters, check the air conditioning unit if it needs it, and do whatever else needs doing. Try that approach in a neat letter, telling the people what to do and how to respond. Write them a very nice letter from the heart, telling them who you are. You could say something to the effect of, “For years we’ve just done commercial work for our contractor. Now, because there doesn’t seem to be pride in residential electrical repair workmanship anymore, we’ve decided to make this offer. It’s a great marketing opportunity for us. We’ve decided to take the quality expectations that our contractor has imposed on us for years and impose them on ourselves as we go to work for you. We think we’re going to run rings around our competitors with this offer, but we’re not trying to blitz the city. We’re just trying to introduce ourselves.” I think it will be a real neat understated offer, don’t you? Spencer: Yes. Jay: Just make a simple offer. Tell them, “Here’s what it’s worth to you, and remember, I’m just going to cover the expenses of my man. Frankly, I’m doing it for two reasons. First, to introduce ourselves; and second, to build a relationship by saving you money and by prolonging the life of your furnace and air-conditioner. The very best thing we can do is prolong the life of your units by 3 or 4 years. We’re not in any hurry, because we’re going to be around for the next 20 years. Some time in that 20 years, you’re going to need a major repair. We feel that once you see the

kind of work we do and the competitive, affordable prices we offer, you’re going to be delighted to call us for any emergency work you might have. “Right now, to get acquainted with you, we’re offering a tune-up and basic fundamental repair on your entire heating and air-conditioning system for only $35. Evaluation, analysis, and review cost only a little more than the combined price of my up-front expenses and my repairman’s work. There’s no profit in it for me, but that’s all right. I just want to get acquainted with you.” And, Spencer, at first there may not be any profit in it for you. But, if it’s a great letter— which no one ever gets anymore—people will say, “Hey, this guy is believable. He’s smart—and yes, he’s right: if he saves me money, I’ll be eager to give him my business. Ultimately, I’m going to have to get it done anyway. But if this guy can prolong the life of my heating and airconditioning unit for another two years, I’m going to be exhilarated.” Make sure that when your people go out to make repairs, they’re educated, charismatic, charming, polite, clean, presentable, and personable. That stuff really works. Spencer: It goes a long way. Jay: Now, let’s talk about commercial businesses. From dealing with businesses, what’s the singular service you do the most? If you could provide one service to businesses, what would it be? Spencer: Electrical. Jay: Be more specific. What kind of electrical—repair, installation, or what? Spencer: Installation. Jay: Are your prices competitive? Spencer: I think so. Jay: If you read my material, you will see that there is no right or wrong. What we try to do is experiment. The market will tell you which approaches are the most appealing and pull the most responses. The smart thing to do is never put all your hopes, faith, or expectations in one premise. Instead, try a lot of different suppositions, see which ones bring responses, and analyze which ones are the most profitable for you. To start, I’m going to suggest that you get lists of all the homeowners and small businesses in a 40-50 mile radius that you could comfortably serve. Break them apart into five groups. For one group, try one offer. For another group, try a second offer. For a different group, try a third offer, a totally different premise. Evaluate the responses after you mail to 500 or 1000 businesses or whatever the number you mail to. Find which one produces the best profit. Then, mail this superior approach to the other four groups. The premise and approach to try is a straightforward one. The letter will say. “You may not know my company. For the last 14 years, we’ve been the primary subcontractor for our major contractor. We still are, but we’ve observed that even though there are many companies purporting to be electrical installers and repair people, the truth of the matter is that most of them are sloppy, expensive, and not conscientious. The jobs they do take longer, cost more, and are more troublesome.

“We think that it has taken incredible performance, pricing, and adherence to quality standards to keep the account with our major contractor. Now, we’ve decided that we’re going to impose the same kinds of controls on ourselves in serving as your electrical repair people. You may feel that you don’t need us right now. Then again, maybe you have some problem that you’ve put off, such as a major re-wiring job. Perhaps you’re bringing in big equipment, and you need assistance in planning the most effective, inexpensive, and practical way to do the job. Or you need an experienced professional you can trust whenever there’s an electrical problem. “Whatever the need, I would like to personally supervise the repair of any project that you have in mind. Keep this letter and feel free to call me if any kind of electrical problem comes up. Our business hours are such and such, but you can call me at home if you have an emergency. I have a crew that’s very conscientious, professional, price-conscious, and capable of fast, topquality work. With our background of continuously performing to our contractor’s very rigorous expectations and standards, we’ll be delighted to offer you the same service. We believe you’ll be pleased with the results. “So, whatever your electrical projects are, I would like to give you my insights before you offer somebody else the job. If I get the business, great. At the very least, I think I could give you some ideas that will help you save money. Again, my name is Spencer, I live in your area , and I would very much like to become your electrical contractor and repair serviceman. Would you give me a chance?” That’s a pretty powerful understated letter, don’t you think? Spencer: I would say so. It lays the cards on the table, doesn’t it? Jay: Yes. A lot of people don’t believe in being up-front with their motives. I think the most powerful thing you can do is tell people your motives right from the start, and give them something to compare it against. That’s one letter. You might send another letter to retailers and store owners. Tell them, “You’re in business and have employees. That means you’ve got to worry about comfort. You’ve got to worry about air-conditioning in the summer and heating in the winter. Air-conditioning runs up your electric bill, while heating runs up your gas bill. “Quite frankly (most people in my business probably don’t want you to know this), there are little techniques you can employ to make your heating and air-conditioning system up to 25% more efficient. You can do it without spending much money at all. All you have to do is make sure the unit is running at peak efficiency. Most people only call in technicians when it starts getting too cold in the winter or too hot in the summer. You may be that way. Wouldn’t you rather make a few minor adjustments to your system today that could save you $1,000 or $2,000 a season on what it costs you to maintain temperature control for your employees? “I’ve been doing the electrical work for a major contractor for the last 15 years. Believe me, they demand incredible performance, consistent quality, and money-saving approaches. This same style of performance can also save you money. I would at least like to talk directly to you about it. I’m in my office every day between 10 a.m. and 3 p.m. Would you consider giving me a personal call?” That’s an interesting approach, isn’t it? Spencer: It sure is. Jay: Let’s talk about plumbing. Is there money in that? Spencer: There’s good money involved in plumbing repair and installation. But I need trained people to do it. So far, only myself and an older guy can do it.

Jay: Is it hard to get somebody, or do you just not want to push that part of the business? Spencer: I’d rather stick to the other areas. Jay: O.K.. Air-conditioning, heating, and electrical are good. Let’s talk about other applications. Is there one segment of these 3 areas that’s particularly lucrative and overlooked by people? Spencer: Nothing that I can think of. There’s so much competition in just our little town. Jay: Are your prices competitive? Spencer: We’re in the middle of the road. We’re not the most expensive, but we’re not as cheap as the man who works out of his back yard or the contractor who doesn’t have a full-time secretary. Jay: Do you carry good systems? Spencer: Yes. A couple of different ones. Not the top of the line, but as far as efficiency, they’re just as good as any on the market. Jay: How are they price-wise? Spencer: They are price competitive. Jay: Yes, I understand. What is the typical guarantee when you install a new system? Spencer: A one-year unconditional guarantee. A five-year guarantee comes with the fuel system. Jay: What are the incidents of a system actually going out in the course of a year or in the course of 5 years? Spencer: Very seldom. Jay: If it does go out, does it need a lot of repair? Spencer: Usually not. Jay: Well, this might be an interesting way for you to do some calculated experiments. What if you sent a letter to people or you ran an ad. Again, I’m suggesting you identify the prospective markets you could address, i.e., the business people, the residential, etc., and break them into segments. Try different approaches for different segments. Evaluate them all and determine which approach has produced the best response for the money you spent. Continue using these approaches. Does that make sense? Spencer: Yes. Jay: Good. It’s simple, yet most people don’t employ it. One approach you might take is very simple. Send a letter to homeowners or business people that offers a whole different twist on the assumptive technique, those little pre-printed sales solicitation letters that say, “If you need an air-conditioning system, we would like to bid on it”—or something like that. What about this approach instead: a personal letter comes to their house. It’s from you, and it has their name and

address. It’s all personalized, the letter and the envelope. It’s printed from a computer list to give a personalized look. Spencer: I’ve got that capability. I’ve got an electronic typewriter that we hook to the word processor. Jay: Think about this letter. It says, “I know your heating and air-conditioning units are getting very old. I also know that you and your wife have probably talked about replacing them. I know that it’s probably a very difficult decision that’s both expensive and easily postponable. I know that no one, including myself, likes to deal with major investments such as the heating and airconditioning units of their home. “Now, I have a proposition that I think you’ll find almost irresistible. For the last 15 years, my company has done all the work for this major contractor. We have had to perform to incredibly stringent quality and cost specifications. Quite frankly, I think we perform the best service for the most economical price in the entire county. Consider our proposition: we’re willing to put in an air-conditioning or heating system in your house if you need it. A lot of people only need to have their master unit rebuilt. This is only about a fraction of the cost, but a lot of contractors won’t be honest and tell you that. But if you really need a system, we will be glad to come in and change your whole system.” Can you put in a system while the other one is still operating? Spencer: A lot of times you can. It depends on the type of system. Jay: Then tell them, “In most cases, we can keep your current system operating until it’s time to switch over to the new one. More importantly, consider our offer. Most companies sell a system for a one-year guarantee, and then sell you a limited five-year guarantee. We extend the guarantee and give you five full years on everything. That includes unlimited service calls if you need them and free maintenance every year. Think of what this means for you. If it’s airconditioning, we recharge it. If it’s heating, we come out twice a year for five years to do everything from changing the filters to cleaning your system. All these services are part of the one price you pay—which is probably 20% less than what our competitors offer. “I’m not suggesting that you should buy from us. Yet, I’m definitely suggesting that you should meet with me, and let me explain a number of important points you should know. First, the reason that most people replace air-conditioning and heating systems before they need to. Second, the mistakes people make when they install these systems. Third, the advantage that I think our company and systems may offer you. And fourth, why having us come out every year two times to tune-up and replace the filters and change the Freon would probably double or triple the life of your equipment.” That’s pretty powerful, don’t you think? Spencer: It sure is. Jay: And again, you take a calculated risk, but if you do all those things, it’s probably going to minimize the breakage anyway, isn’t it? Spencer: Right. And if you have a pretty concentrated area, you can catch 4 or 5 customers on the same trip. Jay: Right. You could try another approach to another segment. The headline might say, “Here’s a way to double the life expectancy of your heating and air-conditioning.” Then the letter would read, “Dear Mr. Jones: You’re probably starting to get concerned about the life

expectancy of your heating and/or air-conditioning unit. My company has come up with a way that we think can, at the very least, double or maybe even triple the usable life of both systems. We do this through a regular annual maintenance tune-up and monitoring program. Once every 3 months, we come out and tune your entire heating and air-conditioning systems. “When we do this, we often discover equipment that’s on the verge of breaking down. By catching the problems early on, we can prolong the life of other equipment, and, in a nutshell, save homeowners like yourself $2,000 or $3,000 dollars every three years. This is a logical technique used in the aeronautics industry and on expensive automobiles. Yet, for some reason, most homeowners don’t do it. Instead, they spend the minimum and wait till the systems burn out. This costs them thousands of dollars every two or three years instead of the few hundreds of dollars it would cost to do proper maintenance. “Now look at the price we offer. Our program costs only $50 each quarter. This amount is automatically billable to your charge card. When you sign up with us, we will automatically send a man out every three months to check your equipment. If there’s a problem, you get a certain amount of work done absolutely free. Above and beyond that, you get 40% savings on all the parts and materials. And if you ever want to stop the service, just give us a call. “Quite frankly, if we do our job right and catch the problems before they become too serious, we can prolong most systems for a long time with a minimal amount of maintenance. The time to schedule this service is now, before your system goes out. Faced with this winter’s brutal forecast, we’re writing to you now, because this might be the time to get the job done before you put more strain on your systems. Whether it’s a gasket, a duct that’s not going to work, a misalignment, a hole eaten into materials because of rodents, we’re here to help. Just give us a call.” That could be pretty powerful, don’t you think? Spencer: Yes. Jay: Is all this helping you? Spencer: It’s got my mind spinning. Jay: O.K.. Let’s switch over to another thought. Think about people you could engage to help get you business because, after all, you’re only one person. Are you actually working the jobs, or are you just managing the office? Spencer: Mostly managing the office. Jay: O.K.. I think you should identify all the kinds of people who would have contacts with homeowners and/or businesses—people who could refer business to you for a share. What kinds of salesmen, what kinds of people, or what kinds of fields of endeavor are constantly calling, visiting, or looking at people’s homes? Who could you arrange to represent you in these different segments? Spencer: The only thing that pops into my mind are ladies that sell Tupperware or Avon that are out seeing homeowners every night anyway. Jay: It would be very interesting if you could put together a concept for them where they offered your maintenance program for $100. A lot of people have the wrong perspective. They think about the moment, not about forever. If you could sell a thousand people a $100-a-year maintenance program, and you had to give a person selling your program $50 that first year, you

may just break even in the first year. But, if 50% of the people who bought the program renewed in the second year, and 80% of those people renewed in the third year, and so on, the money keeps coming in. At the same time, every year you sell your maintenance program to another 1,000 people. Again, you pay half the money to your sales people that first year, but you pay nothing in subsequent years—and you’re bringing in a lot of repeat business. What you will accrue not in the next 6 months but in the next 6 years is pretty incredible, isn’t it? Most people don’t understand that. They’re unwilling to wait. I’ve always tried to teach my clients that if you bring people in to sell your business, you’re not losing money in the long run, because you’re building highly repetitive and residual customers. Give your salesperson such a juicy incentive that he or she will bust their buns to bring you customers in droves. Don’t worry that you may not make any money in the first year. You wouldn’t lose any, and, in your subsequent years, you just get richer and continue to accrue new customers. In essence, you’re building for the future. Say you brought in somebody who went door to door with your program or hired people to do it. These are people who don’t put on the pressure but are door-to-door salesmen—highly visible people such as your Tupperware or Avon ladies, or retirees. The whole purpose is to sell $100 or whatever price you want for your annualized or maintenance tune-up service. The first year, if the service costs you $30, you give your salespeople as much of the remaining $70 as it takes to get them excited about selling your program. If you get 500 homes paying you $100 a year, think of the residual effect. In the next two years, at least 10% of those people will need major work at the rate of $500 apiece. So there’s probably $50,000 every year. You’re going to get some people that want a whole new system, right? And if you keep adding 500 people who are going to keep renewing, you’re probably going to end up with 3,000 people paying you $100 a year just to maintain their equipment. That’s pretty good, too, isn’t it? The stuff that I’m telling you is very do-able. You have to have vision. You can’t think just in terms of tomorrow. You have to think in terms of next year and three years from today. Do you have a salesperson? Spencer: No, I don’t. Jay: You could come up with what I call a “leader introductory service” that doesn’t make you any money, but gives you access on a regular, annual, and orderly basis into businesses or residential homes. You’ll do a good business of salvaging or prolonging the life of their equipment, and, at the same time, you’re going to get a lot of repeat business because their equipment will eventually need major repairs. You can find two very charming retired guys in your community who would love to work part time. They’re going to work as your operatives and promote maintenance services that will prolong equipment and save people money. The services are really inexpensive and maybe priced from $100. You’ll give the customers $200 or $300 worth of value every year, and of the $100 maintenance fee, the guy selling it gets about $60. You use the remaining $40 for your expenses. So, it looks like you’re the biggest fool because you’re not making any money on it. What you’re really doing, though, is accruing all this good will and all these contacts for year after year after year. Your sales people won’t receive anything for the other business that comes from their initial sale. In order to get their money, they’ve got to bring customers in. Doesn’t that make sense? Sometimes it’s so logical, people don’t see it, but that stuff works.

Say you bring in five guys. Give them each a territory. Giving them a territory makes them feel there’s a value and builds their sense of responsibility. You don’t really want high-pressure people. You want people who are really known and respected in the community. Let them sell maintenance systems to customers and make most of the money. You don’t make any money yourself because you want them to be motivated. If you could give somebody an opportunity where they could make themselves $100 a day doing a noble service for the community, it would be pretty exciting. I mean, if they sell to 2 or 3 people a day at $100 apiece, and you give them $40 to $60 for each one sold, that’s pretty good money, isn’t it? Spencer: It sure is to most anybody around here. Jay: So they’re probably going to bust their chops to do it, don’t you think? Think about the possibilities. If you’re breaking even by bringing in 25 new maintenance clients every month, and every year you’re bringing 600 new people into your fold, what’s that worth to you in the long run? Spencer: It’s hard to put numbers on it, but it could be quite a bit, couldn’t it? Jay: It could be enormous. All things being equal, you don’t need the money today. What you’re worrying about is next year and the year after. This is the time to start building for the future. The way to do it is not to pay them a salary, but to pay through the nose in terms of a percentage or commission. Bring in a very basic leader to train people how to do this selling process over and over again. Spencer: Would you tie this maintenance service to the maintenance service for businesses we were talking about earlier? Jay: The one you were talking about applied to your major contractor. That might be more dangerous. I think you might try this approach first to a more limited audience, such as the business community. It depends on what you warranted. Figure out your worse case scenario. If you have terrible claims, you’re only going to be able to make $14 an hour instead of $22. It depends on whether you warranted labor, material, etc. Try to forecast the maximum downside risk you’re exposed to, and take this into account when you’re structuring your maintenance package. For instance, you can say, “I’ll come out any time you want, and it will cost only $200 per facility per year if you provide a minimum of 50 facilities. If cash flow is a problem, we’ll bill you quarterly.” Keep in mind that you’re still getting prepaid in advance. Think about it. The question is: how important is the cash? Do these business accounts pay very well? Spencer: As far as our major contractor accounts, they’re pretty good. Jay: You have to experiment when you’re offering prepaid services. If $200 is too much money, break it out to quarterly or semi-annual payments so that it’s almost nothing. Make the services they’re getting sound great. Tell them you’re really there to try to prolong the life of their units and relieve them of any future disruption. You know the equipment so well that you can get right to the problem and prevent catastrophic disturbances. It makes good sense, don’t you think? I think if I were you, I’d go hogwild in this area, as long as you limit and control the risk. I’d try to have 1,000 people on air-conditioning, heating, and electrical maintenance contracts. You’ve got to give them a case that shows what’s in it for them. Maybe you can nicely scare them. Give them an educated piece of information in your solicitation, whether it’s by mail or by telephone. Have your salespeople show them that your regular maintenance program will probably make a system last for 12 years instead of the normal five. That means that in 1989,

they won’t have to shell out $6,000 for a new system. With this maintenance program, their system will last until 1992. They may even sell their house before that, and pass the expense on to somebody else. This maintenance program could also mean that instead of spending $70 a month in the summer for electrical bills, maybe they’re only going to have to spend $45. Keep in mind that you’re not just selling service, you’re selling results. Results mean the most to them. Does that make sense? Spencer: It certainly does. I would like to reflect on this a little bit. Jay: Have I given you some really good thoughts? Spencer: You certainly have. Jay: In conclusion, look for people who are already calling on customers and who can represent your service. Perhaps you can use business people who are calling on your prospects all the time. Every time you accrue a customer, you’re accruing income for yourself for the next year and many years after. Not all the customers will renew, but that’s just renewal for the maintenance fee. You still may have additional work from them later on. Right now, if you give away $60 to the salesperson, you’re going to make that $60 next year. In addition, one out of every 10 people are going to have a problem every year. You’ll take care of their problem and reduce the probability of future problems. One out of every 20 is probably going to need a new system every 20 years. You’re setting yourself up for the future, aren’t you? That’s what I suggest you focus on. I hope I’ve given you some really good ideas. Spencer: I think so. I’ve enjoyed it. Jay: Thank you and good luck. *

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Personal letters can be an effective way to offer your products or services. Rent a list of prospects with the right demographics and send them a personalized message. Use a straight forward approach, telling your motives up front. Introduce yourself, and describe your qualifications, experience, and reasons for writing this letter. And by all means knock your customers out with a great offer. Respected community people can be highly effective salespeople to represent your company. Give them a territory and a generous commission so they’ll be strongly motivated. Most important of all, have a vision of the future. You are building customers for tomorrow, not just for today. Even if you barely break even up front, your marketing efforts are laying the foundation for repeat business and greater profits in the years ahead.

Medical Supplies Kevin’s medical supply business had a large share of the market for post-mastectomy supplies in his city. But he wanted to expand his business by establishing himself in other markets, including outlying areas. His attempts so far had not succeeded.

Even if you think that competitors have captured the market in your area, there could be a goldmine of new business still there for you. I showed Kevin how he could tap such a goldmine through developing host relationships with other companies that didn’t sell all the products he did. This strategy is frequently overlooked, so I went into considerable detail with Kevin on how to do it. I also explained how to win his customer’s allegiance through a simple principle that’s essential for every business that wants to succeed. And I told him about the power of pre-emptive marketing, an amazingly simple technique that has made people fortunes. * * * * Jay: I want to compliment you. You’ve tried a lot of things. You’re very promotional. I’m impressed. Why don’t you give me a synopsis of what you want to gain from the time we spend together today? Kevin: We’ve tried a lot of things and we’re trying some more. We’re at the point of making a decision on whether to get into another phase of the business, and we need to decide where to focus our efforts for the greatest financial return. We want to expand our mastectomy business. Last month, that department was bringing just under $30,000 a month—that’s one-third of our business. But we have to expand so that we will not become a one-product company. We’re looking at the soft orthopedic business and elastic hosiery, and at disposal supplies. My saleslady who calls on doctors has focused on that. Jay: With success? Kevin: No, we’re just getting into that now. That took a little more start-up time than I thought. We are also focusing on the consumer orthopedic business as opposed to just doctorprescribed business. But the respiratory business in our city is very competitive. Every other market is the same way. Being a small company, and not capitalized the way that the big national chains are, we are having a very hard time getting referrals from referral sources. That would be hospital discharge planners primarily, because so many of these patients are tied up with health-maintenance organizations. You either have the contracts with them on an exclusive basis or you are excluded, or you have preferred providers. So it’s much harder to squeeze out new business in our city. What we are now looking at is marketing our firm as sort of a subcontractor that would work with businesses in outlying areas. I thought a geographic scope of 35-50 miles would be our surface range. But where the big companies are not focusing their attention, I am joining forces with other people who are in the business but not in a big way, and offering to serve their customers. I feel that an alliance of us with them will bring us an entry to their customers. Jay: What’s their inducement for wanting to have that kind of relationship with you? Kevin: Mainly we’re putting together the sharing of net revenues. Whatever we get paid, they would get a percentage of that. Jay: And you’ll do a more effective and comprehensive job of running the marketing area than they would themselves?

Kevin: Not only more comprehensive in the areas they’re in, but we’re in areas that they may not be. Take the man we’re meeting tomorrow. He has four pharmacies in a town which is 25-30 miles away, and is presently serving their pharmaceutical and some of their orthopaedic needs. He is not doing the mastectomy business and does not want to get into the respiratory and other medical equipment because of the high cost. With high tech, you need specialists. Jay: Would you put your products and materials in his facility, or work on his clients with your salespeople, or telemarket—how would you do it? Kevin: Again, this is basically a referral business. The patient is in the hospital. Upon being released, he will call somebody to set up a hospital bed, deliver a special wheel chair. This man I’m going to talk to has access to the hospitals, and three of his pharmacies are in clinics. Jay: Makes perfect sense. It’s made money for him. Kevin: We need to not only make money for him, but also have enough of an inducement for him to want to work with us. Jay: And are the pharmacies, in fact, your best hosts for that kind of a parasitical relationship? Kevin: Yes. Jay: It makes sense to me as well. What do you want me to focus on? Kevin: How can we market a package like that? Also, you talked about the “Unique Selling Proposition.” We need one, something more upbeat. We need a kind of a focus. I need, from a marketing point of view, to understand where I should put our efforts. Jay: Let me ask you a number of questions. In the mastectomy-based business, how many existing customers do you have? How well-positioned are you throughout your city and the contiguous areas to get business referred to you? What is your existing sales force made up of, and what do they do typically with their day, internally or externally, on the phone or in the field? Kevin: Our regular mailing list has 2500 names. Jay: And these are customers of yours? Kevin: Yes. These are women who have had a mastectomy and have come in here and purchased something in the recent past. They get a mailing one or two times a year. Jay: How many women who have had mastectomies would there be in your city, and how would one identify them? Is there any way to identify all the prospects, or is that impossible? Kevin: That’s impossible. One woman in 10 will have a mastectomy —that’s 1/5th of the population. We can identify some when we do this breast cancer forum, which we are doing again this year. Jay: Is that the one you’re doing with the hospital, or with the Cancer Society? Kevin: The Cancer Society. We don’t have access to their mailing list, but they mail our pieces at their expense to all of the people on their list. That’s usually 15,000 brochures.

Jay: It’s great that they’ll mail it to their people. They will not relinquish their list to you, but they’ll let you access it? Kevin: We just give them the brochures and they address and mail them. Jay: In the last one you did, how many people attended? Kevin: About 300. Jay: Of those 300, have you tracked and analyzed how many of those people have migrated to you for business? Or did the Society give you the names of all the attendees? Kevin: No, we don’t get the names. That’s something we should get. Jay: Any time you co-sponsor anything with anybody, make part of the provision that the names of the attendees or respondents will become the joint property of both of you. Agree that you will never rent them to anyone else, and will only use them for internal purposes. You won’t abuse them, but you want to have access to them (if, in fact, you can so negotiate). Kevin: With the Cancer Society, you have to go by their rules. Jay: It would seem that you have every entitlement to mail them a follow-up letter saying, “I enjoyed meeting with you. All the fashions that were shown are readily available. We’ve got some in stock, and we’d like to talk to you.” Kevin: We do have a display booth at that thing. If we had some kind of a coupon that people register, we could get a good percentage of names. Jay: Are people reluctant to register because they’re afraid they’ll be embarrassed by mail? When I first was reading your material, the name was so discreet that it was a while before I could see what kind of services you were in. In any event, you do those shows once a year? Kevin: Yes, we do the forum, which will be in May, annually. The fashion show is the other brochure, and that’s done in the fall. That’s done in conjunction with a medical organization that includes 2 hospitals and a nursing home. Jay: How many hospitals are there in the area? Kevin: Ten. Jay: And you have relations with all of them? Kevin: Some good relations, some occasional relationships, and some of them very little. Some of them are tied in with things like the health care affiliations, or nursing services, or affiliations with hospitals. Our local Visiting Nurses Association, the VNA, is part of the local system— something I never would have expected, because visiting nurses are totally autonomous. They’re affiliating with one of the major hospitals. Jay: Is that good or bad?

Kevin: I would think bad, because that means that the VNA is going to keep everything within that system. Jay: Who in your organization is responsible for what? How many hats do you wear? How well delegated are the various functions in your organization? Kevin: My secretary would laugh if she heard you say that. Jay: I’m impressed with you, but I have this feeling that you wear 97 hats. Kevin: That is probably part of the problem. I’m involved in everything, and I’m a generalist and not the expert. Occasionally, instead of adding to the situation, I’m tinkering. Jay: How do you pay your people? Kevin: Everyone here is paid by the hour with four exceptions. I’m salaried, as is my secretary, my purchasing director, and Joe, our respiratory man. Jay: Is there any variable or incentive compensation? Kevin: No, there isn’t. When I hired Joe, we talked about a salary of $20,000 a year, with incentives based on his building the program. I said, “I want you to be a part of building this. You can increase your compensation by 50%, which would mean $30,000 a year maximum, if we meet certain objectives that you and I would set together.” We are paying him as if he were earning half of that. He and I have talked about this and he is very disappointed in the results he’s bringing in. He came to me with that, rather than the other way around. I told him, “I’m not going to go back to where the bottom was, but I’m real comfortable with just putting the incentive program on the back burner.” He has the opportunity if this really grows. There might be a commission for him. But with the exception of various little promotional contests internally, nobody is really on an incentive. Jay: Do mastectomies result from referrals from specific kinds of surgeons, or would any kind of a doctor be referring? Would they be referred to a specialist to do the operation, or would a general practitioner do the surgery too? Kevin: Generally not in major metropolitan areas. The only doctors who really do the surgery are the certified surgeons. Jay: How many of those are there in your area? Do you have good working relationships with them all? Kevin: Not all, but I would certainly say positive working relationships with half. Jay: What kind of contact do you regularly have with them, and who maintains that contact? Kevin: The contact is maintained by our saleslady. She calls on many different doctors, including surgeons, no more frequently than once a month. But in reality, with many of them, you’re lucky if you get to see them once or twice a year. They are just plain unseeable. Jay: In the meantime, do she or you (representing her) send letters to them? Kevin: Yes. Again, they’re the form letters that you’re looking at.

Jay: With the small quantities of targeted people you’ve got to deal with, you would be well advised to experiment with quasi-personalized mailings. You can hire someone to do it, or you can lease a laser printer, which I think is very fast on letters. I think a personalized letter to your existing customers would have infinitely greater impact than your form letter does. I think a personalized letter to your doctors telling them more about yourself, developing a persona for you, and making charmingly understated offers to them on behalf of their customers, would be more effective. Of 100% of the business in your city, do you get half of it? Kevin: In the mastectomy, we feel that we get more than half. I wouldn’t say as high as 75%, but it might be. But I think we get more than all of our competition put together in the mastectomy business. Jay: So you’re known pretty much for that. Take the next category of business. The next biggest is the oxygen? Kevin: It isn’t, but it should be. Jay: Who’s got most of that? Kevin: There are a few major competitors, but I have a good share of that too. One competitor is probably the biggest, and they probably do a good job. Jay: How have they established their business? Who is the specifier—the doctor or the hospital? Kevin: A big part of this again gets locked up with this contract business. The doctor tells the patient to get oxygen and since the patient’s insurance is X, they are required to use the provider that X elects, which is often a captive bid. Jay: So the people that have the oxygen basically have these kinds of captive relationships. Kevin: You also get into preferred providers, where a company like Blue Cross tries to work with a particular provider that gives them special pricing. Again, I’m not talking about exorbitant discounts. Jay: I sense that you are the crucial man in your organization, and that you work with the hospitals a little and with Blue Cross a little. That probably makes it very difficult to achieve really good results. Do you have some on-going program where you have so many weeks you’re on the phone? Do you notate on your calendar when the contracts that you already have will come up for re-bidding? Kevin: I know Joe has that information. Jay: And is he doing a good job of working that? Kevin: Based on the results, no. But we know when bids come up and we have submitted bids. Jay: What do you think keeps you from getting more of the business you want right now?

Kevin: In the respiratory, we’re small and we don’t really have the track record that some of the bigger ones have. Jay: I need clarification as we’re talking. Kevin: The mastectomy business we have a lock on. No one can come in and take that away from me, because we are doing a good job at that. Nobody wants to go somewhere else—we’re already here, and the patients have the referral, and there’s the nurse sitting in the hospital making a call. They call us and we take care of all of their needs. Well, if they can call you and you can get it all done, why should they try someone else who might not? Jay: Most competitors in your city who have their feet in the door do not provide all of the services you offer. What if you go to the competitor and say, “We offer the following, and we have the expertise and the inventory to do it. We want to make an affiliation with you, where we don’t supplant a dime of the business you would normally realize yourself, but in fact augment it by giving you 15% or 20% or 40% of the profit that we make on those customers you provide us with.” That may be one way to go. I would have someone work full time to try to set up as many of those relationships as they can. That means if there’s somebody who’s got the oxygen business, and all they’re doing is oxygen, the oxygen business could also be a host for whatever else you do, and you could make an affiliation to supply the bedding and other things. I would establish as many criss-cross relations with those kind of people as possible. If it works, you have long-term provisions in the agreements so that they don’t start doing it themselves. Kevin: That’s kind of the opposite of what we’ve been thinking about doing. Jay: Normally when you make a joint venture with a third party, they’re never going to promote you as well as you promote yourself. So what you want to do is take their customer base. You make a deal where you would compare the overlap on your customer bases. Any customers of theirs that you didn’t already have would be considered theirs exclusively, but you would be able to play off of them. You would promote off of them with letters and the like to their customers. The letters would be signed by them but crafted by you with their editorial approval. You would telemarket to their people. Maybe you would jointly promote with their salespeople, or you would have training programs for them. You can start it very quickly and easily. I think it could be a sequential or conditional agreement, where they agree to test it for a month or two, and if it works, it would evolve into a long-term non-cancellable agreement. It should stipulate that they can’t throw you out or do it themselves. You could tap 10 different companies that are not competing with you on every front. It could be pretty lucrative, couldn’t it? Kevin: In a way, that’s a little different from what I was planning. We’re actually doing an educational thing for a fellow who has a group of pharmacists tomorrow morning, so he can see a little more about the respiratory business and how we can help him. Again, he’s another dealer and it’s a different level of supplier. What you have put in my mind is to find somebody who services the community on the whole rather than go outside the geographic area.

Jay: What I would like to suggest is that you take a “CAT-scan” perspective on your whole city. Take the four or five product areas or service areas that you want to be in and ask yourself, “Who else has the customers I want, but isn’t exploiting them for some or all of the areas I want?” Ask, “Who has the customers?”, and then make a list of those based not only on the dealer but on the supplier. Ask yourself, “Who has some of those customers but doesn’t have others?” Kevin: One of the ways we can tap into this HMO (health-maintenance organization) business is (since we’re the premier mastectomy company) to act as a subcontractor. It is the only foot we have in the door, and even doing it on a discounted basis, we’d retain more of the profit than we’d give away. Jay : And you have to be willing and able to embrace the philosophy. You could make arrangements with 15 different entities, from dealers to suppliers, that would generate for you a million dollars of business that you would never have had on your own and would never have gotten. You may have had to spend a million dollars over the years in manpower and nurturing, and you may have to give up a hundred thousand dollars now, but you have $150,000 in net profit ahead as a result. Too many people flinch at the the thought of having to share revenue for found business. Kevin: No, I don’t have a problem with that. Jay: If you can embrace that, then you can understand that even your competitors could make you money in some way. Kevin: I think we’re kind of progressing down that road. You’re saying, “go for it further.” You’re even showing me ways that I can expand that further. Jay: I’m saying there are no rules shackling you except integrity and ethics and legality. You never know until you try it. I’ve seen numerous occasions where somebody would go to somebody who was a direct competitor in one avenue and say, “Look, we are competing, but if I can make you another $150,000 a year in an area you’re never going to be in on your own, and if in the process you can go out and build an even bigger oxygen business, and you can earn enough to pay for one year of your overhead or salaries or newpaper advertising through your share of the revenue, and it’s not taking a dime away from you, doesn’t it make sense to experiment and see if it’s viable?” But you’ve got to present it with the big picture. “You’ve got 1,000 customers. The problem with those 1,000 customers is that there are going to be 300 people a year who will want this or that which you don’t carry. That demand will generate $3,000. You can make $100,000 net for doing nothing, because we’ll turnkey it for you, by providing a special order line that will be segregated from yours. You will get that percentage on that customer forever.” You’ve got to show it to them in such a big picture that they’ll see that for absolutely nothing, they can mine a vein of business that they long ago had, but don’t use. Kevin: So you would not ask them to give referrals, but to let you tap into their mailing list? Jay: What you want to do is set up an ongoing relationship. To me, when you say, “Give them referrals,” it suggests a very haphazard deal. I’d rather say, “I think I can make you X dollars a year forever. To do that, here’s the plan: I’ll pay all the money, which is not charged against your percentage, and I install and pay a full-time person in the store who will handle whatever it takes to do the job. We’ll warrant you in writing that we won’t sell your customers Y (whatever

it is that they they are already selling), and if we do, you will get all the profit (or whatever, so that they’re protected).” Cover all the negative sides of it, and show them, “Mr. Joint Venture Partner, what I’m saying to you is that you’ve got everything to gain and nothing to lose. We’ll protect you on the downside, and we’ll do all the work and finance it on the upside. You’ll have 100% control, but have our investment, our expertise, our personnel, and our equipment. We’ll do it on site and we’ll turnkey and of course promote our products to the customer, but you’ll get great benefits because we’ll be reminding them of you and keeping your name in their hearts. It will be done by stringent standards of quality and expertise.” If you do it right you can own the world pretty quickly. Does it start to open some ideas for you? Kevin: This is the kind of direction we’re proceeding along, but you’ve taken it a whole lot further than we have. Jay: My feeling is you should make an affiliation with somebody. To get referrals is different from saying, “We’re building up a profit center and we’re going to mine it for you.” What that means—let’s say you go to a mastectomy company—you’d say. “You already have the mastectomy business, but your customers also buy this and this. So let us supply this for you. Let us buy that business from you. You’re only making $20,000 a year. How would you like to make $115,000 without adding personnel? We’ll do all the work. Let us keep working your customers, and we’ll give you half the profit forever.” You could show people where a segment of their business is marginal. They could make more money by letting you take over, and even get rid of their expensive inventory without hiring a full-time person. Kevin: In fact, that particular scenario works by putting our person in their shop at our expense and then sharing the profit. Jay: Exactly. Whatever it takes, you’re probably far above your competitors in your promotional acuity. Kevin: In the mastectomy area, I have done especially well. Jay: But the point is that in all the areas, you can probably show that it’s better for people to let you take over certain segments of their business. You’ll be raising funds for their capital outlay or personnel while they keep doing what they’re doing. They just let you assume certain parts of their business that they aren’t equipped to do, and you can certainly grow their business. Play off of people’s businesses by playing off of areas they’re not addressing. It’s exciting. The possibilities are limitless. But it’s also abstract. If you do it haphazardly, it won’t work. You can grow really quickly with this kind of approach. All you have to is be able to present to somebody. For example, what is the worst position you’ve got right now? Kevin: Diabetes. Jay: If I came to you and said, “Look, I’ll make you a deal. I won’t take any of the money you make on anything else. But if you let me play off of your customer list, I’ll make you three times as much on diabetes as you’re making right now, with no investment on your part,” you’d probably be open-minded. It’s all in how it’s presented. If you show them, “I’ll do it all for you, I’ll work it for you. Good PR, goodwill, and good promotion will accrue to you. We’ll call the people, we’ll present it, and we’ll call all the doctors you have affiliations with. We’ll send letters to them from you.” Think about all the things you can do.

Kevin: You’ve changed the emphasis. Instead of affiliating with somebody far away and saying we’ll take care of your oxygen needs, and you send us all the rest, we would be much better off to carry it another step by actually putting a person into their facility at our expense. Jay: What you do is the following. You can be willing to try it on a conditional basis. If it doesn’t generate enough business, you can pull that person out but still have the contract established for yourself long-term. I think if you’re open-minded and willing to test a lot, you don’t have to spend a lot of money to test a lot of different kinds of cooperative relationships with other competitive and non-competitive businesses, whether they be dealers or suppliers. You can even approach doctors: “We’ve calculated that in the course of a week, you can generate $3,000 worth of rental. We’ll set up a rental center in your office and give you 50%, as long as it doesn’t run afoul of the dictates of your profession.” Do whatever you can that stays on the right side of decorum. Try it with much more of an orientation than getting referrals. Part of the pitch is, “We’ll work it on an ongoing basis. We’ll show you how and we’ll do it; we’ll work off of your customers, and we’ll work off of your doctors and work off of all the referrals and work off of assets and resources you don’t exploit. The prospect of us exploiting for you and for this product, is that you’ll probably grow more business in the other product lines too, and the net result is that we’ll keep your name familiar. We’ll give you wonderful mailings emanating from you, and if you want we’ll place our people in your store taking all the problems away from you.” Just understand that it’s incremental in a marginal way for you. You could make 20 affiliations like that, and it’s almost like trading commodities. But once you get your foot in the door, and you make a noble effort, if at the end of three months’ experimenting, you find that it was very profitable if it was done a certain way (say, putting a full-time person in there) but not in another way, you can then make that aspect be part of the provision. As long as it pays off, you gladly put the person in there, but if it doesn’t, you retract them. Don’t be afraid to put somebody in—you spend $100 or $500 a month to find out; it’s just experimenting. It’s exciting because you can look at competitors in a different light. You look at competitors who don’t do enough business on their own, and say, “You’re making $1,000 a month on oxygen. How would you like to make $1,500 a month letting me do it for you? We’ll take all the risk, man the thing, and grow it for you.” The biggest thing you’ve got to overcome is the philosophical culture shock, because most people aren’t used to their competitor trying to grow business for them. Kevin: In other words, while I have been entrepreneurial, I can be even more so. Jay: You can be 10 times more, but the crux of whether it will work or not is how you execute the presentation to them. Kevin: And based on what you’re saying, with all the different hats I wear, I’m really better off to relinquish some of those hats, or to have somebody else do this job, so that’s it’s done properly. Jay: It’s not going to be an immediate sale. It’s going to be a nurturing sale. You’ve got to be able to convince somebody why they should let you have access to their business, why they should let you sell to their customers, why you should take over almost like a lease or

consignment department within their business. It takes a certain sincerity and it takes nurturing. If you do it and you fall on your backside for two or three months, don’t worry. But I personally don’t believe in setting up referral deals. You want turnkey relations, whether it’s turnkey from your office or turnkey from a satellite relationship at or through their office, or turnkey from your people working with their people and training them, or doing mailings for them—whatever it is, you’ve got more to gain. Referral relationships are so haphazard. They’re erratic, don’t you agree? Kevin: Yes. I think that’s one of the reasons we were moving so slowly. Jay: As I’ve said, it’s got to be presented logically, so that you overcome all the impediments. For example, you’ve got to say, “We’ll make it a sequential relationship. For the first 3 months, we’ll do it on a probationary basis. The only obligation is that if we do a certain amount of business, the relationship will automatically go forward. If we don’t do that amount, it will be discretionary on both our parts as to whether or not we go forward. The only reason we want to go forward is if we make you a lot of money for no grief. If we don’t make you substantially more than what you’re already making on this, or so much on the back-end, we don’t expect you to want to continue. If we do make you that money, however, because we’ve identified it and we’ve marketed it, it’s only right that we get that business for the next 5 years.” By the way, if you put provisions in there so you have rights to those names even if they sell the business, you can get cash for that little piece of paper. There are a lot of interesting subtleties in what I’m talking about. Kevin: How long a period of time would you think is an adequate test? My gut feeling is that anything less than three months wouldn’t be adequate. Jay: Three to six, it depends. I’m at a disadvantage because I don’t know the experiences one would have with the products or services you offer. The longest you can get is the best for you. For example, do a 9-month test, and if that shows a minimum of X (whatever X is), it automatically reverts to a 5-year affiliation, non-cancellable. Kevin: Now, let’s take this whole scenario that we’ve talked about and look at another option, which I admit is not as good. I think the alternative would be to go into an area that’s 25-30 miles away and set up a satellite store. Jay: See if you could find 20 other businesses, competitive or synergistic, who have spent five, ten, or 20 years in their location with facilities that they’ve invested in. They might have million dollar locations, they’re spending $5,000,000 a month in rent and they’ve got four or five employees that they’re investing $200,000 or $100,000 a year on, and they’ve got advertising they’re doing and they’ve got all sorts of feeble or competent programming they’re doing. You can leverage—for virtually no investment—their employees, management, contractors and insurance and all those other things. You’re playing off of all the good will that’s taken years to build. Do you see what advantage that offers you? Kevin: If I look at my profit and loss? Jay: If you could do this, you don’t need very big results. If you can leverage off of $10,000,000 a year and you only get a 10% return, you don’t have to go through the growth stage. They’ve already got the good will, they’ve already got the trust, they’ve already got the names of the

customers. You don’t need to mail to 100,000 people hoping to find the 1,000 who use the thing; instead, you can find the 1,000 immediately, so every dollar you spend is very efficiently spent. Of all the advice I give people, that’s probably the most frequent and consistent recommendation: host/parasite relationships with synergistic businesses or with competitors who are not aggressive. Maybe they’re making $2,000 a month having $10,000 at risk; you can take it over and they can liquidate all their materials and their overhead and the grief and the management and the details. If you can show them why it makes sense for them to let you play off the business they don’t handle, and show them you’re not going to steal the business, I think you can convince them. I think it’s so exciting that it sorts of boggles the mind, because there’s an infinite number of ways to try it and experiment. Did you read my writings and my instructions on testing? Kevin: Yes. That’s the area where I’ve probably been weakest. I’ve tried to do it and I’m even falling short when I’m trying. Jay: Testing’s important, because what I’ve suggested is not cut in stone. You may find experimentally that something costs too much to be profitable; if so, then you go back and retrench. But what you want to do is get your foot in the door and get the deal made. You can always change it. Suppose I said to you, for example, “I’ll grow your business and give you 25%. I’ll have a full time person inside,” and you said “Great.” Suppose that all of a sudden I found that that made me $1,000 and you made more. If after I got my foot in the door, evidenced good faith, and started growing the business for you, I came to you and said, “I have a problem. I can’t continue at this rate and I want to modify it,” unless you’re horribly close-minded, you’ll probably more than likely be flexible to renegotiating. Once you’ve got your foot in the door, the probability of being stuck with a bad deal is low—you can probably extricate yourself and still make a profit. You just want to get deals going. The only thing you don’t want to do is get loose and give away the store. You need somebody who’s going to do it pragmatically, and you’ll need a lot of experimentation. You’ve got to learn all sorts of patterns. For example, you might break even three months out of the year and lose money one, but in the summertime you make $25,000 that makes up for the loss. Be systematic about the patterns, because if you do it haphazardly, it won’t work for you. Kevin: So you need somebody focused on that full-time. Jay: Yes, somebody that makes virtually coolie wages, but gets a big share of what they grow. Or yourself, if you can concentrate on doing that full-time for a while. What you’ve done is impressive, but if you get nine million balls in the air, to keep the business going forward and keep closing these kind of deals, it’s got to be done judiciously. They’re sales that need a lot of nurturing in the first place. Even if I came to you with that kind of proposition and you agreed, it wouldn’t be a one-time close. There are two concepts you have to deal with: “selling in” and “selling through.” “Selling in” is what most people do. They make a deal through referrals or whatever, but then have no

control. “Selling through” is a deal where you’ve got to continue to make it happen. It’s always going to be more valuable to you than it is to the people you’ve made the deal with, so it’s going to be up to you to do everything possible. That means you do the mailings, you put somebody on site, you re-route the people, etc. I can’t give you specific instructions because I really don’t know the unique facets of your business well enough. But are you starting to get what I have in mind? Kevin: Oh yes, very much. Jay: This is the most powerful concept if you nurture it. If the deal is presented abstractly, no one will get excited. You’ve got to approach them with the big picture. If you know somebody who’s got a marginal business, show them that by letting you take over the grief, they make money for themselves on a guaranteed basis. If it’s somebody who’s a competitor, you’ve got to show them. “How would you like to have your overhead paid for by me in the next 10 years?” and “How would you like to have all your newspaper advertising paid for by me?” and “How would you like to have expansion in your building paid for by me?” and “How would you like to have all your vacations paid for by me?” and “How would you like to have an addition to your home?” Something much more tangible than just saying, “Let me develop this business for you.” They’ve got to see graphically, in the big picture, a tangible end result of what you’re offering, something very exciting and appealing. If you just try one or two things, you’re going to overlook such opportunities. Try as many things as you or the designated internal deal-maker, profit-center developer, or joint-venture coordinator can do. Test them and you’ll find, among other things, that—to your fascination and chagrin—some things that seemed like a sure thing will disappoint you, and some of the seemingly silly ones will end up being incredibly lucrative. But if you can develop 20 or 30 of those deals, you’ll probably end up doubling your business—without having to put a million dollars in more facilities, without having to put a lot of money into promotion, without having to put a relatively large amount of money into personnel. You’ll be leveraging off millions of dollars of other people’s assets and goodwill and facilities and personnel, relationships with doctors and hospitals and all sorts of things. In my experience, it’s the most lucrative, low-risk, high-yield, residual-yielding way to do it. You’ve got to remember when you make the deals that once you’ve validated it and the conditional part of it is over, make it long-term, non-cancellable, and non-transferable. And if they sell the business, have some seemingly low formula where you’re going to get $20,000 or $30,000 in punitive payment, or buy-out payment if they want to take it back and do it themselves. You should have all those things programmed for. Another topic. I think you can develop a more personal relationship with your customers and your client businesses. I think that if you have different products for different mailings, and services that tend to deal with one or two kinds of people, you should develop a persona with that person. Develop more of an indication that you really care for them. “I looked at 100 different swimming suits to find the 15 that we display. We chose them because they were more flattering and their lines were better. I think that you’ll find that they’re very complimentary.” I don’t think you give adequate dimension. If you could give more dimension and persona to the products you’re offering, and express to the person more human concern, by signing the letter, etc., that would attract the customer a lot more. I don’t mean you should just praise the product, necessarily—”we’ve got something, and we find that the looks and the feel and the comfort and the pricing and the way they look are the best”—but rather, you should show that you’re more concerned for the customer, that you’re not

wanting to just sell them something, but have a more empathetic understanding of their problems and their needs. They want to look beautiful and they want to be comfortable. I’m assuming that after that kind of operation, those two things are the most important: they want to look natural, and they want to look good. You want to show that you understand that. There’s this concept called “pre-emptive marketing,” where the first person who explains the thing that they do on behalf of a customer (even if it’s the same thing that everyone else does) gets the customer’s sense that “you’re doing so much more than your competitor, you explain the fact that you guys look at 100 manufacturers of hosiery or bras to find the 3 or 4 that are really the most comfortable and complimentary, and have the greatest support and the greatest symmetry, and they’ll never embarrass you and they’ll never make you chafe or whatever.” Even though that may be what everybody does, if you’re the first person to tell it, and it sounds like you guys do 10 times as much...” Anybody can sell you a bra and anybody can sell you prosthesis but there are 5,000 manufacturers. Certain products are more expensive and, frankly, we know they’re more irritating, they don’t last, they cause you discomfort.” If you don’t do that, you’re missing the boat. Kevin: That’s very pertinent—more empathy and more humanness. Jay: More personal. Say, “We’ve talked to a lot of women, so I know what your problems are. Maybe you don’t express it, maybe it’s awkward, but speaking woman to woman you want three things: you want comfort, you want it to be flattering, and you want it to look great. I think we can make you look better than you did before. We’ve worked very hard to find the products and the accessories.” I think if you show that you’ve really extended yourself—”and of course, we’ve worked hard to find very moderate price ranges. We’re not the most expensive. We try to be very practical.” Show how you extend yourself and they’ll see that you’re doing cartwheels. Your posture in their eyes is that much better. Kevin: Can you explain marginal net worth? Jay: Basically it’s this: to get a customer, it costs you a certain amount. You run ads and that costs; you have a salesman and he costs. If he calls on 100 people and each sales call costs you $10, it costs you a certain amount to capture a customer. But that customer has a certain life expectancy and a certain sequence of residual business, either relating to the original one or something kindred. Somebody who buys a prosthesis may buy more than one prosthesis, and they may buy bras, or buy a special type of clothing. So if you don’t make anything on the first prosthesis sale because all the profit was necessary to run ads or mailings or seminars to find the customers, but you make $10,000 a year selling that customer bras and accessories, it may still be wonderful. But until you know what the customer is worth to you in the long run and what the relationship of other products and services are worth over time—that is, what the marginal net worth is—you really don’t know what you should spend to get a customer. Does that make sense? Kevin: Yes, it does, and that also explains back-end marketing. Jay: But if you put it on paper, you may be shocked. You may find that even though you’ve been trying to spend only 2%, you spend 100% on a new mastectomy customer because she’ll be worth $500 a year residually forever. That may change your whole attitude. You may want to run a full-page ad in the newspaper, and your competitors may think you’re crazy, but you’ll know that if you spend $1,000, and you make only $100 on a prosthesis, but every time you run a $1,000 ad you have 10 new women you never had before, who will be worth $5,000 in future business each, then you’re making out like a bandit when you run the ad. Do you see what I’m saying?

Kevin: And that’s on residuals. Jay: And most people don’t ever look at that. Kevin: I have, and I always figured that I could justify an ad by what it brings in, but you phrased it much better. Jay: And if you look at it analytically, every time you call on a doctor, if you know that for every new doctor you get you’re going to lose $500 in the first six months, but you’re going to make $1,000 a year on residuals, then in year two you’ve got the cash flow to finance and refactor. Then you can go to your bank, and your bank can even get excited about it. I hope this has helped you. Kevin: It sure has. Thank you. *

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Think of ways to grow your business through host relationships. The host can even be a direct competitor. Approach these relationships patiently and systematically, and they could vastly increase your profits, with very little investment of capital. Are your marketing and customer relations efforts conveying to the customer a sense of your personal concern for them? Communicate charmingly, and without any hard-sell feeling, and you may be surprised at what it does for your revenues. Pre-emptive marketing—being the first to tell the public how you serve them, even if everyone else serves them the same way—can be worth millions. If no one else in your industry tells people how a product is made, why don’t you be the one to tell them? Simple as it seems, this one strategy has enabled many a company to leapfrog over its competitors.

Cosmetic Products A common problem for a manufacturer is how to get distributors to buy their products. In this consultation, explain that the key is not to try to sell products by themselves, but to sell a whole marketing approach that’s virtually risk-free to the distributor. *

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Jay: Is it a nice business? Do you make a good living from it? Orson: Well it’s a job, it’s not a business. That’s what the problem is, that’s why I feel I need your assistance on the whole thing. To get from a job into a business. Jay: I understand. Does everybody pay their bills well in this business? Orson: Oh yes, 30 days. If they have a problem, sometimes they are a little slow.

Jay: You talked about merchandising to other people on private labels. Who else could you sell to? Are you very price competitive? Orson: Yes, on private labels. The price always depends on the quality, the formulation too. Jay: Are you able to do a lot of volume so you can be price-competitive with the other formulators and private labelers? Try to focus on your strengths. I’m asking for a very specific answer. Orson: Up to a certain volume, yes I can be competitive. If it exceeds capacity with my equipment, I cannot. Jay: Let’s take the concept of capacity. If a 100% of capacity is X are you operating at 50, 40, 30 right now? How are you? Orson: Right now, maybe at 30%. Jay: So you’ve got plenty more capacity? Orson: Oh yes. Jay: If you did 70% more would your profits be profoundly better? Is there a point where the incremental is really lucrative? What kind of margins do you work on? I’m trying to figure what you could afford to spend to solicit new clients. I’m not trying to strip you bare but I need this information. Orson: If it’s a private label you’re looking at gross profit of over 50%—anywhere between 50 and 60%. Jay: Who are the logical people if you were going to solicit? First of all, since you have never solicited and people come to you, if you’re going to solicit more private-label clients, who would they be and where would they be and what businesses would they be in? Orson: Well, they could be somebody who wants to get into selling products, it could be a chain of beauty salons, it could be a distributor of beauty aid products, it could be the marketer who already has existing products out there. Jay: When you do it, when you formulate a product for somebody, do you retain ownership of the formula? Orson: I don’t have any exclusives, so I can’t have the formula. Jay: It’s easy to break down and replicate? Orson: It’s already on the bottle. Jay: Tough business. Orson: It is tough business. Jay: Why are you in this business? You must be a sadist right? A masochist.

Orson: That’s right. Jay: Okay. Well if you’re in the business let’s see if we can give you some good ways to expand. Let me ask you a couple of questions. Do you have experience or observed knowledge of a lot of people making money doing their own product in beautician’s operations or beauty salons or whatever? If you’re going to do your own product, do you have a lot of capital to spend on marketing? Are you going to do your own product on the outside market? If it’s going to be retail you’re going to need a lot of money. Orson: Right, the raw material cost is minimal. So there’s money... Jay: To promote marketing? Orson: Right. Jay: The easiest thing for you to do would be to probably not do your own product. But then again, that would also give you a proprietary advantage. You talked about joint ventures in your letter, as I recall. Who would you joint venture with? Orson: There’s one beauty salon where I made a complete product line. Jay: Under his label and your package for it? Orson: Right. Jay: Is it selling well? Orson: He does great for beauty salons. Jay: If you had the same formulation, same stock packaging containers but you had to silk screen different labels, what is the smallest quantity you could do? In other words, if we were to set up a concept for you where you went to 500 beauty salons and rather than having them buy and sell other people’s, you formulated quality products and it always had their label on it and they bought it from you... It would probably be less from you than it would be from the people they’re buying from now,wouldn’t it? Or would it? So if they make money on the price saving and they also make money on the proprietary aspect of their own labelled product... What’s the smallest quantity that you could do before it would be cost prohibitive? Orson: Probably 1,000 bottles. But there are so many companies advertising that at salon markets. Jay: Oh they will do that? Orson: Yes. Jay: That’s an interesting idea. Orson: Well, see you can silk screen and you can get yourself a laser printer and... Jay: So you can do that too? Orson: Right, that’s right.

Jay: Somebody is doing that though? Orson: Yes. They’ve been advertising it for more than a year now. I think that they’re very successful, but the problem is if you contact beauty salons they all have their own ideas what it should be. Jay: They don’t want a standardized formulation, that’s what the problem is. Orson: Yes. Jay: But you could give people 4 or 5 or 6 choices, couldn’t you? If you had 500 clients and you bulk create it and you package it. If you were individualizing the containers 5 dozen or something at a time, could you do a nice job on either silk screening or lasering? Would they look nice, or would they look bad? Orson: I don’t know how a laser... I have no idea. On the silk screening, yes, I could do it, but not in small quantities. Jay: What does it cost to silk screen? What are the jars and the screening cost for, say,1,000? Orson: For just 1,000 maybe about 12 or 15 cents apiece in one color. Jay: Does that include the jar or is that just the screening? Orson: It’s just the screening; it’s expensive. If you go in quantity it drops down to 2 cents apiece per color, but for a thousand, they charge you a set up charge anyway, so silk screening is not the right approach. Not the right program. Jay: So there may be some other packaging alternative. I don’t want to come to any conclusions yet. I just want to evaluate your possibilities. You did this with a beauty salon. How do you get paid? Do you just charge per bottle or do you get half the profits or what’s your deal on that? Orson: Just whatever I charge, I charge. So much per bottle. Jay: And they sell a lot of it? Orson: Well, they sell not a lot but... Jay: What’s a lot, what does one salon...? Orson: Maybe about 5,000 bottles per year. Jay: What do you make on that? Orson: At least $3,000. Jay: And he’s probably making $15,000 or more? Orson: More than that. Jay: So if you had 100 clients doing that, would it be good?

Orson: Yes. Jay: Okay, continue. I’ll come back to all the points. Orson: Now another thought that we had is on direct marketing one product and I looked through one of your reports and you had Hot and Icy? Jay: Icy Hot, yes. It was an analgesic balm that relieves minor pains and arthritis. I’ll give you a little history on that. We got into it years ago. I was in it in 1972 or 1973 and we ran ads in the National Enquirer, the National Star, a lot of the geriatric magazines. The retirement publications, things like that. We did joint ventures where we didn’t pay for the ad, but the publication could keep 100% of the sale, because all we wanted were the names. We also did radio stations on a joint venture and other things. We sold the product then for 3 dollars including the postage and handling. We were willing to spend the entire 3 dollars and in fact lose approximately 45 cents per sale. We were willing to spend that money because we found that every person would order approximately 5 or 6 units a year. We built it to where we had 500,000 people and it was a very lucrative business on what I’ll call the back-end. You want customers who will repeat. I’ll give you a great example. Two friends of mine wanted to be in the cubic zirconium (simulated diamond) business. One of them was a very, very well-known copywriter who wanted to go into his own business. But all he knew is frontend office. He ran a full page ad and it offered his cubic zerconium for 25 dollars for a 2 karat stone. The ad was a great ad and it broke even. He got disenchanted and quit the business because he felt the test didn’t work. The other friend of mine isn’t really as good a copywriter but is a much better conceptualist. He crafted a similar ad which wasn’t really quite as good but it was okay. His ad offered about the same thing. It was 20 dollars for 2 karats. His ad also about broke even, but instead of giving up, he would send these people, when they got their cubic zirconium 2 karat piece, a mailing piece showing them all sorts of other stones he had set in 14, 18, 22 karat gold that averaged between 200 and 500 dollars apiece and he offered them full credit if they wanted to trade their stone in on a larger set version. He averaged 22 percent of the people buying something for an average of 180 dollars and he ended up making about 3 million dollars a year from it. What I’m saying is you’ve got to understand how to connect things. All an ad would be would be a lead generator. Then you’ve got to go back and you’ve got to put a pencil to it because you’ve got to make it on subsequent orders. So you put something promotional in the box, and you subsequently also resolicit that person a month or two later saying, “About this time the original purchase is about finished. By now you should have...every time you’ve had a problem...I’m hoping you have gotten temporary relief and that it was blissful etc., etc...Before you end up emptying your jar and have nothing left and have to write to us, we’d like to write to you and tell you it’s time to reorder, and we’d like to make you a proposition which will keep you well supplied for the next 6 months at a price that will be very advantageous. Instead of buying a jar for 5 dollars, we’ve got this 22 dollar package and it’s got...” Do you understand what I’m saying? If you do that you could build a nice business. But you’ve got to start off with something that’s lucrative enough that if you only do 10,000 or 20,000 customers a year,you’re going to make a nice income. If you get something that needs a lot more tonnage, you’ll drive yourself crazy. Maybe you could get big, maybe you could get a million customers but I wouldn’t set out to get a million customers initially. I would set out with a business where if you’re moderately successful and you keep running ads... What was good for us when we sold Icy Hot to the geriatric set was there wasn’t the fluky non-loyalty that there is

today in hair care, where today it’s hot, tomorrow it’s not. Geriatrics, for something like arthritis or sinus neuritis they’re going to have the pain until somebody comes up with a cure or they die. So you’ve got them for almost forever. You don’t make any money on the front-end, but you keep bringing people in and they stay forever. I used to be in the business opportunity field and I used to work for Entrepreneur Magazine years ago. We found out there was a period of about 9 months where someone was interested in going into their own business. And they were hot and they’d buy books and they’d buy courses and they’d buy reports but then they’d find out... Really they did it because they were unhappy with their performance at work or they hadn’t gotten a raise or their wife was disappointed in them or whatever. And after they found out that it took real money and you didn’t draw a salary and you struggled and you had to mortgage your house and it was real work if you go into your own business and you may not get any reward for years if ever, and knowing they got a 50-dollar raise in their jobs or something,they would lose their interest. They only had about a 9-month window of viability before they’d be worthless. Contrary to that, somebody like a geriatric and you can have forever because they’re very fierce and loyal if you help them with recurring problems and you render temporary relief. But you’ve got to be very careful in what you write because there are a lot of laws. It’s got to be temporary relief, you’ve got to be very careful you don’t get yourself in trouble with the FDA with what you report your product will do in remedy. But that’s a good business. It’s a consistent business. It’s boring but who cares? It’s very lucrative and you can do a lot with it. You get customers and you can sell them a lot of other things. There’s insurance and lots of other things. Or you could make joint ventures with people and sell them other things. You’ve got to be willing. With something that has a large back end and a high propensity to repeat... My recommendation is that you be willing to not make any money off it at the outset. The more people you bring in, the more starts you get, the more residual income you’re accruing. You start something like that slowly and say, “Okay, we’ll put 2 or 3 thousand dollars in and we’ll do an ad. Then we’ll put 1,000 dollars into formulation and some jars and learning about it and we’ll try it out and if it works, we’ll analyze it. Maybe we’ll get in 1,000 customers then we’ll see what happens after 1,000 customers. What frequency do they reorder? And what dollar average is every order?” Until you know those things, all you can do is deal with a supposition, and that’s very dangerous. But when you go to empirical experience... The first thing is to run a couple of ads and then you get some customers in. Find out what publications pulled the best, try a couple different ads, see which ones pull, and which ones do nothing. Are you in a big hurry? Orson: Well I... Jay: My mail-order recommendation is whatever you do, be patient and ginger, because you’re probably going to mess up in the beginning and it’s better to mess up for $2,000 than to get wild and mortgage the house and spend $100,000 not knowing what you’re doing yet. Orson: Right. Well, I’m a little bit in a hurry, yes. Because I’ve been hanging in there long enough and now I want to see a quick return. So by offering the product through direct mail... Jay: If you do mail-order, be slow. You can rent lists of people who have. I mean whatever the product, whatever the chemical-based product, you can rent lists of people who have a predisposition... If it’s geriatrics, it’s people who subscribe to certain things, or they bought books on arthritis, or they’re members of AARP which is American Association of Retired

People. If it’s other beauty supplies you can buy lists of people who subscribe to World of Beauty, etc.—you know what the publications would be. There’s a whole spectrum of names you can rent. All you do is get a Standard Rate and Data Service Directory list. You ought to get your hands on one. There are two versions—consumer and business. You don’t want the business for purposes of mail-order, you want the consumer book. I’d get my hands on one of them and every evening start looking through it. There are like 30,000 or 40,000 lists. Start looking at descriptions of the demographics of people who bought things that have interests that you could serve with a chemical product. Start looking and thinking in terms of that. There’s a lot of business in hair preparations. I mean curative, restorative. It’s a great, dangerous field. Orson: The same thing there—all kinds of problems... Jay: Yes. You’ve got to be very careful. There’s a very, very, very exciting product called New Generations that’s doing like ten or fifteen million dollars a year by mail. If you come up with the right product and you have a decent claim and you aren’t going to go awry of something like the FDA, what you could do is do one of these 30-minute television shows. Do you ever watch them on cable? Where you interview some people and talk about your credentials and the formula and the family or whatever it is, and you talk about where you got it, from Sweden or Switzerland or Europe or wherever. Those are very successful shows and a lot of cosmetic products are very successful at very high tickets. You can also go to people who you think would be right for lending their customer list or their name to a product and get them to put up the money with you to market it, and you put up the product and split the profits after the recovery of the investment. You could do a lot of fun experiments there. If I start getting too cerebral, stop me. Orson: Oh no, that’s what we had in mind. That’s what we are trying in our area. Jay: Something you might do, and it might be a fun thing, is besides putting it on sale at the stores, you might come up with interesting packages of maybe a whole hair care system that would sell for 100 dollars. You might make deals with salons where you create the product, all at your risk; they furnish you with their lists of customers and phone numbers; you set up either a mailing program or a very upscale classy telephone room that calls representing the salon and says, “Look, we just came out with a whole system. It’s a 100 dollars, you can charge it to your charge cards and you can try it out. If it doesn’t work, send it back and we’ll give you a refund.” If you had 100 or 200 or 500 salons just giving you the right to do that and they’ve got 20% of the profits, and you had the endorsement of the salon, it could be big business. That might be a possibility. Does that make sense? Orson: Yes. Jay: You also could do them differently. You could do the opposite. You could do a custom label and consign it. You could go to somebody who looked like they could do a lot of volume and say, “Here’s the deal. I’ll design the jar, the packaging; I’ll formulate the product for you, just give me some of your preferences, etc. If you have no preferences I’ll tell you what I would recommend. I’ll educate all your people in your store or your salon. I’ll lay the merchandise in on consignment and what I want is to come in once every two weeks and inventory it. Everything that’s sold you pay me for, and I’ll replace everything that’s been sold. You give me a check for 80% of the gross. You get 20% for no risk whatsoever.” You could probably do that in a lot of places too, or derivatives of it. Orson: Any haircutter, they have no interest in selling products even if you give them 50% of the selling price.

Jay: I wonder why? Orson: There’s no incentive. They’re more involved in cutting hair or doing hairstyling, so either they rent a space to sell products and take all the money in, or they get 35% of the gross. Jay: What if you did a deal with them though. I’ll give you some possibilities. It’s one of visualizing. If somebody’s willing to spend $5,000 to run an ad and you take that willingness and direct it to a more correlatable substitute wherein, let’s say, you make a deal with a salon but with this mentality of the hairdresser who doesn’t care about making 2 dollars or 3 dollars. What if you sold this package for 10 dollars and they got to keep the whole 10 and you paid the salon 2 dollars to boot, and you lost 2 dollars but you’ve gotten somebody to start it. In the first month or two, you give them basically all the profit, you give them more than the profit, you give them everything. The profit and the cost of the thing to get somebody started. You figure, “Okay, we’ll lose 2 dollars to get a start.” If you had 500 people starting a month and you’re spending $1,000 in losses in a month just to subsidize the losses but you have no advertising and you’ve got 25 salons started... The hairdresser’s tip can’t be more than 10 bucks can it? If he’s pushing a $10 product and he gets to keep 100% of it, I bet that would motivate a lot of people. It cost you $1 for the product or so and you give the salon $2 on top of that, or whatever’s tenable and you experiment with 1,000 and then you see. Say you did 1,000 but you lost $3,000 getting started. You analyze after the first month. The first start—it’s like a gentleman’s agreement—the first start you give them 100%. Thereafter, they only have their $2 or whatever but you absorbed all the cost of getting them started. You said, “Okay, we’ll buy 1,000 customers just to see what happens. So you do a deal with 3 or 4 salons and you buy 1,000 customers and it costs you out of your pocket $3,000 and they make $10,000 and you wait and see what happens. You wait and see what the resell is. If it’s good, you keep doing it, if it isn’t you try something else. Does that make sense to you? Orson: Yes. Jay: It sounds silly but things like that are how you can redirect a bad human nature. Make an appeal to their grievance. Say, “Okay, you won’t do it because it isn’t worth it, but how would you like to have another $10 tip every time you do hair?” The guy’s going to say yes. “Here’s the deal; here’s the package; you can start them off, it’s $10 or $20. Whatever it is, you keep 100% and I’ll pay the salon $2 to boot.” Some situations we did that. We gave $100 to the radio station and we gave 45 cents commission to the guy who made the deal. We lost money and it still paid off on the back-end. But you can’t be promiscuous. You may find after doing 1,000 people, and losing $3,000 to get the 1,000 people, that your losses are in direct proportion to starting people. You may find that you can’t keep doing it and losing 100% because it doesn’t pay off enough, but you may reevaluate and see that you could lose 75% and it would be worthwhile. So somewhere in between you might come up with a formula. If you go to a salon owner... Orson: But I don’t think I’ll be interested in the whole essence of the beauty salon business. I can see no opportunity for taking that salon in our area and doing some work with him. Jay: Is his a well-known salon? Orson: A well-known salon, yes. I don’t know what potential he has and what clientele but everybody who has a beauty salon in the area has heard his name.

Jay: Here’s another possibility. You could make this proposition to them, where they’re getting free PR out of the deal too: You’ll call under their name, you’ll communicate with their customers, and you could warrant to them that you’d be very prestigious about the preservation of the name, the sanctity, also the way you conduct yourself in what you say. You can call people and talk about how much you appreciate them and that’s why you’re calling, giving them the first opportunity to sample and try out the system. That would be a lot of fun. You could do it through mail-order or by phone. That could be very powerful. If they won’t let you phone the people, maybe they’ll give you the names and you do a mailing under their banner. Just basically create a stock mailing piece. You just customize the flyer—just put the letterhead of the various salons on it and you send it to their customers. You’ve got a very high, a much more enhanced possibility of sales that way. Orson: But I thought what I want to do is have him put up some money for marketing the product now. Jay: That’s smart. And what you ought to do though is this: Take one more step. Most of them aren’t going to understand marketing so tell them if they’ll put the hard cost up, you’ll not only put up the product but the marketing pieces as well. You’ll write the letters, you’ll put it all together for them. Don’t defer to them because they won’t know how to do it right and they won’t want to take the time to do it. The best thing to do, by the way, is to prove it. Conjecture is hard to sell; empirical is a lot easier. The best thing is to go to one place, put up your own money for 80% of the profits and prove it. Go to a salon who will give 500 or 1,000 of their customers. Put them up on computer. If they’re not on computer tell them if you put them up on a computer, that charge comes off the top if they want to ever use the labels again for their own use. Do a mailing. You write a great mailing. Try 2 or 3 different slots or break them up. 1,000 people with one letter, 1,000 people with another letter, and analyze it. Once you get a winning concept it’s easier to go to other salons. To have somebody put money up when you’re not proven is one thing. You go to Jimmy’s Salon, and you prove it for them and part of the deal is that Jimmy agrees to be your validation when you go to the other salons. Then you go to the salon manager and say, “Look, you put up $1,000 and you’ll make probably $5,000 back in the first 30 days, but you’ll probably make another $10,000 a year on residual sales. Here’s Jimmy’s number. We did it there. Ask him what his experience was and then call me back. It’s proven as opposed to unproven.” It’s a lot harder to get someone to put money up when it’s unproven. When I try to get somebody to finance something, I would always rather put up my money and get validation first so have an empirical success example to sell to somebody. Rather than have to sit there and beg and plead for somebody else to put up the money and have them wince on me and waffle and at the last few moments change the deal, and because they’re putting all the money up, change my mailing piece too. Once you get a winning program, you go to them and say, “Here’s the letter, here’s the product, put your name on it and all you do is fund the mailing. If you don’t have it on a computer we’ll put up a computer for you and we’ll advance the cost and just take that out of the profits or whatever or add it on to the sale or something,” and make it so easy for them to do it, that they’d be a fool not to try it. So if they’re risking $1,000 you could say, “Hey, if you don’t want to risk it all at once, here’s a way to do it $500 at a time.” It’s highly improbable it’s not going to work. And put something in the letter where you give them something free or something where maybe you’re doing good will for them. That’s a hot concept. If it works here, you can do it all over the country. You could be a good mail-order operation sending by UPS to almost anyone where you’ve got a $50 or $100 package under their brand name, their private label.

Selling in is not as exciting as selling through. Anyone can go to somebody and say, “Here. Here’s a great concept, you buy the merchandise.” It’s quite a different story if you say,”I’ve got a concept that’s going to make you a lot of money. It is already proven, and once you get a customer it’s not just a one-shot sale—you’re seeding yourself another $25,000 or $30,000 a year from these people even when they’re not visiting your salon. Plus you can sell it in the salon too as an add-on business for you. You get goodwill to boot and we turnkey it all for you, and you can try it as small as you want; you could spend $100 on a mailing, we don’t care. What you do is sign an agreement that you will use our letter and our concept and we supply all the products. We have great products, and we make them available to you at less than you could get them for yourself because of volume and batching them.” That sounds like a good concept. Keep in mind, you never know unless you try it. It sounds like a hot concept and it’s probably something you could operate from. It’s imperative for you to create the marketing that will sell through. It’s silly to wait for someone to batch it. What you might want to do is go to a salon that’s got money and say, “I’ll put up the first dollars provided that if it works you’ll be my financier and we’ll go all over the country with it.” And give them half the deal if they put all the money to write or run ads in the trade publications or hire telemarketers to sell it to everyone across the country. That would be worth it. Some entrepreneur salon owner would probably love to do that. When that option’s available to them, all they have to do is let you use their list, validate it at your expense and give them 20% of the profits to boot in the first shot. If it doesn’t work they’re still going to make some money. Is this helping you? Orson: Yes. Well I mean that’s what it’s... Jay: Am I being too cerebral for you? Orson: No, I mean there’s a little... Jay: I’m watching your face and I don’t see that you’re enthusiastic. I can’t tell whether you’re just stoic or you don’t like it. Orson: I think we’ve been through...I mean, I’m just so sick of these salon people, they’re all such awful... Jay: Let me give you a couple of philosophies. A lot of people that I have had falling-outs with or philosophical discord with, or who just basically turn me off, I’ve found different ways to profit from them, and the posture’s everything. It’s one thing if you’re trying to sell them something. It’s something else if you’re going to make them money on a turnkey basis, and the truth of the matter is if you find out that it works well enough you may not want their money, you may find that if it was your own deal, every time you invest a dollar you’re getting back $10 instead of having to give them $5. I think it’s work trying. Orson: The one big salon guy in our area has two major salons. One is also is a school of training which means they train people all over the country... Jay: And they’re respected? Orson: Yes and... Jay: They’re the ones I’d tie in with.

Orson: It’s beyond belief I hadn’t thought about that, but they must have a mailing list... Jay: Well, I’d work with him selling products. It would be an endorsement by him. I mean he’s probably already spent millions of dollars on his reputation. Orson: How do you approach him? Jay: Is he a nice man? Orson: Yes. Jay: Sometimes you just want to tie up the relationship even if you can’t get them to put in some money. Whether you’ve got money or not for that, tie up the relationship and then validate it. If it means you’re only going to spend $1,000 out of your pocket and do it down and dirty and then wait and if it shows light send them letters saying, “The shipment hasn’t been sent off yet, it’s going to be 30 days late,” and give them the chance to have their money back or wait—but you want to prove it works. Once you prove it works, whether you could afford to shoestring it or whether you’ve got to go out and sell somebody, it’s so much easier to sell somebody on something that’s already proven. Orson: Let me ask you one thing. When they graduate from the beauty school, they go to other beauty salons. Now if that other beauty salon uses Brand X and we come in and ask if they want to use our product, because they’re familiar with Brand X, the guy says no. How do you overcome this? Jay: If you walk into somebody and you show them, “Look, I mailed out to 1,000 people, here’s my master plan, it cost me $487, here are the $10,000 in checks that came back,” that’s stronger than “Here’s my product. Do you think you might like to take it on?” I mean, you’ve got results. People take heed. Conjecture is too hard to sell. A pie in the sky. Getting someone else to finance the conjecture is even worse. My recommendation is the best way to be able to make joint ventures is to do the beginning part yourself. Don’t look for someone else. It’s the fastest way because everyone wants aboard when there’s a winner. Do you understand that? And right now giving somebody 3/4 of the deal to put the money up, no one will do it. But if you’ve got $10,000 in checks in your pocket from a $300 investment, you could give somebody just 20% of the deal to continue it for you. You don’t have to argue with them. It’s validated. It’s empirical. Keep in mind the kind of things I suggest. They’re not life-threatening, life-changing decisions. You can validate or invalidate anything with no more than $5,000. You don’t have to go out and have a product. It would be nice if you did, but the concept is more important than the product. At the very worst you give back their money and you say, “We had a screw-up of unsuccess...” and if you’re playing off of somebody’s list you give everybody something so they retain customers, and you lose a little money on it and you move on. If it works well, you can always say, “It’s going to take another 3 weeks. However, in consideration, if you’ll wait we’ll give you twice what you paid for,” or whatever. The reason I’m more successful than most is because I try lots of things. I don’t get emotional about them—I get passionate, but if it doesn’t work it’s not the end of the world. I’m not going to mortgage the house just because I believe in it. I’m going to try something out; I’m going to stop; I’m going to analyze it. If it works very well, I’m going to take it and either do it myself and poorboy it or I’m going to sell it to somebody or... And what I’m suggesting is there are a number of possible things you can experiment with at your convenience and at different levels of

progression. I’ve got a philosophy I call the multi pile-on theory. You set up a lot of little profit centers that as long as they aren’t aggravating and you can basically find someone else to run them for you once they’re operative and you’ve got the profit dynamics downpat. Right now wouldn’t it be nice if you had 25 bases of income instead of 3? I like to build what I call pile-ons of different approaches. If you had a bunch of people either in your offices or somebody else’s—a bunch of young men or women on the phone calling customers of various salons around the country selling these $100 packages—if you had letters going out, if you had a little program and you try it, an analgesic or something...it’s harder to kill something like that. And again you’re building the back-end and it becomes proprietary to you. You’ve got to sell it. You can’t wait for them to come to you. It’s always going to be more important to you, the purveyor, than the customer, do you understand that? They’re not going to wait to call you when they run out. You’ve got to write them a letter and say, “About now you’re running out, so don’t wait and be out and have your head get frizzy or flat or have your arm be in pain.” I’m talking fast, but do you understand what I’m saying? You can try a lot of things. None of which requires you to quit your job or compromise anything. I hope when this is done that you reflect and you read my materials 2 or 3 times over because it will uncover even more possibilities. Just try a lot of things very conservatively, knowing you can afford to lose on 5 or 6, it makes no difference. If the 7th one works you’ll make out like a bandit. And you start doing that slowly, methodically, and even if you find you can only make it break even, that’s not necessarily a loser if you can see what to do with that person once they’ve validated themselves and you’ve acquired them. It may cost you $10 each to go through your city to find 1,000 people who are interested in something, but once you’ve found those 1,000 people it doesn’t cost you very much to go to them over and over again and sell them something else. That’s very important to realize. And you can test or pretest, you can validate. I know I’m sounding almost evangelical about this, but it’s important. You can try a lot of things. No urgency. Methodically, you stop after you’ve done tests and analyze what happened. How much do they reorder? What’s the average dollar amount? How many of them want their money back? Can we do it over again? And when you get that down pat, then you can do all sorts of things. Then you can project cash flow, you can go to the bank and borrow on it; you can sell it to somebody if the profit’s there. You can start all those things, and if you didn’t want to keep doing it, then for a $1,000 or $2,000 investment you sell each one off to somebody for $10,000 down and 20% of the profit and walk away from it. All you did was start deals and get a cash flow of $50,000 or $60,000 a month after a couple of years. There are all sorts of fun possibilities. There really are. It sounds like fantasy but I’ve done it. You’ve just got to believe and try and not be afraid. Orson: O.K., I understand. Jay: I think it would also be appropriate for you to start ordering by mail all sorts of chemical products that people are selling and see what they send you. Seeing if the ads repeat because if the ads repeat, it means one of two things. Either they made a lot of money on the ad itself, or the ad brought in a lot of people who they’re able to sell something else to or resell their product to. Buy a lot of things, and when you buy different things buy them under different names. Your check has nothing to do with the order form. Buy them under different names so you can identify and keep files on each one—like the ad, where it ran, the position it ran in, the section it ran in—so you can get an education and you can see whether you want to go into that business.

You track and see what happens. Once they get your name and they send you the first product, take notes and file them. What was in the product? What are their solicitations? What are the offers they make me? At what intervals did they resolicit me? Did they resolicit me to reorder the same product or to order other products? If you order one thing as Oliver A. and the other one as Oliver B. and the other one as Ollie and the other one as O, make sure you correlate what name you used for what offer and follow up what the people are sending you. These people are spending millions of dollars to get an education and you can get the same education by watching what they do. It sounds so silly and logical but no one ever does that. You see the product they send out, and then if you find it’s really good you can do several things. You can either write to them and solicit them for a product you may create. Or you can use a marketing twist and write to them and say, “I’ve got a concept, a product and I think it’s logical for you. I’ll send you not just the product but the marketing piece for it as long as you buy the product from me—as long as you send my piece out at your expense to all these people and buy the product from me. And you can create products and you can create opportunities at will if you start analyzing people, don’t you think? I’m trying to give you some other possibilities you may not have thought of. What else do you want to talk about? Orson: The only other thing was what I first had in mind—that joint venture. What I’m looking at is a company that already markets products, so what I think... Jay: Keep in mind something very important and I’ve focused this again and again and I hope I’m being clear enough to make my point. Products are a dime a dozen but the most valuable commodity is where you go to them with the whole idea on how to sell through including the pitch, the ad, the mailing, the telephone concept, and how to use your customers. That’s what makes everything work. Selling through. You figure a way to sell through and you can do anything you want with your product. You can charge anything you want. Products are a dime a dozen. Focus on getting the marketing concept together and go to somebody who has a customer base or has the names or has the positioning or has the mail-order and say, “Here. I’ve got a way you can add another product.” But just getting the product is nothing. “I’ll give you the product plus the mailing fees, plus the ad, the whole kit and kaboodle. All I want is for you to buy from me at a fair market price and give me a long-term contract in exchange for validating it at my risk.” Don’t tell them the product or the ad yet until you get an agreement. If they say no, you either walk away or you say, “O.K., if I give you the product and I give you the concept and you validate it and it works, will you pay me $20,000 for the concept over a year?” Some way you can make money on the deal, and when you start making money then maybe you’ll start singing. I’m convinced you can make money marketing even as a manufacturer. Most people don’t understand how to sell through. If you can focus on that, you can sell any products you want for any amount you want, don’t you think? Orson: Now I do. * * * * If a person knows what your products are, that doesn’t mean he knows how to sell them. Don’t go in and say, “I’ve got a product for you.” That’s too abstract. That’s putting all the onus on the person you’re soliciting to figure out how to sell it. Go and say, for example, “I’ve got a way to sell a great product where for every time you make a dollar it will probably make you 5 more dollars on the back-end, and I’m willing to put up my own money to validate it if you won’t. All I want is if I validate it, you agree that you’ll buy it from me at a fair profit for as long as you sell this product.” That’s a reasonable request because you’re validating it for them.

With that basic approach and derivatives of it, you could own the world because the possibilities are limitless.

Construction Lyle is a construction contractor who in the past has been fairly successful in overseas markets. However, his international operations have recently been almost at a standstill—even though he has developed ways to save clients 40-60% on construction costs. Lyle currently wants to generate more business in the U.S., but is having difficulty getting new accounts. Like many business people, Lyle has a chicken-and-egg problem. His good reputation overseas does not translate into a good reputation here in the States. He can’t sell to others because he doesn’t have the reputation; he can’t get a reputation unless he sells to others. I offered Lyle some key sales strategies that can overcome this dilemma and quickly bring in some business—while staying within his limited budget. I also identified viable alternatives he can use to reach individuals and organizations that might be able to help him build a solid customer base. * * * * Jay: I read all your material. Tell me, what got you started in all of this? Were you a contractor originally in the Southwest? Lyle: Yes. I had a very small residential construction business, and I was overseas quite a few years ago in the mid-seventies. Jay: Were you just visiting or were you working? Lyle: I was looking for construction opportunities. As it turns out, I was able to get my proper contacts over there and get my business started by the late seventies. Jay: You put a lot of thought into the letter. I acknowledge and appreciate it. Are you doing much business anywhere? You show quite a bit of variance in income—a maximum of more than $4,000,000 in one country to a minimum of just $200 in another. Are you just basically operating at idle speed? Lyle: We still have to maintain two offices in the Far East. The rates we charge there are very low compared to our cost, so we’re maintaining our offices mainly to keep our crew together. In the United States, I have three projects that are almost ended, but not quite. Jay: Is that the nature of the beast? That is, does it take a year or two or three of nurturing to get a good contact? Lyle: Frequently it does. You might make some very nice contacts with interested people, but they may not have a project right at the time.

Jay: Let me get to one of my key questions. What do you really want to do? Of all the things I can render out of the time we’ll spend together, what’s your highest ranking imperative? What do you really want me to do for you? Lyle: The most important thing is to put together a letter that will be read and responded to by my potential clients. Jay: O.K., then let’s direct the initial part of this consultation towards that. Then, if we satisfactorily address that, and if we’re both comfortable, then we’ll springboard to different subject matters. O.K.? Lyle: O.K. Jay: Of 100% of the prospects, if you could have the ones you really want in the U.S. right now, who would they be? Where would they be? Give me a real tight focus on who the optimum client would be. Lyle: Well, I believe they would be large development companies, either residential or industrial. But I think we can really save the most money for residential or shopping-center developers, large developers—people with tracts of maybe 2,000 acres. Jay: What publications would they read? Lyle: To my mind, they would read things like Professional Builder and International News Record, both of which I have advertised in. Jay: When you ran an ad, how large was it and how did it do? Lyle: It was a classified ad. Jay: What does a full-page ad cost, do you know? Lyle: Well, you can buy it in a regional edition for about $5,000 or $6,000. Jay: I need to counsel you based on reality, so you have to counsel me on what you’re comfortable doing. If I come up with a program that spends $20,000, $30,000, or $40,000 over the next quarter, is that something you can embrace? Lyle: A year or two years ago, I certainly could have, but it’s been such a long dry spell. My reserves are getting very low. No, I would not be able to put out $20,000 or even $10,000. Jay: Can we do a letter to 2,000, 3,000, or 5,000 people? Lyle: Oh, sure. Jay: O.K. I just need to know where you’re at. Also, I see that you were chagrined when you ran ads to find people to represent you. The ads didn’t seem to produce much of anything for you. Did you run them in the publications you just mentioned? Lyle: No, they were in different publications.

Jay: One of the most lucrative things I do for clients is find ways for them to access selling organizations that are not in any way competitive, but are already entrenched in the minds of those prospects my clients want to reach. I tell my clients to make an affiliation deal and solicit these organizations directly. Are there people who would be receptive to representing you? Who would not regard you as competition? Who already has an established and entrenched place in the contractor/developer market? And who, if you could access them, could instantly have 100 people around the country calling every developer for you? Lyle: They would probably be sellers of building materials, construction services, and possibly computer services, or things like that. Jay: What would be the commissionable profit you could give to a representative, whether it be an independent or some business that takes on your services as a product line? What could you afford to give them as a percentage? Lyle: The basis I have been working on in my previous contacts has been a straight 7% of gross, depending on our fee. Jay: And the typical fee would be $200,000, $300,000? Or more? Lyle: Well, it could be anything, but I would say that a reasonable fee would be in that area and could be much more. Jay: And if your fee was $200,000, according to the information you sent me, you would be saving the contractor/developer $100,000 to $200,000, right? Lyle: That’s right. Jay: O.K.. One of the things I found in reading your material and sales letters was that—again it’s a very delicate line—I thought that the essence of what you offered, the big promise, wasn’t evident in the beginning. What I got out of it was, “We can save you 40% to 60% on your engineering, probably enhance the overall quality, and be fully compliant with the type of constraints the project is under.” Isn’t that really it? Lyle: Yes. Jay: That wasn’t clear. It was in there, but I thought you were protracted in the way you evolved your letter. I think of all the things we could do today, we should draft a letter. However, I would like to strongly urge you to think in terms of taking different parts of the country, identifying different types of people who could rep your service, and approaching them with a real exciting offer. People selling building supplies, for example. I think we should find 3 or 4 different kinds of people and experiment with conditional, probationary representation arrangements to see which ones are really the best suited. They may be able to make more selling your services than their own, or certainly as much. Lyle: I would think so. Jay: And I think that should be the overture. What if we found the names of the top 100 building supply companies in the country and sent a letter saying, “We think you could make as much money representing our non-competitive services, which are an adjunct to your product line,

than you do selling your own products.” Certainly, this approach will give you an edge. Saying you will make them money would favorably predispose them to you. “We’re suggesting that you consider a probationary representation arrangement with us. We’ll do all the work for you and play off your contacts. We’ll train you. We’ll educate you. All we ask you in return is a noble effort and an agreement not to compete against us for a certain period of time. During that time, we will give you a percentage. We can send our people to collaboratively and technically work on the bids, etc.” I think that’s a provocative letter. Lyle: I agree. Jay: You try to evoke a favorable expression on the part of the decision maker who runs a national or even local building supply company. You try it again with some other kind of competitor. Try to work in concert with architects or with other kinds of engineers or even a big engineering firm. Experiment with three or four kinds of associations with the knowledge that you’ve got to do all the work through them. Just realize that they aren’t, on their own, ever going to do a good job. Maneuver and manipulate them, if you can do it very delicately without provocation. You just basically and ethically manipulate their contacts and efforts. You do a lot of the work for them. I would strongly suggest that you seriously consider dredging your knowledge base and putting down on paper all the kinds of people who would be entrenched favorably in the mind of the contractor/developer. Who would they be? Architects? Building supply people? Realtors? Maybe a really good architectural firm who doesn’t get a particular job can still be a rep for you as a hedge. They’ve gone through all the effort and expense of bidding. They’ve taken the time. Why should they walk away if they can reclaim their efforts by promoting you after they lose the contract? I don’t know if that makes sense to you, but it’s an approach that few people understand. I’ve persuaded a couple of clients in similar circumstances by showing them that they’ve already made such an investment, and that they’ll benefit by helping me get the job. They can make a profit on their efforts as opposed to just walking away. If you can sell that conceptually, it’s a very powerful philosophy you could get people to embrace. And the dollars that you’re talking about are substantial and enduring. It’s almost like a consolation prize. This is the strategy you may want to employ. My methods are very different. I don’t know if they’re different from what you expected, or if I’m telling you the kinds of things you anticipated. Lyle: I didn’t know what to expect. Jay: There are no rules. What I try to do is assess what a client situation is and work backwards from time and capital imperatives. What I strongly urge you to do, and we’ll talk about a mailing too, is to make a comprehensive list of the kinds of people who would have their foot fairly in the door with the decision-makers at the contractor/developer level—at the beginning, before expensive contracts are awarded for engineering, architecture, and the like. I suggest you make overtures to various people to represent you. The arrangements can be exclusive, or maybe they can be non-exclusive. One of the things you’ll find is that the reverence, regard, and enthusiastic excitement and value a subcontractor or representative will have for your service will be in direct proportion to what you imbue it with when you offer it to them.

If you offer it to them in the context of desperation, begging, or groveling, it has one posture. If you offer it to them with a very powerful, positive, well-contemplated, well-articulated, wellembraceable logic, and they see that it’s to their advantage as an adjunct to what they sell, or as an adjunct to a contract they don’t get—either way—it can be a hedge for them to make a lot of money or a lot more money than they’re already making. They are wonderfully poised in a position to extend your offer. It’s a wonderful service to the developer or contractor, because in the process of availing themselves to you, the contractor is assured of maintaining painstaking quality compliance while cutting expenses 30 or 60 percent, or whatever it is. That could be very exciting. But in reading your letters, although you wonderfully, poignantly, and charmingly open your heart, you write in a technical, slightly protractive way. In communicating with these people, whether by phone or letter, you have to learn to get the benefits right up front. Don’t make your sales letter overly sales-oriented, but state your offer so it’s clearly perceivable and exciting. First and foremost, make the benefits clearly evident to the end-user, that is, the developer and the contractor. In addition to the benefits, show the person you are soliciting the logical advantage they’ll have if they represent you. Be clearly evident right up front, crisply, clearly, concretely. In other words, you might say, “How would you like to pay your entire overhead each year—just by getting us one client? How would you like to pay all your office expenses, all your sales guarantees, all your travel? How would you like to earn money you could use to solicit the entire country—just by placing one job for us?” That’s what you’re asking, isn’t it? I think that by bringing your message down to these kinds of distilled levels, it might be more excitingly embraceable by somebody you’re soliciting to represent you. What do you think? Lyle: I think that’s great. Jay: You might conscientiously try to get a whole spectrum of people making overtures to contractors/developers in a well-contemplated manner, with a letter or with a phone call. Are you the company, or do you have a staff? Lyle: I have a part-time staff of secretarial help. Jay: They can do letters, but as far as any interaction, it has to be you. Let me impose my perspective on you for a moment. I know you’re good. You have to imbue your personality and style with a modicum of enthusiasm that’s right for the result. If you call somebody, you have to get right to the bottom line enthusiastically. You’ve got to think as if you were the president of an architectural or building supply firm, or whatever kind of firm, and were getting a call. Don’t just think logically, think about all the different kinds of people and all the favorable kinds of access they have in the embryonic stages of the contract. Maybe somebody sells a service. If he’s making $200 on the person, but he’s got their ear and could show them where they could make or save $200,000, it could be very exciting. Think about all the people who sell things, who purvey goods and services, who are trusted and respected, and who already have the favorable disposition of the contractor and developer at the highest level. Any or all these people could conceivably represent you.

Lyle: You have been mentioning architecture. One of the letters I sent you was one I had sent to many architectural firms. To me, our services would be a perfect fit for them. The only response I got was overwhelmingly negative. Jay: Are you telling me that somebody complained about you? Lyle: Yes. In fact, I had an instance just a couple of weeks ago. We had an inquiry from an architectural firm. I met with them, and they were interested in doing some joint-venture work. When they approached me, they thought I was doing engineering work, and when they found out that I was also doing architectural work, the whole thing just fell apart. Jay: You were looked on as a competitor. Lyle: Perhaps if I had approached architects, dropped the architectural part, and only pushed the engineering part... Jay: You understand the premise of testing and my philosophy of testing. Functionally speaking, I don’t have the answer. It would be interesting if you took a segment of overtures and depicted yourself as an engineer, and if you took another segment of overtures and depicted yourself as an architect. When you approach people, here’s how you might put it: “You say there are certain jobs you are aware of where you know you can’t be competitive, so you don’t bid on them. But why let an opportunity go? In collaboration with me, you could get business from 20% of the jobs you pass up. Now, what’s wrong with that? If that enables you to successfully pursue the other kinds of jobs you want, why don’t you use me as your ally to advance your ultimate purpose. It seems sensible to me.” What do you think? Lyle: Sure. Jay: “There are a lot of jobs you can bid on. There are probably a number of large jobs that you can’t bid on. You don’t understand, or you can’t sharpen your pencil to make it profitable, or you don’t have what it takes going in. Why not use me and my services every time? It’s ludicrous to let opportunities go unexploited.” If you had 100 architects across the country who were clearly aware of that premise, and they were basically your bird-dog collaborators, I would imagine in any given period of time, you’d get certain amounts of business, don’t you think? Lyle: I would hope so. Jay: But the big problem you have right now is setting up the infrastructure. What you need is to have 1,000 architectural firms around the country agreeing to this philosophy, either in collaboration with you or by making referrals to you. You need to have 50 different kinds of people representing you in different segments of the country and the contracting business. You need the numbers. Work them. You don’t just set them up and walk away. Have all this in play six months from now. Your comment is that you had a couple of people and nothing came of it. I think one of our problems is that we believe other people will follow through on their own. All they are, basically, are conduits you have to manipulate ethically. Do you understand that? And if you don’t, you’ll be sadly disappointed because they’ll do nothing for you. You’ve got to do it all for them. You’ve got to ask them who their contacts are, you’ve got to program what they do,

you’ve got to write letters ostensibly emanating from them, you’ve got to give them pictures, you’ve got to follow up, and you’ve got to go into the field and do the calls with them. It sounds laborious, but they are all basically parasitical hosts from whom you can get rides and access other people. Until you show them that it can be done, until you validate your program for them, until the time comes that they can run on their own, you’ve really got to do it for them and through them—and pay a double commission. You do the work, but you’re paying them a commission for the process. That’s fine if that’s what it takes to get started. Once you get started and show validation and make an achievement somewhere, you can take the validation and the case study and present it to somebody else who doesn’t see it as real. They’ll see that by making your pitch to somebody they normally wouldn’t, they’ll have a chance of making $200,000. It’s very real. You’ll say, “This person in Southern California did it, and this person in Florida did it. Here’s a signed copy of the contract. You can see it’s believable.” Again, it’s not going to happen overnight, but you know it’s do-able. Is this helping? Lyle: You bet. Jay: I think we have to get you a pragmatic structure, a blueprint for you to follow, to get you started. If I were you, I would be identifying all the different kinds of people who would have their foot in the door with contractors and developers—if that is, in fact, the market you want to reach. Maybe letters aren’t the way to reach the architects. Maybe you should take the opposite approach. What salespeople have their foot in the door with architects? Maybe that’s the approach instead. Maybe instead of calling cold, get somebody who’s already broken the ice, who can minimize fears, who can present more passionately and gracefully. Maybe the trick is not to do it with letters, but to do it with people. Until you validate your approach, maybe you’ll give up some profit in the beginning. That’s O.K., if that’s what it takes. Once it’s validated, you can go to other parts of the country and other segments and not need any representation, because you’ll have a track record to show that it can be done. Lyle: That makes sense. One of the groups you mentioned just now was realtors. It strikes me that they might be very likely candidates because they would be selling land to the developers. Jay: I think you could get somebody, maybe commercial people, to take you into a pilot program in one area. Expand it also to address a couple of the issues, and see if it works. You told me a lot of people were unwilling to take a shot on you because of liability or whatever. How do you retort to that? How do you respond when negatives like that are brought up? We have to overcome that. I think before you go into something, you should have a greased chute to avoid impediment. If you know the probability of these kinds of questions or resistances, let’s cultivate right now a strategy to overcome them. Lyle: I’m trying to be prepared for any objection that would come up. I’ve gotten one or two I didn’t expect. Jay: State for me clearly, in one sentence, what the real trepidation is. Is it the liability for shoddy work? Incorrect work? Bad engineering? Lyle: Probably shoddy work. Jay: Are you insured for that?

Lyle: Yes. Jay: So, you are insured. That should be indemnification enough, shouldn’t it? Lyle: What about taking it a step further? I think their concern would be that if we did shoddy work, we would be one-third of the way through the job before they recognize it. Even though we would be insured, they would go through X number of months before they could get another company to redo the work. Jay: Can you in fact build into your offer and your package some other kind of guarantee, warranty, and indemnity that is irresistible? I don’t know, maybe you can get Lloyd’s of London to write a policy or something that doesn’t cost much—and it’s written per transaction, so it can be built in and isn’t just a blanket deal. Or maybe it is a blanket deal. Remember, you have to give them every reason they would want to take you on. If they’re worried they’re going to have a disruption for three months, you package into the deal and provide free disruption insurance for the whole project. It is easy for me to be promiscuous with your money, but I’m suggesting that you try to work backwards. You could probably address all of the negatives before you go scurrying out into the market trying to stock associates, affiliates, or prospects, don’t you think? So far, you haven’t found the right devices. If you do have it presented, you haven’t had the compelling and unimpeachable barrage of irrefutable reasons why a contractor or developer would be foolish not to avail himself or herself of it. You have to make your case powerful. Is your overseas business pretty dormant right now? Lyle: Yes. We pulled out of the Middle East a few years ago. Jay: When you pulled out, did they owe you anything, or did you get paid in full? Lyle: Well, they always paid their bills on time, just absolutely no problem. I wish I had 30 more clients like that. Jay: Well, let’s see what I can help you craft so your business can be irresistible. It would seem to me it’s almost like the cart and horse, chicken and egg. You really need to develop a local track record. You really need to get some business going locally, don’t you? Lyle: Sure. But that’s a problem too. Even though we present a really outstanding track record overseas, most American firms are not as impressed with that as they are with a local track record. Jay: Can you get anybody you dealt with overseas to write a wonderful letter of recommendation? What if you wrote a letter and they signed it? A letter that mentioned not only your work, but the savings and the reason why you’re back in the States. That would strongly encourage somebody to at least give you a call and include you in the bidding procedures. Lyle: I could probably do that. Jay: If I were John Schmidlapper, owner of a development company, and in my mailbox I got a fascinating-looking letter emanating from either an individual or company, and if the letter came from Middle East American Petroleum or whatever it is called, or if it came from London, and if

it were a really neat letter from a respectable source and it told about you, what you do, and the work you had done for a client, and it told about the savings you had effected for the client, and about the fact that you decided to bring the concept back here because no one’s ever done it, and if it strongly urged me, the recipient of the letter, to give serious consideration to giving you a call, or, if nothing else, if the letter just discussed these points with me... Tell them how to get hold of you and what you’re willing to do. You’re willing to talk about any project, you’re willing to recommend either partial or complete facets of the engineering or architecture. You’re willing to tell them where your services are the most useful and costeffective. It’s foolish for them not to avail themselves if it’s not going to cost them anything to engage you. I just think that kind of a letter coming from somebody with unimpeachable credentials and associations would be a powerful way to get you in the door. Lyle: That sounds very interesting. There are least two and possibly several individuals we used to do work for that would probably do that. Jay: Maybe the thing to do is get a prospect who’s a little apprehensive. Then you can indemnify them and give them a little share, if that’s what it takes to get them really enthusiastic, or ask them how they would like to make $50,000 or $60,000 for helping you do a wonderful service. Lyle: You’re saying have a letter direct from them to... Jay: Yes. It’s interesting, and the best examples I can give you are experiential ones. I just got through with a two-year long, multi-million dollar divorce. It cost me almost everything I had accumulated. I had to sell all my businesses. I was pretty much out of consulting for two years. I decided as I was going back into it that rather than going full hog and doing real involved work, such as contingent marketing, to first do 6 or 7 months worth of the kind of stuff that you and I are doing. The first thing I did was get people like Howard Ruff to send a letter. I got one of my other clients to send a wonderful letter that went out to all his people. What I’m doing is not very lucrative compared to other things I’ve done, but it’s a transitional way for me to get familiar and reorient my skills—before I have to take on somebody for a whole year. And I find, if you receive a letter from me telling you how great I am, that’s one thing. When somebody you respect, because you deal with them or know of them, sends you a letter, that’s very powerful. Even if you don’t use it now, you hold on to it. In the letter, you have the person say, “I know I’m sending you this letter out of the clear blue. I don’t know if you have a project in development or are contemplating one. If you are, I strongly urge you to call this firm. If you don’t save this letter, pass it on to somebody who you think would really appreciate it.” That’s a powerful approach, don’t you think? Lyle: It certainly worked with you. Jay: Yes, and I suggest to you that human nature is fundamentally immutable. The letter can’t be hype or silly. It certainly could be a two- or three-page letter from somebody whose title and credentials are unimpeachable and who would be known. I’m just trying to give you every way to hedge yourself. Lyle: So, it would just be a letter from an individual, not from a company.

Jay: It would be better from the company if the letter says, “You may not know it, but I was general manager, executive vice-president for seven years for such and such company. We did X billion dollars worth of construction projects in the Middle East, etc. I’m writing to tell you about somebody I think you should know, and about a concept I think can make or save your firm money—perhaps a lot of money. His name is blank. Let me tell you what he did for us. Let me tell you the effect. Let me tell you about the overall savings, the timesavers, the quality preservation. Let me tell you how I think he could impact projects you may be in the process of doing, or contemplating doing. Let me tell you how you can use him. Let me tell you what he’ll do for you without obligation. Let me tell you why you should call him. Let me tell you the most important thing he can help you with. Let me tell you his number. Let me tell you what to do if you’re not really in the process of anything right now.” Lyle: Yes, it sounds very interesting. Jay: I hope that I have really gotten you focused and introduced some valuable ways you can employ the techniques. Lyle: I think so. You have some really interesting concepts. Jay: It sounds like you have a wonderful service of supreme value and usefulness that a lot of people should avail themselves of, and it’s just a matter of getting the ball over the goal line. Lyle: Thank you. Jay: You’re very welcome. * * * * One of the most lucrative things any business can do is access organizations that are not in any way competitive, but are deeply entrenched in the prospect’s mind. In such a joint venture, you may have to do a lot of the leg work, especially in the beginning. You have to set up systems, train, and educate. To make the deal fly, you have to cut them in for a big share of the profits—at least initially. You spend the extra time, effort, and money now, so you are set up for long-term success. Like you, Lyle has many options he can use to effectively reach and convince his marketplace. One powerful concept he can tap into is to offer a deal to architecture or engineering firms that have lost bids on a contract. He can use their resources to his—and their— advantage. If you can tap into a situation where another business is getting little or no return from its investment, or already has its contacts firmly in place, convince them that they are better off giving you the job or helping you. Cut a deal that will benefit both parties. Another effective way to reach potential prospects is through a powerful sales letter from a well-known and respected authority. In Lyle’s case, one letter of recommendation from a wellknown international client could smash the wall of resistance and turn a perceived disadvantage into an advantage. Likewise, your prospects would think long and hard if they received a letter from a famous and trusted figure talking about the benefits of your products and services. It’s an approach worth looking into.

Lumber Products Jeb distributes lumber products, including wooden fences, to nearly 4,000 independent home centers. His prices are competitive, but there’s not much potential for growth in the market. In this consultation, as you’ll see, I really got into numerous possibilities for Jeb. I suggested a simple strategy of offering fractional truckloads, then probed into other possibilities, such as developing offers for magazine ads, follow-up letters, cover letters, money-back guarantees, pre-prepared purchase orders, special accounts sales reps, joint ventures, distribution ventures, and even how to leverage a business buyout. With these techniques, Jeb can inexpensively find many new avenues of business he had never dreamed of before. As you read, think how you can use some of these techniques to create new opportunities for profit. * * * * Jay: Let me review what you wrote in your letter. You have a quality product with escalating prices. There are 100 clients or customers representing 50% of the entire market. There’s not much growth in the market. Your prices are fair. You’ve offered the equivalent of a guaranteed sale to them, the manufacturer didn’t promote, and you lost money. Jeb: Yes. Jay: By and large, you made the offer traditional. You said to somebody, “Show it prominently in your display area, and we’ll sell you the first truckload on an annual basis and on a 100% guaranteed basis. Thereafter you own what you buy.” That’s not a bad approach. How much of a price variance is there between your low-ball and high-ball price? Jeb: The average is about 30%. Jay: So that makes a big difference when you’re doing 40 or 60 truckloads. Jeb: Yes. Jay: There are a couple of ways to go. What is your sales structure? If you want to address these 4,000 independents, do you have the time? Are you receptive to hiring somebody to telemarket? Jeb: The brokers are basically selling to the 4,000 independent home centers throughout the country. These centers usually purchase just the quantities they want to sell. We’re open to any suggestions you may have. Jay: I’m going to give two or three possible scenarios. Here’s the first: Take the magazine that is read by home-center people and create a special oversized ad, maybe a two-page ad. Maybe create a reader ad that says, “For the first time, we’re selling fractional truck loads to small independents who have a good following.” Make your case, give them a proposition, but make it that they must send for details, prices, samples, or whatever. Add a response coupon or a very neat postcard that they then send back to you. It says, “How can I say no to a proposition where, if it doesn’t sell, you’ll give me all my money back? By all means, give me all the details of your guaranteed sale and your independent, fractional, truckload purchase plan.” Ask for their name, title, address, and all the pertinent details you

would want to know about their operation, customers, volume, or fencing, or whatever. That ought to be a real powerful approach. If you get anything more than 10 or 20 responses, you might be overwhlmed. A follow-up letter is instrumental. The first thing you do is you send everybody a nifty letter that’s more complete than your ad, along with your little brochure. The letter talks about your business, standards, and this and that. Tell them you never sold in less than one or two or five truckloads. But now, because there is so much demand by the smaller independents, and because you have a quality product, you have succumbed. You’re setting up an independent division that is going to sell fractional loads. You will have prices that are very, very close to the ballpark of the nonfractional loads. Then you give them the reasons why they should consider it. Tell them they get the best of both worlds. Make them a great offer using simple criteria. For example, they have to buy at least one-third of a load and prominently display your pictures in their center. Even though they have to pay for your delivery in 30 days, if it doesn’t sell out, and if they don’t reorder it within three months, you’ll take back what they don’t sell. It’s a neat offer that I doubt that anyone has made. Then you send it out with a turnkey, preprepared purchase order for them to send back. However, you don’t even wait for that. You have a guy or woman on the phone that follows up on those who responded. You could give them a salary. You can probably find a knowledgeable person who knows lumber and would be delighted to work on a moderate salary, don’t you think? You get somebody who is very personable, knowledgeable, human, and passionate—who’s smitten with your product and your business. Try this it out for three months on a moderate salary with some kind of a wonderful bonus provision. He or she becomes the special account salesperson for the independents. The next thing you do is take the entire mailing list and send a weekly customized letter to 100 or 500 or whatever quantity you can intelligently follow-up on. This specialized letter is a little more embellished than the follow-up letter. These people would have presumably seen the ad. For whatever reason, they didn’t respond. Maybe they’re happy with what they have. You say, “Let me tell you 10 good reasons why you should have responded, and I’ll give you a chance to re-respond right now. First, we’ll make you an extra $10,000 a year. We’ll take all the risks.” Make the offer and tell them that in the next five days, your special independent account salesman will contact them and try to take their order. “In the meantime, we’re taking the liberty of enclosing a prepared purchase order that you could execute for half a truckload—totally at our risk.” Start working that arrangement. It will probably cost you five or six grand, maybe. With a postcard and prepaid permit number, you’re going to work the living daylights out of it. You only want to experiment at first. If it pulls, you can do it forever. There is no need to commit to 3 or 5 or 6 insertions. You tell them you’ll sign up for 2 or 3, whatever. You’re only going to do the first one now and you’ll plan to do one a quarter. That way, if it doesn’t work, you can abort early.

Try not to do bingo cards—they are worthless. That’s where, if they want more information, they check off on a card with listings of 100 other advertisers. Have one postcard you want to send them back and an incredible follow-up letter. Here’s another idea. Send your materials by Federal Express. It will probably get their attention and it’s worth trying. Try 100 people by UPS. Try the rest of them by regular mail. See if there’s any difference in the response and the impact the different methods make. Do a lot of substrata testing as you’re doing this experiment. You want to have a great cover letter that has a complete story. It’ll refute all their potential objections; it’ll address their concerns. One of the things I like to do in my letters, whether it’s long or short, is pre-presume all the negatives that your prospect has, may never verbalize, and is probably saying to themselves as he or she reads the letter. For example, they’re probably thinking, “Why do I need your fencing? I already have somebody else’s. Answer: “First of all, you’ll have fewer incidences or problems. We’ll make you net an extra $5,000, but don’t take our word for it, take the marketplace response. Buy half a truckload or a third of a truckload, put most of it in the back of the warehouse, and set up three sample fences. “We’ll send you pre-assembled things on self-supporting posts if that makes it easier for you. Put it somewhere prominent. Secondly, we’ll even furnish you with special displays. We’ll make it worth your while to try it for three months. If it sells, and there’s no more inventory left except for a little sawdust, send us a new purchase order and you’re on your way. If not, then send us back what’s left. We validate our risk for you, and we can make you a lot more money. “We’re giving you the same price as somebody who gives you 57 truck loads, and all we’re asking for is a few dollars extra charge for the inconvenience of a truck having to stop and move stuff around.” That’s pretty compelling, don’t you think? You can also probably grow another two million just through the pipeline. I suggest you start running ads—a provocative ad—in the same trade publication. Say you’re looking for products—successful, major cedar forest products, doing almost eight figures, having distribution everywhere, high-ticket, high-volume, highly competitive, or kindred products that are not competitive and can be exclusively distributed to the United States and perhaps the world. Here’s another approach: “If you have a great product but you’re having a difficult time getting distribution, if you’re limited in capital and you don’t have good sales support, if you’ve got very limited distribution and you’ve got a great product and people you sell it to love it and reorder it, and you can’t for the life of you break into the majors, if you can’t get orders and there’s a good enough case for your product, if you have the right entry and the right muscle and distribution behind you, send complete details in absolute confidence to box such and such. We will acknowledge everyone. If the bottom looks suitable, we’ll make you a proposition for the long term. We’ll even consider buying you out.” Run that kind of ad every month and you’ll start getting some serious business. I had a client that wanted to buy a publishing company. I ran different ads monthly and he got 1,000 prospects. What you do is review the responses every Friday afternoon according to specific criteria. Take all the submissions for that week or month. You’ll probably reject 90% of them; 10% you’ll

like. If you feel that they could consistently produce with quality, you’ll entertain coming out and looking at their facilities and operations. You can do a lot of fun things, not the least of which is you can make deals with people. They’ve got to agree to a certain volume. There are no rules. The only rules you’ve got to live by is that you’ve got to be ethical and honest. If you decide you’re into something that you’re worried about, then, by doing certain things, you can make some really binding, benevolent, almost ruthless caveats in almost any kind of distribution deal you made. You can say, “We have a right to take over the business for a certain amount of money.” You can do all sorts of fun things and look at a lot of deals. I have a feeling that’s where you’re going to make the most money. If you have other sleeper products, you can think about what gives you the most leverage. It seems to me that if you could tie up long-term, non-cancellable, performance-based distribution contracts, that’s probably the best of both worlds. You don’t need to invest the capital. All you’re doing is milking the investment you’ve already got in your resource, vendor, and customers. That would seem to me like the easiest way to grow the thing with the most profit and the least downside. It’s just a matter of exploring. Look at a broad array of different possibilities and throw a gauntlet down to people. What you have, people probably want. What other people have, you probably want. It might just mesh. If you bring on somebody extremely bright—if there’s enough margin in it for everybody—they may open your eyes to other opportunities you never realized existed, that had better profit dynamics or better repeat factors. There are a lot of people with interesting products, but they can’t market their way out of a paper bag. Maybe they’re regional and could easily go national, but they don’t have the acuity or even know how to begin. All you have to do is run different kinds of ads in different magazines. Let them find you. You might also throw the gauntlet in and use finders. Get all the reps. You could even go backward. You could write all your customers and tell them you’re looking for products that might have merit, or are regional in scope and should be national. If you work two or three different ads, the total convergent effect is usually dynamic. Which other publications, newsletters, associations, or affinity groups have prospects, independents, members, or manufacturers whose products you might want to take on? I’m looking at ways we can identify. Call the publications and ask them not only to give you the advertising information, but a breakdown of any and all lists and list segments you can rent. See if you can buy by category, by title, or by generic kinds of businesses. You might find they have all the wood-product manufacturers on a separate segment. Maybe there’s only 5,000 of them, but you can get the names and phone numbers of every one. Instead of running an ad looking for products, you could mail to 5,000 people and say, “We’re interested in either taking over the distribution of all your products, or outright buying your company on a long-term, pay-out basis and becoming the master distributor. If that has appeal to you, give us a call before you reject us. Let me give you some of the advantages.” The kind of letter might be very fascinating. The right letter can produce a 5% response. At any given time, there is always going to be some enthusiasm for their business. Your letter might say, “How would you like to make $100,000 a year forever by doing nothing and letting us take over your business?” They may have a million dollars at risk, are having a bad year, and have all these employees. Your letter might just have come at a wonderful time.

You could try so many different kinds of mailing pieces to meet the different objectives you are interested in. You could try 1,000 letters to buyers and home retailers and 1,000 letters to business owners. If you could bring on one or two product lines that have potential, the kind of profit they’ll contribute could be outlandish. Just understand that these people are very creative, but there are no rules. You can make some very innovative deals. Sometimes distributing rights are worth more than having the responsibility of the overhead, equipment, employees, wages, retirements funds, and taxes. A lot of people like just to supply and not to worry about it. But all you’ve got to do is find five manufacturers so you can double your business without having to tie up inventory. Just keep in mind, sometimes the people don’t value highly enough what you represent—the distribution, organization, sophistication, contacts. Relationships are intangible, really, but they’re worth a fortune. That’s probably worth a lot to somebody who doesn’t know how to do it. It’s very important when you communicate with them, whether it’s an advertisement or another form, that you take time to point this out. Whether it’s a kid who inherited a business and doesn’t want anything to do with it, or maybe somebody who’s working and is just tired of it—you’ve got to point out the advantages. And you’ve got to show them a lot of options, because different people respond to different stimuli. You can also make provisions with somebody else to manufacture for you. I don’t think there’s anything wrong with that. The ability to communicate is to be simple and straightforward. Don’t assume anybody knows anything. Always state your reasons. “Why don’t we sell you a truckload? Why do we take all the risks and take the stuff back, if you don’t sell it, in three months? Simple, because we know from experience. If we get it in your center and it sells, the odds are two-to-one you’re going to reorder. It’s not incumbent on you to take our word for it. We’ve got to convince you.” It’s good business to tell them reasons why. “Why are we running this ad and wanting to take over your product? We’ve spent millions over the last few years establishing a relationship; we’ve spent hundreds of thousands dollars going to trade shows; we’ve spent hundreds of thousands on airfare; we’ve put millions of dollars in products and risks to gain the trust and the contacts; we’ve meticulously qualitycontrolled our product; and we’ve got millions of dollars and years invested.” You can play on these if you’ve got a product that’s competitive, but you’ve got to make it sound like you’re as good an opportunity for them. Does that make sense? Well, I hope I’ve made an impact. It’s execution, assertive implementation, and experimentation that will make it work. I hope this has helped. * * * * If your product is good enough, you can find inroads in the market by offering a guarantee that nobody else would offer or would even dream of offering. Use your own resources to promote the product. Have a formal agreement or proviso that if the product delivers, then the retailer is locked in for repeat business. One way to reach the market is through magazine ads targeted to your audience. Make your case, but have potential customers send in for more information. Then follow up with a powerful letter or sales package with a guarantee they can’t refuse to turn down. You can also rent a mailing list or partial list from the magazine and approach your prospects directly. Take a closer look at your hidden assets. Jeb had established contacts and systems. He could plug into the industry pipeline and move other people’s products, with a great potential for profit for himself and for

others. What systems does your business have that can generate profits for yourself and others? Do you have established connections in your industry? If so, if you can effectively market and capitalize on this ability, then you’re in a win-win situation. You could distribute or manufacture other people’s products and receive a percentage of the profits in return.

Specialty Hardware Product Karl’s company makes a fabulous hand tool that gives 2 -1/2 times the turning power of a screwdriver. It has a doorknob-like handle that’s comfortable and natural to hold, and it’s made of extremely highquality materials. At the time of his consultation, Karl already was selling the product through a number of major national discount and hardware chains. Despite this success, he knew that the product had far more potential than he’d been able to capitalize on. Karl felt that the tool should be a staple item in every hardware store in America, and he wanted to know how to go about getting it there. * * * * Jay: It’s really demonstrably superior to a regular screwdriver? Karl: It’s demonstrably superior. You’ve got 2-1/2 times the turning power, yet because you grip it like a doorknob or baseball, you can turn it in a natural fashion. I sell to General Motors direct. It’s their tool of choice for all of their employees who have tendonitis. Jay: They actually use it in their factories? Karl: They do. Of all the ratcheting screwdrivers, I don’t care if it’s Stanley or Sears Craftsman or who it is, ours is the tool of choice. The body wall on the this is 1/4" polycarbonate. U.S. Testing Lab tested it. It’ll take 460 pounds of torque before you can do any damage to the rachet mechanism. That’s 6 or 8 times what the average 25-year-old, strong, healthy human being can generate. The only direct competition I have is from the illegal knock-offs coming in from Taiwan. Jay: Now, are there two separate products? Karl: Actually, I have about dozen. But they all operate off the same patent. We make one with 2 different kinds of tips, and one with 3 different kinds of tips ... And the reason we do this is that at the retail level, you get so many people who say, “Well, I’d take it if it had only 2 tips,” or, “I need the extra tip,” so we make a smorgasbord for them. And with a 1/4" or 3/8" drive socket adaptor, it drives socket wrenches as well. It’s a more versatile tool than a regular screwdriver. Jay: How are you marketing right now? Karl: The main thing I’m doing right now is marketing through manufacturer’s reps throughout the country. And I personally handle the major discount chains. Jay: How are the reps paid? Karl:

On 10% commission.

Jay: On collections? Karl:

On collections.

Jay: Do you do anything else? Karl:

I’ve just started doing mailings to hardware dealers, meaning retail hardware stores.

Jay: What’s the offer you make? Karl: It’s an introductory offer. They can go to their wholesaler or come back direct to us selecting a 4model introductory package. With a couple of models they’ve never seen before. It’s about a $120 package for $76 bucks. Jay: That’s wonderful. And they get really good margins out of it? Karl: They can get excellent margins out of it. For example, let’s say the nearest comparable 6-in-1 Stanley tool retails at $16.95. Mine can go out at $12.96, give the customer a superior product, and the store owner can make 60% on it. Jay: Anything else you’re doing? Karl: There’s one another thing. On the back of some of the retail packages there’s a customer reply registration card. Jay: Do you send them a letter when they respond? Karl: We send them a little mail-order sheet with an 800 number on it. It has a bunch of graphics of different model screwdrivers and an order form. It’s our down-and-dirty mail-order catalog piece. Jay: And how does it do? Karl: It does well. We have a high response rate, and we make an excellent profit on the average order. But I’m wanting to know how we can beef that up. We haven’t had the resources to afford a really good catalog sheet and the postage to send it. I have a whole carload of names of people who have registered as buyers. These are people who have taken the trouble to clip the card off the package, fill it out, and send it to me. Probably 1 out of every 3 of them would buy if I sent them a nice catalog sheet. Jay: Let me ask you a question. These display ads you sent me — how did they do, and are you still using them? Karl:

Let’s say they paid for themselves, but not any better than that.

Jay: You didn’t make any profound profit or anything? Earl: No. With that type of direct response in journals, I’ve always been told that the key is repetition. You know, let them see it month after month. I don’t know if that’s right or wrong or indifferent. Jay: It depends. One way to look at it is to say that if it’s going to work, it should be profitable in its own right. However, if you could run ads all over the country and they would break even, but what you’d get is 2 out of every 10 customers would buy things from you on the back end, plus the free exposure you’d be giving your retail outlets, that wouldn’t be bad at all.

Karl: Even so, our direct response advertising has been a limp -along-home kind of a program. There’s tremendous potential. We have a superb opportunity ... I have a trainload of letters from people who have used this product and love it. It’s an excellent product for the elderly. It’s an excellent product for the arthritically impaired. There are even some doctors who travel around the country lecturing on different things for people to use, and our product is one of the ones they recommend because of all the advantages it offers in ease of operation. Jay: So you’re not running direct response mail order ads right now? Karl: No, we’re not. The only thing we’re doing is sending out that little printed catalog sheet. We make a nice profit on the orders we get back, but the volume could be a lot higher. Jay: Okay. What do you have as far as capital resources to put into marketing - and can you devote personnel and time? Karl: I have a financial backer, and I can provide staffing for a pretty sizable marketing effort. I just need to know which way to go. Jay: Okay. Let me offer some suggestions, some possibilities that you should evaluate in terms of the prudence and viability of integrating into your operation. One possibility is doing a television mail-order spot whereby you just basically run ads all over the place showing the product, demonstrating it, evidencing to the viewer why it’s so superior to other product, and offering them a money-back guarantee, perhaps with a few other little products in a package you can sell for $19 or something. That’s one possibility. One of the neat by-products is if you could make it work lucratively on TV, it will also accrue great benefit to your hardware retailers. You could even run the ads until you were all the way down to breakeven if you knew you were getting retail sales from it. If you do this, by the way, you may have to be careful to do it in such a way that it doesn’t annoy the retailers. They need to understand that your mailorder TV advertising actually is adding to their business rather than taking away from it. Karl: Yes, and let me say that the money-back guarantee is no problem. My return ratio is .003%. Jay: Fabulous. Another possibility - and this is doable instead of, in addition to, or after the mail-order TV advertising - is to create TV spots that aren’t mail order, but that tell people to go to their hardware dealer to buy the product. You try it both ways. In one or two markets, do mail-order ads without referencing the hardware stores, and where you don’t put any special attention on stocking your retailers. And, in one or two other markets, presuming you have inventory on hand and don’t have to reach into your pocket to produce a lot, you get the retailers to really stock up and maybe even set up displays in the stores, and you run ads which only reference the hardware stores. Then you analyze and quantify how profound an impact the mail-order ads made on retail sales as compared with the ads where you directed people to the stores. And even if the mail order ad make a killing on their own, it might be worth running them more often all the way down to the breakeven level or even a little below - if you saw with certainty that every time you spent $1,000 you brought $900 directly back to you but accrued another $2000 in retail sales. Karl: We already have a fair amount of money committed to expanding our marketing effort. The question is how best to spend it. Although it’s a fair amount of money, it’s not an unlimited amount. Jay: Let me tell you about a product called Icy Hot that I marketed years ago. It was an analgesic balm like Ben-Gay or Mentholatum. We had no money, and the owner of the company wanted to do all sorts of things, not unlike you, and so he shackled me with the job of marketing the product.

What I did was I started calling people and making inordinately appealing offers. We’d go to radio stations and offer to run ads where we’d pay them nothing up front but we’d give them 2/3 of all the revenue - which was a big percentage - and we’d write the scripts for them. We went to TV stations and we had TV people create commercials for them and give the stations exclusives. We got ad agencies who had good relationships with magazines try to get the magazines to run ads for us on a PI basis - where we’d pay them per-inquiry instead of up front - and they’d try to get the magazines to run the ads when they had unsold space. And we’d have great ads written by people to whom we’d pay a percentage of the sales we’d get on PI. We had full-page versions, we had quarter page, we ad vertical eighth of a page, so whenever they had any unsold space they could throw us in. In addition to having people out soliciting all this for us, I mailed letters to thousands of names, I mailed letters to thousands of radio stations, I mailed letters to hundreds of TV stations. Karl:

Is it possible to do that today, Jay?

Jay:

I think so.

Karl: My experience with these advertising people, and television and radio people, is that they want their dough up front, risk-free, no questions asked. That’s the way the game is played, and anything else forget it. Jay: It’s always possible to make these kinds of deals. It depends on the offer. The more abstract the offer, the more inclined people are to reject it. Keep in mind that you’re causing people to have to think, conjure up, see a new dimension to it. The more specific you can be, the better your chances. You go to them and say, “Here’s the ad, here’s the proposition. We’ll take all the risks, we’ll ship for you, you keep the money and we’ll bill you only after we’ve shipped out, ...” What offer you make depends on how much risk you want. But it’s really not that much risk, because you only try it one time in one application, and if it doesn’t work, you can stop doing it. If it does work, it’s going to be to your affiliate’s advantage to keep doing it more, because they’re going to make a lot more money than you. You don’t care, because all your marketing expenses are on contingency, and because you’re going to make your profit by selling other products to the customers who respond, and selling the product to their friends who will see them using it and ask about it, and then go to their hardware store to buy it, etc. Sure, most advertising and media people say no, but if you solicited 3,000 magazines and you solicited 8,000 radio stations and you solicited 1,000 different people who had mail-order operations in magazines whose demographics were consistent with the areas you want to go, and you approached them properly not with a form letter, but where you put a lot of thought into giving it dimension - and you did letters or phone calls to 100 people who create TV and radio advertising and you did joint ventures with people who do package inserts, ... and told them that they could keep the lion’s share and you’d inventory and ship the product, what’s going to happen is that 95% of your efforts will be in vain, admittedly. But the other 5% can make you a fortune. With Icy Hot, I ended up with 1,000 affiliates, all totally contingent. I had 600 or 700 radio stations, I had 200 TV stations, I had 60 magazines, I had distributors on contingency, ... And what happened was a couple of them really took off, but most of them were mediocre. But 1,000 affiliates generating a mediocre 3 orders a day adds up to something pretty significant. Karl:

That’s like me with a national discount chain selling 1 screwdriver a day in 2,000 stores.

Jay: Exactly. And if you can’t get people to risk their money on great ads for you where you say to them, “If it breaks even, I’ll give you 5% of sales. If it makes money, I’ll give you 25% of the profit.” Because if you can run ads all day long in magazines all over the country and break even, you’ve got the back-end for selling other products, and you’ve got the residual, accrued effect on all your retail sales.

Karl: Let me ask a question. Do you have any quick, stimulating thought on how we can get more consumers to look at the product in the first place? Jay: Yes, I do. First, as I said, you put it on TV, and try doing this by going to an ad agency and saying, “Look, if you put together a good commercial and you buy the spots, we’ll give you x amount of all the sales that come out of the market.” Second, I have this feeling that the product is so interesting you might be able to get a deal where you put demonstrators in high-volume stores. Karl: You just hit on something we’ve been wondering about. One of the problems we have is that if it, in a hardware store, a customer comes in and sees this ball-shaped thing on an impulse-buy rack, and he can’t get a feel of what it’s supposed to do. We were wondering if there is some kind of inexpensive way of demonstrating to the ultimate retail customer what the product really is. Jay: Let’s say you started off funding it yourself until the point where you had trained a bunch of people to be good demonstrators. You could pay them hourly to go into big stores, and their main job is to sell lots of tonnage. And after you’d gotten your demonstration procedures down, you could go to stores that don’t even stock the product yet and say, “Look, we’ll bring in a trained demonstrator on Saturday and Sunday, or for the whole week, we’ll bring in the inventory at our expense. You don’t have to stock anything, and we’ll give you 20% of the sales.” That’s one way. You could also go into stores that are already stocked and put a demo in, and you could tell all the salesclerks that you’ll pay them a dollar a unit for every unit sold. Or 2 dollars or 60 cents, or whatever. Are these ideas good for you? Karl:

Yes, they are. What about rebating?

Jay: Have you ever done rebating? Karl:

Yes, with some other things I used to be involved in.

Jay: Was it successful? Karl: It worked and it didn’t work. We had a high response on one model. All in all, it was a successful program. But my retailers hated it and I hated it. And everybody from toothpaste people on up are rebating now. Jay: Rebating may okay, but it may not be as applicable now as when the product is really well-known and desired. What I’d focus on now is getting the thing demonstrated. I think TV is probably the best place to do it. I really can’t think of a more cost-effective way to do it than TV. Karl: Another question: How do I motivate my reps? The problem I have is they’re so high-caliber. They’re used to walking into a big hardware store, making a one-hour sales call, and coming out of there with 100,000 dollars worth of business. Jay: You might make them a specific proposition. Tell them that for the next 3 months you’ll take your entire profit on each unit they sell and spend it on marketing to get the thing going in every new area they can get it into. Make it very specific. Don’t leave it to their abstraction. Say, “Okay, let’s take Los Angeles. My net profit is $6 per unit (or whatever). If you can get 25,000 new units sold for me in Los Angeles, I’m going to put $150,000 into marketing in the L.A. area. That’s the guarantee I’m giving you. You tell the retailers that as long as you sell that many units, I’ve committed $150,000. That means I’m going to be on every TV station at least 10 times. I’m going to be on the three main radio stations. There’s going to be a coupon redemption ad in the L.A. Times sports section on Sunday. We’re going to send brochures to every talk show host....” Tell them in specific terms everything you are going to do, and get them excited about it.

Karl: Okay, I hear you. I know we’re almost done, so let me ask one more question. Are press releases a viable avenue? Jay: Absolutely. In fact, I think you should send 1000 ... and again, when I give you a suggestion, it’s predicated on the understanding that if you don’t have the money, you do a fraction of them at a time. Do you understand? If I say 1,000 and you can’t afford to do what I’m going to say, you do it 16 or 20 at a time. Take the actual unit, the screwdriver, and send it along with your press release, and enclose a semipersonalized letter and also a glossy photo of the unit. Have the letter say, “You simply can’t appreciate this product unless you really use it. So rather than just telling you about it, there’s one enclosed. Take it home, use it to screw something down and see how much easier, how little pressure, etc. Send out an actual unit along with your press release. I think this is one product that has to be demonstrated for people to get excited about it. Karl:

I think that’s very true.

Jay: I hope you’ve gotten something out of this. And I wish you great success. Just remember this: Try to get as many people as possible working criss-cross on contingency. Pollinate it and you’ll be incredibly impressed with what it achieves. Goodbye. And good luck to you. * * * * If you can show a good track record of back -end or repeat business, or the potential of your product or service is high enough, you might try your own variation of what I did with Icy Hot. If you’re willing to operate at or below breakeven to start, you can offer your affiliates a disarmingly large share of your initial revenues, knowing you’ll quickly gain new customers and make your money on future sales. Approach enough media people, advertising agencies, distributors, retailers, etc. with compelling enough offer - spelled out in clear, concrete terms - and enough of them may be willing to work on a contingency or share-the-costs basis to catapult you to a whole new level of performance. Even if you don’t try this in big way, try it in a small way. Try approaching one TV station, or one radio station, or one vendor or distributor, If they don’t go for it, you’ve lost a bit of your time. If they do, you could wind up multiplying your volume at virtually no out-of-pocket cost. Leverage like that could be well worth your effort.

Resort Development If you’ve ever seen a good marketing opportunity but didn’t know where to start, this transcript will be of value. It covers very basic, but crucial, things you should do even before you begin the marketing process. * * * * Jay: Before we go any further, give me an overview of what it is you’re really trying to do with the project. I want to be sure that I’m focused on that.

Wendell: All right. What I’m trying to do is put this project together and determine a method of marketing it. I’ll be reaching a point where I have a product, or a number of different kinds of products - basically condominium units - either for retirement or recreational purposes. Jay: Are units being built right now? Wendell: Not yet. Jay: What’s the status of everything? Wendell: I’m just in the process of investigating the property. I know the property is for sale; it’s available and it’s zoned properly. I need some help on it financially. I’ll be searching up here for prospective investors. Jay: Let’s talk a little about the level of involvement you really want to have. Tell me, all things being equal, what would you optimally like to do with the project? Wendell: I would like to be the co-developer. My fees would come out of finder’s fees and the architectural and real estate development sides. Jay: What do you think the project will cost? Wendell: Well, as I visualize it, the whole thing could ultimately cost a couple of hundred million. Jay: Okay. Wendell: It would be built in stages. The golf course is actually in process already. A local developer is interested in doing something, but he doesn’t want to do the whole thing - he just wants the golf course. Jay: Okay. What’s the status of the golf course right now? Is it being built? Wendell: It’s partly built but it’s on hold. It got stuck in the recession. Jay: Oh. Give me an overview of the area. What you mentioned in your letter about the lakes and all was very powerful - very intriguing. Tell me what’s the market right now relative to people moving in and retiring, etc. Wendell: It’s improving by leaps and bounds. This is developing into “the” place in this region. It looks very much like southern California. It has that dryness, undergrowth. It has the warmth in the summer but it has the benefit of a real winter. Jay: It was interesting. You mentioned wines - are the wines good? Wendell: Yes they are, and they’re improving. Jay: Are they moderately priced or very expensive? Wendell: They’re moderately priced - four or five dollars a bottle. Jay: “The commonage” is what, now?

Wendell: That’s just a ridge of land between the two big lakes. Jay: It’s virtually undeveloped - there’s very little development on it, right? Wendell: Right. There is a little community which is down toward the south end of the ridge. There’s a town at the top end and in between there are just a few small farms and a lot of . . . . Jay: So there’s nothing at all developed there right at this moment? Wendell: Very little, and certainly not of this sort. Only a camp area on one of the lake shore sides of the proposed development. Jay: Let’s try to focus now. Why don’t you ask me sequentially the most pressing questions relative to marketing and to joint-venturing. Let me try to help you and give you the clarity that you need, first of all. Wendell: What would help me a lot in acquiring co-developers or financial backing would be to have a very impressive marketing plan for the units and also for the health spa. One of the other things I didn’t mention earlier was the health spa part of the development. I think the health costs would be much less than anywhere in the United States, and I gather there would be a fairly substantial market in perhaps a large part of the United States for this kind of health spa - a recreation kind of thing where the family could come up. One person could have their treatment and so forth and the others could be on a holiday. Jay: That’s very interesting. Has anyone done anything like that, to your knowledge? Wendell: There have been some similar things. There was a group that tried to do something like this but they had a bad location and they were tied up with the government on it. But we’re patterned after some of the kinds of developments in Arizona and California, such as Palm Springs. Jay: Let me ask you a question relative to the accommodations. What kind of financial support is available from the city, the locale, anything? Is there any kind of subsidy you can get? Wendell: Some state government money in terms of servicing the place, sewage and water. Jay: There is no development money or anything like that available? Wendell: Not government money for that sort of thing. There used to be, but not so much now. Jay: What would be the first phase and how much would it take? Wendell: The first phase would be one of the golf courses, and that’s probably about a half a million, a third to a half a million. Jay: Once it was done . . . Let’s go through the process: You would build a golf course, and that would take how long? A year? Wendell: It would take, well, if we could get started in the spring, it could probably be in operation by the end of summer. Jay: The golf course would be operated on a membership basis initially? Without the homes?

Wendell: Half membership, half public. We have a feasibility survey and the most successful golf course, thirty or forth miles south, is half and half. It’s the newest one and is most like this one in having an interesting landscape. Jay: It is operated at a nice, handsome profit? Wendell: Yes, very much so. Jay: The nearest nice course to you is where? Wendell: A reasonably good course is ten, twelve miles. Jay: But this would be a wonderful course. Wendell: The demand is greater than the supply right now. Jay: Really? And as the populace keeps growing and the people keep retiring and moving there, it will only increase. Wendell: Right. It is a resort valley. We get a lot of people from both the east and the west coasts. Jay: Right now, in your city, the population is 60,000? Wendell: No, the market area would be about 35,000. The town is south of us thirty miles and it’s probably 65,000 or so. Jay: Of 100% of the populace, what else do they do besides retirement and commerce? Wendell: Oh, lumber. A lot of manufacturing. And it’s increasing, especially in the town, at a very high growth rate. Jay: All right. First of all, let’s talk about merchandising the project. Are there developers within a 100, 200, 500 mile radius? By day, when you’re doing your normal architectural work, who do you do it for? Wendell: Basically apartment-condominium developers in the area. Jay: All right. Have you shared this proposal with any of them? Wendell: No. Jay: Would they be terribly inapplicable or would they be desirable as partners? Wendell: It’s possible, yes. There are some good possibilities there. Jay: Okay. The biggest thing, besides just a marketing proposal, which you want to be able to take to these people, is the most comprehensive assessment of the numbers translated into a pro forma. I don’t think that was included in what you sent me. Wendell: There are some tentative numbers but. . .

Jay: How do they look? Wendell: As I said, very promising. Apparently our area is now overtaking the leading regional area as the number one retirement place. Jay: That’s exciting. In your area, have you identified who the most probable prospects are to go to for a joint venture? Wendell: No, not completely yet but I have one in mind - the head of the largest privately-owned corporation in the country, a very aggressive developer. Jay: But you’ve never made any overtures to him? Wendell: Not on this particular venture. Jay: The first thing I would keep in mind, as you’re getting your thoughts together, is that the more finite and specific you can put it together, not only on the numbers but on the marketing content, the better your chances of selling it. The next thing I would do is identify the 50 or 25 or 150 most viable prospective people, entities, and companies for partnership, and then the highest ranking, titular-designated person at each one. I would prepare - I don’t know if I would send it off yet - but I would prepare a personalized letter of inquiry, of solicitation, a provocative overture to them. Are you good at doing things like that? Wendell: Fair. I don’t know what you think of the letter I wrote to you . . . Jay: It was very good but it was laborious, to be very honest with you. In other words, I went through most of it and I wasn’t exactly sure what it was you wanted me to tell you. There’s a book that’s really easy to read called “How to Read, Write, and Think More Effectively” by Dr. Rudolph Flesch, and I would strongly urge you to get it. I sense that your style is professional, but you need to imbue your letters with passion and dimension - without, of course, purveying rhetorical chicanery. Let’s identify a lot of different prospects. First and foremost, the conventional developers. Second, those people who are already in businesses who could be benefited by a project like yours. For example, if the hospital is an interesting. . . Who’s big on operating resorts? Who could do the resort in concert with you? I’d start looking at different kinds of possible partners or combination-partners who you could overture. People who would have as much if not more to gain by the development than you do, and may be more satisfied with a marginal yield. Do you see what I’m trying to get to? Wendell: Yes. Jay: Ask yourself a lot of logical questions. What group of business people would benefit most by seeing my project succeed? The most logical one is the developer who would make a profit. But who else would? Who does golf courses? Maybe they would be good. Who does hotels? Maybe they would be good. If the hospital exists, that’s one thing. Maybe somebody who does for-profit hospitals would be good. See what I’m saying? Wendell: Okay. This is a new thing here, because the hospitals are all government-run right now. Jay: There are no for-profit ones there?

Wendell: No. I have an inquiry in to them to see if they will license. Jay: Yes I understand. Is your own capital situation decent? Wendell: Lean, very thin. Jay: So the best capital you can do is human capital deployed into. . . But see, you can leverage. With marketing, you can leverage a lot. Wendell: That’s right. Jay: Let’s talk about who has got what tied up. Go over for me how much of it you control, option, lease, or whatever. Wendell: I’m just in the process of trying to acquire some sort of control and joint-ventureship on the land itself. Jay: Who owns it right now? Wendell: Right now it’s a partnership of five different companies. One of the companies has control over two other ones, and I think may have control over the other two. Jay: The five companies, are they all local? Wendell: Relatively local. Jay: What businesses are they in? Wendell: Actually I’m not sure. The one that’s right in town is basically a landholder. Jay: So they’re not developers, just speculators. Wendell: Well, they were trying to develop it and ran into the recession. Jay: Are they the ones who prepared this brochure? Wendell: Yes. Jay: Whatever came of the brochure? Wendell: Well, that’s it. They got as far as partly clearing for the golf courses, and they had a preliminary design. Jay: I’m looking at the photos of the houses illustrated in the brochure. Do they exist? Wendell: They do not. Jay: So they were just facsimiles? Wendell: Photos of other things.

Jay: Hah. So right now there is a partially-developed mass of land controlled by all or part of these five companies. They have no current interest in developing, or no capital to develop, right? Wendell: Right. Jay: To your knowledge, have they taken the project to other people? Wendell: They’ve been trying, but I don’t think they’ve been trying really actively. I think they lack the same word skills and marketing techniques that I lack. They haven’t done anything to try and improve that or . . . . Jay: How much to you think they have invested in all this? Wendell: Well, I could probably acquire three of the five for about $260,000. Jay: Really? Would that be total purchase? Wendell: That would be the cash outlay. Jay: Could you option them for a dramatic amount less? Wendell: I hope so. That’s what I’m in the process of trying to determine. I just had a search on the properties and tried to figure out what the nature of the charges against it are. I was so close to having the discussion with you that I haven’t finished that up. Jay: I understand. Before you can pop for any of your marketing, you really and truly have to have the property either controlled or owned. What about the other two? Are they going to be more difficult? Wendell: I could joint-venture with them. Jay: Would they cooperate? That’s not bad. Would they put up capital? Wendell: I don’t know. They might if it looked good - if I could paint a good picture for them. Jay: Why do you think you would be successful when they failed? Wendell: Well, because I’m an architect. I can put my professional input into it without their having to pay for it. Jay: What is that really worth in terms of hard dollars? Wendell: That’s hard to say, but if someone like me does it, it could come off. If someone like me doesn’t do it, it probably won’t come off. Jay: By the way, I’m not trying to frustrate you; I’m trying to get down to something that we could turn into your Unique Selling Proposition for garnering outside investment funds. Bring it down to something more tangible that I can perceive. Did they not have an architect involved? Wendell: I don’t think they did. I think they were doing it without one.

Jay: Rather than talk about abstract conjectures like this, your approach should be to do it with very concrete model examples, right? Wendell: I could draw some hard lines on it, right. Jay: You’d do working models and the whole thing? Wendell: Sure. Jay: What would that take in time and money? Wendell: Okay. If you look at it from the point of view of me as a developer and what I would hope to get out of it, it would be maybe 10% of the total project. Jay: In the first phase, what do you think about the $500,000 dollar golf course? Would you retain ownership or would you sell it off? Wendell: I would be prepared to sell it off or joint-venture or hang on to it. Jay: What do you think that $500,000 course would really be worth? Wendell: I don’t know. If it was $500,000 going in, it would probably return a fairly nice profit, but it would be more a seed kind of thing for the rest of the project, which would be the real estate part of it. Jay: Um-huh. Wendell: Along with that might come maybe several hundred dwelling units. Jay: How many acres are involved in the project? Wendell: Twelve hundred right now, but there’s lot of land around, adjacent land. Jay: So you’re going to be able to functionally control 1,200 acres for about $300,000 or less? What’s acreage selling for right now in the area? Wendell: Oh, I would think $200 or $300 an acre. Jay: As far as the access, how close is it to the city, really? Wendell: About ten miles. Jay: It’s highway driveable and everything? Wendell: All but four miles of it would be four lanes, and the last four would be good quality gravel. Jay: Would part of your plan be to improve the roads? Is the state or municipality responsible if you want to get the roads improved? Wendell: The state.

Jay: Is that exorbitant? Really expensive and difficult? Wendell: They have in the past said they would spend $600,000 on road improvement. Jay: At such time as the project comes to fruition? Wendell: Well, yes, showing that your . . . . Jay: Can you get that locked in, that commitment? Wendell: Probably. Jay: That’s good. First of all, you really haven’t yet. . . The $260,000 for getting three-fifths control, is that from you having approached the people or is that conjecture? Wendell: That’s conjecture of this other fellow whose wife owns two shares. Jay: He is the one who wants to joint-venture? Wendell: He’s prepared to joint-venture. Jay: So you have his verbal commitment. He owns two-fifths of the deal? Wendell: Right. Jay: What’s his business? Wendell: Well, I think he is just the landholder right now, semi-retired. Jay: But he was part of the original group that tried to do . . . this is a harder than usual session, you know that? I’ve got to take you very much from the intangible, and sequentially lateral you into more tangible, finite stuff. Can you tell that? Wendell: Yes I can. Jay: It’s not easy, but you need to do homework assignments before you go on, so that you can deal more in specificity and can get focused more. That’s what I think you need to state to anyone if you’re trying to get money. In other words, if you can’t tie the thing up specifically, it’s conjecture. Again, it’s always easier for someone like myself to give tutorial advice for something that’s specific. When it’s not, it’s harder, but I can do it. I can tell you that what you want to do is get it all tied up, and you want to get it tied up for as close to nothing as you can. You want the longest strike option. You want to sit down and find every possible, not just developer, but kindred type of business who would be profit-motivated to get involved either in cash or in constructing something there. Then you want to start weaving all the filaments together. I think it will be much easier when you have a list of the hundred biggest developers and what they specialize in. The people who do spas, the hospital people and where they’re located, if there is a company that does golf courses and manages them. Identify all the possible component players you could approach and synthesize them together to make this deal work.

Then start approaching and at the same time, do your numbers so you’re not talking in abstraction. In other words, if a letter goes out and says, “I’m an architect. I control 1,200 acres worth $10,000,000. We’re going to do this whole development. It’s in fourteen parts. The crux of it is the golf course. The golf course can throw off $5,000,000 a year cash flow to the owner. We’re proposing that you put in the golf course and finance it and give the development 10 or 20% of the gross. Here’s the dynamics. What we expect is that a $500,000 investment on your part can be worth such and such.” You start talking in specifics to them. Does that make sense? Wendell: Yes, I can see what you’re driving at. Jay: It’s time-consuming and it’s grub work. If you can get that, though, then you can start working to your advantage at letting people come to you. There always are going to be, in anybody’s situation, a finite number of businesses and people who actually would have more to gain by seeing your project succeed than even you. Wendell: Right. Jay: You work backwards. For example, suppose you can find a construction firm that has zillions of employees and has capital but doesn’t have projects. They have to keep their people working. Your project might be just what they need. If you can find a hotel firm that wants to grow and is committed to it but needs a vehicle around which to build and by giving them the land, they’d have it - see what I’m saying? Wendell: Yes. Jay: You need to do a lot of research on who the players are in all sorts of specialized fields, such as medical-based spas. You can find out that there are certain people who do all the kindred and related facets. Once you identify the 25 players in each one of those categories, you craft fabulous letters to them predicated on your data, where you tell them that you’re going to give them the chance to be the hub of a $10,000,000 development for an out-of-pocket outlay of $5,000,000. All they have to start with is a commitment for $100,000. You work backwards and put it all together. At the same time that you’re doing all that, you’re also soliciting the big financial groups. Concurrently, you’re soliciting venture people or investment funds saying, “If we get this, will you give us that? Will you give us a commitment provided we give you such and such?” You’re working all the sides together and against each other, if that makes sense. Wendell: Um-huh. Jay: Here’s your homework, and I hate to reduce it down to academics, but you should start by getting some research on who the players are, first and foremost in your region then all over the United States, in all the fields that would have implication to what you’re doing. Sometimes the best deals that I and my clients ever engineered were from finding someone who was distressed and had more to gain than they did by seeing a project come to fruition. Who would that be? Let’s take the category. Would you call this “second home” or would this be the person’s primary home? What would you categorize the whole development as being? Wendell: Ultimately primary. But it could start second-home.

Jay: When you start doing your research and asking a lot of questions, it would be nice if you could strike a nine-month or six-month modest earnest money option on the whole thing for putting it together. It would be to your advantage. The homework assignment I’m suggesting to you would be applicable irrespective of how you settled it, though. If you want to take over that particular development or that cluster of semi-developed acreage, I think before we make overtures to anyone, the most important thing to do is to have it tied down. So it would be to your advantage to take a big deep breath and do a big gulp and then go to the persons who own or control those three-fifths units. Tell them that (A) you’re willing to invest a quarter-million dollars of your professional services, (B) You’re willing to spend the next two years doing some real innovative research and marketing overtures to put together the entire program. But you need to know with certainty - before you’re willing to invest that much time, effort, and speculation - that you have control of the land. Right now, they’re sitting with something that may never come to fruition. With a little bit of luck, they could turn that into $300,000 in their pockets within nine months if you’re successful. But you’re not willing to do a thing until you get a piece of paper that’s irrevocable from them saying that you have this option that you can strike anytime, and make it as long out in time as you can get. If they say no, then start looking elsewhere. I think what I’d like to ask of you is that you try to make an overture to all of the land owners and tie them up. At the same time, you start identifying the numbers based on that situation. Do the worstcase scenario. Do the numbers based on each component, i.e., what’s it going to take to build the hotel, the this, the that, to put the roads in, whatever. What the minimum downside, most conservative yield would be, what marketing expenses are needed. Do you have a computer? Wendell: No, I don’t. Jay: Do you have access to one? Wendell: I have access to one, but I’m not sure if it does number crunching. It’s just a word processor. Jay: See if it’ll do it. Then once you put together the numbers, there are ways to interpret those numbers to somebody that could be very exciting. “For an investment of $500,000 of which you only need make a $100,000 short-term commitment, you can be the focal hub of a ten- or twentyor fifty-million dollar development that will throw off an estimated cash flow of such and such a year.” That might be very exciting. Wendell: Yes. Jay: There might be ways you can get commitments from people that if such and such happens, they’ll do such and such. For example, if the golf course is built and works, maybe you can have a deal where the builder will make an overture to the golf course manager to buy it back at three times his outlay. All those things can be very exciting. There’s a lot of leg work but it’s essential, if you can, to do it all. Your architectural practice continues, am I right? It’s an ongoing business? Wendell: Yes. Jay: This may take you a year. Are you prepared if it takes a year to fool around with it? Wendell: If it’s necessary, sure, yes.

Jay: It may be. It may not, but I think you should prepare yourself for the worst. Remember, though: In business and investing, everybody wants to be taken as far away from the abstract and as much towards the finite and concrete as possible. They want you to show how you’ve hedged the deal. Make sense? Wendell: Yes. Jay: The more ways we can get you hedged, the better off you are. The best way to do it is to play a lot of people against one another, not unethically but just with different overtures, and let the ones in whom you’ve struck the most responsive chords acknowledge themselves to you. Wendell: All right. Jay: I’d like it if you could lock up the principals, get the list of all the kinds of people, do some research. I don’t know who you’ll ask. You might want to go outside your locale and do some research. There are a lot of computer-search associations that can tell you who does what and where. There are a lot of computer data banks where you can put in a thematic subject and it’ll research for you all the articles ever written or all the people or all the companies who are in this field. Wendell: I think our local community college has something like that. Jay: If you’ll do the research. . . The best way I can give you a value on your dollar is to make you do more homework. Wendell: Sure. Jay: Okay? Wendell: I appreciate that very much. Jay: We’re just talking about something that intuitively in the craw of your heart feels good and lucrative, but let’s put it down onto paper. Wendell: Right. Jay: Let’s find out who has more to gain by helping you bring your vision to reality. Somebody perhaps to do it in concert with you. Wendell: Yes. Jay: Let’s find them out. Wendell: Okay. Jay: Okay? Wendell: Thanks very much. * * * *

Attracting investors or joint-venture partners has a lot in common with marketing products to the public. In both cases, you begin by finding your Unique Selling Proposition - the value you offer that no one else does. In both cases, the more concrete and specific you can be about the benefits to the prospect, the better the response you’ll get. And in both cases, it pays to market first to the prospects who are most likely to buy. (In raising capital, for example, there will almost always be a finite number of people who have more to gain from your project’s success than you do. These are the ones to approach first.) But before you approach anyone, do your homework. You must show people - in the most concrete, quantitative terms possible - how you’ve covered every possible angle. You must have a concrete answer for every reasonable objection. And you must present the details so clearly that they can be grasped at a glance. If you forget everything else, remember this: Put yourself in the other person’s shoes. Ask yourself, “What facts would I need to know that would make me want to buy?” Answering that question is the first step to successful marketing.

Environmental Services Michael has a new environmental services company - he figures out how to clean up serious pollution problems, especially hazardous waste and asbestos. He also has an engineering firm, which continues to make a good profit, although it’s beginning to feel a crunch from the competition. Michael had been spending over $50,000 a year on advertising, but all of it had been image advertising. I showed him how to make every ad dollar yield many times the return by conveying a message that will actually convert prospects into customers. * * * * Michael: Hello, this is Michael Hayes speaking. Jay: Hi Michael, how are you? Thank you for sending me your promotional materials. I thought your letter was great. I was very impressed. But because I spent so much time on it, I haven’t read every piece of your advertising. Michael: I didn’t expect that you would. Jay: I normally would but I really got absorbed in your letter. How old are you, Michael? Michael: I’m forty-four and I’ve been in this business for twelve years. Jay: You have accomplished an incredible amount in twelve years. Michael: Yes, in our business it’s an incredible amount. Jay: It is! I like the structure. I like the ethical and philosophical tenets that you extol. I don’t fully comprehend what you do but it sounds like you’ve built yourself a wonderful regional niche. And you do some national business too?

Michael: Yes, we’re becoming a more national company. We opened two offices back east this year. We anticipate opening two others next year. After that, we’re not sure. But we would expect continuing expansion as long as the marketplace stays the way it is in the hazardous waste area, probably at least ten years. Jay: That’s wonderful. I need to get a better feel for what your business really is. The material you sent me was quite comprehensive but I want to get more immersed in your whole operation. Let’s overview real quickly the services you offer and the value or benefit that each service gives the user. Michael: All right. We began as a geoscience firm, let’s say. We did studies for buildings, bridges, dams, highways, and so forth so they can be designed to last. What we did was orient our strengths toward a new and far more dynamic and potentially profitable area, which includes both hazardous waste, and asbestos. Two of our divisions are involved in hazardous waste, and our newest company is involved with asbestos. We still have our original business, the geotechnical engineering firm. We have an excellent reputation in this field, but the increasing competition prompted us to look for more profitable areas, and hazardous waste was one of them. Unfortunately, we were perceived as only a geotechnical firm. So we tried some radio advertising to broaden our image. Jay: I believe you mentioned talk radio in your letter. Michael: Yes, the station we use is by far the top station in town. It’s a network affiliate - the one that carries professional baseball, which we’ve advertised on. Jay: What were your commercials basically saying? Michael: The statement we used was, “Hayes Environmental Services - known for solving industry’s problems.” We wanted to be perceived as the leading environmental service firm oriented toward major industries facing severe environmental problems . The ad was an image builder. The whole purpose of it was to make us well known by anybody who’s concerned with waste and environmental problems on a corporate level. I know it sounds very oblique, but strangely enough, we have actually achieved some recognition in the last two years. Jay: It sounds like you’ve done a very remarkable job with the dollars you’ve spent. But if I can show you a way to make your promotional, advertising, and marketing activities finance themselves and, at the same time, qualify the people that you’ve been reaching over the years, that would be wonderful, wouldn’t it? Michael: Obviously you’re trying to show us a way to attach numbers and costs and returns to what we’re spending. Up to now, we haven’t been able to do that. Advertising has always been a bit like witchcraft to me. It doesn’t deal with things that engineers like to deal with - relatively tangible things that you can nail down and put numbers on. In response to your question about the radio ads, I can tell you that they try to describe a generic problem that the industry we’re targeting might have, and how our company has solved that problem. It’s a very high quality ad put together by professionals, with music and sound effects and sometimes a dialogue between a couple of people. It’s summarized with a musical theme at the end.

Jay: Is there any response or direction that you ask the listener who may be a qualified prospect to take? Are you offering them anything? Are you asking them to do anything? Michael: Early on there was not because it wasn’t our intention. And frankly, we didn’t think it was likely that that would happen. I still don’t think it’s likely to happen. But later, we did give telephone numbers and so forth, and there has been some response. Jay: Any conversions to sales? Michael: Yes. Several projects did come out of it. But that was actually not expected. My goal was not to have the ad induce a call! Jay: Think about this because it’s actually a very powerful marketing concept. Every time you run these commercials, you can have a standard ending wherein you offer a report or an assessment or some educational or informative material that would help somebody whose business has an environmental problem. You want to make these people focus on their problem and to think of your company as the solution. If you get them to call you, you can generate sufficient immediate business to more than pay for that advertisement. The residual value for your company is free. Getting people to call is the key. Keep this in mind, Michael, because human beings are silently begging to be led. You just have to use these commercials to delicately program them. You present the problem, then you show the way to a solution. But you’ve got to get them from point A to point B. You’ve got to get them to act. You have to tell them what to do, because left to their own devices people won’t do anything. All sorts of other demands on their time and money will keep them from taking action. You need to try to get them to at least acknowledge their need, get them to call for a report, get them to have their secretary contact your information officer for some material to help them decide whether they have a problem. Some of the alternative solutions you send them may not even include your services. But the material you send out should give them vital and valuable information that will help them make an informed decision. It will cause them to acknowledge their problem and take action right now. I know it sounds incongruous with what you’re saying. But if you’re going to spend 40 or 100 or 200 thousand dollars a year on radio ads, you should expect more than image building. If every month that same commercial produced just one company that would ask for a specific report or a guide book, something they will want to have because it will help them find out whether they are suffering exposure to some environmental hazard. . . If they are in this predicament, they will want to know if they can overcome the problem themselves, or if they need outside help, they’ll want to know who offers what options and how much they cost. Give them a lot of information-based value that will make them want to respond to you. Does that make sense? Michael: Absolutely. Jay: It’s just taking the same commercial, going to your agency and saying, “Cut it differently, design it differently, so the last ten seconds offer this or that.” And don’t just go arbitrarily with what you and your agency think is the neatest one. Start experimenting with different approaches and different offers. One time offer a report. Another time offer a survey or a guide book. Try different premises, different “hot buttons”, different offers, different environmental topics. Then analyze which one produces the most responses. As you either knew or now know, responses by themselves are meaningless in the context of lead-generating. You want to know

which ads produce the most conversions to sales. Once you find the commercials that work, then every time you run them, they pay their own way. They may even pay for other commercials. Let’s say you find five different themes or subjects that work for you, and every month it costs $10,000 to run them. But you know they’re going to produce $15,000 worth of initial business, and one out of every 20 companies that respond is going to turn into $200,000 in residual business. . . Now we’re starting to talk about marginal net worth analysis. But you can’t get to that point until you start analyzing who your prospects are for each type of service. You should start melding things onto your institutional (image) ad. Make specific offers designed to identify prospects and get them to call you because they acknowledge you as the solution to their problem. That little technique melded to your ongoing radio advertising should, within 3-6 months, with some experimentation, analysis, and a bit of work on your part and your ad agency’s part, enable all your ads to pay their way and give you the residual value for nothing, instead of having to pay for it. Michael: That would be fantastic. Jay: It can be done. Michael: We could also tie it in with something that we can send out. Jay: And make it provocative. Again, don’t just try it with one thing. Sit down and say, “Well, let’s say we’ve got 10 basic scenarios we would really like to identify.” Michael: We already do this to some extent. As you probably know, some areas have a lot of problems with groundwater contamination from hazardous waste. You’re probably also aware of places where gas stations have left tanks to leak and contaminate the groundwater. One of our services is to investigate leaking underground storage tanks. If they’re leaking, we design removal programs and cleanup programs that actually clean up the groundwater. One of our ads is oriented toward all the potential users of underground storage tanks. That’s an example of one of our of our targeted ads. Jay: Have you mailed specifically to tank owners and have you compared the responses of that approach to the responses from the radio ads? Michael: Not in any of our advertising efforts. We routinely keep track of prospects who request our qualifications, people who have expressed enough interest to say, “Tell me more.” The next step is proposals. We keep track of how many proposals actually turn into contracts. Jay: Imagine if every month you choose 10-20 specific products, services, or problem areas and then you identify the thousand, two thousand, or ten thousand prospective businesses in your area that would be most likely to avail themselves of these products or services because they have certain environmental problems. You get the names of the probable decision makers you want to reach, both by name and also by job description. And you experiment every month trying different letters designed to get those people to acknowledge their environmental problem and to request your product or service. Make all the letters fairly similar because chances are, one remedy can be used to solve a number of similar problems. Offer the same kind of reports, surveys, guide books, analyses that we’ve already talked about. Also experiment with this approach in your radio advertisements. Get people to respond by calling or writing in, then initiate a sequence of follow-up activities by your business development people.

Michael: I hear what you’re saying. Jay: Let’s say every month you mail out 1,000 letters to the ten different areas you’re trying to address. Let’s say there are 200,000 businesses in the market, of which 40 may be prospects. For every letter you mail, you want to find out: a) how many total prospects the letters produce; b) how many of those prospects are qualified; c) how much time it takes to nurture them; and d) what percentage of these prospects you convert to sales. Obviously it doesn’t happen overnight, so it’s got to be an in-process analysis that may take 3-4 months. Once you get a handle on it, wouldn’t it be wonderful if you knew every Monday or every month how to project for cash flow and for business and for backlogging and scheduling? Wouldn’t it be great if you knew that any time you need business, all you have to do is mail 10,000 pieces, and within 45, 95, or 105 days you’re going to have X number of new clients? And when you work them properly, those new clients are going to produce Y percentage of residual business or crossover business - that gets very exciting. Michael: That would be great. Let me ask you a question about this concept of direct mail. Obviously you have to get valid lists of potential decision makers. The problem with a lot of our services is that they are very complex and involve rather substantial purchase prices. In the Fortune 500 companies which are our potential targets, no one person is involved in calling the shots on that kind of purchase. Jay: But somebody initiates the action within the client company. Michael: For these kinds of decisions, there’s usually a committee. Jay: But don’t you agree that the problem has to be acknowledged and brought home and crystallized and a solution put forth? You help these people realize that they do have a problem. You help them to identify and articulate that problem, which sooner or later is going to manifest itself in a real difficult situation if they don’t acknowledge it - not the least of which could be being arrested or fined for not complying with the federal regulations - and you present them with a number of effective, efficient and cost-effective alternatives. You’re a specialist in helping them identify their alternatives and figuring the most cost-effective and enduring solution, and in calculating the time needed to do it. Philosophically, you’ll want to sit on the same side of the desk with them and help them identify all the alternatives, not just the most expensive ones, with the understanding that they may or may not engage your company, but that’s what you’re offering. I think that’s a neat approach. Michael: I think that message is what we have routinely done in our brochures and reprints of articles that we’ve had published in various business and technical journals. What we have not done is find these lists of people so we can target the mailings. Jay: Give me a generic position of somebody you would want to reach. Michael: Environmental engineers. Jay: Okay, what publications does that person read? Michael: Chemical Age. Jay: Okay, you go to Chemical Age, and you ask for a list of all the subscribers by name and phone number within your marketing region. What’s the next publication?

Michael: Waste Management. Jay: You go to Waste Management, and ask the same question. You go to every expensive newsletter that those people read. You try to bypass the stupid ways that everyone else tries, and you look for the most direct way. You go to Chemical Age, which is a national publication, and you see if they have a regional issue you could advertise in. You go to the newsletters, the expensive trade newsletters that may only have 1,000 subscribers, and you offer to pay them a small fortune for the names of every one of their subscribers who would be prospects in your marketing area. There are some interesting ways, and even though you may pay a lot more per unit, you’re paying a lot less for waste - no pun intended. Michael: We’ve done that direct mail approach precisely the way you’ve described it a couple of times, with little success. Jay: Then perhaps it was the way you executed it. Even though you’re technically oriented, let me give you a little twist that I’ve used very successfully with clients all across the demographic and socioeconomic spectrum. It’s what I call the assumptive position. It’s not an announcement, it’s not a question, it’s not “we are doing this,” it’s not, “do you have this problem?” It’s the opposite, it’s an assumption. You write to 100% of the people who own tanks, and the letter says, “I know you’ve been having some small leakage problems with your storage tank, Mr. Clark. Perhaps it’s only a tiny little problem that can be usually taken care of with minor patching. Perhaps it’s more profound, and the implications are horrible, but one thing is for certain: I know it exists, and normally it doesn’t improve. Statistically there’s a 1 out of 3 chance you may have a major problem. You owe it to yourself to first have it analyzed.” Of course the people who don’t have leaky tanks probably aren’t going to worry about it. The people who do have the problem are going to say, “How did he know?” and you’re bypassing the B.S., the rhetoric, that most people use. And you do the letter on a computer - it’s laser printed. You try that approach with a lot of other common problems. “I know your firm is having trouble figuring out how to dispose of all the hazardous by-products of manufacturing. I know you’re dissatisfied with the service you’re using. I know you’re frustrated, I know that you maybe have gotten some citings from the EPA. I’m here to. . .” And you try that approach for five or six different applications. The stuff that I’ll teach you, it’s so logical and overlooked, but it’s very powerful. You can see already it’s so different from the stuff most people do. Michael: I agree. Jay: After you affirm that they have this problem, and they’re sitting there thinking, “How did he know?” you’ve got to take them to action. You tell them how you’re going to try to help them, and why. . . And let them in on the secret. “What I propose is the following: I’ll dispatch one of our engineers. He or she will come and they’ll do this whole thing. Why? Because the odds are one out of three that you have a major problem. Frankly, I hope you don’t. We’d only be too delighted to certify that all you’ll need to do is put a dab of putty and chewing gum in one spot and walk away, but if you have a problem, we could fashion a cost-effective, workable way you can address the problem.” You take them to action, you make a proposition which is not only irresistible, but takes the onus of figuring out the problem off their mind. And you tell them what to do. “Call me personally, or my assistant, Bob Schmidlapper, at this number. If it’s too much trouble now, send back the confidential response card to my personal attention, and we’ll get back to you in confidence.” You show them that you understand more than everyone else, and you know they’ve got the problem.

Every situation is quite unique - the people you’re dealing with, their mentality, the problems involved. Don’t just go and run with this and spend $100,000 tomorrow. But I would be willing to wager that if you took what I just told you about the assumptive technique, and wrote a warm, human letter, the response would be quite good. Right in the beginning of the letter you say you know they’ve got this problem, and why it’s worth their while to engage you because you’re going to help them find a lot of solutions. Some of these solutions may not even incorporate your own services, but you’re going to help them determine the most practical, the most cost-effective, the most realistic alternatives given their particular situation - maybe they’re getting ready to sell the business, maybe they’re going to abandon it, maybe it’s not worth spending. . . You might tell them that, you tell them there is no right or wrong, there are a lot of possibilities that will work for them. When you meet with them, for example, you want to ask things like, “are you getting ready to do a whole refitting of the factory, are you getting ready to move out, are you leasing the grounds, is it a marginal business in the first place, one that doesn’t warrant the $2 million. . .” And showing them that you have empathetic, clear understanding of their dilemma and that you’re going to help them evaluate the alternatives, I think that puts you on a different side of the desk, figuratively speaking. Michael: What you’re proposing is far better than what we’ve done so far. Jay: If you have good letters making the right propositions to the right audiences, you should be able to identify all sorts of different prospects. And every month you should have your director of marketing send a thousand of these letters, 500 of these letters, 2,000 of these letters, each batch targeted to a different group. Then you analyze the responses: 50 qualified prospects want this analysis, 25 prospects want this report, 100 prospects want this survey. And you work out your break-even point in each area. Michael: It’s going to take some thought to get all that pinned down. Jay: I’m just saying that these tools are available to you and that they can help you when you move into new regions, because you’ll have all this data based on sales elsewhere. Once you get your methodology down pat, it’s replicable. That’s what’s exciting about it. Michael: We’ve talked about essentially two things up to this point. The radio advertising and the direct mail. I can see how space ads in newspapers could also be oriented toward calling for an action. Jay: Before you run newspaper ads, I would explore properly focused direct mail or regional or segmented ads. For example, if you could go to materials handling or waste control management people, and convince them to sell you their mailing lists - even at an exorbitant cost if 100% of their readers are prospects - I would do that before I would go to the Sunday newspaper and run an ad in the sports section, because 99% of the readers in the sports section aren’t prospects, but 99% of the readers in the region of waste management are prospects. Does that make sense? Michael: Sure. Jay: Let me role-play with you for a few minutes. Give me a scenario, a generic client you’d like to reach and a specific proposition you’d like to make to them or a service you’d like to render to them, and the problem you’d like to overcome, and what publication they might be reading. Michael: Why don’t we say I want to reach the manager responsible for underground storage tanks for a major oil company in our region. We’re trying to get him to hire us to assess whether

his company has any environmental problems at their service stations nationwide. I want to contact this guy, either by letter or by phone. Jay: How many of those guys would there be in your market area? Michael: In the area we’re serving right now, there could be 200. Jay: First of all, we identify all of them. The next thing we do is step back, you and all your qualified people sit down and have a recorded brainstorming session where you ask yourselves, “What knowledge do we have that the person we’re trying to reach probably isn’t privy to, some information that could get them excited or fearful?” For example, I had a client who discovered a special rebate for wholesale fuel users. They were entitled to rebates of up to $200,000 and didn’t know it. We put together a report that spelled all this out. That was enough to really get them excited and this guy generated millions of dollars just by revealing this information to these people. Michael: It think that’s a good idea. Once we’ve identified what that thing is. . . Jay: I would try maybe ten different approaches of a really simple report. Break those 200 top people into 10 groups, send a cover letter to each group and maybe have a messenger go to their office with a cover letter and a special report and make them sit in their office until he handconveyed it to them. And the letter would say, again using this assumptive approach: “We know you have control of hundreds of underground storage tanks. We know it’s a problem no one likes to acknowledge, but has to be addressed, because of government regulation such and such, and we know that everyone thinks in terms of a $2 million problem, you may not know that there are some wonderful, innovative, non-traditional ways to address that problem that are just as long-lasting, just as effective, but probably one-tenth as expensive. And we thought as a service to you we would apprise you of some of the alternatives, so we’ve included a report, which is yours to read with our compliments. Hopefully we’ll open up opportunities you’ll want to explore. We hope that if we introduce you to some options that you didn’t realize were available to you, options which could cut your expenses in addressing this problem by $1 million or more, you’ll afford us the chance to render service to you. We’d like to talk to you after you’ve read this letter, and in fact, I’ve asked our Director of Waste Resolution, Michael Schmidlapper to call you in about 30 days under no obligation. We hope that this will help you. . .” Michael: You’re amazing me at how well you can put it together so quickly. Jay: I’ve done this for a lot of people, and human nature doesn’t change, nor do the principles I’m sharing with you today. Michael: Let me ask you a couple of quick questions about advertising. It sounds to me that if you had $100 to spend on marketing, direct mail done the right way seems to be the best of all the approaches. I’m not saying in our business it can be done exclusively, but it sounds to me like direct mail is better than radio and better than space advertising. Jay: Yes it could be. You have a feeling that you don’t have thousands of prospects, but probably hundreds or less. Consequently, direct mail could be melded to something else. For example, if there are only 100 master prospects in your whole area, you might find that the best thing to do is get your hands on somebody who’s provocative as can be, somebody like a Nobel Laureate who got the award for research on waste management, and pay that guy $5,000 to put on a private seminar, just for invited guests, and invite those 100 key people. Then you record and transcribe the seminar so you’ve got a product you can use forever to send out to other people.

There are no rules except that the presentation should be supremely ethical, it should be profoundly personal, it should always focus on the other person’s problems and subordinate your own. Don’t be afraid to acknowledge your methods, your dreams; tell them up front why you’re doing all this. Experiment with a lot of different ways to offer a valuable benefit that no one else does. By the way, sometimes you can’t do that within the confines of what your business does. But don’t be shortsighted. There may be a way you can help somebody outside of the confines of your direct service. For example, if the man or the woman who’s responsible for writing the contract for waste management is also the decision maker for ten other related areas, and you can go out and commission a report or find ways that can save that person $1 million in these other areas - areas that your company does not even deal with - but, all the same, you send them, as a complimentary gift, a report that will make them a hero and save them $1 million and get them a bonus - what do you think that does for your chances of getting the waste management contract, or the next contract? I’ll give you an example of what I”m talking about. I’ve had clients that go out and buy bestsellers like “Eat to Win.” I counseled them to buy 1,000 copies and send them to people with a charming letter saying, “Michael, I don’t know if you’re like me, but I’ve never had enough energy. I was always ambitious but tired, sluggish in the morning, couldn’t get weight off, couldn’t get anything done. And then my wife got this book for me and I read it. It’s almost miraculous. I’ve dropped 30 lbs. and I’ve gotten fit and I’ve got energy, and I feel vibrant, and I seem to accomplish three times as much as I ever did, and I’m not tired. Now I’m writing this note to you, and it’s 1:00 AM, and I think I’m going to stay up another two hours, and I seem to only need three hours of sleep. I don’t know if you’re even interested, but you seemed like somebody who would appreciate it, and I thought I’d take the time to send it to you. If it helps, enjoy; if it doesn’t, throw it away.” You’d be surprised the impact that kind of stuff has. Michael: Yes, that is very interesting. Now, since we’re getting to the end here, let me make sure I understand all of the things we’ve been discussing. Direct mail letters can be very effective. . . Jay: But humanized letters. Michael: You also emphasized testing. Jay: Right. Even if you have no stockholders to answer to, Michael, you’d be well advised not throw away your marketing dollars in a hit-or-miss fashion. You’re much better off starting off with a lot of very conservative, experimental tests prior to direct marketing. Try different approaches of direct marketing, try telemarketing, try buying lunch for a prospect, try sending him a complimentary report, and then analyze each approach - how it does not only in immediate sales but in residual business, all the interactive ways, and you may find you can do a lot of different things at the same time. There’s no such thing as overkill as long as it is perceived as being valuable. Michael: Okay. . . Jay: Maybe it will turn out that a space ad will be worthwhile, maybe by going to some of the national magazines, but making a deal with them where you just buy an insert. . . By the way, one of the most profitable things I’ve ever done is take what would be a complete 8-page letter and run it verbatim as an insert in a magazine. No one had ever done that before. But maybe you make a special deal where they let you run that insert in just that edition of the magazine

that reached the geographical region you’re marketing to. Maybe it will seem like it costs a fortune, but it will envelope 100% of your prospects in one fell swoop. If you just open your mind, there are so many possibilities you can experiment with. Michael: We don’t generally advertise the way most engineers do, which is buying space ads and ads in professional journals, which is usually a waste of time and money. Jay: Again, I don’t know all the related services you could offer, but I’m sure you can come up with all kinds of possibilities. All I’m saying is that you should start analyzing and quantifying every approach that you try. When you spend $50,000 on advertising, you should have all the percentages worked out so that your marketing manager can extrapolate and forecast expected cash flow. This system gives you incredible flexibility, once you get a handle on it. * * * * Just because you identify a need in the marketplace and come up with a great product or service to fill that need doesn’t mean customers are going to beat down your door. Convincing someone he has a serious problem and that he should give you several million dollars to fix it can be a challenge. Here are three things that can help you pull it off: 1). Identify your prospects. Then try different approaches: direct-mail letters, radio ads, space ads all aimed at different target audiences. Get them to respond by phone or coupon. Keep close track of your responses. Once you find out what works, run with it.

Custom Jewelry This one is all about USP (Unique Selling Proposition). It’s amazing how many companies operate without a USP, even though a clearly articulated USP is often enough to place you head and shoulders above the competition. Shawn at least had a USP, but it wasn’t the one he should be using. Shawn operated a small retail store that specialized is custom jewelry. I was amazed to find out that he could offer his custom-designed items at lower prices than the stock items offered by jewelers in a nearby mall. * * * * Jay: You’re lower on your custom work than they would be on a stock item? Shawn: Yes. I make an excellent profit on it, but it’s hard for me to get across to people the value of it. I’m in like a booth now, it’s a 20 x 20 foot booth. My average sale is around 100, 150 dollars. I’m only open Friday, Saturday, and Sunday. I do all my own work. I do a lot of my book work and I do my ad writing and things on Monday. Tuesday I do my restocking, and I do my special order work, the wax work, the molds on Tuesday. Wednesday I go to the city to do my buying. Jay: Are you a pretty disciplined person? Shawn: Yes. That’s not the problem. The problem is I have too much responsibility. My USP is, “Unusual Gold Jewelry,” but really it’s “Shawn Tobias’s Unusual Gold Jewelry.” Customers want to deal only with me and I can’t handle it all.

Jay: Yes, I noticed the headline you used: “Are you bored with the ordinary jewelry everyone seems to have?” What kind of response did that bring? Shawn: That one didn’t do so well. Jay: You want to bring in customers regardless of who works with them. Your USP doesn’t have to be Shawn Tobias. It’s more like, “Custom jewelry of twice the quality as the run-of-the-mill stuff, but for half the price,” or something like that. I think you’ve got to focus into the pricing in a more powerful way. I don’t recall that you really hit on it in what you sent me. “We can produce custom jewelry that everyone will swear costs 3 times as much for less than the price they pay for stock merchandise at a mall.” That’s a pretty powerful offer, don’t you think? You try a lot of things. And one of the things you can do, you don’t have to use big ads, you could try a lot of small ads just to see which ones bring the biggest response, and then convert that headline into a full-blown reader ad. Shawn: When you say small ads, I don’t know how. How would I set up a small ad? Jay: Just a small display ad that’s maybe 1 or 2 columns square where you’re just testing headlines. Shawn: Just the headline. Jay: A headline plus a minimal amount of copy. You try maybe 10 of them instead of spending 3 or 4 or 500 or 1,000 dollars on a full-blown ad. Wait first and try a lot of little ads with headlines where you tell them to call you or to walk in. Keep track of whether the people who respond are qualified buyers. When you find that one headline dramatically outpulls any other, not only in responsiveness, but when the quality of people seems 100% good to you, or 90% good, or more inordinately good to you than bad, then you can incorporate that into a full-blown ad that gives more explanation. Years ago, a client of mine, a company called Investment Rarities, was in the investment colored gem business, but the market collapsed and they were stuck with a million dollars worth of inventory. They tried to sell it a number of ways and they couldn’t, and then finally in exasperation they asked me to, although they didn’t want me to at first, because I wanted a big commission. I did something for them that was very interesting. Basically we sold it all off in about three days. I sold it just for cost, but even selling it at cost sometimes is hard if you can’t educate them. The premise that made it work was I described the stones individually in an accompanying page. I told people to go to any jeweler and ask that jeweler what they would charge to find them a gem of that quality, and it would probably be twice the price Investment Rarities was asking, and then I said, “After you buy it, take it back to the jeweler and ask him what he would charge to make it for you, and if he says the same thing as you paid, you can have your money back.” It was a very powerful technique. You can tell people the same: “How would you like to have custom-designed jewelry that everyone will swear is worth 3 times as much for a third less than you’d pay for stock merchandise at a run-of-themill jewelry store?” You could actually name the stores - it depends on how overbearing you want to be. You could have some fun by using specifics. You could say, “Saturday I took the family to ABC, the biggest shopping center, and went to five jewelry stores. I saw a ring at Acme Jewelers, and compared it with one that I recently made. Mine has 50% more gold content, 10 times more hand filagreeing or whatever, and I didn’t get a close enough look, but I think the clarity in mine is 4 times better, only mine was custom-made for a client at $350 less than Acme is charging for their run-of-the-mill.” That’s pretty powerful. You could run little ads like that all day long. It would be fun, don’t you think? Is this helping you? Shawn: Yes, that’s a good idea. Jay: Another ad you might run is, “If you see an ad in Vogue, in Mademoiselle, etc., for an item of jewelry you like, tear it out and bring it to me. I’m sure I can design it for you for 50 to 75% less, and your friends will swear you paid...” and you can have a lot of fun with that. You want to posture yourself as a real value versus the discount imagery of the shopping centers.

Shawn: I don’t want to become the discount, I don’t want my selling point to be discount. Jay: I know, but I think your posture should be custom-designed, one-of-a-kind designer jewelry at prices less than the chain operators charge for stock merchandise. That’s not the exact wording, but that’s what I think you should focus on. That’s different from selling the same stuff they sell and competing on price alone. Do you see? Shawn: Yes, I do. Jay: Now in the ads you sent me, you use a very difficult to read typeface. It’s sans serif. I would suggest you use serif type and make sure you use lot of spacing and make it easy to read. Right now, it’s hard to read your letters, it’s hard to read your cards, it’s hard to read some of your ads. You use a lot of all upper casing in your headlines and that’s hard to read too. First letter upper, the rest of them lower is a little easier for the eyes. A lot of white space delineating your paragraphs. Make it easy for the eye to flow. It should be like a greased chute from beginning to end, and it should be so inviting. If it’s hard to focus or it’s all cluttered and stigmatized, the eyes can’t focus progressively and you lose people. You don’t want to make people work to understand and embrace your value. Also you might have another ad. By the way, these are all different premises that you can try individually, then when you find the ones that work the best, you can weave them together into a complete ad. Another ad idea you might try is to tell people to call a certain phone number. You can rent or buy for a very modest amount of money what’s called a crash input answering machine, and basically it’s an answering machine that’s got 3 or 4 or 6 or 8 or 9 or 12 ports, which means you can connect that many phone lines to it. You might run an ad continuously, telling people to call for a free recorded message on how to have jewelry custom-designed for them at half the cost of stock jewelry. You might have a 4 or 5 minute educational message on why one-of-a-kind jewelry is more desirable, both in quality and in the gratification it will give you. You might tell about it in a 5-minute recorded message. You let people call in 24 hours a day and you have 3 or 4 different lines coming into it or however many you want. Like a movie theater when you’re getting information. At the end of the five-minute message, after you tell the whole story, you hit them with the advertisement and you say, “I’m Shawn Tobias, I’m chief designer and president of Tobias Creations. We’re located in the crafts market on South Street. We specialize in custom-designed, one-of-a-kind jewelry, at prices which normally run 25 to 30% less than stock merchandise, the run-of-the-mill stuff. Don’t take my word for it, we have a case of examples you can see, and we’ll spend all the time you need.” Here’s something else you might try: “Let us design a ring for you free of charge, totally at our risk,” and the idea is one day a week—on an off day—they come in and you open up or you have sales reps. And this is what I was thinking on how to leverage yourself: You could hire a lot of people, is it a college community around there? You could hire a bunch of college people part-time to work leads for you, and you’ll work up the design. You do design free of charge, with the understanding that at the end if they want you to do it, you charge only for the execution—the design is free. It’s like a $300 or $500 design free. If they want someone else to manufacture, you’ll sell them the design for $150. That’s neat don’t you think? Shawn: Yes, sure. I haven’t advertised, but I do it free of charge. Jay: Then why not turn it into a value? “Noted industry jewelry designer will custom-design one piece of jewelry or a set for you absolutely free if you qualify, and the qualifier is that if you’re in the market to buy a new piece of jewelry, he’ll do it.” Here’s how you might say it: “Are there any catches to the offer? Yes, three, but they’re all reasonable: 1) You’ve got to seriously be in the market to buy a piece of jewelry or a set in the $200 to $2,000 range; 2) You’ve got to agree that in fact if the design he comes up with is twice as compelling, is at least two times more appealing, more beautiful, more magnificent, more breathtaking than what you were prepared to buy, at a price that’s comparable or less, you’ll favor him with the work; and 3) If you don’t want him to do the work but you want to use the design, that you’ll pay him for the design afterwards.” That’s a pretty powerful offer, don’t you think?

Shawn: I definitely agree. One other thing I wanted to talk about was that in addition to my custom designs, I buy a lot of commercial jewelry and I also sell that. It’s not the main aspect of my business, just a portion of it. I buy all the jewelry that I sell. I buy it myself and I try to select pieces that are better, different from the usual. I get commissions from that also. I import a lot of Italian jewelry. I have a lot of domestic earrings that are unusual. I have a big variety of jewelry for a small area. Jay: What’s your USP been when you’ve been selling stock merchandise? What’s your posture? What’s your offer or appeal to the customer? Shawn: I say “It’s different, you won’t see it in the regular jewelry stores.” I try to carry heavier pieces, a more expensive line. Jay: Let’s think it out together. You’ve got heavier pieces, and how are you priced on that stuff? Shawn: My custom designed stuff starts at $300. The average is like $300 to $500. I don’t sell a lot of diamonds, because it’s hard to sell a diamond in a crafts market even though I have a certificate for diamonds. I have appraised diamonds. People still don’t want to say I bought my diamond at the crafts market. When I move into a regular store, I’d like to get into selling diamonds. The other jewelry that I sell, the commercial jewelry, you know, the Italian imported jewelry ranges from an average of $50 to $1,000. Jay: Now what you sell for $50, what would the chain stores sell it for? Shawn: They’d probably sell for $100. Jay: What you sell for $1,000, what would they sell it for? Shawn: They would sell that for a minimum of $1,500 to $2,000. Jay: Why? Shawn: I imagine they have a greater overhead, or they want to make more money. I don’t know. Jay: It would be interesting if we took what we just said and put that into an ad. First of all you do some homework to make sure you’re right, and then just say, “You know, it may be an interesting question, why can I offer the same jewelry that Acme does but for half the price or less? Here’s one reason,” and then you start the story. “There’s a very nice pair of earrings in Acme. They weigh four grams, they have a little hand tooling, beautiful prong, they dangle, they’re about four inches long. My daughter first pointed them out to me. I thought they were beautiful. Acme sells them for $175, but I’ve got them on display right now at my store for $79.50. Why do they sell theirs for more than two times what I do? Well, I don’t know for sure. Possibly 1) they’re in the main shopping center and their rent’s probably $10,000 a month. 2) Their fixtures alone probably cost them $250,000, or a million dollars per store and they’ve got to recapture it. 3) They have 10 salesmen per store, who each have to make $400 a week to live on. And 4) they need to make a big profit on top for the corporate offices.” You could lovingly position yourself as a sole proprietor: “I do it all myself, my wife and I go to the city once a week, we sort of combine business with pleasure. I take her out, we have a nice dinner usually. I live in the community, my bookkeeper doesn’t get paid for overtime, my bookkeeper is me. The security person is my dog, Spot.” You build a business with a personalized thing. “Don’t take my word for it, go to Acme first. Look up everything you want, then come to me, price it. I make a fair profit. Are they wrong to charge so much? I’m not saying they’re wrong, but I think I’m right for me and hopefully for you. Why pay $150 for one set of earrings when you can get two from me?” Shawn: There are local small jewelers who I do compare with and their prices are in my range.

Jay: Remember what I taught about pre-emptive advertising—pre-emptive advertising where you’re the first person that tells everyone, and you gain distinction for the whole thing. Shawn: Oh right, like Schlitz Beer... Jay: Yes, do the same thing. You’re always going to have competitors, but if you take this position and you do it with gentility and charm and humanness. Shawn: Another thing is, it’s hard for me to write. I don’t think like you do. It’s hard for me to write that out. Any advice? Jay: You’ve got to ultimately learn a way of thinking so that you see things in a light that other people don’t, you see things in a different perspective and then you can run with it yourself. My philosophy is, if you give a man a fish you feed him for a day, if you teach him to fish, you feed him for life. It’s trite but it’s true. Shawn: There’s so much information in your reports it’s overwhelming. Jay: It’s powerful knowledge. But not everyone acts on it. This guy today was on the phone with me and he had a mail order business that’s bringing in 5,000 buyers a month. But he never solicits them for any repeat. I said, “You’re foolish not to sell to your existing customers. You’ve got 1/4 million dollars coming in already if you just connect the dots and solicit them.” Shawn: That’s what I have to do. Jay: I don’t care if I break even, as long as I bring in new people, because there’s residual, there’s other products and services to sell. Most people are so short sighted, they wouldn’t think of breaking even or losing money on a sale because they’re so myopic and they don’t understand tomorrow. If you had 10,000 satisfied customers and you didn’t make a dime on them, up front, what do you think you’d make over the years? Shawn: Right. When I first started adopting your policies, my wife would say, “Why are you going to invest all this money into it?” Like giving the gift certificates and everything. Jay: But it works, doesn’t it? Shawn: Of course it works, and I said, “Every customer’s not a one-time customer. They’re there for years and years. Especially a jeweler’s customers. Everyone wants a reliable jeweler. They’re with you for years and years.” Most of my mailing list customers I know by name, and I’ve known them for a long time. Jay: But you can’t do it all by yourself. You need leverage through other people. Shawn: I know that’s exactly what I want, but I don’t really know how to go about doing it. Jay: Well, one of the ways I suggest is what I said earlier. I think you might try a program where you run display ads or send mailing pieces to affluent areas offering this custom design where you get operatives like college kids or something, and you tell the customer, “You don’t need to come in. We’ll call on you.” It’s to your advantage anyhow, because this way you’re not going to clutter your store. Shawn: What do you think about mail order? Jay: What about it? Shawn: Maybe making up a small brochure catalog with my designs in it.

Jay: By mail, it’s difficult unless you spend a lot of time on it, and it’s a very marginal deal because it costs you so much. I think you could have a single picture of 12 or 15 of your custom designs, and have it mass produced so it looks like a Polaroid. You write a personalized letter and you can rent lists of the names of people in the affluent parts of your area. You rent lists of people, 5,000 names of people who are in that affluent area that you would serve, and you write a letter to them, and you have it computer printed. The mailing houses can do it. You could just call mailing houses or direct mail specialists. I don’t know who would do it there, but there are all sorts of people who’d do it. Or you can buy or lease a computer with a laser printer, and do them yourself manually if you have to. You send 5,000 people a letter, and the letter would basically tell your story and offer them that you’ll do the custom design thing. And say, “Rather than you coming to me, I’ll send one of my design associates out to your office, to your home, day or night, and we’ll sit down and show you sketches. We’ll design it and our proposition is again as follows: As long as you’re in the market for a piece of jewelry or a collection in the $3,000 to $23,000 range, I’ll create a custom design for you absolutely free. The design will be my property, but my normal $200 or $300 design charge will be waived as long as you have us actually make the jewelry and you don’t have to give us the job unless our cost is less than a comparable piece or jewelry would be in the store. Ours is one-of-a-kind and if you decide you want to get someone else to make it, that is your perogative. All we want is to be reimbursed for our design fee. You can’t lose on the matter, we’re taking all the risk. Why we do this even on a $300 sale is simply because we know if you buy one piece, the chances are you’ll come back at least once a year for the rest of your life. And all you have to do now is send back the card or call and we’ll schedule. “There’s one more thing, incidentally. We’re not a huge mass marketing business: we’ve only got two design assistants and I do all the final design and approvals. Consequently, it may take us three or four days to get back to you, so don’t be impatient. But it’s worth it when you consider the fact that what you’ll end up doing, first of all, is getting a $300 custom design done for you, with the jewelry of your dreams, for nothing. Also if you buy it from us, you’ll end up getting a custom designed piece of jewelry or set for about 1/2 the cost of lesser quality stock jewelry equivalent.” That’s a pretty powerful offer, don’t you think? Then, as you put it together, you hire some people and you start working on understatement, understatement. I think the whole thing is very important - posture, posture, posture, posture. You want to make sure that there’s continuity. You don’t want to hire people who are going to slam dunk, double team them, because the concept I extolled about customers coming back is not chicanery, it’s a truism. You just have to understand it and keep the posture of being one of a kind, the custom designer, and give the case of why you can afford to do it. “We don’t ever want to be an Acme. We don’t want to have the corporate overhead of a million dollar facility. We do it from our studios which are in a crafts market setting and we simply don’t have the high overhead.” Do you drive a nice car? Tell them you don’t have a Rolls Royce. You could, but if you wanted to drive a Rolls Royce, it would just mean you’d have to charge them 50% more for the jewelry. But you’re into it as much for the artistry as you are for the money. You can even say, “Don’t get me wrong. I make a good living—in fact, a great living—but I only make it because I make art forms that you can wear.” Shawn: Am I using my USP properly? Jay: No, but you’re doing better than most people. You’re doing a great job on service, you’re doing a poor job on explaining and extolling specific dollar value equivalent. Your guarantee is pretty good, but could you take it one step further? You know, if they don’t like the custom-designed jewelry, as long as they’re earnest and give a 50% deposit, even though it’s one of a kind for them, if they don’t want it they can return it? You may or may not want to take it that far. It may be a little dangerous. Shawn: What I usually do in that case when I design something for somebody, often I’ll make it up in wax first, and the customer has to actually approve the wax before I’ll cast it in gold.

Jay: You might turn that negative into a positive. “I’ll make it up for you in wax before you have to pay for it.” Shawn: Yes, I do that. They don’t even pay for it. Jay: Make that something you’ll do as a service to them. “I’ll even do a mock-up in wax, a rendering in wax for you so you can see what it will be like before you even have to commit for it.” That’s pretty powerful. I don’t want to take you to task, but you’re blowing a lot of the negotiable potential out of the very steps you’re engaging in. Shawn: Yes, you’re right, you’re right. Jay: People don’t appreciate what you’re doing for them unless you educate them. You can make it almost bigger than life just by revering it yourself. Don’t think of it as just a part of the process, think of it as a special service you do for them, so it’s only another adjunct to the risk-free aspect of it. Shawn: Right, I see what you’re saying. Do you have any ideas that I can have for headlines? The new headlines? Jay: Specificity always carries more weight than generalities. So do it, go out and do some leg work. Find out if what the Acmes are doing. Call and ask, find out what people charge for custom jewelry. Get all that data so you can put it together. Again, the essence of what I think you’re offering is: “How would you like to have one-of-a-kind custom-designed jewelry that in essence is a lifetime art form or a keepsake for less than half the price chain jewelers charge for run-of-the-mill stock merchandise?” That’s powerful. “Let us design it for you at no risk, before you decide to buy it.” The wording is sloppy, it’s not clear and crisp, it’s not ruthlessly edited and right, but it’s a powerful offer. Shawn: I have only about 600 people on my mailing list. Basically I’ve been trying to educate them. Jay: You might want to do the following. I think you ought to do a letter to them, but charmingly. Do it with plenty of white space, a lot of short paragraphs, because your stuff is hard to read. Don’t use all upper case for your headlines. Put a lot of spacing between the words. “So, once a year about January, my business slows down a little bit. We had a great Christmas...” Let’s take a couple of possibilities: “An interesting thing happened to me yesterday. My gold supplier came and asked me...” (and you might take a little creative freedom here) “and asked me if I’d like a particularly good deal on what for me is a large purchase of gold, platinum, silver, whatever. At first I said no, because everything I do is custom in small quantities, but I realized that if I could in fact tie up a lot of it, it could bring down the cost by 20 or 30% (I’m giving you a mock concept that you can modify to whatever applies to you in truthfulness.) “But I decided, wouldn’t it be interesting if I did something I’ve never done before—a custom design sale. And I let the idea gestate overnight, and then last Friday at 3 in the morning I jumped out of bed and it all came to me. It’s one thing to buy a bunch of earrings and sell them, it’s something else to have a sale on custom designed jewelry. Specifically necklaces and heavy, finely detailed, beautiful interworked bracelets, and majestic, dangling earrings, and I realized that no one had ever done this before, and I thought wouldn’t it be interesting to be the first to do it? “I also realized that it would cause a couple of problems. What are the problems? Well: a) A customer can’t just walk in and get custom jewelry. It takes time to design and make it; b) The customer also needs to be able to approve the design before committing to it. I think I’ve solved both problems. Here’s my offer: For the next 10 days only, and only for my existing customers, people who have already patronized me, as a form of thank you and as a means by which to reward you, and also fill in my next six weeks worth of anticipated slow time, and also to take advantage of the offer my supplier made of a particularly good price for me on a large quantity purchase of gold, I’m going to offer to design for you a custom piece or set of jewelry of your choice, to include either earrings, necklaces, rings or bracelets or bangles or pins or broaches for a savings of 20% off my normal custom rate, which by the way, is about 60% less than normal retail stores would charge for stock goods, and is as much as 2/3 or 3/4 or 7/8 less than blank store or blank store or blank store will charge for the same custom design.

“Besides agreeing to create for you a custom design solely at my risk, and also turning that design, once you’ve accepted it, into a pre-approval working facsimile in wax that you owe nothing for until you accept it and give me authorization to produce it, I will go one step further. I will also promise you that if after getting the product you take it to any jeweler or friend of your choice, and if they don’t think it’s worth at least two or three times as much as you’ve paid, I’ll refund your money. But before you even take me up on my offer, here are the numbers of the three best jewelers in town, the only ones I would recommend you trust a custom job to. Call any or all three of them and ask them what they’d charge you for a custom design. They probably won’t even talk to you over the phone; they’ll make you come in and you’ll probably find they want $500 to $5,000 for something I’ll do for $300 to $3,000.” Do you see what I’m trying to say? That’s a pretty powerful offer to mail them, don’t you think? Try different things. I would try a lot of those little ads that are mainly headlines. When you find which ones pull the best, take that same headline idea and try it in your mailings. I’d do postcards, letters, little monarch size letters, mailgrams. When you do a particularly good piece, photograph it and have 600 copies of it made and sent out. “I thought you’d like to see the latest example of what I did for Mrs. Smith. What do you think it cost?” And you maybe have 2 sides or 3 sides to the mailer and say, “Inside is the answer.” Inside, you have a little envelope that’s sealed. “You probably thought $1,500 dollars. I charged her $812 or $316, and by the way afterwards she got quotes from this and this and they wanted this, for a piece of the same caliber. If you’re interested, I’ll be glad to design custom for you, and my standard offer for customers holds true. I’ll give you a $400 design free as long as you let us do the work. You’re not obligated to accept it until you see the wax rendering. Moreover, if you don’t like our price, you’re very welcome to take the design for five days to anybody of your choice and get a quote from them. If they give you a better quote, we’ll sell the design to you for $150.” That’s a powerful offer, isn’t it? Shawn: Very. I’m going to be opening a store like I told you in about six months. Do you have any ideas for a grand opening promotion? Jay: Let me give you a great idea for an opening, a great idea. It’s expensive, but it doesn’t matter. You might work on it. I did a couple of mailings for an investment place and we took facsimiles of silver dollars, and we took facsimiles of St. Godens gold pieces, we took facsimiles of gold sets, and we did them three dimensionally in gold leaf using direct postcards. It was so powerful, it brought such dimension of example to the recipient. We did them because we were trying to get people to appreciate what owning coins is all about, and we thought we should facsimilize them not in picture form but in three dimensions by having a facsimile of three different coins right there on this card. Shawn: You mean like embossed? Jay: Die cut then embossed, foil embossed. What if you did copies of three of four of your designs—it could be earrings, a set of earrings, or a gold bracelet—and you did it embossed on a big postcard that says the same thing I said earlier: “If Acme sells earrings for $150 we normally sell them for $79, and if So-and-So sells a bracelet for $250 we normally sell it for $125. Here’s a special offer that we will make when our grand opening comes in six months from today: If you’re thinking of spending $300 for a set of earrings, why not either spend $150 with us, or have two sets for the same $300. Come in and look us over. We’re open Monday through Saturday.” Shawn: That’s good, Jay, that’s very good. Thank you. Jay: You’re welcome. * * * * What is your USP? Can you clearly articulate it in a few crisp sentences? Do your customers think of your company in the same way you do? Do they see you as different from the competition? Could your USP be stronger?

If you can’t answer one or more of these questions, then I urge you to take an hour right away and begin thinking about what your company offers and how you can make that offer more powerful, unique, and distinctive. Then think about how you explain your offer to people. Read your own ads, brochures, and mailers. It is clear to people what advantages they will gain when they buy from you? If not, rewrite everything. There’s nothing you can do for your business that’s more important than developing a strong USP and explaining it in a way that’s powerful and compelling. P.S. Don’t forget those guidelines I gave Shawn about typefaces and white space and all the other things that can make an ad, brochure, or mailer more readable. You can have the strongest USP and the best ad copy in the world, but if your material is hard to read, you’ll lose people before they even get exposed to your message.

Mini Warehouses Occasionally, someone who consults with me seems to resist my recommendations. This was the case with Drew, who was about to open a second mini warehouse (the kind where you can lock up and retrieve your own items of storage). As a result, I spent more time than usual going over the marketing concepts I felt Drew should be using, including suggested wordings of sales pitches. This transcript will show you—in great detail—how to apply some of the most powerful marketing concepts I advocate. * * * * Drew: When I first started in the warehouse business in the early seventies, you could get a decent location, a little storage facility, put in a mom and pop type caretaker and watch it fill up. In today’s market, you build a facility in a good location and you still have to get out there and hustle. You have to market; you have to promote. Jay: Is the profit dynamic still good? Drew: Oh, yes, if it’s full. If you’re empty it’s sad. Jay: What does it cost to construct one? How much per square foot? Drew: 20 dollars. Jay: What does it cost to rent a 10 x 10 cubicle, assuming that’s a standard size? Drew: Around here, I would say, $85 a month. Jay: Then your investment is returned to you over what period of time? Drew: Part of it’s a function of how fast you rent up. And then it’s also a function of what economic climate you’re in, which affects how much you have to pay on a mortgage. It’s also a function of whether there’s a recession or good economy and whether you’re getting good rents, if you’re high occupancy or low occupancy. I’ve examined what I want to do and a normal rental average, statistically, historically, is two new rentals a day. Some have done better, some have done worse.

Jay: How large would this facility be? Drew: 100,000 square feet. Jay: That’s large, isn’t it? Drew: For the sake of emphasis, if I rented two a day that’ll take me 500 days in round numbers. On a superduper real good day, you can rent 10. That might happen once in your lifetime. I’d like to rent 10 a day every day until I’m full. That means I rent up in 100 days. Let’s say 200 days of negative cash flow. Jay: I like the way you think. Drew: I’d like to get a program, advertising promotion, marketing—whatever you wish to call it—that will help me rent the 10 a day. Now, your logical question to me is why not rent 20 a day? That would be a burden, it would cost me more personnel and more money. My office won’t accommodate that many people and at 10 a day, 12 a day, 15 a day, 8 a day you know, there’s flexibility in there. Fine. But too much more would be working against me. I’d have people knocking on the door for whatever reason they would knock on the door and I couldn’t service them. Jay: Do you have on-site management? Drew: Yes. Jay: The ads you send me are from your past endeavors? Drew: Right, and also some ads I saw that caught my eye, that I thought could be useful if they were changed around. Now I don’t know how much of an opportunity you’ve had to review what I sent you, but... Jay: I skimmed over all the ads. Drew: Okay. But basically you’re talking about Yellow Pages advertising being 45% of your market, “drive bys” maybe another 45% of your market, and the last 10% being miscellaneous—direct mail, newspaper advertising, door-to-door, cold calling, whatever else. Historically also, a real good business is 40% business rentals, 60% residential. Jay: The business customers are the most preferred. They’re going to provide a longer enduring, easier pay. I’m probably typical. I closed my office some time back and sold a bunch of my businesses, moved here and ended up with a whole room full of stuff I didn’t want to pitch out but had no place to put. I got a young, not particularly dynamic, but directable sort of a “go for” man, and I told hm to find some storage space for me. We’re paying $100 a month, $1,200 a year. Drew: You’re right, businesses tend to rent longer and pay better. However, you’re surrounded by more residences. There are certain things that I have as competitive advantages. I got the property at a good price. I’m building at a cost equivalent to what other people have built. I’m going to have a lot of amenities in there and it’s going to be very attractive to people who would walk on the site and get a good feeling that this is the place to store. Jay: Of all the possible uses that one in business could have for a storage facility, are you going to focus on any specific areas or needs, or is it going to be general? It’s a gorgeous facility, by the way. That’s got to be one of the most magnificent looking ones around.

Drew: Yes. You can dress a pig up fancy and have it look like a horse, and you’ve lost what you’re trying to get, or you can dress a pig up nice and it will be Miss Piggy and get a spectacular effect. I am more or less going through Miss Piggy here. As you can see, you really can’t tell this is a storage facility, but we are going to have a big sign up front that will be the logo from the letterhead and that gives you every indication of what it is. I also sent you our Yellow Pages ad. I have about three ads right now in different Yellow Pages books. Jay: My gut feeling is that it didn’t pull very well. Drew: You’re right. And I’ve also run coupon ads in the paper, but that doesn’t do much. Over a dozen years ago, I wrote a promotion piece to businesses saying, “Come on in, try our facility, we’ll pick up the first month and give it a shot. Look at all the wonderful things we can do.” Jay: And it didn’t work? Drew: Zero, zero, zero, zero, zero. Jay: Did you articulate it well? Sometimes the way it’s verbalized is everything. But before I go into that, let me ask you another question. Can you analyze what a sale is worth to you in dollars? In other words, what’s it worth to you to buy a sale? Have you any idea? Drew: A little bit. By way of example we were open 6 days a week. Then we decided to be open Sunday too. We figured out we’d have to rent something like two or three spaces that day to justify being opened, to pay the manager, to pay utilities and everything else. Jay: Per week, per month, every Sunday that you’re open? Drew: Every Sunday that we’re open we’ve had to rent something like two or three spaces for being open that day. Jay: So did you keep it open? Drew: No. Jay: It didn’t pay off. So you know the cost of sales, the cost of marketing? Drew: Yes, I know what I’m paying for the Yellow Pages and everything else. Jay: Have you already booked your Yellow Pages ad for next year? Drew: Not for next year, no. It comes up in October. The one I sent you is the existing ad. I’m getting three calls a day on average. I know that because it’s on remote call forwarding to my house to an answering machine so every person who calls, they hear a message that says, “Hi, we’re hoping this storage facility meets your needs, business, residential. Watch for our grand opening specials.” Jay: But you’re not capturing the name. Drew: No. No, because their need is now and they’re shopping so my ad is doing something, it’s making them call. Jay: Are the storage spaces insured? Drew: You buy your own insurance. Like a household, you insure your own things. Jay: So you don’t furnish the insurance?

Drew: No, we insure the building, you insure what you put inside. Jay: If you were to offer insurance like auto insurance, would it be very expensive? Drew: The way it is now, you can pick up an insurance form at the counter and I as the manager will say, “If you pay me $2 a month I’ll send it off to the insurance company’s office and inform them that you are insured and then you pay your $2 or $3 a month along with your rent.” Jay: Who gets the $2 or $3 a month? Drew: The insurance company. Jay: So if you wanted to, that’s a promotable consideration, you could pay the first year’s insurance, right? Drew: Most people don’t rent for a year. Most people are 90 days, 6 months. Jay: I would think most businesses would rent for a longer duration. Drew: Most businesses, yes. Jay: Your appeal is different, or could be. Nobody in this business makes transportation available, do they? Drew: There are two promotions I know of. One has special facilities for record storage. You pay a premium price for them to come to your office and pack a record storage box, then they take it and inventory it. You can call up and say, “I’m box number 123.” They bring you box number 123. You pay a premium for this. The other rents trucks that move things back and forth, but that’s not what you were really referring to. Jay: What average frequency of access is there, either depositing or withdrawing stored items, per month, per 6 months, per client—do you have any information on that? Drew: Most people, businesses and people, visit rarely because it is dead storage. You put your stuff there and say good-bye. Jay: So if you said to me, “As long as you agree to lease from me for at least 6 months, we’ll move it for you free.” That’s pretty appealing. Drew: Well, what I could do is pay a moving company. Jay: That’s what I mean. I’m just talking about a concept. I’ll tell you what would appeal to me as a business person, particularly because the stuff I have in storage I want to go visit all the time, but I probably never will. I have things in there that I think someday I’ll use, which is why I’m storing it—but I probably never will. If you said to me, “Okay, if you’ll agree to rent from me for at least 6 months (and if you take it out prematurely there’s a penalty), we’ll provide transportation to your house or from the storage facility at absolutely no charge, provided the things are in shippable, moveable, containers. You’re responsible, we’re not guaranteeing against breakage. We’ll be very careful, etc., but we’ll move it neatly into our storage facility, pack it in, turn-key it for you, lock it and give you the padlock, and bring it back to you if you don’t want to visit.” That’s pretty interesting. A lot of people don’t have the wherewithal to get it all over there. I think that service would be very appealing. I don’t know what it costs. You’ve got to take a pencil to it but you should figure what it costs to move. It’s a great inducement to bring in customers. From your side, you’re looking at not the $60 it

costs you to move their stuff or whatever, you’re looking at accessing $1,200 worth of cash flow. Aren’t you? Drew: Yes. I can’t tell you how people think and what they’re looking for, because I’m an individual and I can only tell you what I think and look for. Jay: What do you look for? Drew: Well, by way of example, the things I sent you appeal to me. That doesn’t mean they’ll appeal to somebody else, but most people who store, businesses and residential, bring their own things over. Somehow they arrange it. They’ll go to U-Haul and get a trailer, or they’ll rent the Ryder One-Way truck. Jay: I’m suggesting, Drew, that one very appealing reason or inducement you could offer to businesses, particularly because they’re long-term rentals, is, “I’ll move you for nothing as long a you agree to stay for one year. If you move out early, there’s a reasonable, fair penalty for early withdrawal.” You could throughout the year—within reason, on a scheduled basis, at your convenience, not theirs—have a truck to pick up things. You know, if they want to add anything else to what they have stored in the warehouse you can pick it up for them. That’s a very strong appeal. That would appeal like mad to me if I were in your shoes because I’d gladly spend $150 or whatever to buy $1,200. Wouldn’t you? I’m just trying to give you some ideas. All I can give you is a lot of suppositions or hypothetical situations. Every human being is unique, so what I suggest to you is to formulate a number of possible approaches and start experimenting with them, because different approaches will appeal to different people. For example, you could commission salespeople who would get a huge percentage for the first month of a sale, even the whole first month’s rental fee in exchange for closing a sale. Or you could get two or three high school or college students to go through the local paper every Sunday and call everybody who’s got a classified ad for business or residential-type products, and say, “Look, if you don’t sell all the material you’ve got, we’ll make you a fabulous deal for a minimum of three months on a storage facility.” If they were young college kids working nights or part-time and they only got commission and the commission was that if they got somebody locked in for three months, they keep the first month’s payment and that was their commission, you’ve got zero expense. They’re calling on their own dime and that means not even from your offices. If they called everybody running the classified ads trying to sell something, what do you think the odds are they find 10 or 15 people a week to fill your mini warehouse? Probably good, don’t you think? Drew: I don’t know. Jay: What do you think is your downside? When the kid knows every time he’s going to close one he’s going to make $100, he’d try real hard, don’t you think? Let’s say there’s 2,000 ads in there. Drew: I don’t know. If he calls ten people and gets ten hang-ups, you’re talking about a salesperson with motivation and enthusiasm being able to take ten no’s. Jay: You could motivate them very easily, Drew. You’ve got to put a pencil to it, but statistically to make $100 for every sale, you could probably show them that in 10 hours they could afford to get 99 turndowns. They could work 9 hours and get turned down, but if in the 10th hour they get one sale, that’s $10 an hour, don’t you think? It’s not bad money for working at home. You have to posture them. You can’t just give them the Yellow Pages, you have to go through what I call structuring and posturing the concept. People can’t get excited about something said to them, so you imbue it with life and dimension. That’s just one possibility. I don’t think it’s a bad one. If every Sunday you had ten guys or five guys or three guys or girls calling 2,000 people with a neat pitch saying, “I hope you really sell it, this is John Smith, I’m a representative from such-and-such and we have a special going on.” Put a pencil to it. Maybe it costs you $40 to pick up their unsold stuff. “If you can’t sell everything and you’ve got a load of material, as long as you put it in our storage for a least 3 months, we’ll pick it up for free.” And you could split the commission. Half goes to the truck driver and half goes to the guy who sells it. You try lots of different

things. I’ve got a feeling a lot of people selling through the classifieds get tired and say, “My god, office or house, I’ve got so much stuff I don’t know where to put it.” I used to accumulate all sorts of stuff. Buy materials, put materials in boxes, buy reports. I was in the publishing business, and we had overstock and we had component parts. You don’t want to throw them away because you’ve got tens or thousands of dollars into them, but you have nowhere to put them. I had machinery that was outdated which we tried to sell. Finally we moved two computers that were outdated and two CRTs and a bunch of things to our storage. I think you could have guys on the phone calling every residential house and every business that has stuff for sale in the Sunday paper classifieds, and saying, “I hope you sell it, but if you don’t you shouldn’t give it away. You shouldn’t throw it away, it probably has value. Why don’t you consider storing it for 3 or 4 months or for a year in our storage facility, and if you do it for a least 3 months, no only will you get a better price but we’ll pick it up and move it over there for you free as long as it doesn’t weigh over this much.” (and you have criteria). “If it does weigh that, we’ll just charge you our cost, which is a lot less than a moving company would charge. We charge you our real cost.” You get a pitch that’s powerful. I think that’s a cost-free way. But you don’t just sit down and put the kids on the phone. You’ve got to invest a little bit of time and emotion getting them excited about the concept and showing them how it works. Show them by giving them possible scenarios and working on a little pitch for them, and show them how to make a sale so they don’t offend somebody. “If you don’t sell all your things, rather than giving them away or pitching them—because they probably have value—we’re quite sure it would pay for you to store them. We have a storage facility just opening up. It’s very modern and it’s very close to you. And we have a special going on for every business that will agree to store for at least three, six months (you decide the criterion), we’ll come and move up to this amount of stuff—if it’s decently boxed and it isn’t going to collapse in the boxes—for nothing. Here’s the phone number. I hope you will keep it. Please remember, I hope you sell it, and I hope you don’t even need us, but at the end of Wednesday or Thursday or Friday, when you guys are starting to spend $300 more on an ad or $300 to store it until you get it sold, maybe you’d be better off storing with us.” Maybe the kids could figure a way to help sell them. That’s just a possibility. Have you experimented with field salespeople before? They give the customer a 3 or a 6 or a 12month rate and build in some neat incentives, e.g., free insurance for a year, or e.g., you’ll pick up (and, as long as they go for a year, you’ll even take it back to them) as long as you can pack it and move it for what it’s going to cost you, and you give the salesperson strictly commission. The salesperson gets the first month’s rental fee. If you go to offices where you know they don’t have storage facilities (and you can go to about any office around), and you start calling on people and the person knows that every time he makes a sale, he gets $100, I would imagine a young, ambitious college guy who’s got three hours a day to work would love going to offices offering them a value. The value is, “Hey, if you’re in some other facility we’ll give you a better rate, we’ll give you free insurance, we’ll pick the stuff up and when you’re done or you need it back, within reason, we have a regular schedule—once every week we’ve got pickup and deliveries for our clients and we’ll be only too happy to do it for you as long as you let us know a few days in advance.” I can’t believe—and we’ve got to form or develop all the other possible benefit services—but I can’t believe a charming young man or a charming young woman calling on me, somebody who walks in my store with a nice smile and a package and says to me, “Hey, you’re spending $100 a month right now, what do they do for you? When you need stuff back who do you have to send? Well, we’ve tried to make our service compensate for all your problems: A) You get free insurance for a year as long as you sign up for a year: B) If your stuff is here or at another facility we’ll move it for you as long as it’s reasonable. If it’s a little bit difficult we’ll just charge you our real cost which is nominal relative to what it’s going to cost you elsewhere; C) As long as it’s in some kind of order where it doesn’t cause us a lot of grief—you’ve got it numbered and you’ve got it referenced or it’s easy to see or colored or something—we’ll gladly bring items back to you when you need them and the service is at no charge. We have a regularly scheduled pickup and delivery every week, and finally, our rates are 20% less for the first year than you’re paying right this moment. One more thing. Even though you get the great rate, if you are forced for some reason to cancel early, there’s a modest

cancellation charge that’s very reasonable. You are locked in to get the rate, but if you have to cancel, just prorate it and there’s a modest cancellation penalty that’s very reasonable.” It’s a powerful approach. It’s simple. Everybody wants to be made to feel they’re important. If you make me feel important, you own me. We’ve done a lot of experimenting in the financial newsletter field. What we found is we can lock people up almost forever on early and advance renewal programs, if they get lots of bonuses up front. Load it up front. They’re locking themselves into a great low rate for three or four or five years but they can always get out of it. “Three months from now, if you decide your investment needs a change or you’re no longer interested in the hard money marketplace, or the stock market, or any stocks or whatever, feel free to cancel and you can keep all the bonuses we’re giving you and it’s just a modest prorated refund.” There are all sorts of possibilities. You can offer a bunch of fun things. It’s $85 a month, but you’ve got specials. If they pay you right now, it’s $750 for the whole year prepaid, and you’ll even give them a prorated refund if they cancel. You try all sorts of experiments and let the market tell you what works. Drew: How’s this: “You get $5 off personal insurance with prepaid 2, 3, 6-month rental”? Jay: See, that doesn’t appeal to me as much. I think you can conceptualize it in a much more exciting way. If you offered me a low annual rate, a savings of $200, that sounds exciting even though it may only be the same kind of thing as a discount on the insurance. Even to a residential person, $5 off doesn’t sound like much. Drew: Residential I was going to change to five lottery tickets. Jay: What I would suggest is the following. You make yourself a grid analysis of all the possible benefit services and packages you could go to somebody with—somebody being in category A, a residential person, category B, a business person—and what would benefit me with respect to these two variables: If a) I had not ever used a storage, or b) I was using storage. Again, I don’t know your business. You have to do this yourself, but besides what I told you, you could have other considerations. “If you have coverage, for people who are year-long clients, you get one month free. If you need to store things temporarily, you get two weeks free extra storage if you need it, for three years as a service for those times. Or maybe you get something in that you’ve got to send back out, but you can’t store it at your facility.” You have all sorts of fun conceptions that almost no one will ever use, but if people think they may be able to use it, they will appreciate it and it makes you stand up as so demonstrably superior to all your generic competitors. Drew: What was this about two weeks? Jay: Well, what if your salesperson came to me and said, “By the way, everybody who’s on a year-long program not only gets free pickup and delivery, and free insurance, but also has two weeks a year—if you ever need it—of extra storage up to 10 feet by 10 feet for two weeks free, because we know that there are times when maybe for just three or four days you get something that comes to you and that you don’t have room for and you don’t really want to spend money storing it, you don’t want to lock it in for a month or two, but you need to put it somewhere or you need to take delivery somewhere else. That’s a service we make available to all our year-long clients.” I can’t believe things like that wouldn’t make people happy. They’d love that kind of stuff, don’t you think? And the beauty of it, Drew, is that you’ll know instantly what works when you resort to trying a lot of these. You could try them in the business section of the newspaper, but I think that would be very expensive. I would think you would do much better if you gave lots of young, mature, well-groomed and articulate college kids a chance to represent you. Have some on the phone and some just calling on office buildings and making pitches, and give them territories. You don’t just give them the Yellow Pages. You don’t just say, “Go up and down the street.” You hire three or four people, set down contingencies where they get the first month’s fees or they get 3/4 of the

first month or whatever the deal is. You work out the deal, and you’ve got to figure what you need to package it for, and you divide the area in territories so they have some sense of real value, and you take a lot of time when you hire them. You’re making them revere what they’re doing, and the benefits, and how superior your service is over everybody else’s, so they really believe and understand it. Then, entrust them with this “territory” and their territory is north of Main Street and west of Harrison and someone else’s is east of Harrison and south of Main Street. Everyone’s got their real territory. You show them that they can call 100 people a day and get turned down. You see, you don’t just hire them and let them go do it. You show them that they can get turned down 99 times out of 100 and still make themselves $100 a day, which is $500 a week which they couldn’t possibly make delivering pizza while going to college, they couldn’t possibly make it working in a retail store and going to college, and they’re professionals and this is their client. Tell them that once they get into it, they’ve got clients, they can work the referrals, you probably have other things they can see for you if you open another facility. To me that’s the most logical thing to do if no one in the industry does it. Why would it not work out? With this approach, your expense is totally correlated to your yield. Instead of spending $5,000 a month on ads that may not ever work, you spend $5,000 only after you’ve got 50 new customers locked up and you have 50 contracts or whatever you call them, 50 agreements for three months or more. So you only pay them after you’ve gotten the money—it’s after the fact. They can knock on doors, they can sign the guy up right there, they get the contract, get the first check and when that check clears you write the corresponding check to them. They don’t get paid for 10 days afterward. Maybe you give them a draw or something if you have to, but I wouldn’t even do that. I think that would be fabulous. You may have to go through a lot of kids to find the right ones, but you show a young man or woman who’s got any sense of opportunity how they could make $500 a week in a professional endeavor offering more service than anyone else they’re competing with, using a lowpressured sales pitch. I just think that’s a whole different marketing angle. Somebody on the phone. I think if you called 2,000 people a week you would find 20 or 30 or 40 people if you had the right pitch. Drew: What I would be interested in also is some sort of direct-mail advertising or even newspaper advertising that would be effective. I know in that Hopkins book he says you could put a coupon in that says, “We’ll pay for your bar of soap,” and then people would rush to the market and buy a bar of soap, but I can’t translate that into what I’m doing. I’m not selling a bar of soap, I’m not selling cough medicine or anything else that he used as an example. Jay: Well, I’ll work out some ads for you. I think direct mail might be better. If I were you, I wouldn’t do a cheap printed postcard or flyer. I’d get a list of all the offices in a geographic area you know not to have good storage, good supplemental storage. I’d write a letter. Almost a monarch-sized letter. It’s more personalized. It’s really nicer than the smaller size letter to introduce yourself. “I just constructed a beautiful self-storage facility we call such-and-such. I’m told you either have material or goods in storage or you’re unhappy about it. I’d like to tell you about our program and make you an offer that I think is irresistible. First of all, let me tell you why we created it.” Motivate. You wanted to give more service. Most people are just reacting. They don’t understand the problems businesses have using a service facility like yours. Getting it there, getting it back, insurance hassles, etc. Tell them what you’ve tried to do is devise a program that accommodates for all that and here are the benefits: “A) You sign up for a year. You’re not locked in. You can always get out. We’ll give you a rate which is probably 20% better than you’re paying right now for space which is maybe 10% larger. B) Moreover, whether your materials are currently in storage at somebody else’s facility or are sitting in your offices, we make available to you, at no charge at all, free delivery and return access privileges. What that means is we’ll pick up the materials for you as long as they’re decently packaged and at our expense we’ll transport them and deliver them to our facility, lock it, and deliver the key back to you at no charge—or we’ll move it from the other facility and store it for you at no charge. “Correspondingly, within reason, we have a regularly scheduled weekly delivery that you can call any time you need to as long as you give us three days’ advanced notice. I’ll be glad to bring you anything you want as long as it’s easy of access. If there’s a problem and it takes our man an hour to find it, there’s a

modest charge of $10 per hour for his time. No delivery charge whatsoever. In addition to that, security is excellent at our facility, but there’s still some possible wind damage, rain damage, or whatever. All our clients who have at least a one-year program receive a full year’s free insurance that is paid for by us. One final thing that may be important. If you so desire, if you are really value-oriented, even though it’s $90 a month on our plan for 12 months, if you prepay $750, you have the whole year, and at such time you find you don’t need the facility and you want to cancel, you get a prorated refund. There’s one small problem and it’s very reasonable: if you have to cancel, there’s a modest little cancellation fee we would impose. That notwithstanding, we would love to have you as our storage client and because of that we’re ready to come and pick up your materials, we can have it all signed off by you right on the spot so you don’t ever have to come to us. Which is very convenient, because it’s a pain if you have to send someone there and you have to draw up the papers. Just call us and we’ll give you all the details.” That would be a very powerful letter to me. Drew: What about, by way of example, writing a letter to a business saying, “Come in and try it. These are the benefits to you. We’ll pick up the first month. If you like, stay on and pay. If not, move on out.” Jay: That’s good too. What I was going to say was every client situation I get involved in today is kaleidoscopically unique. By that I mean what works like gangbusters in a situation or industry in application A may or may not work in B. But you can try out a concept very quickly and very easily. You send a guy out and he makes 500 calls, by telephone or in person or a combination. You send 1,000 letters making the same proposition. Then you analyze the results. Another idea: You can add a P.S. on that same letter: “If you’d rather not lock yourself into a year, I’ve got an equally appealing offer and that is you move it in, try the first month on me, if you’re not happy move it out. If you are happy, you can still go to the year program thereafter so you’re not giving up anything. We want you as a client or a customer. I think we can give you more benefits, more service because we care more than anyone else. Let us prove it. The only way we can prove it is to perform.” You can try lots of different suppositions out. you don’t have to submit to them but these are all interesting. My gut feeling is a storage ad in the paper is going to be the most inefficient way to market. Maybe not, I don’t know. I think direct would be the second-most efficient. People calling will be even more so than direct mail. You categorize all the scenarios causing an individual or a business to put items into storage. Then, you should focus your ads on the most prevalent situations people have that can cause them to store things. That’s something else you might do. Drew: One thing that never made any sense to me is that people will load their garage up with so-called valuables and leave an even more valuable automobile that they paid 10, 15, 20 thousand dollars for out on the street to have the upholstery rot in the sun, have the paint fade and everything else, and they just park it on the street. They could take this stuff, put it in storage, put their car back in the garage, make their property look nice. They don’t take any pride in their property. Does a car in the front look nice? I don’t think so. Jay: You ever hear that story about human nature? Human nature is not preventatively oriented. It’s only curatively oriented. That’s a problem, you’re right. It’s a great concept except it’s going to cost you $1,000 for every person you get stored for $300. One thing you could try. Take people who have been around for two or three years and write a letter that says, “I know you have a beautiful home, but I have a sneaking suspicion that your garage and some of your bedrooms are so loaded with furnishings and things you’ve been saving that it’s driving you crazy. I have a solution that might be a real godsend. Why don’t you consider renting for a year, or a half year. What’s the smallest you can get? 10 x 10 or 20? Drew: 4 x 4 x 4.

Jay: What does that cost? Drew: $18 a month. Jay: “Why don’t you consider renting for a year a 4 x 4 and letting us take all the old keepsakes that you basically don’t know what to do with, you don’t want to give away, you don’t want to throw away, but you have no place for them. Why don’t you let us take them and store them for you for a year? The cost is so modest and we’ll charge it every month to your charge card.” You just give them a charge agreement and you put it through every month. “And in fact we’ll make it so easy for you. If you just get the boxes together and have them packed up decently, we’ll come and pick them up for you at no charge as long as you agree to go on our year-long program. And we’ll even give you free insurance. If you’re interested, please call.” I think you should formulate a lot of different benefit-oriented offers where all the risk is borne by you. I wouldn’t let a consumer rent for a month free because I think you’re going to get taken advantage of. Drew: Oh, I agree. Jay: I would absolutely let a businessman rent for a month free. If he takes advantage a little bit it doesn’t matter. I would offer him a lot of plans they could tie up and get benefits from, but they’re not locked in performance-wise. In other words, they’re getting all the benefit of the 12-month plan and insurance that’s free, but if they ever want to cancel they’re very welcome to for just a modest little fee—whatever you figure it is, $50 or $60 or whatever. Drew: Once comment. I found too much choice leads to no choice. I give them ten plans and they’ll say no and not bother to call. I have to show two or three maximum because otherwise it’s a blur and they don’t even know what they’ve looked at. Jay: Well, that’s possible. My response to you is (and if you read my materials, you know my theory) that we don’t have the right to decide, we have the obligation to put certain questions to the marketplace as a test. I would suggest to you that you take three or four possible thrusts. You’d try them. You’d try them in the laboratory of the telephone. You’d try them in the laboratory of young men and women calling on people. You’d try them in the laboratory of some direct mail to offices. You’d try them in the laboratory of direct mail to homeowners. I think that the problem with storage ads is that you’re asking the reader to conceptualize the possibilities, to understand you can get a 4 by 4 and put into it all this stuff that you don’t want to throw out and you don’t want to sell, but you don’t have any place for. “You can put it in ours at such a modest cost, and we can insure it for you. In fact, we’ll buy the insurance if you go for a year plan.” Most of the ads are presuming the people comprehend all the possibilities, that the progression of thought I just expressed is evident to the reader. You owe it to yourself to be very clarifying in the ad. I’d say, “If you’ve lived in your house for two or three years or you just moved into a new house, chances are you have collected over the years more keepsakes and memorabilia and out-and-out (not junk, but give it a name) than you’ve ever imagined, that the truth is you probably don’t have room for it all.” I wouldn’t ask the question. I would make the assertive statement. People that don’t have the problem aren’t going to be interested in it. If they do have the problem, they’ll think, “He understands; he’s writing to me.” You continue: “You probably have more of whatever it is than you have any place to store it. It’s cluttering your bedroom, it’s cluttering your garage, it’s cluttering your basement. We have a solution that we think quite frankly is extraordinarily practical for a modest $18 a month. You could put all your precious valuables in a secure, airtight, waterproof, fireproof facility.” Drew: My insurance agent is rolling over in his grave. Jay: Well, you’ve got to say what you can say. Whatever I say to you I hope you understand you have to modify. I don’t know your business so you have to modify what I’m saying to what you can deliver. “We’ve got a special. If you’ll sign up for a 12-month program...” (not a year, a year sounds too long)

“where we can come out and pick up the stuff for you and bring it back any time you need it within reason,” and with an asterisk say, “We’ve got a regular delivery and you’ve just got to call.” “In addition to that, we’ll pay for the first year of insurance coverage. Maybe you don’t know that it’s not necessarily insured on your homeowners unless you register it and you pay extra premium. If you’re interested, give us a call and we’ll schedule. As long as the material is packed in a storable way and it doesn’t require a lot of extra effort on our part, we’ll schedule a no-cost pickup and we’ll sign up all the papers right there at your house.” That kind of a small ad, very tight reader ad, would probably be interesting with a headline. Drew: What’s good for a headline? Jay: The headline you would use might be something like this: “If you’re saving more stuff” (and I wouldn’t say ‘stuff,’ but you’ve got to replace the word) “than you’ve got room to store, here’s a practical solution.” Drew: ‘Valuables.’ Jay: Whatever, I don’t know what you would say, but something, maybe ‘keepsake.’ Something like that, and then just tell them and make them an offer, and the offer is very simple. Pitch one thing and after you’ve made the offer say, “By the way, we have larger facilities available and a similar offer would apply to those if you have more goods or larger things. You can put everything from your motorcycle in there to your offroad vehicles to your boat.” And you might say, “We can come and pick those up too,” as long as you’ve got releases and everything. Think about the possibilities. People don’t want to contend. Like me—I don’t want to figure out how to get the stuff down there and get it back. How often do you go boating? Once a month? It should be worth it to you—and you’ve got to put a pencil to it—if it costs $30 to get someone to pick it up and return it, but you can get $500 worth of storage out of the thing. Particularly when you’re empty. I’d pay $60 to get $500, wouldn’t you? Drew: Yes. Jay: You could always purge it out and change it, you don’t have to be as liberal once your facility is filled. My recommendation to you is to formulate a lot of different offers and plan them out individually in various packageable forms. You might do another ad in the sports section: “If you’ve got a boat or motorcycle or offroad vehicle or motorhome, if it’s taking up too much space in your home, we’ve got a practical solution. A lot of people like you love all the wonderful recreational toys. They have motorcycles, they have boats, they have campers, they’ve got portable tents, mobile tents, and all of a sudden one day they can’t get their car in the garage. Their friends come over and they can’t get their car in the driveway. The neighbors are complaining because everything is parked out front. If you find you have this problem, we have a solution. Our solution is this: We have a storage facility that is designed specifically to be able to accommodate those kinds of unusual storage requirements. Moreover, we’ve got a wonderful annual rate and a special provision. We can come and arrange to have it picked up, taken to our facility, and brought back to you whenever you want it. The first two times a year are free. Any time after that there’s a modest delivery charge which is so reasonable you couldn’t even afford to do it yourself. Finally, we provide you, if you go on our 12-month plan, with complete insurance coverage. If you’ve been thinking for a long time about trying to organize, or just to unclutter the mess, the garage, the driveway, or the front of your house, why don’t you give us a call and let us tell you about our program?” I think that would be very interesting, don’t you? I don’t know the answers. If I had all the answers I would charge you a lot more. All I can do is give you suppositions and teach you and then you try them out. You run one ad in the right place. You run the best ad in the right place, and with the best proposition which is irresistible and reaches the most broadly appealing segment that makes you the most money with the least effort and the most chance—and to me that would be somebody with a recreational vehicle needing ongoing storage. You know, they’d come

back and get it when they go to the mountains and then take it back when they get home. If you brought it to them, that’s a heck of an appealing offer. Think about how you can serve them in a way no one else does. Figure out what it’s going to cost you, including the insurance ramifications. Put that all in a packaged unit and figure if you’ve got to spend $10 a month on service to get a $200 rental and the rental is locked in for a year, and you’re empty anyhow, and you’re accelerating your cash flow by almost a year, plus maybe a deal where you get some of it prepaid—you can experiment with that—also some of it’s on automatic billing to their charge card, what’s all that worth? In the first place, if it’s not worth it to you, don’t do it. But I’d try all sorts of things. I personally would be only too delighted to pay a young adult the first month’s rent to lock me in a 12-month contract. You could probably pay them two months, but I wouldn’t. Give them a month, and see if a guy can make himself $300 or $500 a week serving you—and I bet they could—or if not you can play with it and manipulate it. If you find it’s too hard for them but it still works, then you give them a month and a half. The possibilities are exciting. I don’t know whether I’m giving you the kinds of answers you want. I think the possibilities are exciting because no one else thinks like that. How can you serve them? How can you reach them? Give me some other scenarios that might represent usage both business and consumer. Drew: People in transit from a house to another house, or an apartment to a house think like that, believe it or not. Bekins, Allied don’t want to see a full-size moving truck pull up to a storage facility instead of going to a Bekins facility because we are less expensive. Jay: Who sells Bekins? Do they have independent salespeople working for them? Drew: I have absolutely no idea. Generally people look in the Yellow Pages under the moving and storage or whatever. Jay: What I would do is the following. I would get another salesperson, and it can all be on contingency. Get a young man or a woman, maybe you’ve got to pay them $3 an hour minimum wage for the harder ones, but it doesn’t matter, it will pay off. You want everything to converge. Get a young man, instead of running a wasteful ad in the newspaper, pay a couple people a couple hundred dollars a week, or $100 a week between the time they’re going to class, and it’s the most fun PR-type selling and you have them calling realtors. You have them call on everybody who serves the home. Call a pool man and say, “Hey, I don’t know if you need this, but I have a wonderful relationship with some people who’ve got a wonderful storage facility and I’ve got a deal with them where they actually pickup and deliver for you free.” You get every contact you can and get everybody working on it. You get all these young college kids and you don’t just let them go crazy because they won’t see the vision. You respect it and you entrust them with a division, a region, a territory, and you take the time, and that’s the hardest thing. You’ve got to work on it because you’re a very nice man, but you’re a little too serious. You’ve got to get a little emotional about it. You get 12 or 15 people working different markets. They call on every realtor and say, “Next time you sell somebody a house, you give them a great service and we’ll make this available and we’ll give you a great gift.” You could buy them the first month if the people want to sign up for a 3-month plan. Let the realtor do that as a service. Give them a certificate. A nice card. Tell them that if they promise to use it, you’ll give them a wonderful card with raised letters and you print them up for them free. Say, “John Smith Realtor has purchased in your name the first month of a 3-month program to store surplus items for you.” Do you get an idea of the possibilities? Drew: Yes. Jay: Not everything you try will work. You analyze which ones work. You don’t presume anything will or won’t work. Don’t become opinionated. Let the market tell you which one’s the most efficient. They may all work, but one of them may be 10 times more profitable for the time or the manpower invested. The whole business, don’t presume. You don’t tell the market. Do you have all the issues of my newsletter?

Drew: So far. Jay: How many have you gotten so far? Drew: Eight or nine. Jay: Okay, reread them but particularly focus not on how to craft the ads, but how to craft the concepts. Discipline yourself to think about service. Think what would it take. Look at your competitors and see what they: A) What they don’t do for people; B) The negative side of it; C) The most prevalently-used methods. And then think about the fact that people need to be told what to do. If you’ve been reading any coupons that I write, they get people to say, “Yes, that makes sense, it does make sense for me to send away for your product and get these bonuses, so I’m going to put my check in the envelope and send it back to you and check the right box.” People need to be told. The more abstract you are, the less responsive. If you take them and give them the scenario, tell them what’s probably happening in their house, don’t say, “Are you?” say, “you are,” because the ones who aren’t are not going to read it anyhow. How long will it take until your new facility opens? Drew: It might be open towards the end of the summer. Jay: What if you have 800 of them prepaid before you even open? Drew: That would be wonderful. Jay: I’ll bet you could presell 200 people or 300 people right now. It may cost you $1,000 to subsidize a kid, but it’s money that you’ll get back because you’re just advancing them against the commission they’ll accrue when the thing opens. The possibilities are awesome. Do you want to ask me a couple more questions before we stop? Drew: Yes. Do I take it that everything I’ve shown you I can just sort of throw in my folder and forget all the time and effort I’ve invested in it? Jay: Most of it, I think. Drew: What I’d like is to have you send some polished mailers to me and I’ll just get 10,000 duplicated. Jay: I can do it, but I’ll have to charge you a lot of money for it. If I had to choose between copy and concept I always go with concept. A great concept will transcend lousy copy. Great copy will not transcend lousy concept. Do you understand that? Think to yourself about the concept, worry about the concept. The Unique Selling Proposition. You get that down pat, you’re home free. I’m just trying to tell you what I see. You’ve got to get a little looser and more empathetic with people if you’re going to hire people, etc. That’s what I think you sort of need to work on. Drew: What would a day of your time cost me? Jay: I have a philosophy that’s very important. It’s trite but true. If you give a man a fish you feed him for a day, if you teach him to fish you feed him for life. I get interested in so many things. I’ve got hundreds of thousands of people prevailing upon me quite literally and I like it. But what I like most is to teach people a way of thinking so they can help themselves. I can help you short-term, but I can be a lot better to you if I can teach you a way of thinking that will precipitate benefits for years to come. In other words, you’ll see something, you’ll start seeing there’s a need you could fill. You start thinking of how to advance and perpetuate yourself. I’m delighted you came here to get help, but I sense that you need me or somebody to plow through. You’re almost fighting yourself a little bit, if that makes sense. You see, but you don’t fully understand. You need someone to crack through the veneer.

Remember Gardol the Colgate seal? Remember all the ads they had? They shot a gun and it hit the Gardol seal and it bounced off. Well, it’s almost like you’ve got a deflector and you need to understand a little bit more on how all this converges, until all of a sudden it becomes revelational to you. You can see its application. Then you’ll start to think and you’ll start seeing things. There’s a concluding example I’ll give you, something which taught me this thinking. When I was about 22 I worked for a guy. We sold medicine by mail called Icy Hot. Icy Hot was an analgesic balm like Ben Gay or Mentholatum. Very effective. It sold for $3. Everyone was trying to get the guy who owned the company to run expensive ads; $10,000 ads in the National Enquirer, Family Weekly, Parade Magazine, TV Guide. He would not. He went to everyone and said, “Look, I’m willing to spend $3 to get a $3 sale. In other words, I’ll spend 100% of the money I make on the first sale. You can take all the risk that you want. If you buy them for a dollar you can have the other two dollars, but I don’t want to spend money on ads, I want to spend them on results.” He’d spend 100% of the first sale because he has a repeat, he has reorders from then on. I didn’t understand, but I was talented, I made 50 or 60 grand doing it. After I did it, I still didn’t understand the dynamics. It took about two years, and all of a sudden it became part of all the things I do. I’d spend the first month’s rental to get a 12-month guy locked in, because I can hit him with a penalty and get back all that if he gets out early. If he doesn’t pay, I keep the merchandise. If I can teach you a way of thinking about all the things that I have told you today. You have to be absolutely willing to use the information. If you’re not willing to use it, I don’t know what kind of value I’m doing for you, but you can think about it. Try to get it where it becomes ingrained, start seeing things. And where I left off is just the beginning instead of the end, if that makes sense. If I just gave you a way of thinking, a way you should look at things and people and their needs, benefits, services, variable correlations, and accessing people, and the fact that you can try so many things for so little. If it doesn’t work, stop doing it and it’s cost you so little, and if it works you keep doing it and expand it. There’s one other thing. All the things that you perfect you can license to people all over the country who aren’t your competitors. Let’s say you have 200 people before you open. Let’s say that out of the 200 people, 150 of them are committed for 12 months even though they’ve got the right to change. Let’s say you fill up in four months instead of a year and four months. Let’s say that after you fill up your attrition rate is half of the industry’s. You can’t tell me you can’t sell it to somebody either A) on a variable, or B) on a deed, or C) you say, “Fine, I’ll send my own people to your city, you give me $100 or $200 for every one I sell. Once you get the methodology down, don’t think about it just for yourself. You can make a lot of money sharing it with others. * * * * After reading this transcript, see if you can come up with similar ideas for your business. Find out what people really need, find out what the competition is offering, and fill the gap. Perhaps it’s a stronger guarantee, or a special service you can add in for free. Whatever it is, find the least costly avenues for reaching your prospects, and try your offer out. Don’t assume that advertising or direct mail are the best ways to go. They may be too expensive. Instead, see if you can adapt the idea I gave to Drew for using college students as commissioned salespeople. And don’t be afraid to try a variety of concepts. Don’t presume that you know what will work and what won’t. Let the market tell you. Finally, when you find something that works, remember: You might be able to make even more money by licensing or selling the concept (procedures, ads, scripts, etc.) to others.

Restaurant Harry’s previous marketing efforts were meager, and so were the results. Like so many other business owners, he had been relying mainly on the momentum of the marketplace to generate sales. (In other words, he had been hoping that the mere fact that his restaurants were in business would bring in the volume of customers he wanted.) What I suggested was that he create a persona for his business—an air of fun and specialness—and that he continually educate people about all the care that goes into the food he serves. In this consultation, I gave Harry close to a dozen different marketing concepts, and showed him how to apply each one to his business. See how many of the concepts apply to yours. *

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Harry: Except for one of our four restaurants, I don’t think they have ever reached the potential that each of them could do. And part of it is that we don’t do any marketing. Yet we have a very loyal following. Jay: You say you’ve never marketed. But are you philosophically disposed towards the concept of allocating a finite percentage of your sales and investing it in either traditional or non-traditional innovative type programming for a sustained enough period that you can monitor and gauge the results? Harry: Yes. At various times I have gone to various ad agencies but I’ve never been able to measure an increase. Usually they would do radio, billboards, some newspaper ads. And then I would wait for the increase in sales or whatever, and we could never measure a significant amount of it. And then they would say, “Well, if you hadn’t done it, your sales would have been lower.” The usual line. But by and large, we’ve always gone back to word of mouth as our advertising. Jay: Are the daily/weekly/monthly averages pretty consistent? Harry: Yes. Well, we have a seasonable pattern every year. Jay: There has to be some indication, some parameter you can correlate to your advertising. What is the criterion that you use on a weekly basis—I mean customers, dinners, sales dollars or what? Harry: We could tally sales dollars and the customer count. So, I’ve always felt that with the right kind of marketing, we should be able to probably increase sales in at least three-fourths of our restaurants by at least 50%. Jay: Are they geographically located where one marketing program would benefit all of them? Harry: Yes Jay: Okay, now tell me what kind of programming—not necessarily with what conventional/traditional agencies do—what kind of programming have you engaged in? Have you done anything where you could see an indication that it worked? Harry: Barely. Jay: What would those be that barely worked? Harry: Oh, it would usually be the newspaper ads, or we’ve tried two-for-one or free desserts, or just a few radio ads talking about the different kinds of foods sometimes.

Jay: What other kind of club promotions or special events or the like have you tried? Harry: Well, let’s see. We sometimes tie into local races, giving T-shirts or a complimentary drink to people who come in after the race—a shake or something, or breakfast. Jay: And does it do anything? Harry: Oh, we get some of those people. Jay: But those that come in are transitory, aren’t they? Harry: Yes. Oh, but some of them are regulars too. Jay: All right. What else have you done from a promotional or special event theme? Harry: An ad in the phone book. Jay: I skimmed almost all your materials. You’ve got some nice reviews from some of the papers. What do you currently think is your unique selling proposition? Harry: I’m having a hard time with that. I guess it should be, or that we do everything from scratch, the old-fashioned way, whether it’s making our soups or our breads. We do a lot of work. Everything is fresh, the old-fashioned way, as much as we can do it. And that is the result of a lot of caring going into the food, and we try to do that with the service too. And yet what it is in some ways, is a high-end coffee shop, but the food is much, much better than you’ll ever get in any coffee shop. Jay: All right. First point: You’ve got more passion for your business than any advertising agency you could ever engage. If you’re sitting across a table talking to me and we were either sipping wine or champagne, and you were telling me the passion about your restaurant and what you just said on the phone to me right now, you’d be giving me so much wonderfully dimensional and emotionally vivid and graphic imagery you wouldn’t believe it. If you ask an agency to do it, they come up with hyperboles and monodimensional things. I think if you rented a list of prospects and you tried four, five, three or two thousand, and you wrote a long letter (and you can do quasi-personal letters, you can do computer letters that cost only a little bit more than personal, because they can be mailed out bulk rate, but they can be personalized, either just by the salutation or all the way through to the content), and if you told people the story, “Did you ever long for the old-time coffee shop? You know you wish there was something a little better.” And you told it with passion. Remember Claude Hopkins with preemptive advertising? If you told about what goes into your food and what most coffee shops do, and how you’re different, and the kind of ingredients, and the care, and how everything is so fresh. You know that most people don’t always want that, but you could say, “Isn’t there a time once a week or once a month where you get this knawing craving in your heart or you palate to have some really great ham and eggs, or really great homemade bread, or really hearty and robust rich soup? And the next time you do, here’s a suggestion. Try us out.” A letter like that, that is not necessarily abbreviated, but telling all these wonderful things, and the kinds of ingredients. I mean even if what went into the soup is the same thing that everyone puts in, if you talked about the 17 vegetables, and it simmers for five hours, and you’ve got a soup cook and a chef and they all check it out, and the final one is like the mom, if she doesn’t like it you throw it out the window. I think that would be pretty neat, don’t you? Harry: I do. Jay: If you are going to run ads, I think you should tell the same kind of story. Give yourself the vivid image of being a person who cares. Say “Anyone can just throw some eggs in a pan and run them in and

run them out, but we go to great efforts,” and tell them the ingredients, tell the same kind of story in this really personalized ad. Down here we have a store called Four Day Tires, and another called Dorman Winthrop. I don’t know if they have them down where you are, but they run the most incredible ads where they tell a complete story, and you get the emotion and you see how they buy everything, how they price everything, how persnickity they are, how they fire the manager if the bathrooms aren’t clean and if there isn’t any coffee freshly made in the coffeepot. Harry: What is Dorman Winthrop? Jay: Dorman Winthrop is a clothier. They are price cutters, but they sell good clothes. In their ads they talk about how everyone marks up, and they talk about value, and they talk about construction, and they tell you why a $600 suit is worth $600, but even though they are selling it for $490, why it is still worth $600, and the extra effort and what it takes to be a real consummate tailor as opposed to somebody you hire off the street, and they add dimension to these things that are otherwise pretty mundane, and that everybody else does. Does that make sense to you? The best thing you can do is start spending time telling people your story. Every time you talk to somebody with fervor about your business and what you do, take out your recorder, and later transcribe it. Double space between what seems like sentences. Quadruple space between what seems like paragraph breaks or thought breaks, and you’ll be writing more good copy than any advertising agency ever did, because yours is paternal, you’re talking about your progeny. Does that make sense to you? You want to base or found your USP (Unique Selling Proposition) on a backdrop of old-fashioned commitment to quality, to service. Tell them how finicky you are. You know, you can even create characters that don’t exist, like your mother. You try to make your cooking the way it was when you were a kid. You say, “It may not be for everybody, but almost once every week or every month, everybody probably has the urge to go back to that kind of great food, but they go to one of the national chains and it’s just not the same. You can make the case that it is not just for fanatically healthy people, but it’s good food. The public cannot be expected to automatically know what goes into your concept. You have to take the time to nurturously, not condescendingly, but nurturously and respectfully educate them. You have to do it charmingly and buffer it between a little bit of entertainment. The greatest example of it is, have you ever seen the commercials for Bartles and Jaymes? Well, I mean these two guys have developed this whole persona. You could do the equivalent in letter form and it would be wonderful. The letter can be translated to quarter-page—or if it’s cheap, full-page reader ads. Keep in mind preemptive advertising. Even if someone tries to beat you afterwards, they’re just trying to plagiarize. Do it first and you get distinctive advantage. People love it. The more they know, the more they can justify their action. “There are 18 different grains that go into our bread, whereas most breads have only one and its all bleached out and the vitamins are not in it, and the taste...” I don’t like serial ads— and I don’t mean cereal, I mean serial with an “s” but it might be neat if every week or every so often you took a different dramatic approach, and you gave them an indication of why your bread is so good—why people come and not only eat it, but why people practically steal loaves, take them home, buy loaves. “Do they know something you don’t? Let me tell you about our bread.” Tell the whole story about how it’s made, and then you say, “That’s just our bread. Our soups, our meats.” I think that posture is really neat. And then you come back with the fact that “probably the best thing of all is that we go through 20 more procedures than everyone else, and our prices are maybe an itty-bitty bit more (if they are), or the same.” Does that make sense to you? We have a restaurant that I patronize almost exclusively in our area because its so interesting. They make their breads daily, fresh, and their menu changes daily, and it’s a really interesting place. They have theme nights. Besides just their regular clientele, they have price-fixed nights, and they have Mexican nights, and they do all sorts of fun things. Harry: One of the things I’d like for my restaurants is more fun.

Jay: It’s great fun, and besides that, he commands incredible amounts of money for it. He also does special rooms. He doesn’t supplant money from his ongoing operation, he augments by having it in the side rooms. Two times a week he has special events. One night it’s just appetizers, and one night it’s Meet-the-Winemaster, and one night it’s all desserts, and one night it’s German thematic, Mexican thematic. Harry: That’s what we need more of. I need help having more fun in our restaurants. Jay: We also have a couple of the really classy theaters around. They encourage you afterwards to sit around, and it’s an event as opposed to a drudgerous thing, and people want things that are joyous. It’s incumbent on us to make it as joyous, as alluring as possible. We accrue great benefits by doing this, and in the process we have a lot of fun too. It becomes much more fraternal, as opposed to just a customer, and all you have to do is, you do the events. You can do it two ways. You promote it externally, and you promote them internally. Do you have a mailing list? Harry: Oh, we have people who have submitted their business cards for a free lunch. So, I don’t know, we probably have 500 names. It’s not a huge list. Jay: I think it would be well worth it for the next couple of months to have your servers garner the names of your customers even at the risk of being awkward. Maybe the deal is you give them a spiff as an encouragement. It’s hard for them to do, you know, to garner for you names from everybody. But it wouldn’t hurt you, and the rewards could be great. I don’t know how many hundreds of thousands of people come through your place every week, and that may not matter because the point I am going to make is very easy. Harry: The name and address? Jay: Yes. And immediately that day or evening you give it either externally to a computer person, or internally you had a word processor, and they got a letter of thanks from you telling them what the restaurant was all about, and an invitation to come back and some of the things about it, what do you think that would do to their image of it? Harry: What should we tip the server to get this name? Jay: You shouldn’t have to. They should understand that residue is only going to enhance their income. It’s going to make their job easier. If you really want to do it in an exciting way, have a contest among your servers. Give them a chauffeured limo for a day, give them a dinner for two, a complete dinner for two for the one who gets the most in a week or a month, or whatever. It doesn’t matter, you leave that up to your imagination. If you’ve seated a million people and you’ve only got 500 people on your list, you’ve got a long way to go. And the cheapest investment you can make is your own customers. It’s the most effective way you can leverage. I mean if you’ve got a million people running through your place every month, just by focusing your marketing expenses strictly on those people, identifying who they are first of all and focusing on them, it’s the most rightful way you can spend money. Commit a finite percentage of sales or profits that you’re going to put back into your marketing. Let’s say for illustrative purposes, 5% of gross. Split it up. First of all, you’re going to put the bulk of it, at least half, into working your existing customers, because if you get one more turn a month, or $10 more a customer, that’s much more leverage than bringing in new ones. New ones will probably be a breakeven or losing proposition to bring in. You make money on repeats from them. Do you understand that? Harry: Yes. Jay: Wouldn’t it be neat if you changed it around every month, and one month you featured a different wine, or a different specific item and you told about it or talked about it: “It’s one of 20 items that are featured every night,” and you send it off. Or you write a little story, and you had a regular continuity

mailing to your neighborhood? USP isn’t enough. You’ve got to believe what you’re doing and you’ve got to have a strategy that you adhere to and be consistent in. You’ve got to understand—I’m giving you great-sounding concepts. Some of them won’t work. Some of them will work much better than others. But the winners will so outweigh the losers that from a leveraging standpoint, you owe it to yourself to keep trying a lot of things and manipulating the fabric of your concept as you get results. If you find that by getting your servers to be more educational and funloving, maybe you can’t sell more salads, but you can sell one out of every ten people an extra bottle of wine, or one out of every five people a dessert, or capuccino, or whatever it is, and that brings the check up $3.00. That’s one thing you can do. Then you find out that by sending little letters of appreciation in with the check, that seems to bring people back, 2 out of every 15 will come back. You start playing with it, but the kind of stuff I am talking about you can measure. Talk about it with your staff. You’ve got to have everybody play back to you. It has got to be a unified concept. Everyone should be in on the strategy, and everyone should agree to participate. The ones that don’t—the infidels—are going to screw you up. And if they understand it, it’s fun. Instead of being a laborious task for them, it should be a labor of love. Your job is to make it fun. Set up a mecca of joy and an alluring environment, where the people look so much forward to being there because it is so different. They are welcome. It is fun. They learn about food, about good wine, exotic foods, sauces, desserts. You could make a deal with the wineries where they give you some, maybe not complimentary, but deals so that you can let everyone sample a red wine at different times, and you can extend yourself, but it has to have a theme behind it. You’ve got to educate them and talk about it. Tell them that if they’ve never tasted a fresh Oregon salmon or whatever, tell them the story about it, and there are neat stories behind all that stuff. And play with thematic evenings, you know with different 18 course dinners, with special things where you invite all your customers. First thing you’ve got to do is you’ve got to build your customers. And I’m not saying this to make you feel bad. Harry: We run little ads now in the newspapers from time to time about jazz, because we’ll have a jazz guitar player. Jay: I’m not so sure. There is a place for ads, but I think you can do more if you can identify your customers and your geographics with direct mail or you could even try telemarketing. You could hire people and give them a variable to nicely call the neighbors and invite them to special events. You could have special events. This place that I told you about, they do promotions for charities. They are really promotional minded. And the place is packed from 5 in the evening to midnight every night. It’s packed, and it’s because the guy is a wonderful promoter. He has a mailing list and a newsletter he sends out every month. He does theme events in the restaurant—it’s Mexican night, or it’s Independence Day, or Bastille Day, and he had Australian night where there was Australian food and Australian wines, and for a fixed price you got that, but you could also order off the menu. And at the same time, going on in another room he may have dinner with the winemaker, which is $50 a head. You should commit a budget, but I’m suggesting you get all your vendors to collaborate, too. You know, obviously if you can get 100 more people to love Ridge Wine or Jordan Wine, or whatever it is, theoretically their consumption is going to be higher. Don’t just get the stuff on comp, also get them to pay some of the promotion if they can legally do it. And also you might run ads looking for innovative people who could teach cooking. You could have cooking, tutorials, you could do all sorts of fun things which appeal to the educational instinct in people. The more you educate people, the more you imbue them with knowledge and information, the more they regard you. Do you know that? If you have times during the day when a restaurant is not being used, throw it open for other events—you know, for $5 have people come and learn about how to make sauces or salsa. You could do all sorts of fun things.

You might even bring somebody in on a strictly contingent basis and make that person your special events director. Find somebody who understands what I am saying, and pay them strictly on a contingency, on how successful they are in coming up with concepts and ideas, and speakers, and fun things, and events you could have. You could try all sorts of different things. Just keep in mind that when something works, integrate it as an ongoing part of your business, and also derivatives of it. I am speaking abstractly because you’ve got to experiment yourself and analyze it. But the possibilities are really enormous, don’t you think? Harry: How about cross-fertilizing or doing things with other businesses? Do you think that is appropriate for the restaurant business? Jay: Let’s take your most expensive restaurant for a minute. Any business that’s upscale and that has a clientele that respects them, you can make a deal with. You write a letter ostensibly from them that they’ll sign and send out on their letterhead. You pay to mail it out to their customer list. The letter tells them about your restaurant and says, “I’ve arranged with Harry Mort, the proprietor, that when you make your reservation, you tell them that you are doing it at my request. You’ll get a delightfully charming surprise glass of wine for you and your spouse when you’re seated.” You go to these businesses and you say, “Fine, you have a mailing list.” And if they say they don’t have one, tell them you will help them actually get it and give them an education as to why it’s important. Do that in exchange for them letting you have use of it with a signature from them. If they have a list already, tell it’s worth something to you and what it’s worth. The easiest thing to do is trade them dinners or something for the use of it, because that way it is soft dollars. You get two or three of those people and you send out letters that you write, and the proprietors of those sign the letter on their letterhead. You pay all the expenses, they get to pre-approve it, but you write it for them. And all it is, is an invitation and telling them a little bit about your restaurant and why it’s a neat place to visit, and the fun, and some of the neat things about it. You can try it. The neat thing about it is that as long as you can figure some way to measure, you can keep track of what works and how well it works. You understand, half your budget should always be directed towards your existing customers, if you can capture the names and communicate with them. Half should be experiments in gaining new customers. Half or three-fourths of the experiments won’t work or they’ll be more marginal than the others. The winners you integrate into ongoing programming and sustain it; the losers you don’t. You realize that you have a three-fold goal: (1) Once you’ve got a customer in, your obligation is to keep them there and get them to come as often as possible. (2) Concurrently you want to upgrade their average ticket. (3) At the same time, you’re going to spend more money to bring somebody new in. So you have three goals going on concurrently. Let me make a very powerful and underscored point. Almost none of your peers do anything like this. You know, if you do it with the slightest bit of charm, panache and you do it as a joyous, fervent, passionate person, and you do it with fun and caring, you should very quickly—if you do it right and you analyze and you don’t go promiscuous until you get some results—you should own your market very quickly, I think. And it can be such fun. * * * * Here are the marketing concepts I recommended to Harry for building his restaurant business: 1. No one has the passion and enthusiasm for your business that you do. Put your passion into your marketing materials so they’ll be emotionally vivid instead of mono-dimensional. 2. Show prospects that you care about quality. 3. Create a persona for your business, and communicate it in everything you do. 4. Make it fun to do business with you (special events, theme sales, etc.).

5. Educate people as to how your product is made or your service is rendered—even if your competitors do it the same way (“preemptive advertising”). 6. Your existing customers are your best prospects. Devote a large share of your marketing budget to communicating with them and making them special offers. 7. Send letters of appreciation to your customers. 8. Get everyone in your organization behind your marketing strategy. 9. Hire people to help you expand your business, and pay them on a contingency basis—i.e., pay them a percentage of the added profit they make you. 10. Get other businesses to recommend you, or to offer your product or service to their customers as a gift. 11. Experiment with lots of different approaches. Measure the results and compare. When something works, integrate it into your ongoing method of doing business. Now do yourself a big favor. Reread this list and put a check mark next to every concept that you feel would work in your business. Then reread the ones you’ve checked and put an asterisk next to the one that seems most likely to bring you the biggest return for the time and money involved. Next, plan out, step-by-step, how you will put that one concept into action. And finally, take the first step and get yourself rolling. In other words, don’t just say, “I could do that,” or “I should do that.” Instead, do it!

Newspaper Publishing Tyler owns three small newspapers. Every idea I gave him for building circulation and gaining new advertisers—and there are more than a dozen such ideas in this consultation—can be adapted to virtually any kind of business. This transcript is a gold mine for anyone wanting to gain new customers in a hurry. * * * * Jay: Tell me specifically how you market advertising sales and how you market subscriptions. Tyler: With one of my papers I marketed circulation by doing a co-op deal with a local charity. We did telephone sales, three people calling at night from 5 to 8:30. Jay: And has it worked? Tyler: We doubled our circulation. Jay: That’s great. So you can do that everywhere else, too.

Tyler: Yes, we are going to try other places also. Jay: Did you double it without incurring a negative cost, or did it cost you money to double it? Tyler: It costs us about $5 a subscription. That’s the amount we give to the charity. Jay: Is that justifiable, tenable? Tyler: It’s acceptable to me. In Nevada I used that kind of idea in the past. I would pay $5 to get the $18 subscription fee. It’s your concept of marginal net worth. I think I will have them for five to seven years, and I can sell them a few classified ads. Each one of them I think is worth a minimum of $80. I do the editorials, the movie reviews and I jockey back and forth between three newspapers Jay: That’s good thinking. Tyler: Thank you. But I still need your help. I haven’t been able to tap the potential to the degree that I want to. I want to talk about building my circulation other than the co-op idea with the charities. Jay: If it works, continue doing it, just expand it. A couple of restaurateurs were here, and I gave them some interesting insights about charity. I said most people look at charity as people coming to you wanting you to give money, time, or goods. But you can do charitable things that bring you a big return. I suggested that he go volunteer to any group he wants and that he put on a brunch or something with fresh baked goods and things. I said that I would imagine if you could pay to get the goodwill of 100 new people at a time who have never been to your restaurant and get them to sample your wares, you couldn’t help but get 10 people to start coming regularly. With you, I would say the same thing. I believe in tiers, almost like pylons, legs, if you will. Most people try to find one breakthrough to build everything on. I’d rather have 20 solid concepts that are operating as profit centers autonomously and perpetually. Because you will find that anything you hit on that works has a saturation or a dilution level, and if you build the whole business on one thing, and you have employees and everything and all of a sudden you hit the saturation point, you could be in trouble. I like to build layers and layers, and by the way, everything I am telling you is going to be so simple and logical, you may scratch your head and say, “Why did I pay him?” But it works. Tyler: I’m willing to spend $5 to get somebody as a subscriber. Whether that is a good business decision or not, I don’t know. Jay: You will spend $5 to bring a subscriber in the door, not counting what it costs you to fulfill? Tyler: That is bringing the subscriber in the door, yes. Jay: If we get someone to you that does not subscribe who is a good prospect, will you pay $5? Tyler: Yes, that’s what I am paying now. Jay: I’m just trying to clarify. That being the case, I would put together a budget. I’d say, “How much can I afford to spend experimentally over the next six months or year to validate this?” And let’s say it’s $50,000 for things like going to charitable groups and offering to buy subscriptions for anyone who will make a donation to them. Try a logical approach. Say, “If someone donates at least $15, we will buy them a year’s subscription to the newspaper. The stipulation is that they can’t be a current subscriber.” So you qualify it. Another thing is at Christmas time, you can give subscriptions to charities that they can sell to people or give to other people for whatever price is donated. Say, “At Christmas time we will give you 100 subscriptions to this. You can sell them to whomever you want, and the people who buy them can give them as Christmas gifts to their employees and friends. The only stipulation is that they are valid only to non-subscribers.” You have to be able to see some indication. You try a whole plethora of activities like

that, where the subscription is perceived as having a lot of value. If a subscription normally costs a customer $18, then you are giving an $18 gift. Here’s something else you could do: Instead of giving away subscriptions, you could put a representative on the road to call on people at Christmas time. Instead of buying a gift for everyone, you could sell people subscriptions for $2 or $3. You could even sell packs of 200 or 300 of subscriptions. The only stipulation is that the $2 or $3 price is valid if you are not an existing subscriber. A lot of people would give that for gifts and you can give the rep all the money. What I try to do is not shackle or edit or censor my creativity. I just try to blitz you with ideas and then we can sort them out and categorize them later. Let’s talk about packaging, ways you can go to people and have the newspaper be added to some other sale. In other words, if you could give certificates to every retailer, every quality womens’ store, every barbershop—and again, as I am talking to you, I am giving you the benefit of probably 40 consultations I have done in three days. So I’ll stop and give you tributaries but I think you understand. The way you present something is all important. It can’t be a shlocky piece of paper. It’s got to have perceived value. I’m going to get on one more subtangent and then come back. Eight years ago, I was running a magazine company, and somebody who had a mailing list that we rented a lot had a newsletter called Personal Finance which used to be an inflation survival letter. He sent me in the mail the most gorgeous lithographed card with raised print like a wedding invitation type. I opened it up and it said, “Robert Bellman has purchased in your name a 12-month subscription to Personal Finance as a Christmas present.” It cost him probably 60 cents, but the impact was so impressive even on me—and I know better! I was touched. If he had sent me just a piece of xeroxed paper that for Christmas we are giving you a subscription, it wouldn’t have had one-tenth the impact. The way it is done is all important. What you can do is go to retailers—here’s the deal: You could charge anything from money to just the cost of printing the cards, and offer that every time they got a customer who bought a certain amount of merchandise from them, you’d give them a year’s subscription to the newspaper, but they could say they were buying it for the customer in their name . What if every time somebody spent $50 at Mrs. Jones’ boutique they put in the package a beautiful, beautiful thermographed card and envelope that was customized for the person, and it said: “Mrs. Jones, owner of Jones Boutique, has purchased in your name a one-year subscription to the newspaper”? You can’t tell me that wouldn’t be very, very impressive. You have to have the qualification that they can’t be a subscriber now. And if they are, you may even want to have something else you do to endear yourself. If somebody is a current subscriber, you may have something else you give them that costs you almost nothing but engenders goodwill. In other words, if someone calls and says, “I got this and I am a current subscriber,” maybe you could have some kind of an almanac or something that costs you 50 or 60 cents that you can give them that has a $20 perceived value, and instead of turning it into a negative, you incur such goodwill. You just tell them that, truthfully speaking, you made the special rate available to start new people. You tell them the truth, if they call in. But you tell them, “We appreciate you as our current subscriber, and we want to give you such-and-such.” In other words, you pre-identify what the most probable negative ramifications are and you address them positively. Is this the kind of thing you want me to focus on? Tyler: Yes. How about a restaurant or something? I was thinking of trying to work something with a local restaurant. It’s a really good restaurant, although I think it’s a little expensive. At least it is perceived to be that, but I was in there eating last night, and I was wondering why there are not more people there and how he (the owner) and I could joint venture something. Jay: Does he advertise anywhere else? Tyler: He advertises in my competition and in my paper, too. Jay: And is he a good advertiser? Tyler: No, but he has quality food.

Jay: There are some really fascinating possibilities. You could say, “If you run all your ads in my paper, I will do one of two things. I’ll either put up all the money for it, and every Friday I come in and whatever sales you’ve made for the week, I get 5% of sales, and I’ll pick up a check then.” You could say, “How would you like to have a $1,000 ad every week?” Let’s say it really costs you a hundred bucks. In truth, if you made $500 cash every week from it, from a cash flow standpoint, from a real investment standpoint, it’s not the worst thing in the world, and you’d also block the competition. And you could make some great proof or disproof to yourself of the pulling power of the newspaper. You have to ultimately live and die on whether the publication really generates results and has the market. It isn’t the worst thing in the world if it costs you a bit to do it. You go to somebody on a selective basis. You go to people and say, “I will make you a proposition that I have never done before. I may be cutting my own throat, but I’ll try something very noble. I’ll buy or invest $5,000 worth of advertising over the next 13 weeks or whatever. That means every Friday or every Tuesday” (or whatever you can fit in) “that I’ll run at least a 3/4 page ad for you. And we’ll work very closely. It won’t just be a thrown-together ad, it wil be an ad designed to create a continuity image that progresses, and to tell the tale of why your restaurant is expensive, the quality of the food, the extra effort, the chef and the skill and the portions. We’ll create something that will be proprietary to us. The ads are ours, not yours. The newspaper will own those ads. We’ll create a 13-week program for you and we will front, we’ll invest approximately 5 or 6 or 10,000 dollars. In exchange for that, I want three concessions. Starting the week after the first ad is run, I want you to cut out of every other newspaper and radio, and I want us to be the only source of advertising. Second, for the duration of this schedule, every Friday I want 5% of that week’s sales in return for my investment. At the end of 13 weeks you have three options: 1) We will show you exactly what the ads would have cost you. If the results are so exceptional, we will let you out of the deal and you can just buy ads from us as long as you go on a 13-week contract for at least half page a week or whatever is acceptable; 2) We’ll both look at the results, what we made, what you made, and we’ll make a decision perhaps to go forward; 3) If you want to cancel totally, we will have owned all those ads and we will have created a whole identity for you, and we will sell you the ads for a fee which you can pay for over two or three years, or maybe we will even take it in restaurant credit.” That sounds like fun, doesn’t it? Tyler: Yes. The restaurant credit would be good to use with my other advertisers. Jay: That’s what I meant. You could use it to buy other people lunch or dinner. Or give it as prizes or the like. But if you do that in five or six little places... Again, anything I advocate, it’s never etched in stone. You should not be promiscuous. You say to yourself from a budgetary standpoint that you are willing to invest real money, not funny money—say $20,000—and it shouldn’t be something your salesman does, you do it. The way you present it is all important. You’ve got to do it almost with a little bit of theatrics. If it doesn’t work, try something else. If it does work, what a story you have. You see, the neat thing about it is that if it doesn’t work, who cares. You probably aren’t going to lose everything. You will probably cover your real space costs at the very worst. Again, I’m using a restaurant as an example. If that doesn’t work out, you find scenarios that you try where the probability is that at the very worst you will break even. You have a high chance of achieving great results which will be a case story that your salesmen can go everywhere with, and it’s possibly a profit center as well. I mean, wouldn’t it be great if half of the pages in the newspaper were variably based, and every Friday you were collecting checks for $25,000? Again, the specifics aren’t important, the concepts are what I am trying to explain. Tyler: O.K. Jay: But truthfully speaking, I would hire somebody who is entrepreneurial, and give that person minimum wage against 10% of the profits they can make throughout all your papers. Their job is to sit in a room for two weeks and read all my marketing reports, and then every Friday or every Monday they sit down and give you the ideas and you try them. Every idea that works, they get 10% of the profit for a duration. It is basically to get them to do what you are trying to do, but you are too busy writing the newspaper. Give them a variable, almost no base, but a variable incentive. You try it for 13 weeks and if in 4 weeks the guy

you hired doesn’t come up with good ideas, replace him with someone who has a more creative mind, somebody who is openminded. And you could also do something else. I’ll show you a great way to sponsor entrepreneurial activities for yourself. You could run ads in your own paper looking for people for a marketing project, and the deal is that they come in for an entire day at their own expense, and they read my material. You have, say, 20 people reading it. Then they go home and a week later they have to submit the best idea that they can come up with. All the ideas are your property, and the best one gets the job. I’m trying to give you ways to play off that without spending real money. A lot of it is the way you value and revere and posture everything. Here’s an example: When I started doing contingent consulting, I’d go through a hundred people looking for one or two. I used to have people come to my house all the time and I’d spend about 15 minutes interviewing them, but in the process I would give them advice too. I realized that no one revered the advice. Believe me, if you just came down and asked to spend a half day with me, you wouldn’t revere what I’m telling as much as you do having paid for it. Well, at first I would do it freely and none of them would appreciate what I had told them. Finally, if I was interested in interviewing with them, I’d say, “O.K., come to my home or my office and I will buy you $500 worth of my time. They would come and I had a timer that I set for 15 minutes, and it was very theatrical, but I would say, O.K. you are on.” I saw immediately an approximately 500% enhancement in the perception of value of the knowledge I was imparting. Back to this idea of how to keep these ads in your name. What happens is quite funny. If at the end of the time period, they don’t want to continue, you could give them a great scheme. You could make all your money back by charging them $5,000 for the ads—and give them three years to pay, who cares? Or you can trade the ads for meals or whatever. All the things we’re doing, you are basically a laboratory. Once you perfect something, instead of going to all the trade conventions and freely showing information, I would license to other newspaper publishers for so much a month or a year the right to use the ideas. Anything that works here, I’m sure that there must be a hundred equivalents of you over the country who would love to have this knowledge. You could have a licensing company that owns the rights to everything, so there are a lot of possibilities. It’s very abstract and you must be able to comprehend the possibilities. Most people can’t transcend their habitual thinking. This is so abstract and conceptual and it is so nonstructured, non-traditional that it’s hard to embrace. If you know that your publication pulls and you run into somebody who has never advertised before, you can go to them with another proposition. You’ve got to give them an education. Most people don’t understand the dynamics of advertising. Your salesman goes to them with a proposition like this: “My publisher is so convinced that our newspaper can pull for you if you know how to use advertising, that he is willing to pay to buy you one ad, the first ad, with a couple of simple provisions. That is, we create the ad to focus on a specific offer for a product or service or something where it’s absolutely unequivocal. It’s only going to be offered in our paper, so you will know definitively that the people are resulting from that ad. It should be something so appealing—it may be for something you actually sell for cost. That is not the purpose, since we are taking all the risks on the ad. We’re risking our money on you to evidence that our publication has pulling power. In return for our buying you a $500 ad one time, you’ve got to agree that if we generate a minimum amount of responses, sales, orders, dollars, whatever, then you will go ahead for 13 weeks of advertising with the understanding that we will write the ads for you.” Now something else very important. I sold radio advertising when I was about 21. I was so zealous that I could sell a lot of people advertising who never advertised. I did them a doubly grotesque disservice. One, I never worried about my radio station being demographically suited for them. Two, worse than that, I didn’t know any of the tenets that I now know about how to craft an ad to make it work: giving reasons why, educating, giving unique selling propositions. I would garner a customer and take them to this station where we had an old-time ambivalent copywriter whose claim to fame was that he could write a 60 second commercial in 60 seconds. It was garbage. It was vacuous, but I didn’t know that then. We’d run the thing and it wouldn’t pull at all, and the poor person who had spent $2,000 who had never been on radio

before was turned off, though most of them paid the bill. They were turned sour not only on me, but on advertising in general, and I felt like I perpetuated a grotesque disservice to them forever. Most people running ads don’t know how to craft them. I would have the paper sponsor courses all the time on how advertisers can double or triple or quadruple the pulling power of every ad they run, and give them the rationale—why we are doing it free, why we are buying you a $400 course—and you bring a person to teach it, a person who uses my techniques, because the university techniques are garbage. As to the rationale for why you are doing it, you can run an ad in the newspaper about it or you can send out invitations. “Why are we buying a free prepaid tuition for anyone who advertises at least one time? Because we know if we can show you how to make every dollar you spend go five times as far, you will be delighted to advertise more and more with us because it will make you more and more profit.” Concurrently, I would take that course and turn it into a series of reports that you could send out to people one at a time. Send one and then say, “If you want the other four, I will be glad to send them to you on the day your first ad is published in my newspaper.” Years and years ago, I went to work for the very first people in telemarketing. I was the marketing manager. I had a book on every salesperson’s desk, and at the end of every call, they had to look up categorically what had transpired, and find a letter in the book that corresponded to that. If the guy said, “I’m not interested,” or “I don’t think it will sell,” there were categories for that. I had four or five different letters or versions addressing each category. I suggest that you do that for all your salespeople, and that all the letters bear your signature. I like to scatter a series of letters between regular size and... I think monarch size letters sometimes really have a great impact. You can play around. It depends on the quantity. If you are doing thousands of them, it’s harder. If you are sending hundreds, you can send things certified mail, you could try all sorts of different things and just analyze the results. If every time somebody made a call and you followed up and everything in the letter was procedurally structured... For example, “Dear Mr. Jones, my salesman just told me he called on you. I was glad. I have seen your ads in the paper (or I have listened to your ads on the radio). I’ve always said that if you knew how to craft the right ad, first of all you could probably make more dollars and moreover, I have told John that I have had an idea for you that I thought may really be irresistible. I will have him tell you about it the next time that he is out. But I wanted to send you with my compliments something that I thought might be really good for your review or just your contemplation between now and the next time he sees you.” Here’s one I did once. It starts out saying, “I would like to buy you 100 shares of promising penny mining stock I think you would be interested in owning, plus a rare coin with the potential to double and redouble in value over the next three years.” (This is all hard money oriented.) “I decided to throw in one of the newly updated copies of Doug Casey’s and Jerry Pogue’s report on 40 top North American Mining Stocks, all poised to explode in value like a tightly compressed coiled spring. Before you ask yourself why I am being so incredibly generous, let me tell you that there is a small catch to my offer, but I am sure you will agree that it is actually quite reasonable. Read on and decide for yourself. Every year about this time, my financial people starting tearing out their hair because of the seemingly impossible problem I ask them to solve. On the one hand, my costs keep going up from year to year. It seems hard to believe this, but even though inflation is supposed to be controlled, every cost and expense seems to go up by 5, 10, or 20% per year. Our printers never come to me with price reductions, just increases. When you print 48 million pages of printed information a year, a seemingly small increase of just a penny a page adds up to nearly a half million dollars of extra expense for me. Surprisingly, due in part to the stagnating economy, vendors and suppliers want to charge me, their existing good customer, more to help cover their lost new business that is not as valuable now as it used to be. Likewise, it now costs me almost 20% more indirect marketing cost and expenses to bring in a new subscriber to the newsletter. The sad fact of the matter is that I rarely make any money at all on new subscription promotions. Only if you renew at least two or three times or more do I make any money. “My employees—and I have nearly 100—all expect a nice raise and a Christmas bonus each year. For these reasons and more, I am looking at a minimum price increase of 15% in my production overhead if no more surprises hit me this year, and perhaps as much again next year.”

That letter has made two million dollars. I wrote it in about 20 minutes. If you understand the concept, you can probably use it to do something very good for your newsletter. To go on: “After that, the fact that it costs me more and more to provide you with a great newsletter, my monthly editorial expense is almost $46,000.” (Remember where I talked about educating.) “I have an executive editor, 10 contributing editors, 12 famous editorial advisers, 6 full-time researchers, a financial librarian, and two full-time financial readers who do nothing but scan hundreds of little-known publications looking for information. We subscribe to 4 world-wide wire services and 2 national data bureaus and our travel expense budget for on-site research, like visiting the actual gold mines we recommend, exceeds another $10,000 a month.” (I’m not trying to bore you, but I think if you get the idea, it will make you a lot of money.) “You see, we don’t just have some gold mine issue that we hear about, we really dig into the facts and actually travel to the gold mine itself to check out first hand that the mine is for real, that the production level the stock promoter claims is in fact the production level our readers who invest would like to see. In other words, we take our adviser responsibility very seriously. More seriously, in fact, than virtually every other newsletter publisher we know. I’m not trying to brag, but we spend a lot to be the very best. It’s important that you know that. “Is all this expense worth it? We think so, and so do our subscribers. Sure, we know of publishers who pay a part-time editor $1,000 or $1,500 per month to throw together a mediocre newsletter, but very few people want to read a mediocre newsletter because what they get is mediocre advice. Not with Personal Finance, perhaps the most reliable and long-term profitable financial newsletter there is because of the effort we put into every issue, and up to 80% of our subscribers renew every year. “But, my accountants are ready to scream. You see, most smaller circulation newsletters that don’t even come close to Personal Financial’s track records charge their subscribers $145 to $295 a year. We currently charge a modest $94. The accountants are pushing me to raise prises nearly 26% up to $118. I have told them absolutely no, no price increases unless there is no other way. I told them to go back to the drawing board and come up with another way for me not to have to dramatically raise subscription renewal rates this year. That was about six weeks ago. Two hours ago, my chief financial officer came into my office with quite a good idea. He’s been playing around with the possibilities and finally figured out a way to keep renewal prices from increasing dramatically. In fact, if the plan works out properly, I could keep renewal prices at the same modest level that they are presently at. Here’s the plan and the financial basis behind it. “First of all, let me give you a quick lesson in suscription renewal expenses. It costs a company like mine about $7.50 a year to send out all the renewal notices, pay for the computer services to print and keep track of the upcoming renewals, pay for the postage, pay for labor to stuff and mail it. It all adds up. $7.50 a year. Over the two years, just the combined cost to keep you renewing is $15. If I could avoid having to send out two years’ worth of renewal notices and all the corresponding expenses that go with it, I could eliminate the $15 in hard costs right off the top. Keep that $15 savings possibility in mind, but follow along as I progress on this intriguing mental adventure.” Want to hear more? Tyler: Yes. Jay: “I will further point out, that if I got enough people to prepay or advance renew for two years, I’d make, at the very least, an additional $5 or $10 in interest use of the money. Besides the direct interest I’d make, I could use part of that money to put into vastly expanded subscription mailings which while admittedly not making any money up front, would add considerable increased profit in year 2 or 3. Also, in the summer months, we borrow heavily to finance mailings that bring in money in the fall. If I had the use of advance renewal money to pay for the mailings instead of turning to the bank, I’d save something like $500,000 in annual interest charges. You can see that the aggregate savings or profits that are possible if I persuade a lot of subscribers to early renew for two years are substantial. Also, I could save or make enough both to keep renewal prices the same and to have an actual profit left over. I could hold onto that profit of course, but that would not be in keeping with the entire purpose of this letter, which is to keep your cost of renewing the same and reward you for your loyalty.

“After sending my poor accountant back to the drawing board again, we figured out we can afford to spend that profit on you by bulk-purchasing, at far under market rates, a collection of highly desirable bonus materials that I can give you for free if you renew early. You see, it is one thing to print up or buy 100 copies of a given report. They’ll cost you $10 to $15 apiece. If you put in orders for 10,000 copies, the premium cost drops to $1 or so. It’s like that when you buy rare coins too. But go direct to the wholesales and buy 20,000 coins, and the price per coin goes down dramatically. And so it is too with penny stock shares. Buy ten shares and you pay through the nose. But negotiate a bulk purchase of 500,000 or a million shares, and you can snap up really promising issues at true bargain basement prices. And that, my dear subscriber, is precisely what I’ve done.” Do you get some ideas about this? Tyler: Yes, yes. Jay: “I have put together a whole package and it is yours and it is all free. All yours if you renew your subscription to Personal Finance right now for 2 additional years for the very special low rate of [blank]. That is correct, for [blank], which is the same two year renewal rate that we offered you one year ago, you can add 48 additional issues to your present subscription, plus receive all the valuable bonuses to boot. What are these bonuses worth now or in two years?” I tried to show them that things that cost nothing can have a lot of value, so I said, “The answer could very well be a lot. If the stock shoots up or the coins take off, the sky is the limit. But there is a delightful protection on this offer as well. It is this: If you decide at any time in the future that your subscription to Personal Finance is no longer providing the value you expect, you may always exercise your right to cancel, plus you may keep the entire bonus regardless of whether you cancel or not. The way my accountant and I see it, you really can’t lose. Not only do we extend your subscription for a fraction of the renewal rate we expect to be charging come January, but you will receive a tremendously valuable, potentially profitable investment bonus on top. You helped me keep costs down, make investment interest income, eliminate computer expense. It’s a win-win deal for us all.” I won’t bore you with the rest of it, but I went up in price for a 3-year offering and made them a greater bonus, and I went down if they only wanted to go for a year. The possibilities for you could be awesome. Wouldn’t it be funny if you could liquidate half your debt in one year, or generate all the money you can use to seed all sorts of marketing programming? You might be very surprised if you did that. No one has ever done it, but I believe it can be very powerful. This one I just read made 2 million dollars. It may or may not work for you, but the point is, what would it take to do a full page ad and tell the story? Maybe you talk about how you can’t afford to do certain things, and say, “I am going to give you and your family a book of passes for the theatre,” or “We’ll buy you dinner for two,” or whatever. A question here—is your cash flow big or a problem? Tyler: It’s a problem. In January, February, and March it hits rock bottom. It’s always a battle in the newspaper business, because you advertise for 30 days and you send out a bill, net 25. I’m thinking about giving a 10% discount if paid by the 10th to speed up payment. Jay: I used to make all my money on fixed rate services. Then I started doing variables. I found out that I made about 5 times as much for the same thing. Some of them didn’t work. I am suggesting that if you can do it without compromising, this idea of trying a couple of advertisers where you get a variable could give you great cash flow. I tried some really daring things. This one worked, and the guys came back to me and said, “We want to do another one, but we need a new rationale. We think we’ve beat the customer to death with premiums and bonuses,” because this was about the seventh premium-based mailing I had done. So I had the new one say, “We want to find out what kind of difference a premium really makes. Whether bonusing and super bonusing or just good price makes a difference, or if nothing makes a difference. So we want you to vote.” I told them how well this mailer did, and said, “We don’t know if it was because we kept the price low, or because of the bonus, or because a lot of people could write it off in taxes. So, we have no basis for going forward, and rather than going forward blindly and presuming it was one of those, we want you to help us. We are offering you 4 different options: 1) An irresistible bonus for 2 years that’s worth $300; 2) An outlandish bonus for 3 years that is worth almost $1,000; 3) Or no bonus for one year but a good price. If you don’t want any of those, we still want you to write us a note telling us which one you would have done, and we’re limiting it strictly to 10,000 people because we’re not really

doing it for the money, we’re doing it to find out.” All you need is a rationale that’s believable. You let them in on the secret. What if you said to advertisers: “In December, we’ll presell ads,” and tell them the truth. “Cash flow is down, and we have never done it before, it’s the only time that we are going to do this, but if you’d like, you can buy an ad for January and February for up to $1,500—or so many inches or whatever—and take a 20% savings as long as it is paid for in advance. We were sitting here one day in an accounting meeting and our crazy accountant said, ‘I wonder if you have ever done that,’ and I said, ‘They don’t do that in the newspaper business,’ and the accountant said ‘Why?’ And he said, ‘Think it over,’ and I said ‘It would be fun to try it out.’ I might only limit it to 10 advertisers as a test, so if you get this and I have already signed up all the ones that I’m going to sign up, I will have to refuse, but the truth of the matter is I will give you something that’s worth $500 for your effort.” Are you starting to get a way of thinking out of this? Every time you want to do something that is different, give a rationale for it and tell them that you don’t know if it is going to work or not. You’re trying it out. Nothing ventured, nothing gained. We’ll give it a shot. And you do it in letter form or in person and you believe in it. You always revere yourself, and you have got to revere the newspaper and the value of it. Let me give you another idea for selling classified ads. The first thing you should do—you could do it manually or on computer—is this. Probably in your city, almost everyone’s phone number is easy to find, right? You might try a couple of possibilities with them. The first thing you could try, if classified is a great growth area, is to have commissioned sales people calling people on the phone saying, “This is Mr. Smith, assistant manager of the classified ad department. Mr. Tyler Carleton, our publisher, had me call you. So many people have been running classified ads lately. Maybe they are cleaning out their garage and they see something they want to get rid of. We have an idea that maybe you needed someone to help you visualize and focus on the possibilities and help write ads for you. So, we are running a special for the next whatever.” (See where serving the public really makes sense?) “and as a little market experiment, we’re calling a select group of our subscribers and suggesting that if they want to go through their attic or their basement or closets or garage, we want to give them all the possibilities, help them think of all the ways they could use a classified ad.” You might do the same thing also for businesses that currently don’t advertise—garages, shops, whatever. I’ve found, in my experience with doing things, that the cost of being chintzy up front sometimes is awesome. You’re better off saying to somebody, “On the first classified ad you run, we are going to charge $30 for something normally worth $70.” If you know that for every 20 of those people you will probably get 4 of them back in the course of a year at full rate without having to sell them, it will be worth it. You can also give little courses beforehand to help them create ads. You ought to have somebody who can really grasp my material, and use that person not only for all the things that I suggested, but also as a teacher for a little class to teach these people how to write classified ads themselves so that they’ll have a high probability of placing ads again. Life is a moving parade—they will tell their friends about it. They will find stuff they want to sell every six months. Do you see what I’m saying? It’s up to you. If you called somebody on the phone and suggested, “Mr. Smith, we are willing to do cartwheels because we know that if we help you design a classified ad and you sell something successfully now and you make $300 on it, the chances are once every six months, you will...” (and tell them what the chances are because they don’t know, don’t leave it abstract.) “The chances are that once every three months you will go through your garage and you’ll tell your friends and you or they will come back as a customer. Even though we don’t make any money on the first one, we know...” You’re programming them. Programming is very important. The same thing applies to the sales pitches to your advertisers, etc. If I can impart a way of thinking on a couple of points—service doesn’t just mean how the newspaper can serve in the context of advertising. It’s much more encompassing. You could, for example, make a deal with, say, a doctor in the community who just moved in and wanted to advertise but didn’t have a lot of money. You go to him and offer a one-time full page ad, and if you found that innoculations cost $1 of real money but have a $35 value, you’ll pay the real $1, but he has to administer 500 to the whole community, and you take credit as a sponsor. You can do all sorts of high-leverage things to promote your

image. You can gain the whole community with your service. And not just service to the reader, but service to the advertisers—and the possibilities go crazy, don’t they? Tyler: Yes, they do. Jay: They are going to love you for doing it! No one is going to hate you. You’re going to help them make more money and you are going to help them make their ads work better; you’re going to be more known in the community for your service instead of being haphazard. You can have a full-time person doing nothing but setting up charitable deals with associations, and joint-venture deals, helping fledgling advertisers get started. You can also barter, but be careful of one thing. Barter can be wonderful as a profit center, but it’s terrible as an impulse thing. In other words, never trade unless you have an intended use for the product or service. Most people trade based on the “screw one another” theory. You got something that costs you a penny and sells for $10, somebody else has got something that maybe costs them a penny and sells for $5, you think you are getting the better of it. You trade and then you never use it. I only trade when I have an intended purpose already in mind, and it’s a profitable intended purpose, not an indulgent one. Do you understand what I’m saying? Tyler: Yes. Jay: For example, you can go to a restaurant, if it’s a decent restaurant, and get the restaurant people to agree to these terms: 1) Giving you total assignability to the credit; 2) Using it any way you want. If you give them a $500 advertising credit in return, you get immediate use of the restaurant credit today. You can give it to anybody, it doesn’t matter. It is just like cash, except that it is not refundable. But don’t take it unless you have some intended use. You use it for an expense account, you use it to buy organizations dinners so you can get the PR; you use it to take advertisers to dinners where you all go and talk. Or, you take it and you package it in a sales capacity to somebody else. You trade for stuff, and they pack it together, and go to some other advertisers and say, “If you can give us a 13 week commitment, not only will we create this, we will create a whole promotion for you where you give away a $500 certificate to this and that.” And you have somebody who does promotional packaging, too. I don’t know if you guys do that, but do you see the possibilities? Tyler: Yes. Jay: If you have $100 in it and you get $1,000 out of it, you still make 10 times your money and you made everyone happy to boot. If you try it and you bring new advertisers in—am I going too conceptual for you? Tyler: No. Jay: It’s very exciting and no one understands it. That’s what is so funny. The biggest problem in dealing with me is that people think I am going to give them these profound hi-tech concepts. But the little things are what work. All we’re doing is weaving threads into a fabric. Your whole community becomes accustomed to a way of thinking and conduct, and then it starts. After you start doing it, it feeds on itself, if that makes sense to you. You’re predominant in the market. It’s fun and it’s profitable. Can you trade with your radio station? Tyler: Yes. Jay: You go to a radio station or a TV station, and you trade a full-page ad for assignable credit with the understanding that the credit can be used by anyone who is not currently an advertiser. You go to the advertiser and you get a package together. Who cares what you give them....whether you get them to advertise or you assign that TV station to your salesman to sell contingent deals and you trade that for whatever—who cares? If there are maybe a thousand businesses that you think could help and you don’t think they will ever advertise on their own, the best thing to do is go to them on a percentage deal if you can show that you’re a good medium for advertising. The salesman goes in to schedule the next ad and he

gets a check for 5% or 10% of their sales or whatever you can negotiate, and the ones that work, you keep doing. The ones that don’t, one of two things happen. Some of them will probably still want to advertise and you may want to take them. The other ones may not want to take you, but somewhere in between you’re going to probably save half of them. You’re going to get a lot of experience you can license and sell to other people. That’s what I would do. I’m thinking of about four things concurrently. I hope I’m not confusing you. Am I? Tyler: No, you’re not. Jay: If you trade for TV ad time, you may or may not want to use it for yourself. You may want to use it for a classified ad sales pitch, or you may want to use it for basic promotion of your newspaper. You may want to use it to pack in with a deal where if an advertiser spends $10,000 with you, you give him $5,000 worth of TV ad time. The possibilities are enormous, and you need somebody to help you who has that kind of flair. A lot of things won’t work. When you find that out, you chalk it up to experience. I never get dissuaded just because something doesn’t work, because when I find a winner it makes up for 20 losers. Do you understand that? Tyler: Yes. Jay: Here’s another idea: find a product that will have value to your readers. Then, write a feature article about it. On the next page, run an ad for the thing and see if the combination works. If it brings in $10,000, you can take that concept to 30 other newpapers. Tyler: I’ve been in the business playing with newspapers for 10 years, and it is just getting a little embarassing, the number of things I never thought of. Jay: If the whole advertising community starts getting personalized letters from you saying, “You have never advertised with us and goodness knows we would like to have you as an advertiser, not just because we want your money, but because we think we can deliver better results for the dollar. Most newpapers just want to take your money. If they see that you are crafting an ad that is inversely leveraging its potential, but you use an agency, or they are afraid that if they point it out to you, you would run a smaller ad and get the same results, it’s going to hurt their pocket, so they don’t tell you. They’re not interested in your best welfare. We frankly are. We don’t have you as an advertiser today, and we may never have you, but the least we can do for you is offer more service than anyone else. “I have written a report called, ’25 Ways To Make Any Advertising You Run 10 Times More Effective.’ Sometimes an ad you run on a full page doesn’t pull any better than an ad you could run in a quarter page. Of course, if you have enough to say to fill up a full-page ad, you should run it, but if it is just a quarter page worth, you just increase the cost of every sale by 4 times. I could tell you a lot more, but the best thing I can do is have you read this book. If you have any questions, give me a call, whether you advertise or not. We understand how to ruthlessly demand the maximum performance of every ad you run. I don’t think our competitors understand it. If they do, they’ll put their own profit over your best interest. Is that right business? We don’t think so. You judge for yourself.” You can’t tell me that if you sent some letters like that out with some really powerful accompanying material, you wouldn’t turn the industry on its head. Are you getting some ideas? Tyler: Yes. Because nobody has done that kind of thing. Jay: What have you got to lose? Particularly if you send it to somebody who is not advertising anyhow. And you say, “You don’t advertise with us. I think you should, but that is not even a point right now. You advertise in the other paper and I’ve read your ad. Frankly, I think that if you changed your headline or you told them more reasons why, or you articulated your guarantee better, you would increase the yield of any ad you ran by probably no less than 40 or 50%. Restated, that means an ad that pulls $1,000 should pull $1,400. Do me a favor—I want you to try at my risk in their paper the following suggested copy changes,

and if you have an advertising agency, tell them to do it. One publisher to an advertiser. Two advertising men talking on a gentleman’s agreement. The proposition is to try my technique in the other paper. If it doesn’t demonstratively generate a superior pull, write me and I’ll buy you a replacement ad.” That’s pretty daring too, isn’t it? Tyler: Yes. Jay: And a P.S.—”I don’t know why the other paper never told you this, but we do. When we get an advertiser, we don’t just take your money. We try to make you the best deal for your investment.” I think it would be fun, don’t you? Tyler: I do, I do. Jay: I think if you adopt some of the tenets I am trying to extoll, it won’t happen immediately. But give yourself six months. As long as you have enough staying power for six months of experimentation, you’ll own the market. These things work. I hope your mind is percolating with possibilities. The sky is quite literally the limit if you can see the possibilities. You will see what I do, by the way, and what you should do too. Do you know why I can run rings around people? It’s because in my ads, I don’t titillate, I give freely up front. I tell them how to do things. In the cover letter for this consultation, I gave you free marketing knowledge, didn’t I? Look at what I did, because you can use it yourself if you have something to sell like that. Tyler: You do it with dimension. Jay: Yes, and I do that always. In the promotion for Your Marketing Genius at Work, you got 10 specific examples in the letter from Howard Ruff. You had $10,000 worth of ideas you could use yourself. And you think, “If somebody would give me that much free, he must have a hell of a lot more to offer.” Some of them are going to say, “Well that’s all I need, so much for that.” The other half are going to say, “If he gave me that much for nothing, what’s he going to give me when I send for the materials?” That’s always been my policy. Give them something free. Give them a free sample. Tyler: Would you suggest doing it first just for the businessmen I know, or try to do it with something else? Jay: I would suggest you test, because there is no answer. Try 10 businessmen you know and 10 prospects. If you can, when you make a pitch over the phone, get a telephone adapter and record it. Have your secretary transcribe it. Be brutally critical of yourself. When something works, focus: Ask yourself what you said that got the guy to come this time, when last time it didn’t. Analyze it. When you make a pitch, if you can, have a recorder in your pocket somehow, not for him. It is to eavesdrop on yourself. You’ll try lots of things. Find hot buttons. What have you got to lose? Keep in mind that possibilities are limited only by the boundaries you impose on them yourself. I’m not trying to tout “positive thinking” or whatever, but the truth of the matter is you’re only limited by the governors you impose on yourself. * * * * Here, in summary, are the marketing concepts I gave to Tyler: 1. Give away free products or services. Once people sample your wares, a certain percentage of them will probably become customers. 2. Offer free products or services to anyone who makes a minimum donation to specific charities. 3. Give free products or services to other companies to sell or give away to their customers.

4. Instead of giving products or services away directly, have a rep sell them for you at reduced prices— and let the rep keep 100% of the revenue. 5. Try packaging your product or service along with those of another company. 6. Add bonuses to your offer. 7. Try bartering your product or service. But make sure you trade for something you can use yourself or something you can offer to others. A good thing to receive in trade is credit towards future purchases of the other company’s product or service—especially if you retain the right to assign that credit to someone else. 8. Offer a greatly reduced price on the first sale in return for a commitment that if they get good results (according to mutually agreed on criteria), they’ll buy from you exclusively for a given period. 9. Offer your customers a greatly reduced price on the first sale in return for a percentage of the money your product makes them or saves them. 10. Hire someone to study my marketing concepts, and pay them a percentage of the profits you make on any idea they come up with that you use. 11. Take the marketing ideas that work for you, and license them to other people in your industry. 12. It may be worthwhile to give your customers a free report or seminar to make sure they know how to use your product or service to full advantage. 13. To boost your cash flow, try preselling products and services at reduced prices. 14. Tell people the reasons why you are making them a particular offer. This adds dimension and lends credibility. 15. Revere your concept. Execute it in such a way that your offer has a high perceived value. 16. Try a variety of things. Better to have 20 solid concepts working for you than to put all your eggs in one basket. Is there a concept here that doesn’t apply to your business? I doubt it. Which one should you try first? That’s up to you. But remember, trying a concept doesn’t mean saying, “Yes, that’s a great idea” and then not doing anything. Do yourself a favor. Choose one of the concepts in the above list, plan out how you’ll execute it, and then resolve that you will take action on it beginning tomorrow. The return on your investment of time and effort could be spectacular.

Coin Dealer This consultation focused on one offer and how to articulate it for maximum results. As you read, you’ll see that the ad copy I suggested does not seem overly sophisticated. In fact, it may even seem overly simplistic. But the copy (which you can probably adapt to your own use) brings the message into sharp focus, thereby giving it enormous power. * * * *

Jay: What are you guys selling? Seth: Well, we’re selling mostly silver dollars, with a little bit of gold. Jay: What kind of silver dollars? Seth: Mostly the more common stuff. Jay: Are they sold to your old customers? Seth: Yes. We haven’t had an influx of new blood for a while. We’re planning on selling through one mailing anyhow. Jay: I’ve had some experience in the coin industry. Your prices on common silver dollars are high, relative to the coin buyer, aren’t they? Seth: Well, not necessarily, because the guys in Coin World are overgrading, and we’re giving proper grade silver. Jay: What if you ran an ad in Coin World, a half or full page depending on if it cost $500 or $1,000, and that ad said, “We’ll sell you a complete set of Disney Commemoratives at half price if you buy at least a minimum of one roll of silver dollars from us at better-than-market prices,” and explained the rationale? Would you be price-competitive if people called in? Seth: I suppose. Jay: What do you think? Seth: I honestly don’t know if it would work or not. Jay: It might cost you $500 to find out. Seth: Yes. Jay: You’d find out in one or two weeks. Seth: I could go with it. Jay: If you said in the ad “We’ll sell you a complete twelve-coin Disney proof set for half price when you agree to buy a minimum of one roll of Morgan silver dollars from us at below-market prices.” Then you could go into body copy that says, “In case you’re unfamiliar with us, we’re So and So, and we specialize in one thing only—silver dollars.” Is being uncertified something you talk about, or is it a negative? Seth: Well, we don’t really make a big deal one way or the other. Jay: You could say, “We specialize in high-grade silver. We don’t sell a lot of gold, and we don’t sell a lot of commemoratives. We concentrate on just one thing—and we humbly believe we sell the finest examples of common-date silver dollars imaginable. We do it at very, very competitive prices. The only way you’ll know is if you call and talk to us. But in order to induce you to call, we’ve come up with an offer that is irresistible. In short, here it is. We’ll sell you a complete 12-coin, Disney proof set worth as much as $500 for just $250—when you agree to buy only one roll of common Morgan Dollars from us at our below-market price.” Then you can explain why you’re doing it, how you’re doing it, and what your angle is. “Here’s how we do it. We buy a lot of silver dollars and work to establish an ongoing business with our customers, not

one-shot sales. Consequently, we don’t have to make the killing on a sale that a lot of other dealers have to make. Our customers have the tendency to come back to us over and over again, year in, year out. Consequently, if we make half the profit that another dealer makes on each individual sale, we get 10 times more sales per customer over time, so we make 5 times as much. It makes sense. It’s good business. So we found that by pricing really top-notch coins below other people’s prices, it gives us a unique advantage for attracting people who are ongoing, long-term collectors and investors. “Why do we do it? Because we learned years ago that there’s a lot more sense to building long-term relationships than trying to gouge customers on a one-shot, and that a long-term collector/investor is a much more enjoyable and fulfilling type of customer to deal with than a one-shot speculator. For this reason, we only look for clients who want to continually amass coins, particularly silver dollars in the dates that we specialize in, which are blank through blank. To get you motivated enough to pick up the phone and call me or my partner—and by the way, you’ll always deal directly with us, the owners, never with our underlings—we decided to make you an offer that is irresistible. We’re making no money on it, but we’ll get you introduced to dealing with our company. “If we’re right, and if the coins we sell you are equal to or exceed your expectations, you’re obviously going to keep coming back and buying more from us. We’ll make more profit from you over the years, and we’ll develop a relationship. So it’s more than worth our while to forgo the $200 or $300 profit other dealers make on a Disney set, and make that your inducement for starting a purchasing relationship with us. “Why do we ask you to buy only one roll of Morgan Silver Dollars to get the Disney set at half price? Simple. All we care about is your sincerity and your earnestness. As long as you’re genuinely interested in the long-term accumulation of silver dollars, we want you as a customer. We don’t care if we don’t make any real profit off you to start with—we just want to get to know you. “Once you’re introduced to us, we will introduce you to the kind of quality and values you can get from us. Consequently, we want to make it so appealing today, that if you’re in the market for buying one, two, or ten rolls of silver dollars, you’d be a fool not to buy from us. Right off the bat, you make $250 on your purchase by getting a $500 Disney set for half price. “We limit the offer to one set per customer. We limit the offer to the first 50 customers who come in. We reserve the right to rescind the offer once we’re out of supplies, because we don’t know if we can get any more at that price. You may know that silver dollar ‘A’ alone is worth $125 on the retail market, and it’s included in the 12-coin set along with this and that coins. If you want more information about prices or availability, call us. “You will, again, always deal with the owners and never an underling. I believe our prices are more attractive than virtually any other dealer. More importantly, the quality of silver dollars we will send you will equal or exceed your highest expectations. I believe, for the money, you’ll always get a greater value with us, and this is a wonderful way to prove it. You’ll get a $500 Disney set for half price when you buy just one roll. Call us at this number.” Or you can quote your price and have an order form for them. You can reduce all that into a half-page ad or less with a headline. I think that’s a hot little ad. Seth: Do you you feel that going into Coin World is more appropriate than going somewhere else? Jay: Yes and no. People have asked me this question. I’ve had about 10 dealers coming up to see me in the last three weeks and they’ve asked me that same question. My answer to them depends upon what they’re selling. If they are selling a commodity and they don’t have a Unique Selling Proposition for it, no. It’s very, very useless. If you’ve got a really good proposition and an offer which delineates you favorably and demonstrably above everybody else, when you consider there’s 80,000 hard-core collectors and nouveau-collectors going in there—the people from Investment Rarities wouldn’t run those big ads unless somebody was trading them. I would hope they wouldn’t keep running them if there was no market activity.

I believe there’s a limited number of people collecting and investing in new issues, commemoratives, and that kind of thing. It may only be 3,000 or only 2,000. The point is, if, for $500, Coin World is a very leveraged access, a rifling if you will, to a very viable market, I think for that particular proposition that I just outlined for you, it would be a wonderful $500 risk. Now, if you were spending $5,000, maybe not. Consider the fact that if your $500 risk doesn’t work, you’ll still probably sell some coins. If it does work, that $500 ad could sell most or all of your Disney coin sets. When you’ve sold them all, besides getting you reliquified, you’d have 20 or 30 new customers that you could continue to sell to. It’s improbable that everybody’s going to buy just one roll if your prices are good or fair, and if the quality you send them is reasonable. Don’t you think? Seth: I guess it’s worth a shot. Jay: I’m not trying to browbeat you, I just think it’s a neat idea. Two things. If your prices are going to be fair, and the condition of the coins you’re going to send will equal or exceed whatever else they can get at that price at this point, you have a high probability of a repeat customer. I think it’s a wonderful way. Seth: So you’re saying what we should offer them is our customary Morgan dollar at the same sort of price that we would charge them in the future? Jay: A normal market price, provided that price is fair and market-competitive relative to what you’re delivering. But you should give them the Disney coin set for half price. Seth: Okay. Well, the whole problem is, what is half price? I mean right now, the set is being offered at $335. Jay: I’m saying that the coin set is supposed to retail for $400 or $500, isn’t it? Seth: Yes, it has retailed for as high as that. Jay: That’s what I’d say. Half price is $250. It’s still under-market. Basically, you tell them, “The set is $250. It has retailed for as much as $500. Some other dealers will, to sell one over the phone, sell it to you for $335 and try to sell you a bunch of other things. I deal straight-forwardly. Buy one roll and you get the set for $250. No questions asked. We’d like to talk to you more, to get to know you, and we’d like you to get to know us. We’d very much like you to take the time to thoroughly inspect the roll of silver dollars we’re going to send you. If we never talk to you again, that would be sad, but we will not pressure you. It’s a very straightforward offer. We’re selling it for half of its peak price.” Seth: When we send their coins out, we always put them in some sort of a holder, whether it be an airtight capsule or special plastic. We don’t believe in just putting them inside of a tube. Do you see any problem with that? Jay: No. I see an opportunity. Visually, your packaging can be easily inspected, right? I think there should be a P.S. at the end of the ad or a special sentence that’s done in bold that’s says something to the effect of, “By the way, unlike many of the other dealers who send their silver dollars tightly sealed in paper wrappings in hopes that maybe you’ll look at the first two or three and won’t open the whole thing up, we’re different. We spend a not inconsiderable amount of money breaking out each coin, even though we refer to it as a roll. It’s a unit-measure phrase, not a literal phrase. We take those 20 coins and we individually protectively seal them in transparent plastic, so you can easily and completely view and inspect every coin in the roll. “By the way, if for any reason whatsoever you’re dissatisfied with any of the coins individually, they’re sent to you on a 30-day, no-questions-asked replacement option. If any one of them doesn’t meet your expectation, send it back. We’ll replace it free. You can’t lose. You get great silver dollars at undermarket prices, a Disney set at half of what it sold for at the beginning of the year (and less than anyone else is selling it for right now). You get the chance to start dealing with a company that’s more interested in having you as a customer in 10 years than they are in making a killing on you in 10 minutes. I don’t know

if you can ask for anything more. I encourage you to give us a call. The problem is, we only have 50 sets available on this promotional offer. We’ll still sell you the coins at a wonderful price when the Disney sets are gone, but if you want a double value, you should call us before all the sets are spoken for. The number again is 1-XXX-XXX-XXXX.” I think that’s a hot little ad. Seth: All right. So honestly, what we would have to do is sell a roll for $1,000. Jay: Now, parenthetically, is that price market-competitive? Seth: It’s very difficult to say what’s market-competitive. Most of these people selling rolls sell them at cheap prices, but with various catches. Jay: What you might do is put in a money-back provision too. You can also say, “You can always find a dealer who will quote you a lower price on a ‘roll’ of silver dollars. But if you want us to put a catch in our deals, unfortunately we won’t accommodate you. There are many dealers who will do that, and we’ll gladly give you their names. If you want really prized, very desirable, top grade MS63 Morgan silver dollars at very competitive prices, you owe it to yourself to take advantage of this half-price Disney coin set bonus/under-market Morgan silver dollar offer because you’ve got nothing to lose. If any coin isn’t what you expect, we’ll replace it. If you don’t like the coins at all, you can send them back and get your money back. We’ll even let you keep the Disney set at the half price for your trouble. We’re taking all the risk. You have nothing to lose.” If you can be market-competitive, I think it’s a great ad. I think that kind of ad with a neat little headline would do really well in Coin World. Coin World is a very fine publication for somebody who’s got something very specific that stands out favorably and appeals to people. Seth: I think the people are going to feel, “Yes, sure, he’s selling these cheaper because he’s making money on the silver dollars.” Jay: I think we’ve addressed that in disclaimers, but if you feel that you need to make one final point, you could say, “One final point. It may be important. If you think, ‘Wow, he’s got to be making it on these silver dollars,’ put us to the test. Check us out. Buy the roll. Take it anywhere. Price-compare it. Scrutinize every millimeter of every coin we send you. If you find even one coin that isn’t up to par, send it back and we’ll replace it. If you’re unhappy with the whole roll, send it back, and we’ll give you your money back. We’ll still let you keep the Disney coins at half price for your trouble. We’re at risk on you. We’re not going to make a dime on you. Frankly, we’re barely going to make enough to pay for this ad on the first transaction. If we’re right, though, we’re going to make money on repeat business every 3 months, 6 months, 9 months, etc. Why in the world would you even consider giving us repeat business if we took advantage of you?” Seth: Have you done any business with any of the dealers who do advertise in Coin World? Jay: I had a lot of dialogue with this guy William who does a lot of business from Coin World. Seth: The reason I ask is that some people who buy out of Coin World will cut your throat for a nickel. That’s literally how price-competitive they are. Jay: I would submit to you the following. There are three categories of people who read Coin World. 40% or more are exactly what you said. 40% of the remaining people are on the line. They’re new people who are becoming cutthroat price shoppers. But 20% are just getting into it. I don’t think William’s ad would work if everybody were cutthroats. I think his ads address the segment you would address with your ad. They’re part of the new people that are just coming in. Seth: Are you saying William is doing well in Coin World?

Jay: Yes. He keeps running a full-page, two-color ad every week. Do you think he would do that if he weren’t getting results? I really and truly think it’s the most focused, inexpensive way to go. If it works, you can keep building offers that would emphasize this little thrust that all you sell is coins. Again, if you get 2,000 customers out of Coin World, it’s like a pig in manure. Seth: I should be so lucky! Jay: Not on one ad, of course. But if every time you run an ad, you can make $10,000 or $20,000, plus you’re accruing another $10,000 or $20,000 in repeat business, plus this time you get $20,000 or $30,000 out of your Disney coins, and a couple of the guys that call in might buy 10 or 15 rolls. Stand behind your program. If you send out a couple of crummy coins, replace them. The way that I’ve written that ad, it doesn’t matter if they want their money back. At least get rid of the Disney sets. Tell them that just for their trouble, they can keep the Disney sets at half price. You can’t lose. If a $500 ad in Coin World sells $20,000 in Disney coins, and concurrently gets you 25 new customers, and every week you run the ad. It’s not the same ad every week, we’ll find some other new issue that doesn’t really have any market, but you offer it to them for half price. You make the same kind of deal. “This week we’ve made a great deal. We’ve found an ABC proof set. They’ve sold for $600, but we’ll offer the set to you for half price.” I think that’s a neat little approach, don’t you? Seth: Let’s just say that we haven’t tried it before, and if it works—let’s say that we’re skeptical. But at this point we’ll try anything. Jay: I think it’s a good proposition. Why don’t you pick up a Coin World and look at William’s ad and tell me that his ad is geared towards a sophisticated coin buyer? I believe it is not. Seth: I agree with you on that. Jay: I’m saying that most of the readers of Coin World are what you said they are. But any magazine has attrition. When you have attrition, you replace it. A typical attrition rate is 20-50% a year. If they’re losing 16,000-25,000 readers a year, and replacing them with people coming in every week, every year, a certain percentage are new collectors, not hard-core; they are just in the beginning stages of enthusiasm. They’ll become hard-core in a year or two, but right now they’re open-minded. They’re your fodder. Seth: Thank you very much. You’ve been helpful. Jay: Good luck. * * * * If you’ve got a really good offer that delineates you favorably and demonstrably above everybody else in your field, then use it in all your advertising and promotional efforts. One great package you can put together runs like this: “If you buy such and such, at our regular below-market price, you’ll get a bonus of this and that for 50% off retail. If you’re not satisfied after thirty days, send us back the such and such and you’ll receive your entire money back. But the bonus is your to keep.” Be up front about what you’re doing. Say you want them as long-term customers; that’s why you’re willing to take a risk on them now. Tell them why you’re better than the competition, why you’re unique, what benefits they’ll have dealing with you. Answer all their possible objections. Make the offer irresistible. If you regularly run variations of your ad in a publication read by your prospects, then you’ll open your door to new business and long-term profits.

Cake Decorating Products & Services/Bakery Ellen runs a small bakery that specializes in cakes and cookies. She is an expert cake decorator. When she called me, she was thinking about several avenues of expansion. One was to help other bakeries build their businesses by developing new products. Another was to teach cake decorating to homemakers (she had already made a videotape on this, and had 5,000 copies sitting in inventory). And finally, she had ideas for a newsletter for bakery owners. The problem was that Ellen only had $3,000 to spend on marketing, which meant that most of the conventional marketing channels—ads, direct mail, etc.—were out of the question. In this consultation, I showed Ellen how to do low-risk joint ventures that would leverage her $3,000 many times over. * * * * Jay: The best way to do it, in my opinion, is for you to offer to help bakeries for a percentage of the increase you bring them. The way to do it is to take a 3, 6, 9, or 12 month period and unless they are seasonal, whatever the bakery owner has been averaging a month, call that his base. If he is making a quarter of a million dollars divided by 12, it means that he is doing $20,000 a month. That’s his base and if he balks a little bit and says, “Oh, we’re increasing it 10% even without you,” say, “Okay, $22,000 is yours,” and you may lose a little or win a little. Thereafter, on a monthly basis, you want him to recompute and pay you on sales—don’t wait to do it on an annual basis. You might work your fanny off and you may not get paid for a year, and that’s not fair to you. Negotiate a monthly base and let him give you the figures. Ask him to compute what he has done over the last six months, ask what the trend is, and if it is up, ask him what the percentage is and do this so he has no complaint about it. Every month, based on the sales as of the 30th, he will compute the numbers and on the 15th of the next month, he will give you a check for 10% of the increase. Convert it to a simple letter agreement. Ellen: How about him paying me any kind of rights to, for instance, the designs? Jay: What I would tell him is that the designs are for his exclusive use as long as the relationship prevails and he pays you in compliance with the contract. At such time that he doesn’t...(If he is a nice gentleman, you might want to be very gentle about this. Have your attorney deal for you and always make the attorney or someone else the heavy if you have a nice relationship, so you don’t jeopardize it.) Just say that you want to retain ownership, but you are willing to assign the royalties to him as part of this arrangement but at such time as the relationship would terminate, you’ll give him the choice of either buying the royalties from you or you’ll repossess them or reclaim them. You should make the relationship have a minimum time span on it. It takes, in my estimation when you are doing a project like that, three months to six months to get it going. You want to at least reap benefit for twelve months thereafter, so you should make the minimum duration 15 to 18 months. You want to tell the man, in your agreement, that if you account for a minimum enhancement, if you do at least $150,000 more gross in the first 18 months or whatever period, that automatically renews the relationship for another 18 months on the same base period—the same $20,000 a month. It is very important that you add that to it. All these little things that you add to it, if you don’t get along or if something happens in the middle of the year, you could sell the rights to that back to him for cash, do you understand that? He cannot dump you, he can’t say 18 months is over, it’s all over. So, going in you get paid monthly on the 15th of the following month, you retain 100% ownership rights to your designs. If you achieve a minimum enhancement over that 18-month period, it automatically renews for another 18-month period. And ask them one other consideration. You would like them to agree, if you

match them out of your commission money, to match you and put up to 5% of enhanced gross into marketing, advertising, or something. Tell them that you will match and then be willing to. If you think that an ad in National Bakery Today is warranted and if they agree, you’ll match them 50/50 out of your money. It will cost you, but is a seed for the future. Ellen: Should that be in the initial agreement or should that be down the road as we go along? Jay: I would incorporate that now, because the truth of the matter is that you might be better off. If someone wants me to do consulting for them, I can get a fee, but sometimes I would rather have pages in a magazine that I can use to promote my newsletter or something else, because I can leverage that. If you get them to match you, you’re better off, once you get a feel for what you are doing, to put a full page of ad in National Baker once every quarter, or do a mailing to all the west coast bakers or do something like that. If you have any longevity, say for 3 or 4 years, you want to do everything in your power to keep generating business. I know that you need cash flow, but you still want to do everything in your power to boost your business, and the more you can roll on their money the better. Even though you need money, really they are financing it all out of their own pocket. Now, I am going to take you to task. Your are paying me to counsel you, not to patronize you. Shame, shame, shame, you shouldn’t have made 5,000 videos. The smartest thing you can do if you go with a product is don’t spend the money on inventory, don’t spend the money on anything but a couple of prototypes or just enough samples that you can legally have somebody sell. Spend all the money you can validating the marketing. Put it in an ad. If the ad doesn’t work, move on to something else. Don’t be stuck. Paying for 5,000 videos was not an astute move. I am just taking you to task. However, now that you have 5,000 copies, let’s see what we can do to make use of them. Possibilities: Is there a cake decorating magazine for consumers? What do homemakers who are interested in cake decorating read? You go to such a magazine and you offer a joint venture whereby you’ll create the ad, you’ll furnish them with Veloxes (camera-ready layouts). In the ad, you could offer the newsletter that you want to publish plus the videotape as a package for $39. Then you could say (since you have not really sold it before), “the tape is valued at $39,” so you could say it is like getting a $39 bonus. And you can offer a 60-day moneyback guarantee where they keep the video even if they take a refund on the newsletter. You’ll get taken advantage of a little bit, but it doesn’t matter, you’ll still probably get a great yield. You are putting a package together that has a high perceived value. You go to the magazine and tell them that you want to do a couple of double truck (two-page) ads and what you’ll do is offer the newsletter plus the tape for $39. That’s a possibility. If they put up the space, you have no risk and if it doesn’t work, you are down to just the cost of writing the ad and typesetting it. And, if it works, then you would do it over and over again. And what I would do is just give them 50% of the proceeds. Tell them, “I will furnish you with the ad, double truck, you run it one time at your risk, and you keep 50%. If it does a minimum of X, we’ll do it every month plus I’ll produce a series—we’ll be 50% partners in business. When we get a new subscriber, we will start a program where we mail out offers for a sequence of other tapes and products, and we’ll set up a publishing division, publishing not necessarily being limited to print but also video, audio, etc.” (although video, not audio, is probably more useful for this type of thing). Try it and see what happens. When you approach the magazine, dangle a carrot. For instance, for one insertion, the publisher has the rights to 50% of a publishing empire that could be bigger than her magazine in profits, and all she has to do is use the magazine as the host device, to bring in the initial people. You will have all the subsequent products, you’ll craft all the letters for them. Does that make sense to you? Ellen: Yes, it does. Jay: Concurrently, another thing you might try is if you could get groups to sponsor you, and I don’t know who the groups are, but you could do cake decorating seminars. First of all, you would do a pilot in your area where people would pay, say $29 or $39. You give them a tape as a bonus, so they not only learn, but

have something to review at home. If you got to where it worked well and you had the technology down pat, you could hire part-time women all over the country to do them for you. You wouldn’t necessarily make anything on the front-end—in other words, you would make the tapes available to them for $15 and after you sold out your inventory, you would have maybe a $5 profit on it—but if you had other things that they would buy afterwards at the seminar, like subscriptions to a newsletter, then the back-end sales could be terrific. Say you had 100 new subscribers for some of the products, that would be sort of fun too, wouldn’t it? You could also write to catalog companies and tell them about the video tapes and offer the tapes for their catalog. The problem is if you sell it as your only product, you are going to get creamed. The best way to do it is you have to have a back-end. You have to have other things to sell. You also want the names of the people you sell to, because they are interested in that area, so you can sell them an ongoing array of related products or services. If you know with certainty that you could get enough turn from a video store (this is a little dangerous), you could actually go to a video store by mail or in person and say, “Look, we’ll put these in on consignment and I’ll share the revenue with you for three months. At the end of three months, you can buy it from us for $19 if you wish.” If it works, you could make a deal with women around the country to go to all the video stores and make the same offer. Even when you get them to sign an agreement, you will probably get burned to some degree, but you still could make out very well. I did something years ago—wrote about it, I think, in one of the issues of Your Marketing Genius at Work. I found somebody who produced wonderful tile-like substances and made them into coasters, ashtrays, and all sorts of beautiful things that were real hard to sell. Another guy got all excited about it and bought $100,000 worth of them and tried to sell them, and they were just sitting in his inventory gathering dust. I went to him and persuaded him to let me take them and consign them to different gift stores and drugstores and furniture stores and put prices on them, and once a month I’d go back and take an inventory. If something was gone, they would pay me and I’d replace it, and I made $500 a month for the guy and $500 a month for me. Not good money, but the point is, it was just sitting and gathering dust. I’m just trying to give you a lot of possibilities. They may not all work, but you can try them small. If they work, you can expand outwards. For example, if you knew with certainty that if every time you put a deal out you would make $5 a month, and you put out 1,000 copies of it, that’s pretty interesting, isn’t it? What would happen is that a certain number of the video stores would buy it after 3 months, a certain number would send it back, a certain number would keep renting it from you, and a certain number wouldn’t pay you. But you could generate some cash this way. And you would learn what to do next time. You could build a market for them and you could sell other products on that basis. They would buy from you a whole line of related products. Or, it might be better renting the video and not selling it to them at all. Remember Howard Hughes? Howard Hughes was a big billionaire. His father was the first one to go with the drill bit for oil wells and he was brilliant, ahead of his time. He had a patent on the only drill bit that would go through rock. He never sold them, he rented them to people and leased to them, but you could never own one. You would just lease it over and over. That is a possibility. You know, try a hundred of them. Give 100 people a dozen in a display and work on the concept that you never sell it, they can only rent it. Does this give you some ideas? Ellen: How do I get the money back that I invested in the tapes? Jay: It depends solely on how you sell them. If you sell them by mail order, if you sell them directly or they come through some magazine like Scandia, you want to make sure that your names are jointly owned or the venture is jointly owned and you have control of the names so you can go back to them with other offers. In selling the tapes, you might get back all or part of the $15 you spent on each one. But you can bet that somebody who spends $19 or $29 to buy that tape is somebody who is really interested in cake decorating. For every hundred people, you can probably get 10 of them to spend $50 a year from you, on which you can make $30. And if you can get 5,000 people to buy it, or 10,000, then you end up with a $150,000 to $300,000 a year income. You could keep building on the business or you could sell the business and it is a charming, not pressurized, fun business.

I think you need to parasitically play off of other people who could be host devices to you. The more you can play off some other person’s assets, the better off you are. Use the word “concept.” A deal doesn’t have the excitement of a concept. You say, “I have a concept. We can validate this. I’ll put together an entire publishing division for you and I’ll do all the work. You get half the profits. All you do is make your space available, your customer names, and we mail them and work them and we’ll trade space with other magazines. And I’ll mastermind it all.” Do you see what I am saying? You need to take a big idea, not just do a joint venture one time. That has no appeal. You want to come with a big idea, and say, “If it works and you don’t like me, you can buy me out for a modest amount afterwards, based on a formula. I can create a business that can make half a million dollars a year and be even bigger than your magazine. All it takes from your side is a one-time venture where you get 50% of it.” Then you give them the whole ad concept. But you have to take a big idea. People might say, “Run my ad one time and I’ll give you $9.50.” But every one of those $9.50s can make them $50 a year on the back-end. Do you understand? You have to give them an education, do a little salesmanship, and they have to see the big picture. That one ad that might cost them very little might make them $100,000 or $200,000 a year not only for this year, but forever in a business that the two of you could sell off to a third person. Whatever you do, it’s vitally important that you come up with other products to sell with your name because you might have to give the first product away, you may lose money. Your $80,000 in revenue may be reduced down to $30,000 or $10,000 or whatever. If you do even that well, you’ll be lucky. But then the way to turn that $10,000 into $100,000 is to have something to go right back to those people with that you can sell again, and then again, and then again. You can go to Parade Magazine. Parade Magazine has a little box where they will do a press release where you agree to pay them 30, 40, or 50 cents each time someone inquires about something. And it sounds like nothing, but people get tens of thousands of responses. You have to be sure that the release you do is qualifying and not promiscuous because if you get 20,000 responses, you owe $10,000 whether those respondees convert or not. Most people are foolish when it comes to generating prospect leads. They make it too promiscuous and they get lots of people to respond, but they are not quality leads. You’re better off if you have to pay on a variable—that is, on so much response—if you write a press release or an ad that is a very qualifying type. It should include cost and it shouldn’t just solicit people blindly. If I were going to do it with somebody on a PI (per inquiry) basis, I would offer it for $29, and I would make the promotion pretty tight. You could also go to radio stations, magazines with little suggestive ads and saying in a cover letter, “If you run this (you run 2 different ads, one that is selling it for $29, and the one that is looking for inquiries, for people who will send for a promotion piece about it)—if you run this, I will pay you anywhere from $1 to $5 an inquiry.” Five dollars is a lot, so you do a test where you try 3 different prices on the magazines and radio stations—say, $1 or $3 or $5 per inquiry. I think the smartest thing you could do is do a pilot with somebody you can develop more of a relationship with, but locally so you get some track record. You might go to somebody local and say the following: If they will help you, you will do two things. You will give them 100% of the sale price. All you want is the name and address of the customer so you can sell other products. In other words, if it sells for $19, they can keep it all, that’s the commitment. You will give them all the money and you’ll even give them a little percentage from the sales for every other radio station you get using them as your recommendation. So you tie them in. Does that give you an idea? Same thing with newspapers, Pennysavers, anything you can do where they will take all the risks. I would read every magazine I could that reaches women. Look at every mail order company that runs any kinds of ads, including classified, selling recipes or anything similar. I would have a form letter that looked personalized, and I would send letters to these people and tell them that you have a series of cake decorating products and services that you sell and they have a market you would like to reach, and you

make them your proposition. If they will mail your material to their customers, you will let them keep 50% of sales. Let the money go to them and they mail you a check for 50% of all the sales. Start off with the videotape and if that works, you will give them other products to sell. By doing this, you can probably reduce their advertising costs dramatically, or make them a bigger profit on their customers. Half of them won’t have thought about that and you sell them on it in terms of them making another $30,000 or $40,000 a month. What you are doing is you are playing off all the advertising that they are doing, and the qualifying, and their existing customers. Does that make sense to you? What you have to do is go into each one with passion and not prejudge them. Follow up and do enough tests and approach enough magazines to do a joint venture with you, send out enough ads. You’re always better off to give away a larger percentage and let someone else take all the risks. Try a little test seminar, see if you can get a group to endorse you or you can offer a group 3/4 of the money. You can go to all sorts of women’s groups and say if they put it on, if they organize it, you will furnish them with inserts to put in their mailing and they get to keep 75% of the money for their treasury. Once you get that done, then you can take that technique and you could license other women all over the country as long as they buy the back-end from you. Let’s switch over to your bakery newsletter. Ellen: Direct mail, does that sound like anything? Jay: I sense that you cannot afford it. With $3,000 to spend, you don’t have a lot of money. You’re better off using that to send letters of solicitation, looking for other people to do deals for you and leverage that right now. I don’t think your first time out you are going to be good enough running a direct mail piece that it’s going to make money. You have to rent 5,000 names to do a 5,000 test mailing, and there are good lists out there. But a 5,000 test mailing is going to cost you 40 cents for more apiece in the mail. That’s $2,000 right there, and small quantities are going to cost you a couple thousand dollars to get your package made. You would just spend all your money and if it doesn’t work, you have no money left. Why don’t you go to a bakery supply company and offer them this deal? They have lists of customers and you have a product. You’ll organize different mailings that you want them to do for you to segments of their customers, the consumers, the retailers. The ones to the retailers might say, “Buy a dozen and if they don’t sell, I will take them all back.” Some will say, “Buy a dozen and if that doesn’t make you at least $100 in the first three months, send them back and keep all the money.” Tell the bakery supply company that if they will do the test for you, you will return their investment off the top plus 50% of the gross sales. So, if they put up $3,000, the first thing that comes out of the top is the $3,000, then they get 50% of the gross sales. You may only make a little bit, but you will have them validate where the markets are for you. You will learn a lot from what they do. Tell them you will furnish them with ads and mailing pieces that they will sign, and that you will furnish them with the materials. Tell them if it works, you will give them ongoing participation, and all the sales will come through them forever and you’ll work out other products. Then you need to experiment to find out where the best market is, and you learn the best segments of their customer lists. Let them have the lion’s share of the proceeds if you have to—whatever it takes to get them to take the risk so you can learn a lot and get a name. Ellen: They deal mostly with individuals. Jay: Doesn’t matter. Get them to agree to finance something. Then write a killer letter geared towards each segment based on what I’ve taught you, maybe six pages and you’ve got inserts and you’ve got guarantees. Try one version with just the video, one version with the video free if you take my newsletter, or a more expansive packaging of it. Just see what they respond to and always keep it so the bakery supply company is never at risk. They are fronting you the money but you are always covering them on a guarantee. They get all the money off the top, or the worst you do is give them so many times their investment, but give it in videotapes so they are guaranteed to get their money back in a year if they just send a salesman calling on retailers. The whole concept of the thing is building someone an ongoing business. That little twist gives much more dimension to everything you do.

Ellen: There is a bakery production magazine. It’s good but it covers the big wholesalers more than the mom and pop operations. Jay: A magazine like that is probably big and not flexible. But if they were flexible, I would go to them and say that we wanted to start a newsletter and you could own half if you give us nothing but some ad space. That way you would get them to give you a full page ad each month in the magazine that they assume the cost of, and you could tell them that if they give you the space, they could have 50% of the business, and if they don’t give you the space but they advance you the space for six ads, six months, they can accrue back all the cost of space plus have 25% of the business. The understanding is that as long as the newsletter sells, you will pay them back. These are two different offers. If worse come to worse, you could use the ad space to offer your videotapes for resale to bakeries also. That is not a bad idea, bakeries having that on sale too? Regarding the trade-oriented newsletter that you talked about doing, I think you could teach them so much. You might be better off offering a two months free trial. In other words, at the end of two months you will sent them an invoice. If they haven’t already made $150, if they haven’t found a way to save 25% of their produciton time, if they haven’t found a way to get $3 more out of every cake they sell—you know, whatever you are going to teach them— they can just mark “cancel” on the invoice and they’ll owe you nothing. If, however, you make them at least $100, they should be very willing to agree to send you $100. That’s the proposition I would use for it. Ellen: Do numbers work? There are about 25,000 bakeries in the U.S. and maybe half of those are retail. Out of all the ones that are retail, maybe some of them are large, etc. Jay: First, how many do you need to make it work? Ellen: I’m thinking maybe 300. Jay: If you do the risk reversal, if you can really perform—I’m not impugning you, but if you really can make them money, save them money, show them ways to get more money out of what they do, more productivity, whatever it is that you can do for them, all you want is a forum to get them to read it. And if it makes money it should be self-evident that they are going to continue. It doesn’t always work that way, but if you put the onus on you and you make that offer to them, that you’ll buy them two months’ worth and all you ask in return is that they agree to spend 45 minutes or half an hour a month that it takes to read and try out at least one idea that you’ll give them in the two months, and keep a keen and accurate track of how much money you make them or save them. If it’s at least a certain amount, you want them to know that when you send them the invoice, you expect them to pay for it. If not, they owe you nothing. But each issue you put out, you can offer as an insert—as you have seen in my newsletter—some other product or service that can probably make you enough money getting people to buy it, that you will cover the cost of mailing it. Do you see what I’m saying? It is also possible that you might be able to syndicate. Any project I am giving you, you could also go to people you know and offer them half interest in the future if they finance your marketing, it they finance the letters, if they finance your ad. So there are ways to syndicate out your risks, to lay your risks onto others. You could come up with special reports. You could try little ads in the bakery magazines offering a report on just one subject for $39. “How to Cut Your Decorating Time in Half”—and make a little display ad: “Most commercial bakers don’t understand that there is a way to cut your decorating time in half and, in the process, cut down two actual hours worth of compensation that you give to your typical decorator. On an annual basis, this one technique should be able to save you two hours times five days a week times 50 weeks—500 hours—and the average baker gets $10, and that ads up to $5,000. Our report will tell everything about this and you can try it out at $39 and 30 days at our risk.” That’s a whole other possibility. I wouldn’t do it as a book. A book has a low perceived value. A report has an exclusive value as people perceive it. One other thing you can do—it’s a neat concept if you could get somebody to finance it. It would be with your letter. You could have a little quasi-Polaroid attached to the letter you would send out en masse.

You can go to people who print catalog sheets and print tens of thousands of copies, and have them cut so they look like they are Polaroids and have them either attached on the letter or in the envelope with a PS saying, “I’ve taken a picture of a few of the designs that I’ve done just to give you an idea of what you can do with this product.” It is a good visualization tool. Ellen: What we emphasize most is quality and service. Jay: That’s good. There’s a little German bakery in a shopping center near here, and it’s a little man and his wife and they’re about 25% more expensive, but it’s worth it because the quality is 125% more. You know, another little gesture you might do, rather than advertising your way in, you might ingratiate your way in. You might do little samplings, buy coffee, or little cupcakes for the kids. Not ongoing, but you might, just as a charming move, within the next couple of months, bake up little mini cupcakes and give them free to the kids or give to customers to take home to their kids. Do something really charming that maybe costs you a nickel, but maybe ask a customer how many kids they have and put one for each in a box for them to take home. It’s such a nice gesture, and things like that might ingratiate you. It is a great way to solidify business. No big place or store can offer that. It costs a little bit, but it may have such a powerful impact that it will make up for the cost. Probably one out of five will feel such an obligation that they will buy a few more things before they walk out, so it will make up. I would try something like that. Ellen: What do you think of the idea of sending out direct mail to homes to solicit business for our bakery? Jay: I would do better. I think you should tell them what goes into making your products. Do you remember in one of my issues, I talked about preemptive advertising? It was Claude Hopkins in his book, Scientific Advertising. He talked about Schlitz. Tell them how you made it. You know, “You may be interested in knowing what goes into our cakes and pastries. We start our day a 5 am, we buy 75 dozen eggs, the cake is a formula that has been in our family for 48 years, and my husband got it from his mother.” That kind of thing gives much more dimension to the products. “We taste everything when it comes out of the oven, and my husband, I think he is a little bit too discerning, but he’s been known to throw out a whole batch of cookies if they weren’t soft enough, or chewy enough, or we didn’t get enough chocolate chips per cookie. I don’t know how the other bakers are, but this is how we are and we don’t know any better. We hope you will try us.” That’s a neater approach, don’t you think? Ellen: Yes, I like that better. We are uncomfortable comparing ourselves with our competitors. Try them then try us. Jay: Right, I wouldn’t do that. I would do what I just said and tell them about it and give dimension to it. Tell them a little story. Tell them anything that will give them some idea of what you do. There are things that go on in a bakery that they don’t know about. Tell them about the natural ingredients vs. the synthetics or whatever. Send them a neat letter and say that you would like to tell them about your bakery, “If you are not a customer, we would like to have you try us. Let me tell you why. We are not like most bakeries. We’re probably never going to be multimillionaires because it is a labor of dedication, love etc.” Ellen: At the end of that letter, should there be an offer? Jay: You could make a lot of different offers. You could say that if you have never purchased from us before, we will buy you a cupcake or we’ll buy you a cup of coffee, or we’ll buy you a doughnut or a piece of coffee cake of your choice, or we’ll give you one of our cakes. Try all sorts of things. If it works, do more of them. Just make it a communication from your heart. I think that is what I would do. Send a letter every month. Ellen: Should we send it to the whole community? Jay: Send them to the whole community and say, “Obviously we hope that you will visit now that you know what goes into baking quality cakes and cookies. We’re not just a factory.”

If you’re on a low budget—and even if you’re not—joint ventures are a great way to leverage your marketing dollars. If you have some ideas that can help other businesses, why not offer to license those ideas to those businesses in return for a percentage of the increase in profits you make them? Can’t afford advertising? Try approaching smaller newspapers, magazines, radio and TV stations with an attractive “per inquiry” deal. If you have a strong back end, you may even be able to afford to give the newspaper or radio station 100% of the sale—and that could be a hard deal to turn down. Or find a company whose customers will be interested in your products and offer to create an insert for that company’s next mailing. You write the insert, the other company does the mailing, and you and they split the profits. Have excess inventory? Instead of trying to sell it, why not consign it to as many outlets as possible? That way, you get your product in front of lots of potential buyers for almost no cost. Or, if it’s a low-ticket item that you have in inventory, why not offer it free as a bonus for purchasing another, more expensive item? And regardless of the marketing channels you use, if you need money to finance your marketing, go to people you know and offer them a healthy percentage of your future profits if they’ll put up the financing now. Do conservatives projections, share your enthusiasm, show potential investors how much they stand to gain, and—who knows? —you may soon have all the marketing money you need!

Specialty Carpet Sales Vic had a dynamite product: beautiful, custom-designed area rugs he could offer at a fraction of the price of anything else on the market. But his ads and mailers were weak—for two reasons. One was that he hadn’t identified what his Unique Selling Proposition really was. The other was that he was articulating his offer in generalizations instead of specifics. In this in-person interview, I gave Vic what most businesses need: marketing focus.

Vic: We can make people the area rug of their choice. You can design it or we can design it. You can use subtle designs we have, or anything you want, any type of design you want. We can put in the rug with your colors. And, I just felt that this should go well. My first letter was the one in red and black. Jay: Who did you mail it to? Vic: I mailed it to new home owners. But I sort of screened it. It had to be at least a $100,000 dollar home. Jay: How did it do? Vic: Terrible. Jay: It did not make money.

Vic: It did not make money. And, I wondered, is it me? Is it the way I buy it? What is it? I figured, okay, I know what I have to sell, but in this letter they can’t really visualize an area rug. Jay: You followed up with what? Vic: I followed up with the second letter. Jay: Same names? Vic: Same names. And, I mean, I got some calls. I sold some stuff. But, I never sold an area rug. They all wanted the cheapest possible buy. Period. Jay: They were purely value-minded. Vic: Right. Jay: How many of these did you mail out? Vic: I would say four to five thousand. Jay: Did it make a profit? Vic: No. Jay: What about this third mailing? Vic: That was the one with the riskless thing. I thought, there is nobody in the business who sells carpets at no risk to the customer. Obviously, once that thing is down it’s useless when you pick it up. At least it may be. A dealer might get 10% out of it. If he can sell it. Jay: How did it do? Vic: I just sent out a few because I was a little scared. Jay: I understand. To get some experience with what the risk is. Vic: No response. Jay: None? Vic: None. So maybe the risk is not a big object, maybe that’s not a big problem. Jay: Let me focus. First of all, tell me what you enjoy the most and the least about this business. Vic: The least I enjoy is fighting the legal problems. Most carpet layers deal in drugs, or they have more problems than you’ve ever heard of, and that goes with the whole industry. I was ready to quit this year until this idea came up, because I had just had it. I did not want to fight anymore. But now that this came up I felt it might be something that I wanted. Jay: “This” meaning the craft, the custom-designed area rugs? Vic: The craft. The new craft. I just feel that there are plenty of people out there who have the money and want this done, and there are not enough people yet doing it. The thing is there are too many carpet stores around. Too many guys selling out of their trunk. Jay: I agree.

Vic: I’m planning to move the first of February or March to a bigger place where we can make these area rugs. Right now we only have one table. There is not enough room. I want to hire a couple of guys I can train to make the area rugs, and start from there. All the carpet that I sell from now on will be custom label, my label. I only will sell quality stuff. Things like this. Higher pile, lower pile. Things I can carve. Like this is carvable. A Berber rug is not carvable. Jay: I understand. Vic: Cut loop pattern is not carvable either. I mean you can, but it would not look good. So, basically I want to know what my approach.should be. Jay: Let me talk a little bit. I think you tried to incorporate a lot of interesting devices you learned from my new literature in your letters. But I think it was lacking—not in integrity of the author—but it was lacking a more progressive human rationale for everything. And, you sort of horde the value of the thing that I think is your most promotable item, which is the area rug. I think it should be more developed, more built up, exalted, explained, expanded on. There are not very many people doing them, are there? How many people in your area do them? Vic: Well, there are some mills that are doing them now, but they will not be able to do the inlaid work that we can do on the premises. Jay: Are they priced comparably, or are they less? Vic: I can be less on the area rug because we make them ourselves. Jay: What is the price of an area rug approximately that size? Is that the $500 or $600 dollar range? Vic: That would be more in the $1,000 range. It’s a six by six. We have some others. Jay: Are they all custom in the design? Or is that a pre-stocked design? Vic: Well, we are going to make that pre-stocked. The ones you see right now. Jay: Those are all beautiful. Vic: And we can make them in any color, any size as well. These are four by sixes, what you see there. Jay: And what would they cost? Vic: They would be in the five to eight hundred range. Jay: In that range, what does it cost you? Vic: I feel once we have it down we can produce those for about $250. Jay: Right now it is just what? Vic: Right, we’re just too slow. Jay: So, it will cost you $250, and you would sell it for $600 roughly, or $500? Vic: Yes, well, if I make a combination deal where I can make some money in the carpet, I can drop the price. But, if I just sell area rugs, I don’t want to cheat in the product.

Jay: I think you’re working in conflict with yourself in that letter. You’re appealing to a strictly valuated person on the carpet side and you’re talking about almost an esoteric, artsy person on the craft side, don’t you think? Vic: Well, obviously I’m doing something wrong with it. Jay: But what I’m trying to focus on is whether or not it’s practical to just promote the area rugs by themselves. Would that alone give you a satisfying enough cash flow business, or do you have to tie it in with tonnage? You have to help me understand it. Vic: Well, let’s just say I sell somebody 100 yards of carpet. And, I can give them an area rug. Something they haven’t ever seen, or they couldn’t even buy at this point. And, I’m going to have a customer who’s going to refer me, and I’m going to even pay him for the referral. And, I can really build up business. Make it simple. Jay: Can you be that positive when you talk about it? Give me an example. If someone would go to a big carpet store to buy a carpet,they’d pay, I don’t know, $20 dollars a yard? Vic: You get very little for $20. Jay: $30? Vic: Let’s just say the carpet that I sell. . . Let’s take an example. I have a couple of samples in my car that I should bring in, then you can see the quality and what I’m talking about. Jay: I would like to see it. Vic: A $35 dollar carpet at any of the big stores—I’m talking an installed price—I can sell for $25 or $28. O.K., and at the same time I can give them an area rug. Of course, not something that’s really involved. Jay: Something attractive. Vic: Yes, something attractive that they wouldn’t have to apologize for. So that was my way of thinking. I’ll be cheaper than the department stores, at least 25%. Jay: I think you’ve missed something. It’s not enough just to mail. You have to find some better way to do it. Vic: I figured that this was the wrong list. I used to sell to new home owners six or seven years ago, but basically there was no premium involved. Jay: Aside from the walk-in local area, where is the rest of your business coming from? Vic: Word of mouth. I haven’t advertised for six, seven years until I started this area rug business. Jay: How many customers have you sold aggregate over the last six or seven years? Vic: Definitely more than 1,000. Jay: Do you mail them, write them, and call them? Vic: I haven’t done anything. Jay: Do you have their names and addresses? Vic: I have their names and addresses. I want to put out a brochure.

Jay: See, I want to give you focus. You need focus. The first thing I’m going to suggest is that we craft for you a strategy to work those thousand, or those two thousand people. Because you can use that to generate seed money to help you find your right approach in the other areas. So, that is the first thing I would do. Get out the names and addresses, and do you have the phone numbers? Because I think it is important to focus on them. Now, what is it you really are and want to be? What is your Unique Selling Proposition going to be? Vic: Well, I had thought that mine would be that I’d give a free area rug. That might be the wrong way to go, because that’s somehow cheapening the product. Jay: I think the area rug is a great package for the carpet. If you can get somebody who is interested in carpet, and the only difference is pushing them over the line to favor you over a decorator, or a Carpeteria. It doesn’t just have to be an area rug—it can be anything, including a whole carpet, right? How much more expensive is it done that way? To get this room done custom, what would it cost? Vic: Twice the expense. First of all, you would have to have a hard surface to work on. This is all the padding. Jay: You would have to put wood under it? Vic: Yes. You’ve got to do something. It all depends also on what you want to do. If you want to put borders in or if you want to have something crafted in it like a design, and whatever. But, I’ve got to find the people who want something different in the neighborhood. And, it has to be people who can afford it. It has to be somebody who wants something different and doesn’t mind spending the money. Jay: I’m going to throw out a number of possibilities. The thing you will find out is there is no absolute way to go. The best thing you can do, if you can afford it, is to take a couple of suppositions and try them out. Try to refine them to the best articulated manner, and then try them out. It might be running an ad in the newspaper. I think being expensive and exclusive and positioning yourself that way for the area rug is a better way to go. Second, it might be that you can sell it by mail order in classy magazines all over the country. Have them send in for a brochure. Send the brochure back with some pictures of stock area rugs that you can price. Third, it’s possible that you can re-distribute it. Are there people re-distributing this kind of thing all over the country? Vic: I don’t know. Jay: I don’t either. It may be you could work deals, stock deals with designers. Vic: First thing I think I need is a brochure. I figured we will just use what we’re making right now. We have six stock area rugs. And, I’ll make a full page brochure. I’m going to have a photographer shoot some nice pictures. Jay: Show me the pictures again. Vic: It will be like this and the others, the ones I’ve shown you—the whole combination of them. Jay: So, you have these two pictures? Vic: That’s what we have right now. Jay: A square, rectangle, and circle? Vic: Right. And, then, you know, it’s going to be descriptive. That’s the one I have in my car. This is what is called a “bas relief” and there is really nobody in the area who does it. It is a very time-consuming process. It’s the most expensive process to make.

Jay: What does it cost? Vic: I’ll charge $25 dollars a square foot. Jay: How much is something like that? Vic: That four by six is about $850 dollars or so. But, just visualize that we would carve that into this rug here. Jay: I’d like to see it. Vic: So, but that can only be done at the shop. I need a hard surface. Jay: Do you think you can mass produce enough? In other words, if we can help you find a formula that can sell, consider what the volume would be—100 a week, 100 a month. Would that be do-able, or would it drive you crazy? Vic: It’s probably going to drive me crazy in the beginning, but I feel that I could find or lure people from other mills by paying them more money. I could have maybe 25 or 30 people making them, and we could probably make 100 a week. Once we get good at it. Jay: You’re going do a brochure. Who are you going to direct that brochure to? Vic: I’m going to go to interior designers and decorators. Jay: Local, national, or what? Vic: Just local right now. I mean I don’t want to drive myself crazy. It would make no sense to have 1,000 sales if you can’t perform. Jay: I think you’re right. You want to get the learning curve done before anything else. Vic: Right. Jay: When you have stocked things, do you have pre-packed pricing on them? Vic: Yes, but a lot of people won’t want the stocked ones. They may want a 6 by 8 oval with something in it, but they don’t know yet what they want in there. So anything can be done for them, anything custom. Obviously it is going to cost more, we are going to have to get new templates and all that. I figured the designers and custom builders, interior designers, decorators, all those are the ones who really want this kind of thing. Jay: I think there are two markets. I believe you can probably sell concurrently to them. You can sell by mail, or locally. You could actually have a service where somebody came out and had samples of all your carpets. I bet you could sell them directly, on a qualified basis. It is possible you can rent a list, as opposed to running an ad, from something like Sunset Magazine, where you can rent 5,000 subscribers in a close proximity area. Vic: Right. Jay: You do a mailing where you either do the brochure or something else. One thing you didn’t do is put in a sampling of your rugs. You can’t describe it. It’s one of those examples where a picture is worth a thousand words. A brochure may not do as much justice as a reproduction of a photograph. I think these are prettier. I think these show better. They look more humanized, more customized. And have a letter go

to people. A nice letter, automatically computer typed if you will, that says, “Enclosed you will see some of the examples of the work.” Brochures are sometimes very stodgy. My opinion of this product is that it has a very unique persona. There is very little like it. The only place I’ve seen other things like this are in a design house. They are beautiful. And they are very expensive. Many people will think of them as being expensive. Yet $800 doesn’t seem that expensive. We paid $1700 for that Oriental rug there. And yours is more beautiful, and contemporary. Think about the possibility of doing a mailing to a selected group instead of running an ad. With an ad in the paper, you are paying for a lot of circulation that I don’t think you want. You could run ads in regional or local editions, but most people just throw those things out. They know it is complete with local merchant advertising, and most people don’t read it. I think that even though regionals are much less expensive than running the full circulation, you are wiser to run the whole circulation, because I don’t think people read the regionals, they just throw them away. I think you would be better off trying to focus on the most affluent people, who are more pre-disposed to this than people who subscribe to magazines. There are all sorts of ways with a mailing list that you can focus. Try five or ten thousand of them. You can send them out bulk rate so the cost would be maybe 40 cents apiece. You would have to send at least 3 or 4 thousand to make it cost effective, but try 2 or 3 thousand at first, telling them that besides having these stock ones, you can create custom. And ask them either to call you or come in person. The other approach would be to see if you can sell it directly by mail. Selling by mail, you want to send to people who are mail order buyers. Just because people subscribe to a magazine doesn’t mean they are mail order buyers. You want to buy a list of people who have bought expensive items by mail of some kind of a fashion or home furnishing nature. You can rent those kinds of lists too. And at the same time you can do a fashion mailing to the local designers. I’m sure you can get the lists off a magazine. For example, Design West—is that what they read? I don’t know if that is a local or a regional thing. Vic: I don’t know, but I mean, I can find that out. I’ve been thinking as well to approach better carpet stores. Jay: And offer them to take your product on? Vic: Yes. Jay: What do they normally work on—how much mark up? Vic: Well, the normal mark-up used to be about 35%. But, it is really not used at all any more. It’s whatever you can get these days, you know. I mean, the competition is gruesome out there. So, I’m throwing ideas around to see what is the best approach. I’m going to Hawaii next week so I have time to think. That’s why I wanted to see you first. Jay: That’s good. As I said, understand there is no absolute. You should never relegate things to conjecture. You should always let the marketplace validate or invalidate it for you. I think a very fine approach to try would be to see if you can rent a list of people who have a logical predisposition to be good buyers for you. They would be people who either subscribe to quality newsletters, magazines like Architectural Digest, or Sunset, or Better Homes and Gardens, or some magazines like that, or people who have purchased expensive furnishings and equipment by mail. And make your offer specific: “Here is my whole offering. You’ll see eight designs and three color patterns. And here is the cost, $850 for this one, and $1200 for this one,” and set yourself up on American Express and Visa and Mastercard. And have it come with a money-back guarantee for 30 days, and ship it out UPS, or whatever. And if that works, you have a wonderful quality way to pre-confirm them, and lift the carpet to a position of stature in their eyes. I’m looking at this. Whose is this? Vic: They are out of North Carolina or somewhere. They probably started this thing some years ago. And when I first saw their product is when I first got interested in it.

Jay: How do they price theirs relative to yours? Vic: Higher. Jay: Much? Vic: Quite a bit. Jay: I’ve diverted my conversation. Relative to approaching quality carpet stores, can you price yours low enough so you can make a fair profit and they can make a fair profit? Vic: Well... Jay: Because if it cost you $250 to make that, what would you charge them? Vic: $400. Jay: And they would price it at what? $800? Vic: $800. Jay: So, your retail is going to be $800 to $1,000 on that. Vic: Also, another thought is I play tennis with a man who owns a couple of carpet mills. He does not have an area rug deal set up right now. If I get good and cheap I could certainly deal with him. Jay: Who would he distribute to? Vic: He would distribute to all the carpet stores he has—just give it to his salesmen. Jay: He is ready to push them? Vic: We’ve talked about it. He would be willing to listen, and if he can see he can make some money he will be ready to go. Jay: Is the potential of this substantial enough that it is worth the effort? Vic: I don’t know. I think the potential is there. Because how many houses do you go into where they have an area rug like this? Jay: No, there is nothing like this. Vic: It is really in the infancy stage right now. Maybe 10 years from now, it will be like everything else. But, I feel that now is the time to do it. However, which is the best way to approach it without driving myself totally insane? Jay: That’s it. You’ve got to find the most leverageable way to go. How do these people sell theirs? Vic: They sell it nationwide. So, I guess it can be done. I mean they approached me. They have weekly ads in full color. Jay: What do they say?

Vic: I’m not sure what they are saying any more. It’s been about nine months since I’ve seen the ads. But, they were saying that they send rugs everywhere and anything that you want, any kind of design, can be made and they guarantee it 100% structurally and so on. Jay: Keep in mind that sometimes you can be so abstract that the customer can’t comprehend what you are talking about. The fact that you can make anything is great, but the customer needs to focus on something very finite. Understand that? Vic: Yes. Jay: So that is why sometimes you are better off giving them four or five choices that are very specific. “We can create a custom one for $3,000, or you can have your choice of any of these sizes, any of these orientations, green orientation, or rose orientation, or whatever the color patterns are—for $850 plus shipping, on a 30-day guarantee basis.” You’ve got to seek out your USP. Trying to be all things to all people is very foolish. Prospects like this are depending on the interior designer to be creative. To come up with what they want. I don’t think you want to do that. You want to be very structured, very finite, very simple, very pragmatic. You’re better off saying, I think, “Here are the eight styles we have in stock, and we can do custom,” but promote it in a very—not matter of fact—but in a very structured, very specific matter. “These are the variations we have. If you want anything different, we can create it,” but give them something very specific to focus on. Because I would imagine that probably 80% of your business would be generated on those basic designs, wouldn’t you think? Vic: Yes. Jay: Right now, how much business do you do with those? Vic: We’ve just made samples so far. Jay: So you haven’t sold any. Vic: We haven’t really sold any. Jay: My recommendation would be the following: I think it is important to find out. The first thing I would do is, do a mailing on this to your own customers. Tell them the background, that you just acquired the expertise to do something that, to your knowledge, only 30 people in the country know how to do. That you originally garnered the expertise to be able to do them in a custom way where you charge thousands of dollars, and you are still doing that, but something occurred to you that made it possible to bring the advantage of custom area rugs down to a very reasonable price. And what you’ve done is you’ve taken the custom technique and focused it just on 8 sizes and patterns, whatever you want to say. And it gives you the ability to bring something that, if it was made custom, would probably cost $3,000, and offer it for less than $1,000—plus have it available for almost immediate shipping. “Where most of them take two months, we can have yours ready within three weeks.” And, you’re telling it to them first, because who better to benefit from your newest enterprise than your past customers? “Enclosed in this letter, I’m sending you pictures of the 4, or 5, or 8 optional rugs and designs and sizes, as well as a price list. We called custom carpet companies to see what they would charge, and we called designers, and you can check it out for yourself—it’s about $3,000 if you want it designed for you. If you would like, as a courtesy, because of the past business we’ve done, if you also want to buy something else, we’ll give you a special rate of 20% off.” Maybe you can pick up some tonnage that way. Most of the customers you’ve sold to in the past—were they upscale? Vic: Just about everything. Jay: If your customers don’t buy, I would be surprised. If they do buy, it should throw off enough profit, rather than you dissipating 10 or 15 thousand dollars of your own money to go to cold prospects and find out. You could still dissipate 10 or 15 thousand dollars but it will have been generated from customers. It will be money you didn’t have today. So, if you lose it, it’s not going kill you, as opposed to reaching in

your bank account. If it works, it should make you 10 or 15 or 20 thousand dollars in profit, which I would use to try mailing to that segment of affluent people who subscribe to the kind of magazines we talked about, in a localized area, offering them with pictures. The only thing I’d do is make sure the pictures are more personalized. Vic: How would you get all these pictures together? You can’t send eight different pictures in there. Jay: What you could do is have a gang picture. I just think it is more personalized than a brochure. Maybe you can have the pictures pre-packed in an envelope, a translucent envelope or something. A brochure is going to cost you a lot more time and money to develop then to just figure some way to mass produce inexpensive clusters of eight pictures. It really is. And clusters of eight pictures, since you put them in there yourself, have much more personalization, don’t you think? Vic: Sure. Jay: What I would do is try 5,000. I would take an aggregate list of 5,000 people who subscribe to things like Architectural Digest, Better Homes and Gardens. I would try to get them close to your proximity as you can. You don’t know whether they are mail order responsive; you just know they are accustomed to fashion and style, and furnishing and design. I would make a dual offer. I would have a form that was easy to send in to order. However, if they prefer it, if they are geographically close, they can give you a call, and you’ll arrange to bring samples straight to their home. If $800 is what you are going to sell it for, you should charge $875 plus something so you build in enough time for someone to drive a truck out and put them in their home. That might really be the idea—just bringing it there, laying it down, and they choose the one they like the most. There might be a another advantage, you might be able to sell more than one. “It’s $875 for one, but if you want two it’s only $1600.” And you just have to sort of experiment. But the first thing you want to do is see if it will evoke any responses. If it doesn’t, then I think you are in trouble. If it does, then you try to improve the profitability. The package is going to cost so much to get out, and you try to figure out how to cut half the cost, or maybe you do have to go to a brochure, or you’ve got to play with the closing techniques when you go out, or the telephone confirmation, etc. But the first thing you want to do is see if you can tap that market, and if you can, then you can go around the country and do it. You can license people to do it. Once you get your techniques down, you can expand yourself. If you want to spend the money, you can sell licensees, find little carpet dealers, people who want to go in that business, distributors, whatever you want to call them. And they buy not only the product from you, but the marketing techniques too, and you get money for that. You charge $5,000 or $10,000 for that plus whatever you charge for the inventory. But first you’ve got to be willing to spend some capital to find out. Get a Standard Rate and Data Service List Directory. It’s a directory of all the mailing lists. You look under the categories—catalogs, home furnishing companies—and find people who have purchased expensive things by mail. There are furniture companies that sell by mail; they sell expensive furniture; there are art companies that sell art by mail; there are all sorts of companies. Start collecting magazines. Try to find a composite. Usually when you rent lists you’ve got to buy 5,000. It doesn’t mean you have to mail 5,000. I think you’re better off in the beginning, unless you have a lot of money to spend, to maybe rent 3 different lists, that’s 15,000 names, and only mail 2,000 from each one. You want to try different lists because you might try one, put all your money into it, and find it doesn’t work. Just because it doesn’t work doesn’t mean your concept is not responsive. It might just mean that the audience is not responsive. I would start off with strictly a mail order offer. You can mail anywhere in the country. And the offer basically is this: “If you’ve ever visited expensive design studios or a design house, you’ve probably seen custom-crafted carpet. You know typically they take months and months and months to put together, and a typical cost is three, four, five, or ten dollars or more. and tell the story: “We originally were custom crafters, and we found a way to take the techniques that make that appealing and bring it in to sort of mass production so we can bring the cost down for everybody, and standardize it so we can sell it by mail for immediate delivery.” I’d tell the story, tell them what you’ve done, what you’ve come up with. “You can

have it circular, you can have it square, rectangular, whatever our other designs are. There are four basic color patterns, rose oriented, green, whatever,”and you would include a return envelope, order form, and a guarantee for 30 days. You would ship it out to them in 3 weeks, or whatever is reasonable for you. And, again, you may not make any money, but you want to see if it evokes response. If it evokes response then you’ve got to see: Maybe you need to charge more, maybe you’ve got to put your pattern together for less, but that thing I would do first. Another idea: I would take a category of designers and I would mail them a letter. I think I would make these not personal, but sort of personal. I would use computer-generated letters. You can do it relatively inexpensively, and it’s typically better looking than what you’ve been doing. And I’d send off 100 or 500 of them and I would say, “We’ve got the technology down where we can do it faster and we can do it more economically. And we’ve got standardization where we can make the appeal of custom crafted carpets, area carpets available to people at a price comparable to off the rack. “And, I would offer them either/or. I would say you can do anything for them, and your turn-around time is five times faster than most people. And your quality is actually better, and tell them why, give them the background. Most people are more instant-grabbing oriented. I am. I like things now. I don’t have the kind of abstractness that can wait 6 months. So you’ve got 4 basic styles that are in stock or easily available. There are four basic styles, and here are the pictures of what you have in stock for immediate or near-immediate delivery, and unlike most carpet products you will give them a guarantee on it. If it doesn’t work, you’ll take it back. Also, you can bring it out to the client’s home for them. See if that works. At the same time I would choose a list of not necessarily carpet stores, but high-volume stores, and try and sell them distributorships to this. You want high-traffic stores that are upscale, where you can always have four of them on the floor. And you can do consignment. Do you understand that? You make deals with people who have the traffic. You go to somebody who is used to making 35 to 50% mark-up but they normally have to put their money into it. You say, “Hey, I’ll put four of these down, you sign for them, you are responsible for them. Here is the price I want for them, I want to get for them, whatever, $650. I’ll come back, I’ll have my man come once every ten days to check. Whatever is gone you write me a check for, and we will replace. Or, if you want to change inventory...” And you sit down and find five or ten locations to try in. If you find out that the rugs will move that way, you don’t want them to buy it, you would much rather consign because you will make 25-30% more of a profit. They conversely don’t have their money tied up and it’s add—on business for them. Are those the kind of things you want to hear? Vic: Yes, the problem with the carpet stores right now is there are certain mills coming out with samples and deals like this. Jay: What about furniture stores? Vic: Furniture stores I’d thought of. Anybody that sells types of home furnishings. I mean there are plenty of people out there. Jay: If the product will sell visually, all you have to do is get it exposed. If it won’t, then that’s not a problem. You’ve got to find out for yourself before you commit your energies, your finances, your nerves. I’d want to find out for myself whether there is a market. Once there is a market, you can fine-tune it. Vic: I feel there is a market. Whoever has seen it likes it. Jay: But have they reached in their pocket and bought it? That is the question. Now what I would suggest is you work backwards. Figure the maximum you are willing to comfortably commit before you walk away from it: 20 or 30 or 50 thousand. I wouldn’t put it all on number 8 black. I would hedge my bet. I would take a fraction of it and try mail order. Wouldn’t it be wonderful if every Monday morning you got in the mail 100 orders with checks for $850 because you had ads running in all the national magazines and the Sunday New York Times Book Review, and all those things? That’s a possible business by mail. Another, you can have distributors. And all these avenues can mesh. What you want to do, as inexpensively but as nicely as possible, is to validate or invalidate as many possible concepts as you can.

And, if you are like me, I’d rather know something doesn’t work and get out, rather than harbor close to my bosom something that I think is going to work and doesn’t. If you try all those avenues concurrently, maybe if you’re lucky they will all work, but that doesn’t mean they will all be as profitable. Just because you can put four rugs down in store eight and they sell, that doesn’t mean that’s as profitable for you as putting the same amount of capital into a display ad that sells for you 24 hours a day, 7 days a week, all over the country in magazines. Or a direct mail package that does the same thing. Or distributors who can take the same thing into a local community. Am I making that clear? Vic: Yes, I mean there are so many avenues and that is why I’m here—to find out which one I should pursue without driving myself totally nuts. Let me get started somewhere. I can get the Standard Rate and Data from a library. Jay: And you want consumer lists, not business. There are two of them, business and consumer. You want consumer. Vic: Right. Jay: You only want people who have bought by mail. The business one shows assembled groups; it will show all sorts of people who would seem demographically to be proper. But that is not what you want. What you want are the ones who have bought by mail. I would get lists of subscribers to fashion-conscious magazines locally. They can be anything. What are some of the women’s magazines that are really quality, really stylish-oriented, fashion-oriented? Secretary: There is Cosmo. Jay: I don’t think Cosmo is that high up. Perhaps Vogue, and things like that. And check with all the people who will tell you how to get hold of the lists, check with them and find out what the counts are. The actual counts of subscriber names, in 525, 527, or whatever zip codes you want. I would do that. I would get a list of people who buy. You might also look through the Yellow Pages for generic kinds of businesses who might have the traffic or outlets for this kind of thing on a consigned basis. You might also walk through a lot of shopping malls. A lot of stores put pictures on the wall and sell pictures on consignment. You might find that if you can Scotch Guard it so they don’t get really dirty that you can put them down in a lot of heavy traffic regions, say, where you have quality clothing stores, and you might sell it. Also, they could be on the wall, too. Vic: Right, right. Jay: They could mount either way. Vic: I have one hung on the wall. It looks good there too. Jay: And they could sell. They would be an art form of sorts, when you figure I paid $8,000 for that picture there. If you pay $850 for something on the wall, it’s pretty inexpensive, and it covers a lot of space. Vic: I was just wondering if my prices are too low. Jay: The answer to that is that the first thing you want to do is price them where they are really reasonable. And then, once you get people to buy, you experiment with price. Let’s say you find that you can do mail order. And that when you spend $400 per thousand on a letter you send out, you get back $4,000 and you make $2,000 profit which is 500% of the mailing cost. If you raise your price by $100, will you get back $5,000 or will you get back $3,000?

Vic: Right. Jay: And you start experimenting. But, the first thing you do is see if there is any light. I mean if all these things will at least break even, that shows you there is some hope. Then you try to improve on the offer, the headline. If there is no response, rather than beating your head, move to another application. There has got to be some easy application. Mail order could be it. Mailing and getting leads. And you would have a guy in a truck go out and say, “Choose which one you want and pay for it right here.” And he just calls and gets approval on their charge card. You would have no risk or anything. That could be very exciting. Vic: Or I thought, you know, leave it there for a weekend or whatever. And if they want it, fine. Jay: That is a great idea too. Did you read that Claude Hopkins book? Vic: Yes. Jay: There is a charming little story, which I think is in there, about the man and the pony, is that in there? Vic: I think so. Jay: Where he says he wanted to buy a pony for his daughter and one man said, “Pay for it, and you can return it for a refund in thirty days,” and the other said, “Ride it free for a weekend and then pay for it or give it back if you don’t like it,” and the second man got the sale. All you do is make sure you qualify the people whose homes you leave it in. Vic: I’m sure we would pick a neighborhood or two. Jay: But that alone is a powerful offer. It is very daring, but if you can perform you don’t really mind. You put it down for a weekend. “Use it for a weekend. Choose.” That is a very powerful idea. Most people are terribly afraid to have to earn on performance. Vic: What do you think of the first letter? Should I forget about it? Jay: Okay. We will talk a few minutes and we’ll conceptualize it better for you and I’ll tell you what went wrong. The first thing you went wrong with is that you encapsulated a lot of concepts but you didn’t build them around a lot of substance. You didn’t give reasons why. If you are going to focus the offer on something as beautiful as this, it is so abstract, people can’t comprehend what it looks like. Vic: You’ve got to show it. Jay: And, if I were to do it, I’d say, “Take a look at the examples inside. There are eight different styles, five different colors. All you do is choose the one you want and call up and tell us what kind you want, and we will put a reserve on that for you.” And lock them into that. That is what you should focus on. I think there is an incongruity. I got the idea from the letter that you’re hustling cheap carpet. And this is not cheap carpet. You slammed this down to that same level, which is not really what you want. That is the incongruity there. Vic: Well, as I said in the beginning, my reasoning was if I can get 100 on the floor, people will see them, ask where they are from, and I will build business that way. But, I think the product is too good looking to sell like that. Jay: Your letter didn’t convey that you have an advantage over the competition. People are getting solicited by everybody locally, by everybody else, and you’ve woven too many concepts in you letter. Vic: It’s too confusing.

Jay: Yes. The letter has to be cleaner, more tasteful looking. Visually, it is very difficult. Also, the offer has to have more progressive continuity. For example, your heading. You have good headlines, but I would be a little less startling with the headlines. Make it a little more of an understatement. And you might use some actual examples, like: “Call up three designers; call up Carpeteria. We’ll sell you carpet for $24 a yard that is better or the same as what you can buy at Carpeteria for $30, plus we will include something so beautiful it will make the value twice as much.” And tell the story progressively of what you do. Basically you are custom carpeters. You buy loads of carpet for whatever price. You’ve got to tell some kind of believable story. Concurrent to that, you talk about your expertise in custom work. You are lofting yourself up to this position and you’re selling on the fact that you are artists of a certain type. You are a craftsman. Why can you sell for less? Why are you selling for less? You didn’t tell me why there. Vic: Our overhead is much lower than department stores. Jay: You’ve got to spell it out for them. For example, “I called Bullock’s today, I asked them their price for what we’ll call our X234 and they wanted $38 plus $10.50, or $48.50 installed. Our cost is $28. Why is theirs so much more? Well, they’ve got to buy the carpet three months ahead, they’ve got to store it, they’ve got to pay all these big commissions, pay to run huge ads.” And, you build up this incredible case. You’ve got to build it up. If you are going to use that as the advantage, you’ve got to talk about it. You talk about, not only the art form, but, “You’ve probably seen nice carpets before. If you’re lucky, you’ve seen one or two custom-crafted carpets. They’re usually seen on the floors of the more posh interior design firms, they’re almost always featured in the key focal areas of design houses in better communities. Do you know they typically cost 2, 3, 4, 5 thousand dollars or more? And that they take sometimes 3 to 6 months to be made? We’ve taken the process of custom crafting and brought it to a level which allows...whatever.” And show the pictures, and then tell them the offer. Express your offer cleanly, tastefully. I would sign it. Your signature, I don’t know if it’s purposely that no one knows who signed the letters. I don’t know if you want that. Vic: I wanted it because I’m the manager, the owner, whatever. I didn’t think it was proper that they speak to the owner. Jay: In two different letters you tell them they can directly talk to two different people. Is that just for your codes for when the orders come in? Vic: Right. Jay: Well, that’s better in order to get the order. But when they call in who would answer the phone— you? Vic: Either me or my secretary. Jay: Well, talking to the owner is very impressive. I don’t know about you, but talking to me is better than talking to my assistant. It is not a negative, it is a positive. Your letter should say the following. You should tell them—I know I’m repeating, but I want to do it again so it sinks in even better—you should tell them what you have been doing for the last seven years, tell them that you’ve picked up this technology to use in custom work, but you found a way to take the advantage of custom work that would cost 3, 4, 5 thousand dollars and make it available to them in area rugs that only cost...whatever. Vic: I could incorporate it right into the existing letter. Jay: Right in the middle or something. Also, in your experiments you might take your technique and show somebody that if they are tired of their carpet, but they can’t afford to re-carpet, you can modify the center or the end, and with a little bit of work you can turn it into something new. Vic: Right, right.

Jay: You know, “For a fraction of what it would cost you to re-carpet, if you’ve got expensive carpet that you are tired of, but you don’t really have the budget or you don’t want to take the time to have your whole place re-done, we can come in and take the measurements, figure out what the accents are, and in a matter of a few hours change the whole room.” That might be a fabulous approach too. Another question is, do you want to basically mechanize this so other people do it for you? Do you enjoy going on calls? What do you really want to see this turn into? Vic: Well, I can’t really sell this and do all the other things. So now I’m ready to teach some other people. And I probably will need salespeople to go out. Jay: You could actually hire people on a purely or almost purely variable basis, and call them Project Managers—men or women to develop and exploit a given field—and you could supervise them. It could be very exciting. And if it works here, you don’t have to limit yourself to what you can do in one little area. You could have licensees, you could have someone pay you, you know, 3 or 4 or 5 thousand dollars for a distributorship, and they buy all the stuff from you. And you have 100 of those people around the country. You start off with 8 of them, show them your technique, tell them they could make $50,000 a year going out and showing people how to enhance their decor. It’s fun. Vic: Well, if I could make this thing work with borders, where you can use existing carpet, just put new borders in. I’m thinking of a process where you can actually change the borders. Give them two or three different colors to choose from. Jay: That is possible too. Vic: It would be a dynamite situation, because there are hundreds of thousands of homes around that have plush carpet that is boring to them. They don’t really want to spend their money. Jay: I think that approach could be really exciting. The problem with that though, in my opinion, is once you develop that, you’re going to have 18 people come after you if you advertise. That idea might be better by direct mail, just because of the fact that it is so logical and simple a concept, you’d think someone would already have come up with it. Vic: Well... Jay: Once you start exposing it, it is something people could pick up on easily, as opposed to the custom area rugs. The possibilities are interesting. I think you are onto something that sounds very good. One of the humbling realities of life is that there is only one vote and that is the marketplace. Don’t try to tell them, ask them by trying a number of different offers through a number of different avenues and then if none of them works re-evaluate your concept. If some of them work, focus on which ones work the best for the time and the effort, which ones offer the most expandability for the least amount of overhead. It is possible the mail order operation would be wonderful. It is possible, again this idea of having guys in a truck, strictly on a commission, generating leads. If they make $100 a sale and they have 7 appointments a day and they make themselves $200 a day, that means they are making you $500 a day and the leads only cost you $200 a day. You can sell that concept to 100 people around the country, and that gets very exciting, don’t you think? Vic: You can send somebody in one neighborhood and just knock on doors. Jay: Yes, that is not bad, but I’ve always found you’re better off dealing with people who ask to be called on. They are predisposed favorably, and it’s more efficient. I think you are better off focusing on a tight area. I’d rather have 8 people in this room who had sent back a card or called up and said please come out and show it to me—I’d rather have that than send out a guy to call on every house. The psychology is

different. You’ve pre-sold them with a distilled version of your story. With a 4 or 6 or 8 page letter with samples. And you say to them, “Here is our proposition: We will come out at our expense and bring you the whole line. We will lay it on the floor. If you are undecided we will even leave one of them overnight, and if you like it all you do is sign for it. Even after you buy them, if three days later you decide it wasn’t a good investment we will give you your full money back.” I honestly think that would be more fun than trying to hustle in lots of tonnage of regular carpet. Because you are not competing with what’s out there. You are taking something which is not price-comparable, where the only thing that is anything like it is custom stuff that probably costs 3 or 4 thousand dollars. And you can bring that quality to someone for $800, and there have got to be loads of people who will buy it. It would change the whole image. If it is viable, you should be able to focus on the area rugs and you don’t have to worry about regular carpets. You’ll find that out. Have I answered the kind of questions you want? Vic: Yes, I guess the rest is testing and see what way to go. Jay: The whole point is that you don’t try to tell them. Let them tell you. If they say, “hey, designers don’t want it,” don’t you say designers want it. In your letter, you horde the value of something that’s very, very powerful, because what I think you’re doing is selling people a $3,000 custom carpet for $850. Don’t you think? On an absolute money-back guarantee. And most people when they get a custom carpet, they own it unless the materials are wrong. They had to wait 6 months and had to prepay half down and that they have to keep it even if they don’t like it. But you’re giving somebody a tremendous value. They are getting something worth $3,000 for $850. And when someone sees it you can tell them, it is a custom carpet. Because you custom-designed it. Vic: I can put a little label in the back. Jay: “Custom designed for so-and-so.” That is a good idea. That is your own, you get credit for that one. Sit around a table with your wife and friends and tell them a little bit of what this is all about and regard it. Sometimes it is hard to write what you want to write. It is easier to be what I’ll call folksy. Better to do that, to explain it to a friend. Maybe talk to your friend or maybe talk to someone who is interested, or talk to somebody you are trying to sell. And record it and transcribe it, maybe three hours’ worth. You’ll find you’ve written a better letter that way, if you take the meat of that and use it. And maybe that will help you weave your letter. It is a simple technique, but it works very well. Sometimes it is hard to sit when you have to write, if you try to be a salesman. All you’re doing is you are a storyteller. An honest storyteller. You are telling the truth, you know. That you saw this and no one ever did it, and you got excited, you spent $5,000 to learn about it, you had to go to school far away, there are only 30 people in the country that know the technique, the man that taught you is 65 years old, and you don’t know how much longer he will be doing it. You are able to do custom work in a semi-production capacity, and you are able to bring the cost down, and people won’t see these in any stores. “Unless you tell them you paid $875, they will think you paid two, three, five thousand dollars for it. But, it is every bit as . . . in fact, it has greater depth, greater dimension, greater relief.” That is pretty exciting, isn’t it? Vic: I guess it is just easier for you to say it than me. Jay: That is just my gift, but you can do it too. Let your emotions speak. Sometimes it is hard to do when you are sitting there at a typewriter, or with pencil or pen. Don’t do that, take someone out. You want to talk about it over lunch with a friend or someone you want to share your enthusiasm with. Or go on a sales call and record all of it. Have it transcribed, double-spaced between sentences even if they are rambling sentences. Triple or quadruple space between paragraphs or seeming paragraphs. You will have written it for yourself. Call the guy you got this idea from, tell him to tell you all about it, everything he knows. Call on designers, with them not knowing what you’re doing, as if you’re looking to buy one. Ask them to sell you on how unique it is. Let other people write it for you. Have all that knowlege recorded and sit and have fun one Saturday, or Sunday, or evening or midnight, and put it all on cards and put it in order and play with it. Make it flow. It’s a simple technique, but it might really be powerful for you. Vic: Sounds good to me.

Jay: We are always, all of us, mono-dimensional. The more you can see other people’s perspectives, the broader you get. Talk to people who sell carpets, designers, carpet mills themselves. Have one of your friends, a carpet guy solicit these for you, listen on the phone, record it. Listen and play back their pitch. You’d be surprised what you learn when you start doing research. * * * * This consultation was about carpets, but the principles I brought out can help any business gain focus. What it comes down to is this: What is your Unique Selling Proposition? Is it clear to everyone what you are offering and why it’s different and more valuable from what everyone else is offering? If you’re not sure, reread this transcript. It’s an excellent example of how to articulate a USP. P.S. You might try that idea I gave Vic about talking to friends about your product, recording the conversations, transcribing the tapes, and using the transcripts as the basis of your ads and mailers. It’s a simple technique, but it can cut through a lot of formal, stiff writing and make your ads come alive.

Travel Service Dennis’ trucking firm was doing well, but his new international travel service was barely breaking even. I showed him an innovative approach to getting a large client base quickly. This approach, which had never been applied to his field before, could literally turn him into an industry leader. Applied to your field, it could do the same for you. * * * * Dennis: Even though we are a small company in the freight-carrying business, we compete with all the big companies by providing personal service, following through on details, and pricing competitively. We do very well in that business. But a year ago we bought an international travel firm that had been operating in the red. My idea was to keep the thing going with the base that they had, which was about $700,000 a year. I wanted to build that up by surrounding myself with competent people, and also by calling on my existing customers in the trucking business and trying to switch those people over—both for their personal travel and for their sales organizations and other personnel who travel—to using our travel agency in conjunction with the trucking we do for them. Jay: And how has that developed? Dennis: Well, it hasn’t worked too well. It’s not near what I thought it would do. Even though they’ll give me their freight for a $50 savings, most of them have already developed a working rapport with a travel agent somewhere who they feel comfortable with, and to switch them over when the best I can do is to match the price they’re getting—and maybe not even that—is hard. For example, one of my great customers does a lot of travel in business and also personally, and spends a lot of money on it. But he feels very comfortable with the travel agent he deals with already. He can get her on the phone and say, “I want to go to Memphis tomorrow,” and she’ll already know what airline he likes, what hotel he likes, etc. Until that person lets him down or hangs him out to dry, he doesn’t want to change. I found it very hard to switch people over. Jay: You read the Marketing Genius material I sent you, right?

Dennis: Yes. Jay: What is the Unique Selling Proposition that you are extending? When you try to solicit them over to you, what is the proposition you’re making? What is the reason you’re asking them to favor you with the business they’re currently giving to someone else? Dennis: Well, one thing is our personal relationship. We go out and party and drink together and so on, and I do a good job with him on his freight, and I’ve told him I’ll even try to save him a little money or rebate him back a couple of Mercedes. Jay: Can you do that legally? Dennis: Yes. Now with the deregulation, it’s legal to do. All the big agents do that. But he’s just one example of someone I haven’t been able to switch. What happens, Jay, is that there’s an awful lot of consolidation going on in the travel agency business, like it is in the airlines. And what happens, once you’re able to develop, the big agencies gobble up the little guys who have a following and rapport, so that they can get the benefits of volume. The basic thing we start out with the airlines is a 10% commission. So, for example, on a $100 ticket about $12 of that is tax, so maybe $82 is the actual ticket itself. Jay: So you make $8.20? Dennis: Exactly, which is terrible. Jay: So the only viable way to make money is volume, right? Dennis: That’s right, so you need the volume. Once you’re able to establish some volume with a carrier, you’re set. Where I’m located, one airline has probably 70-75% of the market. Now, for a little guy like me that’s doing maybe $60,000-$70,000 a month with that one airline, I can’t qualify for any overrides from them. What these airlines do is they all negotiate with the agency. In other words, you show them enough gross sales and you can go to them and get a 14, 16, 17% discount. But I don’t have the power to wheel and deal. Jay: What kind of volume does it take? Dennis: Well, with this airline, I’m going to have a meeting with them next week to make sure I’m on the right track with them. If they’re just stringing me along I’ll try to go some other direction. At the present time we’re on their computer system which is a plus for us. We used to be with another and we switched. Jay: Is this one really better? Dennis: No, it’s maybe not quite as good, but it costs us less money, and since this airline is the predominant carrier here, if you’re on the computer with them they look favorably at you too. What happens is, for example, you call up somebody and they’ve got the SABER system, which is American, and you book a flight. Maybe American doesn’t go to that place, so they put you on United or something. United has to pay American or whoever owns the computer system something like $10, $12 or $14 for that transaction. So the major airlines, United, American, Delta, Northwest all have their own little computer systems. They love that and they really make more money on their computer systems and their reservation systems than they do on their planes, because they charge other carriers. I’m trying to get the volume up and I need at least another 50% more than what we’re doing to qualify for a better percentage. Jay: Let me ask you something analytical. To do $60,000 a month, how many customers do you currently service? Give me a breakdown of what their needs are. On a regular basis where is the $60,000 coming from, how many customers, what are their needs, how did you get them? You started off with a certain number of customers, which I think is less than what you’ve got now, so how did you get the remaining

customers you’ve got now? You say you’ve only got 100 on the computer. So give me overview responses to all those questions. Dennis: Okay, we have increased the business. We’ll probably be close to $1,000,000 this year, and we were $750,000 last year. Jay: On $1,000,000 are you still in the red? Dennis: No, we’re just barely in the black. Jay: How many agents do you have? Dennis: Three full-time. Jay: On salary or variable? Dennis: On salary, and I would love to put them on a percentage or commission. Jay: But they don’t want to go. Dennis: They’re a little resistant, but I’m going to try to switch them over. Jay: If you put them on a percentage, what is the percentage you would give them? Dennis: We would probably pay them 40% of the gross profit. In other words on a $8.20 commission, we would give them 40% of that. Jay: Is that unusual? Dennis: No, that’s just about ball park in the industry. Jay: Okay, if you gave them more than that, how much would you need to make any money? Dennis: This is another problem I have to solve. There are two agents that are just borderline, just making their way, judging by the figures we get from the industry, and one of them is dragging his feet. Jay: How much business should a typical agent pull in? Dennis: $30-40,000 gross per month. Jay: If they were doing $30-40,000 gross, what gross profit would they be throwing the agency? Dennis: At 10% it would be $3500 a month. Jay: And if you gave them 40% of that they would only be making $1200. Dennis: It’s a low paying thing, they’re making between $1200 and $1400 a month. That’s with hospitalization and free trips, etc. Jay: Who gets the trips? The agency? Dennis: The agency gets them and passes them out. Jay: Are they really good trips? Dennis: Oh yes. One of our agents just came back from Austria. Another one is going to Hawaii.

Jay: What was the incentive for you to give her that trip? Dennis: Well, we’re trying to give her some incentive to sell the product to customers and also to motivate her to do a better job and so on. Jay: How big is the office and how many more agents could you accommodate? Dennis: We could accommodate four or five more. Jay: If someone wanted to work with you and lived in the city, would it be a difficult drive to your office, or would it be reasonable? Dennis: It would be a reasonable drive. But the other thing I’m trying to do here, which the industry is going through all over the country, especially in congested areas like the LA area, is to have more outside salespeople. Years ago that didn’t happen, but now the industry is developing people to have a little rapport and a following, whether it be a commercial account in the agency or work they do outside. Jay: How would you coordinate them and their bookings? Dennis: They’d call into the office every day with their bookings and what they want. There will be one or two special people in the office who do nothing but take care of outside salespeople, and then they’ll deliver the tickets to a person, which is something we really want to try to do with outside salespeople. We want to do the same thing in other cities where I already have trucking company offices that could kind of help us. I’ve got all kinds of physical facilities around the country. Jay: So in order to staff it, your overhead would be borne 100% by the trucking firms, except for just the computers. Let me tell you what’s coming to my mind right now: getting a list of all the travel agents in the U.S., or in a region, and sending some really powerfully constructed quasi-personalized letters. You’d offer to put them in business as a partner of sorts, giving you a share of the business they raise, in exchange for you giving them a very generous deal, giving them office space in your existing buildings around the country. You can identify them by getting lists of subscribers to travel agency publications, and then you solicit them with a computerized letter that’s laser-printed and looks like it’s personal. The idea is that right now you need volume, so you need to find somebody who’s got good clientele. Now let me ask you a question: If somebody responds to that letter, are you prepared to underwrite them with a draw, or do you want to put them on strict commission, or what would you do? Dennis: I could do either one. I wouldn’t mind underwriting them with a draw as long as they were productive, or for a certain length of time. Jay: My thought is, what if you created some different types of letters and sent them to different people? Find what publications they read, or we find the best way to identify the individual travel agents who employ themselves. Let’s say you find that within five or six marketing areas you’re interested in, there are X number of agents, let’s say 700 agents. You start a series of solicitation letters to them offering to put them in business for a commission. The commission has to be a better deal, and there have to be reasons why, and it has to be a turn-key situation where you’re going to do all the work for them. Basically, if they’ve built a following, you want to build them a career, where they’ll get paid according to what their ability really is worth and what their client base is. Dennis: That’s a wonderful approach. The business is really a very personal business.

Jay: But my observation, frankly, has been that most travel agency owners don’t really appreciate the value of their agents, even though the agents are everything. I think if a travel agent got a letter in the mail at home that said, “Mr. Smith, my name is Mr. Jones. I own a very innovative and rapidly growing travel service called Summa Travel, and we are growing all over the country because we realize that the key to success and growth and sustenance for a travel agency is the agents. We want to reward the agents for the business they have built and the business they will build, so we’ve taken a non-traditional approach to it. We give the bulk of the profit back to the agents, and we do more work. It may sound like a bad way to do business, but it seems to pay off very well for us because we’ve got agents from all over who want to affiliate, bringing their client list and expanding us. Our simple proposition to you: if you at have least $350,000 in billings, we’ll set up a relationship with you—either through one of our offices, or working on a satellite program out in the field, or through your home—where we’ll do all the work. You’ll be our affiliate and we’ll pay you 48%.” And then you translate. “Simply stated, what this means is” (and you’ve got to bring it down to the bottom line so they understand) “if you’re billing $350,000 or more a year, we’re offering to put you in business as an affiliate of ours with no investment on your part. With that much of a base, you could be giving yourself a $52,000 per year income. If you’re making more than that now, obviously this letter is a waste. But if you’re making substantially less and not being appreciated, I can promise you two things: 1) you’ll be appreciated by us for as long as you stay, 2) as long as your customers repeat, as long as the service problems are manageable, we’ll keep paying you.” Do you know what I’m saying? I think you can rapidly seduce 10, 15, 20 people almost overnight, don’t you? Dennis: I think so, yes. I think what you’re saying is a wonderful idea. Jay: I’ve used different approaches with different travel agents. I have had about four different travel agents as clients. To be honest with you, I’ve never used this approach with them before. I’ve used slower building processes. We’re talking about quintessential leverage: instead of spending $20-30,000 on mailings trying to beat your head, I think the best approach is to understand the concept of marginal, incremental profit. If somebody brings me $25,000 worth of profit I wouldn’t have, and it’s going to take me $5,000 worth of profit to service it, and there’s $20,000 left and I have to give them $15,000, I’m still $5,000 ahead. Embrace that philosophy. But more than just embracing it, remember that a lot of people get real excited when you let them in on your angle. For example, rather than letting them think that you may have some trick up your sleeve, in the same letter say to them, “You’re probably asking what’s up my sleeve. Well, it’s very simple. I’ve got a business that costs me X whether I do $100,000, $200,000, or $500,000 a month. Admittedly there’s certain variable overheads amounting to basically 20% of profit, but to be very honest with you I’ve got 75% that I can spend any way I want. I can use it for a lavish lifestyle and paying for a mansion, or I can give it back in incentive awards to people like you to induce you to bring your business and your commitment and your career to affiliation with my business. I’ve chosen the latter. I’d rather see you go out and make $100,000 a year.” I cannot think of any example where anyone was shrewd enough to do this in your business, have you? Dennis: No, it’s such a simple thing. Jay: Most of what I advocate is so simple and logical, people see it as disarming. Dennis: People and personnel in this business are the whole key. Jay: The management are usually not very innovative thinkers. Dennis: And another thing that the biggies lose is the personal contact or the personal touch that customers like, whether they’re a little person or a corporate customer. I called our biggest competitor one day last week, and again this morning, just as a person on the street, to get some comparative prices and

information. I got put on hold on the phone with the music in the background for so damn long that the phone finally disconnected. People hate that, but they love personal attention to develop a rapport. Commercial accounts especially. The commercial accounts are what all of us really need because they are constant business. The leisure people go once a year or twice a year, so you’ll have your peaks and your lows. They’ll go away at Christmas, etc. I need to develop—through rapport, service, and prices— some commercial accounts with salespeople who travel every day. Jay: Let me give you an approach. The first thing is that rather than building the slow, laborious way, you can, by acquisition, be much better off. What you can do is send a letter to these agents, offering to put them into business not by themselves but with you, so that they have none of the investment but all of the benefits. For example you talk to them and say, “You probably want to take more vacations.” Well, I don’t know how many trips come to the agency, but you talk about them getting the trips, and about all the benefits they can give themselves by being almost like a partner of sorts. Explore it with your accountant, but you could probably enumerate all sorts of advantages they could give themselves on the money that they make on the billing, and that’ll even make it more advantageous to them. I’m being abstract, but do you understand what I’m saying? Dennis: Yes. Jay: And you tell them you’ll do it all for them, you’ll supply them with all the accounting, and you’ll pay the cost. If they give themselves three trips a year, you’ll show them how to do it. If you want to, you could pay for their car and get all the deductions for it. But don’t ever, in the letters you send them, communicate in abstraction. Bring it down to the bottom line and say, for example, “If you currently have such and such an amount in billings, that means that just by coming and affiliating with me you immediately create for yourself $50,000 a year in gross. You can take that in the form of taxable income or, in full compliance with the law, we can work out your compensation where you get other allowances. There are various ways you can get it, but you can get all sorts of benefits. We can explore any and every combination that satisfies your needs, and if you don’t know what your needs are, I’ll put you in touch with an accountant who I’ll pay for who will help you figure out the best way for you to get the most benefit out of the income you’re creating.” I think that’s very exciting, don’t you? To my knowledge, I don’t think anyone has every considered a travel agent that way. Dennis: I don’t think so either. Jay: I think you don’t want somebody who’s going to grow and build it over time; instead, you want somebody who’s going to bring it in immediately. It only makes sense to give them the lion’s share of the profit, which I recommend you do. If you’re going to do that for them, they have got to agree to work for you, so you should put them on a contract where they aren’t going to move any time somebody gives them a better deal. You’re going to set them up and say, “I’m going to give you the lion’s share, but you have a contract to work for our agency for at least 2 years.” You can do it subtly, but you want to set them up so that if they leave, your customers stay with you or they have to buy them back or something. I’m getting into some real esoterica. Dennis: What we need to do now is develop a nice attractive advertisement to put into some of the trade magazines, and once they reply, some really good constructive letters to send to them. Jay: Let me make a suggestion. Direct mail might be more effective, because I think the idea that I’m giving you is so powerful in its simplicity that if you put it in print before you perfect it, somebody who may be more effective, who may have more in their pocket, who may have greater marketing acuity than you may pounce on that concept and see its application and just steal it from you. The better suggestion, in my opinion, is to first identify as many travel agents by address as you can. Dennis: That’s wonderful, I agree with you 100%. How do I do that?

Jay: Well, there are a couple of ways, First of all, I don’t have a list directory right now. Do they have to be licensed or anything? Dennis: No. Jay: You probably want to get them by name by home, probably as opposed to the office. Take the list of all the magazines, all the trade publications, all the associations, all the newsletters... Dennis: A lot of the trade magazines we get also are sent directly to agents in their home. Jay: That’s what I mean. You want to get a list, you want to have somebody from your office, preferably you if you have the time, call all the magazines and ask them if they could make their list of subscribers available for rental by you. Dennis: Will they do that? Jay: Some will and some won’t. If you offer them enough money they often will. Say, “I’ll pay you $500 for a list of your subscribers at home in all these geographic areas.” It doesn’t really matter where you do it. It would be more convenient to do them in the areas where you have a facility, because you could match each agent with an existing employee, and you could put two secretaries and a computer on it. As for the computer, you could have somebody who’s working part-time at the trucking company working the other half of the time on the computer there, couldn’t you? So it would be more opportune to do it first in certain geographic areas. You could do it anywhere, really, but ask them if they’ll make their subscriber or their reader list available to you to mail, and if they say yes, ask them what they want and if they say no, ask them what it will take for them to say yes. If you had to pay $2,500 for it, my way of looking at it is that there’s no more effective way to do it, is there? Dennis: It’s better than just a basic ad in the magazine, because the other people can’t pounce on it right away. Jay: And also, the ad would give ideas to the owners themselves. They might know there’s some dissension among some of the their people, so why put a concept in the owner’s mind when you can snatch them first in the letter you’re sending? You might realize, when you’re contemplating this, that it’s quite possible that they’ll come to your agents and say, “We’ll match this, and think about the fact that’s it’s a shame it had to come to this.” But you have a program where you’re going to build a business. Say to the agents, “We want to pay you everything you’re worth. We won’t take a dime away from you, and we’ll give you a binding contract that warrants that your clients are yours as long as you stay in our employ, and you’ll get paid as long as you do the liaison with us.” And you should operate it philosophically. If they bring clients, and your own people have to bring in their orders, it should be such an inducement that some people who are fundamentally lazy might come to you just because you’ll work their customers—but why do you care if, when all the dust settles, you make money on them? You really have to not get resentful of the people, and you have to be willing, at least while you’re at the building stage, maybe two or three years, to overpay like mad. Dennis: I’m not selfish. I understand, and I wouldn’t cut anybody short either. I don’t believe in that. Jay: Tell them that in the letter. For example, “If you have a big business and half of it works itself, all the better. We’re not paying you for hours in the office, we’re paying you strictly for productivity. If you can do it two hours a day and never leave your house, I don’t care, as long as it doesn’t foul up. We have provisions to help you, and we’ll provide you with a back room, but our standard deal is: you do this, we’ll do all this for you, and you’ll get this amount.” It’s a very powerful offer, I think, don’t you, Dennis? Dennis: I sure do. Jay: The first thing you want to do is identify all the publications that travel agents read and the associations they would join, any organization that would have their name at home. Maybe there’s an

insurance company that sells to them or somebody who sells special things, I don’t know what it would be, but you would want all that information. You might also at the same time want to go through the trade books and look at all the companies selling non-travel products to travel agencies, where they would have representatives out in the field calling on agencies. If you could go to those representatives and tell those representatives what you’re doing, and say that you’re looking to hire on quasi-partnership basis all the great travel agents in the country, and if they can bring agents to you to close, you’ll give them finder fees, what do you think that will do? Dennis: Oh, gosh, that could be wonderful. Jay: These guys know the top producers everywhere. Imagine if they solicited them and got 10% of their productivity for 6 months and checks for $100,000, just for bringing people to you. I hope that a trend has come into your mind now. That’s how I see it. I’ve built clients incredible businesses by encouraging them to overpay on variable for business they didn’t have, with the knowledge that when it all boils down, you’ll make out like a bandit two or three years from now. Dennis: I love the example of the coin dealer in your article. Jay: It works very well. But remember two things: First, find publications, organizations, or companies that have sold products or services or periodicals directly to the travel agents, and most probably have their names and numbers and addresses available for you to buy or rent. If their product moves, do a joint venture, but be very leery of telling them what your idea is at first unless you have to, because I think it’s so powerful in its simplicity that somebody else could pick up on it very easily. Second, go to all the old issues of the industry trade magazines, and look for all the ads by companies selling other stuff who would have people in the field who would not be competitive to you. Look for all the ads in the back of the magazines looking for reps and from people looking for a job, and hire these people to be finders for you. If somebody’s out of work and wants to work on commission, you can make him personnel manager or affiliate recruiting director, and give that person no fee, pay his real phone expenses, give him 10% of the profit you guys make for the first 90 days or the first year. It doesn’t matter, if he builds you overnight $20,000,000 worth of volume does it? I’m oversimplifying. What you’ve got to do is very important—you’ve got to manage your growth. But the technique I’m giving you is so powerful in its logic that I seriously doubt that you’re going to have a lot of trouble selling it. Dennis: I think it’s a wonderful approach. I definitely want to go about getting this list the way you’re suggesting. Jay: There are so many ways to try to identify agents. Think about every other entity or person who could have a working relationship with you and who calls on travel agents, either on the telephone or in person selling them whatever. Give yourself a grid. It might be worth your bringing on board, for coolie wages but high variable, a young man or woman or older man or woman who sees the potential. You stipulate that they can’t get mad at you and go to work for a competitor or take the concepts, and once you’ve got them tied up, have somebody full-time who works all the agents for other people and gets all the printers who call on travel agents, and professionally works all the sources. If you have 1,000 letters every month going to travel agents, if you have in process an operative working 100 different businesses who’ve got representatives calling on agents, you’re leveraging yourself so profoundly that it’s unbelievable, don’t you think? Dennis: Another thing to mention, Jay. I need to figure out the proper approach on this: there are 350,000 agents or something in the US, and while a lot of people think it’s such a glamorous business, there are many agents who are going out of business or who aren’t making a buck. How could I sort those people out? Jay: What if you sent a letter to every agency that’s doing marginally and said, “We’ll buy your business from you and pay you for the next three years. Let’s say you are a travel agent making $2,000 a month, and you’ve got your own office, with you and another person, and basically you’re losing $500.” You tell them

in this letter: “A lot of travel agents find themselves in a real dilemma. They’ve got just enough business to be indentured to the operation, but are not able to make a dime. We’ve got a proposition which a lot of people find irresistible. We’ll buy all your business and pay you for it for as long as it lasts. All you’ve got to do is turn it all over to us, and we’ll assign it an operative, and we can do it locally and we can do it by telemarketing with a WATS line. You basically participate in an orderly transition and announcement, and you do nothing but be the conversion officer. You can work them as much as you want or as little as you want, it’s up to you. Just keep in mind, as long as they stay active, you’ll keep getting a check from us every quarter or every month. All of a sudden instead of losing $500, you might start getting a check from us. Wouldn’t that be nice?” My recommendation to a lot of people is to use quasi-personalized letters, not mass-printed letters, but laser-printed letters, that look like you actually sat down and drafted them. If you were a travel agent and you couldn’t figure out how to make a go of it, and you got a letter from somebody that said, “Look, we’ll buy your business and pay you 40% of the profit for the next 3 years,” you’d say “Great!” What happens, Dennis, is you can end up picking and choosing. You’ll have so many people responding to you in different scenarios that you can pick and choose. You may find that you can sell leads off to somebody else—somebody comes to you who’s not the kind of business you want, but you know other people who want that kind of business, so you can refer to them for a fee. It gets very exciting. I know it sounds too easy to be true, but it really isn’t. Is your mind starting to come alive? Dennis: Things are looking really great. I’d like to get these letters developed. Jay: I think you should reflect on what I’ve said. Just to summarize my recommendations: First, identify the travel agents. Second, solicit the agents personally to bring the business they’ve got to you for a perpetual percentage. Third, concurrently, solicit the agencies that are probably marginal to sell you their business rather than folding—by selling you the business, becoming, in essence, not just a PR person for your company to their own customers, but getting paid every month for the next three years. I think those three approaches, developed and experimented with, using a lot of different types of letters that are seemingly personalized, will do wonderful things for you. Dennis: I do too. Thanks, Jay. * * * * Remember the concept of marginal profit. If somebody can bring you business that you wouldn’t get on your own, you may need to give that so mebody the lion’s share of the profit to motivate them, but they’re still making you money you wouldn’t have otherwise. Be generous—you gain business by giving, by looking after other people’s interests, whether it’s those of your customers or those of your employees. You make the most efficient use of your marketing resources if you can locate exactly those people who are likely to be prospects. This is one reason why the direct mail approach is often much more effective than mass-media advertising—it’s like a rifle instead of a shotgun. One key strategy for determining who the likely prospects are is to buy mailing lists either from competitors or from related but non-competing businesses. Another is to get referrals, which you can increase by giving people an incentive for referring to you. A similar strategy might help you locate prospects for joint ventures.

Swimming Pool Product Martin is a swimming pool dealer who also sells distributorships for the manufacturer of a unique swimming pool product—a piece of equipment that eliminates the need for chlorine.

Although the product is a good one, Martin needed help in two areas: (1) getting more distributors, and (2) getting the distributors to sell more product. This transcript is all about how to overcome people’s resistance—including their resistance to others that can help them. * * * * Jay: It’s intriguing what you do. I’d like to get a little chronology before I try to focus on answering whatever questions you have. Would you give me a little background? Martin: Okay, two aspects. First, we developed this product about 4 years ago and started selling it to swimming pool dealers. We went to a national swimming pool show and had booths in the show and sold two swimming pools to dealers. We put the product on new swimming pools and helped them. They could say, “You buy a pool from me you don’t have to use chlorine.” But they wouldn’t sell it instead of chlorine, because every time they sold a unit they’d knock themselves out of ongoing chlorine sales. So two years ago we stopped selling through pool dealers and started selling it through distributors we got through the business opportunity trade shows. We did this for about a year on the business opportunity trade shows and basically our basic qualification is that someone has $22,000. Jay: And you get them through business opportunity trade shows? Martin: About 40-50% of them came to business opportunity trade shows and we still do a few of those, but it ends up more expensive. We can get about one deal per show and it costs $1,000 for the food and a couple thousand dollars traveling expense. The rest of the distributors we get through mail order ads and that’s less expensive for us. Jay: So it costs you like $3,000 to buy, what was it, $22,000? Martin: $22,500. Jay: And you’re really selling a distributorship, not a franchise, aren’t you? Martin: Yes. A distributorship at this time. Jay: Because you don’t have to contend with any of the franchise laws, right? Martin: Yes. A lot less paperwork involved. Jay: And how big a territory do you give them? Martin: About 5,000 pools, which means a population of roughly 100,000 people. Jay: So a city of 100,000 would be a territory? Martin: Right. It’s a territory. We say 5,000 but most of the time it’s like 7,000 or 8,000 or 10,000. We say we guarantee a minimum of 5,000. Jay: What about exclusivity? Martin: That’s the main thing everybody seems to want. If we put two people or three people in the same city, instead of all three of them working together, each one wants their exclusive territory. And it seems that the less somebody’s selling, the more they protect. Whereas the man that’s selling a whole lot could care less.

Jay: Very interesting. Let’s see, you’re an engineer? Martin: An electronics engineer and I also have an MBA degree. Jay: I read the article about you and that’s fascinating. And your wife—has she improved because of it? Martin: Oh, yes. She has no problem at all now. Jay: And she swims regularly? Martin: She’s involved in international sales. She’s the president of the corporation. Jay: I was going to ask you why you were vice president. Give me an idea of the infrastructure of the company. How big is the company and who handles what when an inquiry is generated? Who handles the marketing? Give me just an idea. Martin: We have two people on the east coast who do all their selling and we pay them a 30% commission. Jay: And you furnish them with the leads? Martin: We furnish them with the leads and pay expenses if they go to a show. Jay: Where did you find them? Martin: We met them at a show. We hired them and they’re working out real well. They’re very honest and of course we pay them a good salary. Jay: But the salary is variably oriented, right? Martin: They talk to people on the telephone and never see them and convince them to get a cashier’s check and send here to us and we train them here. We have people come in here with a cashier’s check and go through two days of training and go back with the promise that we’re going to ship the units. Which we do, but it takes a good salesman to convince... Jay: I think it takes a fabulous salesman to convince them. Martin: Finishing up on the background: There are two aspects of this we need to know. One is how we can sell more distributorships at, of course, less cost; and the other thing,and probably the biggest question, is how we can get more units sold? Jay: Let’s talk about each one sequentially. First of all, show me ads you run in Entrepreneur, ads you run in newspapers, ads you run in USA Today. The leads come to you and you tranship them to these people on the east coast? Martin: That’s correct. Jay: When the leads come in, what do you do before you tranship them? What do you send back to the prospects? Martin: We do it at the same time. We mail them a package which is a brochure of the girl in the front office and then the whole lot about how to own your own distributorship. Jay: What about the plan of action? Martin: That’s one thing. We’ve just published that in the last three or four weeks. If our dealers had that a year ago it would probably have been a lot better.

Jay: What is this used for right now? Martin: We send it to all of our dealers and we use it in training. We don’t send it out ahead of time. Jay: Because? You think it reveals too much? Martin: I guess that was my initial impression. Jay: All right. Now, I may not give you exact answers, I’ll give you possibilities. And let me clarify why. It’s not that I’m hedging. It’s that everybody’s situation is kaleidoscopically unique, and you will find that the market and the product and the concept you offer—all those variables—are unique to you. What may work fabulously for one person might not work for another, and you owe it to yourself, in order to maximize the potential both for selling distributorships and for selling more units, to be willing to try a lot of things and analyze them and let the market always tell you which way goes the best. So, now we’ll start really focusing. If you warrant to me that you’ll give me a lot of objectivity and open-mindedness, we will begin. Martin: That’s what we want to do. We want to know what to test. Jay: Good. First of all, when you ran your ads regularly in national publications, have you tried a lot of different ad formats? Martin: We’ve tried two or three, not a lot of them. Jay: And the ones you sent me were your winners, right? But what does it take for me to get you to try other ones now? Martin: Just give us an idea or hint on which way to go. Suggest something and then tell us what is the most economical way to try. We tried that one-two split but we couldn’t get anybody to do that. Jay: The A/B split, where you run two different versions of the ad in a split press run—half get printed one way and half the other? Martin: Yes, the A/B split. Jay: Well, if the A/B split won’t work, here’s an inexpensive way to find something out. You can run a lot of little ads in the classified section of the local paper trying different headline themes, knowing that you may not really convert any of them but you can tell real quickly if one out pulls another one by three, four, or five to one. If it’s not a promiscuous offer, at least it will give you some guidelines before you have to spend $1,000 in a national publication. Do you see what I’m saying? Martin: Yes. Jay: So what I would do first of all is take a newspaper that works well for you and that’s cost effective or the most cost effective, and try 10 different ads. Little display classifieds. And read all my back issues, read those last two issues, eleven and twelve that have a lot of headlines and concepts there and... Martin: How about this one ad headline? Jay: I saw that and I like it. Did it work well? Martin: Yes. Jay: That’s your control right now?

Martin: That’s the one that’s costing us $600 per sale, where everything else is running $1,000 per sale. Jay: That’s a pretty powerful headline. But don’t be content when you find that, because there may be another one you can do that will bring in distributors at $300 per sale. Also, I would try another approach. I would take this booklet and I would say, “We’ll lend you the booklet to read and review—the same booklet we normally give people after they pay us $22,000.” In other words, “Instead of just sending you the titillation, we take another approach. We’ll send you the actual plan of action we would send a person after he has paid us $22,000 for a distributorship and let you make your decision yourself. Just send in your name and address and a phone number. The only thing we ask in return is you agree that after you’ve had two weeks to read it or a month to read it,” or whatever you want to say...”You’ll talk to our director about its application to you and let him ask and answer any questions that he and you both might have.” That’s an approach. Martin: Okay. I guess we could try that. Jay: Offering and giving more than anyone else up front without any strings attached, it becomes implicit that you must be more committed and willing. It’s like me, when I sent you the original promotion for Your Marketing Genius at Work, I had it crafted in a way where it gave you 10 really instructive educational lessons in marketing right there in the context of the 12-page letter wherein if you didn’t ever talk to me or interface with me or send for my newsletter or correspond, you would have gotten enough education that probably was worth $10,000 to you. And it was implicit that somebody willing to give you $10,000 worth of knowledge with no strings attached must have a hell of a lot more to offer you, if you communicated with him. Do you understand that? The facet of human nature, that phenomenon, that implication runs true just about everywhere, don’t you think? Martin: Sounds reasonable. Jay: I would try it. It may not work, but it’s reasonable for you to try. I would try lots of different headline possibilities and I’d try to validate them first of all in classified ads in your newspaper wherein if you blow $59 it doesn’t matter. Try 10 of them in the course of two weeks, you know, in some kind of correlative basis where you can weigh value. In other words, if Monday only pulls 12 leads but Sunday pulls 35, it doesn’t necessarily mean that Sunday’s ad is better, it just means you’ve got more readers, and you’ve got to be very careful about factoring those things in. But I would try lots of different headline themes, reduced to little classified ads and test them for a couple of weeks in the newspapers looking for which ones pull the most responses, and then validating by following up on them yourself so you see the quality of the responses. If one ad pulls 14 times better and the quality isn’t diminished, then I’d use that headline to try in Entrepreneur or in whatever. Martin: One thing that probably doubled or tripled our number one time is they left out the $22,500 in Entrepreneur and we got all kinds of calls but they were... Jay: They were promiscuous. One thing else you might do besides ads, you ought to go to everybody who runs an ad in Entrepreneur, make a deal with them where they give you the names of the people that they write off. In other words, in Entrepreneur, your ad is one of maybe 100 ads of people selling distributorships, right? All those people are doing the same thing. They’re getting 100 people coming in and they’re getting 5 people they sell and 95 people they don’t sell, right? Go to all those people and say, “Look, after you’re done with them, we’ll either buy the names or we’ll mail them our offer and pay you $2,000 a sale,” or whatever you’re willing to offer them. It doesn’t matter so much way you do it because the cost of a lead or a sale is going to be very small. Do you follow what I’m saying? Martin: What if I swap leads with them and give them some of mine? Jay: That’s right. I would approach all these people about that. Do trade-offs. Tell them that you’ll trade with them, and work together. That’s one thing.

Martin: We have probably 500 to 1,000 people in the last six months who inquired and we sent them stuff and talked to them over the phone and... Jay: Now, here’s a suggestion about those. I would send them first of all, a plan of action and say, “You’re undecided, probably for a lot of reasons. Maybe it’s not right for you,maybe you can’t afford $22,000, maybe you think we would abandon you, etc.” You want to try to overcome all these objections. Here are some possibilities. First of all, “We’re including with this letter a confidential...” and stamp on it with a rubber stamp ‘Confidential—for distributor’s eyes only!’ so that it has some perceived value. “We’re including the plan of action we normally give to distributors only after they pay us $22,500. We’re letting you borrow it. There’s an understanding. We want you to send it back.” And send them a label and envelope with postage on it. “We’re sending it to you with the understanding that you’ve got 30 days to read it and think about it and then we want it back, and we’re going to call you and follow up on it. But it will show you what you would do if and when you bought this distributorship.” Second, about the money. This is something I was going to ask you about before. Are you willing, not to finance it, but are you willing to let them do it in installments or are you pretty hell bent on getting the $22,500? If somebody’s on the line but they’re afraid about the $22,500 and you really want to sell in and sell through to boot, could you make a deal with them that for $11,250 you’ll give them 25 units and the training and there’s a note that if they don’t sell a minimum number of units in a certain period of time, they don’t have to pay the rest, or something where you put less onus on them but you’re going to get more distributorships sold? Martin: We’ve done it a few times but almost everybody already has the $22,000, so if they haven’t got that kind of money to begin with they don’t answer the ad. A couple of times what we’ve done is say, “Pay us half of it, 50% deposit on the units, and take delivery, and then pay the balance in installments, $200 every time you take a unit.” Jay: That’s good. I also suggest you write a follow-up letter to all the people who didn’t convert, and address the 3 or 4 issues. 1) They may not have enough money, 2) they may be worried about the support you’ll give them, and 3) they may be worried that they won’t make any money on the thing. “I’m trying to address all three in a way that takes all the risk from you and puts it on to me, Mr. Prospect. Here they are: First of all, as far as the support, we’ve told you in our packet what we’ll do and our director told you but you may not believe it. I’m lending to you a confidential distributor operating book which gives you the basic plan of action. You will learn more expansively when you come to our facility for training. I want you to read it over, particularly notice...” You know, and talk about and focus on certain parts and tell them, “Of course, this is just a synopsis. You would focus all day long on training,all day long on advertising, etc. As far as making money, we though we’d put you in touch with...” and give them five or six names of people who are doing a good job and will validate that they’re making money. If you’ve still got their names, mail it to them again. I know what you’re saying, and please don’t be offended, you’re engaging me not to patronize you. You want me to really focus and take you to task constructively, don’t you? So, what I’m saying is you may have done it, but do it again and integrate into it this whole concept. If you’re sending me a letter and I’m a prospect who didn’t respond, I obviously didn’t respond due to a number of things. 1) Maybe I didn’t have the money or was not comfortable spending all that money, 2) I was worried that maybe I’d spend the money and then you’d disappear on me and I’d get stuck with a bunch of products I couldn’t sell and no training, 3) even if I got products and the training, maybe it wouldn’t sell. And you’re going to attempt in this letter to overcome all my objections and make me a proposition which quite honestly is irresistible not because you’re in trouble and need a quick sale but because you make your money selling units, not selling distributorships. So what you want to do is get units in my hands and show me that we’ll both make money if you can get me to sell 500 units this year. So you say, “I’ll make it easy. I’ll let you take the $11,250 that you would be paying to me and instead spend it for marketing or salesmen. That’s about as fair as I can be, and the reason I’m being that fair, Mr. Prospect, is because there are a lot of people selling distributorships and franchises who make all their monies in franchise fees. We, by comparison, barely cover our marketing expenses with our distributor fee.” Explain to them what it costs to find them. And let them in on the secret and tell them: “The only way you pay off to me is if you sell units. So it’s to my advantage to do everything in my power to a) get

you excited about it, b) get you to take on a distributorship, c) get units sent to you—but more important, get you selling units. If I can get you to sell 50 units a month, sure, you make money, but I make money, too. That means over your lifetime you’ll sell thousands of units and if I get 500 of you people selling units I become a multimillionaire and I go sailing or whatever.” I think that’s a pretty neat offer, don’t you think? Martin: Yes. Jay: Is this the kind of thing you want to focus on in this conversation? Martin: I guess the main thing we want to cover is the second part and that is that a lot of our distributors are not making money... Jay: We’re going to talk about that second. Let’s first talk about getting people in. Getting distributors. We’ve got to figure a way for you to get people to take it on. If they’re reticent because they think you won’t train them, you’ve got to prove you’ll train them. If they’re reticent because they think the product won’t sell through, you’ve got to evidence it by showing them some people who are doing well. Martin: Maybe I should tell them they don’t have to pay their money until the day they come for training. Jay: That’s fine, too. But I think if you evidence to them what you’re in it for and you will explain to them why you’ve got to charge $22,500—because that’s what it costs to find somebody... You can give them another deal, too. As another selling point, you might give them an option for another $1,000 or another territory, a non-refundable option for another territory for whatever... That’s pretty interesting. Or you might also try something else. I’m talking about two concepts concurrently. In part of your follow-up on them you might give them another option and say, “Once you see how much money you can make, you can buy one other territory and the chances are, as aggressive as we’re getting ready to be, we may sell all the territories out next year and then it may be too late so I’ll give you that option as part of the package now.” That’s an interesting possibility, isn’t it? Martin: Yes. Or, “Right now there’s no franchise fee involved and this is the last chance because we are considering having a franchise fee.” Jay: Yes. That’s another good adjunct to the letter. Also, you might do the following. You might make a deal with people where if they’re afraid, you’ll do a reversal on them. You’ll give them a 30-day option after training, and all they have to do is pay you $1,000 for the option and their own expenses and come to you and you’ll give them the same training as if they paid $22,500 then afterwards it’s their choice. That might bring a lot of people in. After you send the first letter we just talked about to all the respondents, if that doesn’t work you can delete all the people who respond and if you still have 628 people who didn’t respond, you write them a letter saying, “I have an even more daring proposition for you. You’re obviously hard core and you’ve got some problem. I’ll make you an offer which I think is irresistible. I’ll charge you $1,000 or $1,500 and that’s a nonrefundable option for 30 days after training for your area, for a protected territory in your area. You get to come to me with $1,500, you get to take all the training, and you can decide for yourself afterwards. You’ve got 30 days to decide whether to go ahead and send me the remaining $18,000.” What do you care if you get 30 people to take the training every time? It’ll pay for your advertising. I don’t think you’re going to. I mean, are you going to teach them a lot of things that they could use somewhere else? Martin: Not really. Jay: That’s what I mean. Then you’re not very much at risk. So, first thing you do is cream off all the people you can get $22,500 from. Then after that, you go to the remaining people and offer them something to overcome their objections. A follow-up letter with all these things in it and offer to do halves and halves. Let them pay 50% now, let them pay 50% on a per unit deal with the understanding they can

take the money—that $11,250 they’re not paying you—and use it to pay for advertising and selling costs. And explain to them that it’s because you’re in it for selling through, not just selling in. Do you understand the difference? You don’t just lure them up and walk away. You want to make money and get him to sell 50 units a month. So again, you cream off the ones who go for this deal. Then you follow up with still another letter to the remaining ones and tell them you’ll give them an option. You’ll make a proposition which is irresistible. All they have to do is pay you $1500 and that’s for a 30-day option on their exclusive territory after they’ve taken the same training everyone else has paid $22,500 for. And what you do is you get a group of them and you only have special training in those groups. You don’t let them mix in with people who’ve paid $22,500 because you don’t want it to backfire. But you wait until you get 10 of them for $1,500 and you have a training session. If even one of them comes out of it, you’re ahead of the game, aren’t you? If two of them do, you come out like a rose, and three...that could be exciting, don’t you think? Martin: Yes. One thing we haven’t done is follow up...I mean, other companies’ salesmen spend a lot of time in follow up on the phone but... Jay: A call is one thing. If a letter comes from you as the founder or co-founder and from your wife, and it has an empathetic bent to it, Martin, where you tell them you understand... You know, maybe they’ve got some resistance. Maybe they’re worried. You show sensitivity and empathy to the kind of questions and problems they very probably have. Martin: What about getting the newspaper to write an article and then enclose reprints of that newspaper article? Is it good or bad to send that with it? Jay: Why wait for a newspaper? What you could do is the following. You can hire a writer to write that kind of article you want about you and your company. Go to a throw-away magazine and have them print it. Buy a two-page ad where you really just run this two-page article that you have had written for you by a professional journalist. Then reprint it and send it out to everybody. You don’t have to wait for it to happen. You just want something in print that you can reprint and say this was just run on us. Am I giving you the kind of things you’re interested in? Martin: Yes. That’s something we haven’t done. We’ve done very little follow up on the people who didn’t come. Jay: You have to follow up. You’ve got $600 invested in it. Why throw it away? First of all, you should follow up as much as you can, and even after you’re done with them, you can offer to trade them to other people. Go to other people and offer to trade with them. If they don’t want to trade, offer to buy their list and if you don’t want to buy their list, offer to furnish them with mailing pieces they can send out and give them a commission and show them how they can recoup their lost sales by letting you work their list long after they’ve given up on it. You can probably get all sorts of people to do that for you. Martin: If we rented our list, what would we ask for it? Jay: How many names on it? Martin: I believe 50,000. Jay: $2,000, $4,000, $1,000—whatever the market will pay. You’re better off trading it for other lists. A name-for-name trade with an ethical understanding that they’re going to be recent and they’re only going to use it for their own purpose and they won’t rent it or anything. And they give you a lead and you give them a lead. It’s based on whether it looks like their names are compatible to yours. Martin: Would it be better dealing with companies who have a high-priced package or a lower-priced package?

Jay: Higher, at $5,000 and up I think you’re all right. You know, this whole approach is really neat. Why not try it in an ad in the first place? “Everyone else wants $22,500 before they’ll see you and we’ll do the opposite. We’ll sell you an option for 30 days for $1,500 and for that option we’ll give you the same training we give people for over 22,500 and you can decide 30 days afterwards.” What if you made money on your advertising? Wouldn’t that be funny? It might be a neat ad to try. I wrote an ad one time that I ran in Entrepreneur. It was for a company in water. A company that I was affiliated with had a product they were selling by distributorships which was a magnetic water unit that de-ionized through magnetism or something and I wrote an ad that used to bring 2,000 people every time it ran. It was a full-page reader ad telling the story of how I got into it, what it was all about, what we were trying to do, why it was so different. It depends on how daring you are and how much money you’ve got to spend. Martin: $120,000 on advertising last year. Jay: How do you allocate it? As a percentage of sales, or what? Martin: Probably in the range of 7 or 8 percent of sales. Jay: If I were you, I’d be trying so many things and I’d be working my old leads, because you should be able to get at least 3 or 4 more sales just by writing a letter to them. All of a sudden, that throws 60 thousand more dollars in. Out of this $22,500 what’s your real cost to fulfill it? If you get $22,500, you’ve got to give $6,500 to the salesperson. What else do you give? Martin: We’ve got about $6,000 in product. We give them product and kits. Jay: What do you net? Martin: $10,000. But we have an office that we have to support them in. Jay: I know, but you’ve got to look at it differently. You’ve got a fixed overhead whether you’ve got three more people who are hooked or two more, don’t you? Martin: Yes. Jay: So if you can sell three more from your past list, that throws $40,000 in for more advertising for you. You might do a couple of other things. But first I want to give you a summary. Try a lot of things. Try a lot of different headlines in the inexpensive classifieds just to find what seems to work the best while not diminishing or diluting the quality of the respondent. When you get a theme that looks good, then you can try that in a larger ad in Entrepreneur or in USA Today. Try reading through the last issues of my newsletter—eleven, twelve, ten—I think there are some headline suggestions there, too, that you might want to play around with. Go back through the headline book that we included in that very first bonus on how to redeploy your assets. There are 100 or so headlines there. Go to all your old names that didn’t convert. Go back with, first of all, an expansive letter telling them about how you understand why they didn’t sign on, and it’s probably one of three things, and you’re going to try to overcome all three, and send them the booklet. After that, go back to the people who didn’t respond to that and offer them an option for 30 days and they’ll get the same training. At the same time, try that as a different theme in one of your ads. “We’ll give you the training first and an option on the franchise before you have to spend $22,500. It’s a daring unprecedented offer and we feel you’ll be motivated enough afterwards that you’d be a fool not to sign on when you see the potential.” That’s a very powerful offer, don’t you think? Martin: Yes. Jay: And if you can break even selling $1,500 options, you can, in effect, run your ads for nothing. That means that all of a sudden you make $120,000 more a year just by reducing your advertising costs.

Martin: One other question while we’re on the distributorships. Tomorrow I have scheduled 15-minute sessions going on cable television nationwide with these business opportunities programs. Do you have any feel for how we should... Jay: I think you should focus all of it on service and education. Tell them what you do for your distributors. Tell them a couple of things. Focus on the fact that you’re in for the sell through. Everyone else tries to load them up and walkaway, but you’re in for selling through. You make money only if you get someone to sell 25 to 50 units a month or a quarter or whatever, so you focus all your time right now... Tell them that right now you’ve got a staff of people working on new ads that are being made available free, you’re spending hundreds of thousands of dollars, or thousands of man-hours, developing new ads you’re trying out at your expense in the field and you’re making these available to your distributors so they can run them and get the benefit of them in their local community. But you’ve got an option: If they’re really interested but they’re worried about having someone take their money, you’ve got an offer that very few other people do, and that is that you will give them an option that’s good for 30 days after the training. Tell them about all those things that no one else does. Do you offer a money-back guarantee on the deal, too? Martin: Not on the distributorship. We do on the product. Jay: Can you do that on the distributorship? Have you ever done that and can you do that? Martin: Yes, that’s something we could do. Jay: You might try that. Try that as a special offer only. Tell them: “No one else does this, and if you look through all the magazines... We’re confident enough that we’re willing to make a proposition to you that’s unprecedented. If you want to try it out before you put your money down, we’ll give you an option, and if you buy it and it doesn’t work for you or you don’t like it, we’ll take it back and give you a refund as long as the units come back to us.” That’s a pretty powerful offer, don’t you think? Martin: Yes, I sure do. Jay: And keep in mind, you can always take back the rights to their territory and resell it. Martin: There’s an awful lot of potential for this product, and we’re also going into industrial and some other markets with this. Jay: So now, let’s focus on selling through. If you wanted to put one on my swimming pool, you would charge me how much? Martin: Probably $995. Some of our deals now run $1195 or $1295. Jay: How hard of a sell is it? Martin: The hard part is getting the people to listen. Most of the dealers will get a 50% closing rate after they get... Jay: What is the pitch that you do on the telephone. Martin: We don’t give the price, but we emphasize the technology idea of no chlorine. Because basically people buy it for one of two reasons: either health or hassle. Some people could careless about chlorine in the health aspect but they look at the hassle of having to put it in every day. Jay: Who does the calls? Each local dealership? Martin: The local dealerships generally use professional telephone telemarketers.

Jay: Now what if you did that for them? That may be another service you might want to offer. You could turn it into a profit center, you know that? Martin: 90% of it is long distance. It would run into too much. Jay: You think so? Martin: You can set about one appointment per hour. Jay: And how many calls will they make to set the appointment? Martin: Usually if they call 40 names they’ll get to talk to 20 people, and out of those 20 people they will set one appointment. Jay: How do they find those 40 names? Martin: Names of swimming pool owners. Jay: And you said you can identify those? Martin: Yes. Jay: There’s a list you can rent? Martin: Yes. But in most cases they can always go to the tax place and get it. Jay: So if you’re paying $40 an hour for a telemarketer, then $40 an appointment is what it costs, right? Martin: Right. Well, it takes about $20 an appointment and it takes two appointments to get a sale. Jay: So, if you get two appointments, you sell one? So their cost of sales is only $80 to get a $1,000 sale? On which they make $370 gross, right? So, are they all doing well, or are some of them doing well? How many units will they sell? Do they get one appointment an hour? Martin: Right. The telephone people do. Jay: So if a telemarketer gets one appointment an hour, eight telemarketers should be able to generate something like...how many hours will they work? Do they work nights usually? Martin: Usually nights. Jay: So a telemarketer working three hours or four hours, say four hours, will get the distributor enough appointments to sell two units. So that means they’re making the distributor $600. The guy could conceivably make $1200 a day if he had two telemarketers working, right? So why are people not making $1200 a day? Martin: Most of them are not actually getting the telephone people to do it. Again, we’ve improved it somewhat but not as much as we have in the last few weeks since we’ve put this plan of action in. We’ve also done quite a bit of testing in the last month with this automatic dialing equipment. We’re able to get one appointment. Jay: And they don’t want to do it? Martin: Most of them do not. In other words, it’s not so much they’re doing anything wrong, it’s just that they’re not doing anything.

Jay: Why would they not? Martin: They’re trying to do it all themselves. They’re trying to do the telephone work, do the sales, and they’re not really good in any of it. Jay: What does it take for you to persuade them? If one person can sell two units a day and if they were spending three working weeks a month that are productive, three weeks times two you’ve got...it would seem that if you got everyone doing 30 units a month minimum you’re making tens of thousands of dollars but they’re not making that. How can we get you to that point? Martin: That’s what we’re looking for. We have a few distributors, a very few, who are doing that, selling one or two a day. Jay: And when you call a distributor who’s not, you say, “Look here, John Schmidlapper in Arlington, Texas is making $30,000 a month and you’re not because the guy in Arlington is using the phones and you can do it, too.” When they say no, what’s your response? Martin: That’s why we’re trying to get with them with this... Jay: Here’s another possibility, and you can look at this as advertising: You go to them and say, “I will coop with you on a training program for the first 30 days just to prove it.” If it costs $80 a call, or $80 to get a $375 sale, you give them the equivalent of that per sale on every unit they verify is sold—again, for a period of 30 days—just to help them. It’s to show them at your expense. But make it correlated into units. And just try it in 10 markets. Call up and say, “Look, John, I’ll make it worth your while. I’ll cover the costs but we’ll convert it to a variable. In other words, I’m not going to give you $5,000 to hire somebody. I’m going to give you the training, we’ll give you the scripts, we’ll let you talk to our best operator and for 30 full days we’ll give you an allocation of $80 a unit in rebate, in credit in new purchase credit. That’s pretty fair isn’t it?” And the whole preface being, who cares? If you lose a few dollars because that’s what it takes to get them to embrace the fact that if they adopt this for 30 days they’ll make you and themselves probably $10,000 each a month if they keep doing it, right? Martin: Yes. And by giving it as credit, if they don’t produce they’re never going to use the credit. Jay: That’s right. It’s funny money. It’s a pretty good deal,don’t you think? Martin: Yes. Jay: Do you think they would get excited about that? Martin: We haven’t done that. Jay: Telemarketing is much better than anything else, right? Martin: Right. Jay: You’ve actually tried enough ads to know that? Martin: We tried radio and billboards. It bombed out. We tried television in one area on the east coast and got real good results from that. But we only tried it one time. We’re developing commercials now so we can make it available to a dealer. Jay: My feeling on the matter is the following. I’ll reach into my pocket any time I have to in order to make a test, but I do it variably. If I give you the money you won’t appreciate it. But I’ll pay the costs... I’ll actually reimburse you all your costs if you’ll try something, because it’s to my advantage if it’s an ongoing relationship. You understand? If it takes me actually reimbursing you on a contingent basis, the $4,000 you’re going to spend this month to prove my concept works, if that’s what it takes for me to

graphically emblazon in your mind the fact that you can make $10,000 more a month using telemarketing, so what if I lose $1,000 in one month? If I’m making $10,000 a month more forever, who cares? And if they don’t perform, it’s not going to cost you anything anyhow. Right? And you try that with TV. You tell them, “Look. Here’s the deal. We’ll furnish you with a TV spot, we’ll tell you how to buy time, we’ll reimburse you $40 an order, whatever it costs.” Whatever it costs in advertising dollars per order, you give it to them after they make the sale. Martin: We were getting a tremendous number of phone calls and a lot of those people still don’t make sales because they don’t convert those phone calls to appointments. And they let the telemarketers get away with sending them a brochure. Jay: What you do is the following. Any functional aspect of the sell-through process that you distributors are weak on, you should say, “Look, you need a salesman. If you bring a salesman in, I’ll give you, for the first 30, 60, 90 days, $80 a unit. I’ll pay his commission. It will cost you nothing. I’m doing it for a reason. I’m reaching into my pocket and I’m going to give him the commission you should be giving him, but I’ll do it for the first 90 days to show you what a difference it’ll make in your own bottom line and you’ll see.” If you pay somebody $6,000 a month variable, he’ll make you $10,000. You see what I’m saying? Martin: Okay. Jay: Anywhere you’ve got an impediment, reach into your pocket. On a variable basis it shouldn’t matter philosophically. If you don’t make any money for 30 days from a distributorship, but by not making any money on the deal for 30 days, that evidences to the distributor that the thing will work... The money you’d keep you use to reimburse the salesman or reimburse him for the telemarketing, you’d reimburse him for running the TV ads, you show him a way that he can make himself $20,000 or $10,000 more a month. If he makes $10,000, you make $10,000 too, don’t you? So don’t worry short-term about losing $1,000. Just look at it as an advertising experiment where you only pay if it works. And if you get all of your guys to try TV and it costs you $100,000 and presuming you’re only getting them to try something that works anyhow, and it costs you $100,000 in the first month, it’ll make you a million dollars before the year’s over, don’t you think? Martin: Yes. Jay: And you can also try something else. Remember, you make more money selling through than selling in. Don’t be afraid to try this: Buy five units yourself and offer them to a distributor to try free on you for 30 days. Put it in. Loan it to them. People are so darned close-minded, you’ve got to do everything in your power to get... Martin: That’s what we thought. The ones who were selling anyway bought the equipment when we offered it at half price, and the ones that weren’t selling it and needed it didn’t buy it. Jay: But the point is, everything you can do to get them at your risk to try something that will benefit both of you, do it. Buy five units yourself, make a deal. Go to the manufacturer and say, “How would you like to sell a hundred units?” And if he says yes, say, “Give me five at real cost and I’ll put them around for 30 days at a time to each one of my distributors with the understanding that they can buy the unit afterwards direct from you.” See what I’m saying? Most people don’t understand that if you can perform, everyone’s going to benefit. That guy can make a million dollars selling units if he makes five of them available to you for $500 instead of $1,000. Martin: We need to work a deal where they cut a third off the price. Jay: But pull it down one more step. Tell them for a test period to give you five of them for $500 apiece and you’ll see that they’re placed all over for 30 days at a time with different distributors. Get them to let you use the units that way at your expense. Doesn’t that make sense?

Martin: Yes. One quick question. What would you say the USP (Unique Selling Proposition) is for the distributorship and for the product? Jay: For the distributorship, I think it’s this: “We’re willing to take all the risk of putting you in business and only having you keep the distributorship if and after it makes you money.” That’s potentially very powerful, isn’t it? “We’ll let you try it out at our risk. We’ll give you the option and everything.” That’s pretty powerful. Second, “Every time we come up with a way that we think could make you more money, we’ll let you try it at our risk so you don’t have to reach into your pocket,” something like that. You say, “Okay, you’ve got to spend $5,000 on a sales manager; you’ve got to spend $5,000 on TV, and every time we ask you to try something like that, we’ll underwrite you. We want to build your business for you at our risk.” That’s pretty powerful, isn’t it? Martin: It would be at our risk. Jay: “Our risk. Your business at our risk.” Do you have restrictions where if they don’t do a certain number of units you can take it away from them? Martin: Yes, but we haven’t executed that. The problem is when we take the distributorship away from them, they’re sitting there with 20 units left in inventory that they try to dump on the market or whatever, and it creates problems. Jay: And you don’t want to buy the units back? What you might do is the following. Anytime you can yank a distributorship, instead of yanking it you might go back and say, “How would you like us to build up your business at our risk? We’re going to take our right to terminate you and convert it to a half interest in your business for which we’re going to put up the market in dollars. We’re going to put the telemarketers in, and we’re going to get a sales manager to close the deals, and at the end of six months you’ve got two choices. You can buy us out or we’ll buy you out. Martin: Yes. We have a clause in the contract saying if you don’t meet a certain number then we can reverse to a non-exclusive, so we can go in and put our own operation. Jay: Don’t be afraid to build them a business, though. Do you have company-owned operations, too? Martin: We’re just starting some. So we will have them, but in the past we haven’t had one. Jay: But the truth of the matter is, with the exception of the initial cash flow, if you can get it down pat where you see how to do it yourself you might be better starting company-owned ones and then selling them off afterwards for a lot more than just a distributorship fee. But the point is, don’t be afraid when you know that ten techniques will mean that instead of a distributor selling 100 units a year he can sell 500 units a year, don’t be afraid to put up the time, and put up the money. Have a guy on staff who goes into a market and you give him a variable and pay his expenses and every time he increases units in a market, he gets a percentage of the increase. Give him the inducement to set these things up and sell them. You don’t care. It’s found money. You’ve got to look at it this way. If a distributor is giving you $1,000 in sales but you can send somebody in the field who can get him $5,000 worth of sales, on the extra $4,000 you make $2,000 that you wouldn’t have had. If you’ve got to give the guy $700 on that extra $2,000 who cares? Do you have that kind of an attitude? Martin: Yes, I do. Jay: Do you want to focus on one more question? Martin: What can we do to boost sales of the product itself? Jay: Well, with the pool owners, I wonder how strongly you focus on your offer to let them try it out for 30 days. Do you really use that proposition? Of the people who try it out for 30 days, how many will want to return it?

Martin: Almost nobody. Jay: And the ones that want to send it back, why would they want to send it back? Martin: They end up transferring, moving, or occasionally a distributor will promise too much. He will say it does everything. Jay: Well, there it is, the guarantee. You might even try a longer guarantee. A longer guarantee is even more appealing, and it doesn’t usually bring in more returns. Martin: What we do a lot of times in the winter time is say, “We’ll give you a money-back guarantee until the 4th of July.” Jay: But focus more on that. “We want you to try our system on your pool for the entire season or until the middle of the summer at our risk, and if it doesn’t save you money, if it isn’t more comfortable, if it doesn’t keep your system as clean or cleaner...” and you’ll stand good for the unit but if there’s any service loss on the part of the distributor, you honor that. Because the redemption, the refunds will be minimal and you’ll probably double or triple the sales. Do you see that? I would assume all the risk in trying to get the distributors to do things for you because you’re the ultimate beneficiary by increased tonnage. If they’re reluctant to make that offer because they’re worried that they’re going to have to take them back, you stand good for the loss. You say, “Okay, I’ll replace the unit and I’ll reimburse you all the service money in removing it and taking it back.” That’s a powerful offer, isn’t it? Martin: What we do now if a unit breaks down is we say to the distributor, “Send us the unit, and we’ll send you a brand new one.” Jay: Do that, but also be willing to pay just for a service call. If it’s $30 of service, be willing to pick that up, too. Who cares? If you eliminate any of their resistance in making the offer to their prospects, and you give them a daring offer to make, like 45 days or until the end of the season or the middle of the summer, if they make that guarantee stronger they’re going to get a lot more people to bite on the deal. And put it in writing. Make it really good. But don’t do it across the board at first, because there may be something about it and you’ll have to change it around. But do it in 5 or 10 or 20 test situations and stand behind it. Tell them they’ve got nothing at risk. You’ll reimburse them for the unit, you’ll reimburse them for the service call...you can even try a couple of them where you tell them you’ll reimburse them all their lost commission. Whatever it takes to get the deal sold for a test period. Until they’ve got a history. Once they’ve got some kind of history then they should be smart enough to take over the responsibility themselves. You should be able to say that, “For 90 days or for one season, we’ll stand good for all your exposure.” Because you’re going to be ultimately the beneficiary more than they will, you know that? Martin: Yes, I do. * * * * Hopefully, this transcript will have expanded your understanding of a key marketing concept: Making it easy for the prospect to buy. Some of the suggestions I gave to Martin may, at first, sound outrageous (e.g., offering prospective distributors an option for $1500 instead of making them pay the full $22,500 in advance, or offering to pay all the distributors’ costs of advertising and customer service). But if your product really performs, you should be more than willing to take all the risk on your shoulders and thereby eliminate objections and resistance. Think about your own business. Calculate how much a new customer is worth over his or her lifetime. Then think about how much you can really afford to spend in gaining that customer in the first place. Chances are, it’s more than you thought. If so, and if your cash flow is adequate, be willing to spend more than you’re currently spending. Try out a wide variety of risk-reducing offers (rebates, stronger

guarantees, greatly reduced prices for new customers, etc.), and see which ones yield the biggest increase in profits.

Oriental Carpets/Copywriting Dinesh, a dealer in Oriental carpet, has a good flair for marketing—or at least for writing ad copy. But running ads might have sunk his business due to the expense and the risk involved. In this consultation, I showed him a way to get his carpets before thousands of prospective buyers at virtually no cost. * * * * Jay: Have you ever tried putting carpets in other people’s stores on consignment? Dinesh: I have already done that. Jay: How did it work? Dinesh: Well, it’s only been about 3 or 4 weeks. Just a few have sold. Jay: How many did you put out and how many sold? Dinesh: Just at one store I put about 13 rugs and they have sold 3. Jay: In what period of time? Dinesh: In a month. They are the small rugs. Jay: They go for how much? Dinesh: The small ones, say about $90. Jay: Retail? Dinesh: No, that is my fee. Jay: How much do you keep of that? Dinesh: I keep about $20. Jay: The point is that you put out 13 little ones and you sold 2 or 3 which is about 20%. What kind of store was it? Dinesh: It is called a discount store. It is a big store, with a lot of products like table lamps. Jay: Is it nice? Dinesh: Yes, it is nice and a big store. Jay: It’s really hard to get excited when you look at all the rugs in your little office. It is better off to see them down where they show best. But you don’t have a showroom. If you had a showroom, it would

probably need to be 30,000 square feet. If instead you could take your inventory and you put it out at 10 or 15 places where there was high traffic and they were on consignment, how much profit would they get? Dinesh: I would arrange with them, it’s up to them. Jay: You tell them what you want? Dinesh: Yes. Jay: I am going to suggest that you start experimenting with a lot of retail stores and just see which ones tend to have the highest traffic. If you can get 20% percent of your inventory turning every 3 weeks and you added a litle bit—say, instead of $90 you charged $100. Then that would cover the financial dynamics of it. I would imagine if you had 50 outlets and you had, let’s say, 1,000 rugs out, you would be selling 200 rugs a month, wouldn’t you think, based on what you are telling me? Dinesh: Yes. Jay: So, 200 rugs a month at $40 a rug, you’d be making $8,000 a month, right? Dinesh: Yes. Jay: Now, you may have to get your brother or cousin or somebody to finance you, but if you show them you have a deal, I can’t imagine they wouldn’t be receptive to that. I would take what you are doing and take it to a very large level. I have done consignments before and the problems are as follows: You have to be darn sure you are entrusting it to somebody who’s credit-worthy. You have a written agreement that makes it clearly evident that you are entrusting them with your property, that it is not their property. If anything happens to it, they are just there on consignment. You have the right at any time to pick up your property, that they have no ownership in it. What you are going to do is you are going to come back every 2 weeks, take an inventory of how many rugs are gone, replace them, and collect a check on the spot for those rugs that are sold. Just start doing it. And what you want to do is you want to play off the traffic. You want to try design places. Maybe you even want to try and put the carpets on a wall. Maybe you want to try restaurants. Just try a lot of different things to get a feel. Start testing which kinds of high-traffic places are the best. Tell them you will decorate their whole wall and the deal is they will sell them and you will replace them. If you have 50 locations (which I don’t think is that hard to do) and you had 20 rugs up at each one, 1,000 rugs total and you get the same kind of experience you are getting here—if you sold 20% a month, it is not bad money, is it? Dinesh: Yes, but considering it was at Christmas time, maybe that’s why they sold that many. Some places will probably do better, some not so well. Jay: There are companies that do pictures on the wall for restaurants, that’s all they do. They go around and they’ll decorate your walls free. The deal is that their picture is for sale all the time, you as a restaurateur get 10 or 20%, you have no investment, you have free decoration. Again, I think your rugs are beautiful, but it is real hard in your little office. The way somebody presents something is very important. If there are too many of them together, if it’s hard to look at them, if you can’t see the bottom ones, it doesn’t do them justice even if you pull them out. But if you had them out to 20 people you could trust, and say each person’s facility is running 1,000 people a week through their facilities, restaurants, furniture stores, whatever, the possibilities could be very, very substantial. Right now, how many people see your rugs a week? Three, four, ten? I would strongly urge that you do that right away. Just try it. The thing is to tell these people going in that you don’t know if it will work or not. You’ll put in the rugs for a couple of weeks. If they don’t sell, you will come back and take them. If they do, you collect the

money and you’ll replace the inventory, you’ll adjust them around. Maybe little ones sell and big ones don’t or big ones do and little ones don’t. You take the big ones and put them in furniture stores under dining room tables and things. What do you have to lose? You don’t have anything to lose as long as they are honorable people and it is clearly evident in writing that the product is yours. One time, I had a situation like yours. I had a friend in St. Louis who was one of the biggest suppliers of 8-track tapes. I got him to give me 10,000 tapes on consignment and 200 boxes of tape display cases. I went out in my city, which was Indianapolis, and put 60-70 out in various stores, high traffic convenience stores like 7-11’s, and all on a consigned basis. I put them out and then once a week I had an employee who would go around and take inventory, replace merchandise that was sold or damaged, and collect money. I was making net $800 a week cash for doing that. I thought it was a pretty good business. It may work, and what do you have to lose? Dinesh: Right. Jay: That is the least expensive thing that I could recommend to you, because I could give you ads and things but I think running ads would be a very, very expensive alternative. Put a pencil to it, try it out. I can’t believe you can’t make money doing it. You can experiment trying them on the walls, trying them in places that maybe don’t seem logical but have high traffic and the kinds of people who can afford it. You should have signs made. Maybe you have to go out and spend the money you would have put into advertising that probably wouldn’t work anyway and make signs saying, “All rugs in here are for sale, ask the manager.” Go to a furniture store, go to even a carpet store. Go to carpet stores and ask them if they would like to sell some Oriental carpets too. Offer to put 4 of them out for people to see when they walk in. Try a lot of different markets. What do you have to lose? Dinesh: I was thinking of like a BMW dealer, but I don’t know what is involved. Jay: You mean inside? Dinesh: They could go on the seat and I was thinking people might buy them. They have a high perceived value. My cost is close to $70 for a small rug. Jay: So what would you charge them? Dinesh: I would give it to the dealer for 15% over my cost, even if I only made $10 or $15. And they could advertise that if you buy a car before such and such a date, you get this $300 Oriental rug for free. Jay: It’s a good idea. But you want to prove and validate your concept a lot more than somebody else is going to want to. I’d go to a Cadillac dealer, a Mercedes dealer, a whole plethora of people who would be right for it and offer to put one rug or two rugs in the car on consignment. Tell them you will do it the first time at your own risk and you will come back in 2 weeks and if they haven’t sold it, then you will take it back. If they have sold it, you’ll sell them a bunch of them on a refund privilege deal or return deal. They can replace them and change rugs and things. You’ll come back and you’ll bring rugs out that are perfect for each model. Tell them you will test 2 or 3. Anyhow, I think you have some very good ideas but I think you have to realize that it’s always up to you to prove it to somebody else. Don’t make them buy it but make them sign a real simple agreement. It should say they are your carpets, you are leaving them on consignment, you are going to come back in 2 weeks to see if they have sold. Show them a sample and make sure to tell them if it works you can even have rugs custom-made for each car. You can, can’t you? If it works really great and they want to buy 500 of them? Dinesh: I’m just trying to share my ideas with you. Jay: I’m impressed. You have a natural marketing mind. Dinesh: It’s just going crazy with ideas.

Jay: 20% of your rugs will sell, maybe you can maneuver and change around the mix and it will even be better. Another thing: One unit is only going to make you $100 a month, but 100 units is $10,000. You have to look at the numbers too. It’s like Jack-in-the-Box, where you make $30,000 as a store manager. If you have 10 or 15 stores, you make yourself a quarter million dollars. Sometimes you have to look at numbers. If you understand what I advocate, sometimes the silliest little things work wonders. You have a great idea, and by cookie-cutting it over and over and expanding and going forward and not confusing yourself, you can make a fortune. If you get bored with it, hire somebody and say, “Here’s the deal: I’ll give you10% of my profits to set it up.” If you don’t want to do it, hire someone who’s got a little money or who’s in another business and who can set up outlets and monitor them for you. Just make sure you visually inspect all the locations just to make sure things are being done right. Some more ideas: What would happen if you made a deal with all the big furniture stores or all the interior designers who have offices and you put rugs down there or you put a nice one in their office for sale? I can’t believe that it wouldn’t work as an impulse item. What if every time there is a new home, you put one down with a sign, “This rug for sale—call this number.” They could get a commission. Try a lot of different things where there is a lot of traffic. I don’t purport to know the businesses and the situations that will prove to be the best, but I think since you’ve got the product anyhow, what have you got to lose? Right now, you have just a few people a week or a month who are looking at it. What would happen if you had 10,000 people? If the rugs are good, if the rugs are attractive, beautiful, high-quality, and of value, and you get 10,000 people to look at them a month, I can’t believe you can’t sell a certain number of them. If that’s the case, you have a business and it’s a business that would be hard to kill. And you don’t have to do it yourself. You want to leverage yourself. Once you get it set up, all you do is keep replenishing inventory, trying new locations, experimenting. You could have 150 places in a city having your rugs on consignment. You could have a million dollars worth of inventory out and be making $200,000 a month. Lots of a little can be as important as a little of a lot, if that doesn’t confuse you. Do you understand what I mean? Dinesh: I do. Jay: And it is hard to kill. Those people have more to gain by keeping people coming to their stores than you ever do. They aren’t in business just to sell 1 or 2 or 3 of your rugs and make $100. They have bigger overhead, they’re running full page ads—you’re leveraging off all the hundreds of thousands of dollars they’re spending on advertising. There are a lot of possibilites out there. I would go to all the furniture companies and just tell them you would be glad to put beautiful carpets under all their dining room tables. Go to the carpet companies and tell them that you would be glad to put one on the wall and two on the floor and you’ll come back every two weeks and you’ll change and replace them. All you want to do is get paid for what sells. Then try it. You may find that the locations that you think will make you the most money won’t. The places you think will be the silliest may make you more. You’ll probably put them on the wall in some restaurant and find you sell 20 of them a month just because people like to look at them. People sitting around all day looking at something, it can be pretty fun. If you have the carpets anyhow, your risk right now is just to take them out of your room and put them out where there’s traffic. If it works, you just keep doing it. You try new locations, you change, you purge out the ones that don’t sell enough units. The possibilites are pretty neat, really. O.K., what’s your next question? Dinesh: I was talking to a friend about how he sends inserts and different kinds of inducements in with his newsletter. Jay: And your question is can you do that? Dinesh: Yes, my question is, if he is giving them a good value, if he could say these rugs... Jay: If you put an order in today to Pakistan, how long would it take to get it back, to get rugs shipped here?

Dinesh: Well, if I really want to have them custom-designed, they need 3 months, and then after that, every 30 days they would keep shipping them. Jay: First of all, let me tell you what won’t work. What won’t work is offering the rugs custom and not having standardization, because you would get too many returns. What would work would be taking 3 rugs that were the most beautiful that you could easily replicate over and over again, and having 4-color, 4-page inserts going in with some of these newsletters. Tell the newsletter guy, “I’ll write an insert for you and it will be pictorial. I’ll pay for the insert.” The insert will say something like this: “I don’t know if you have ever taken the time to investigate Oriental rugs, but besides being beautiful, they are true works of art. Typically they cost $1,000 to $2,000 and the mark-ups are 300 to 400%. We have made direct contact with somebody who basically is just a representative for the manufacturer in Pakistan. They have gorgeous oriental rugs, and we made a great arrangement with them. We have focused on the 3 most beautiful rugs, and here are the sizes, and what we are doing is preselling. We’re taking orders right now for rugs that are going to start being woven in 30 days. The deal is this: For $350, you can get a rug worth $1,000. For $500, you can get a rug worth $2,000. What if you don’t like the rug when it arrives? Two things: First, we’re not going to deposit your check until your rug arrives in the country. Second, we stand behind it. If your rug is not what it looks like in the picture, if you don’t like it when you put it down, if it doesn’t go with your furniture, any of those things, if you don’t think it is worth at least 3 times as much as you’ve paid, we’ll give you all your money back. We may never again make an offer like this. You are getting a value of approximately 3 times, you’re getting a 100% money-back guarantee and we aren’t going to deposit your check until your rug is actually woven and clears customs and is in your city ready to be shipped to you.” If you did that as a newsletter insert and let all the newsletters hold the money and you had your bank advance you money, you do a letter of credit based on the orders, that can be a powerful offer. What do you think about that? Dinesh: It is, in fact, a very good idea. Jay: What I would do is write a letter to all the newsletter publishers. The letter will make the proposition, telling them how they have no risk because they only release the checks to you afterwards; they only pay you after the product has been shipped. They can put the money in escrow and not deposit it or however they want to do it. If it works, you could produce another follow-up piece with seven other possibilities of more expensive rugs that you can sell them to bump the sale after they get it, and you can even give them trade-in allowance. I have a friend who sells cubic zirconium (articifical diamonds) in newspaper ads and when you get them, you get a chance to send them back and trade them in for full credit or double credit on a set piece of cubic zirconium jewelry, and he gets about 40% of the people to send it back and trade up to about 3 times the sale. It’s pretty interesting, isn’t it? Dinesh: Yes. Jay: What you might want to do is take 3 or 4 of the people you propose it to, and if you have a rug that costs you $50, send them a sample so they can see it. That might be a killer. That same offer could be in a mailing piece to the public too. That could be an ad in some of the magazines that would do it 4-color. Here’s the deal: “We’re manufacturers from Pakistan, we have an office here...” (tell the whole story). “Here are the 3 rugs we are going to produce this month. If you want any of these, you can have them on the following basis. First of all, we will hold your check. We’ll verify that the funds are in the bank but we won’t deposit your check until your rug is manufactured, shipped, clears customs, and is in our warehouse ready to ship out to you by priority express or UPS or something, insured and protected in a heavy-gauge shipping container, or whatever. After you get it, you can take it around to any rug dealer you want and ask him to compare price. If they don’t tell you its retail value is 3 times what you paid for it, send it back. Even if they do, if your friends, when they visit your home or your office, don’t compliment you on how beautiful the rug is every time they come, send it back. You have 35 days as long as it is in good condition.” That’s a pretty powerful offer, don’t you think? What else do you want to talk about? Dinesh: I was thinking about these people who have big mansions and who buy things for their houses. They are saving a couple thousand dollars on my large rugs. If we could find a specialized mailing list, maybe we could send them...

Jay: You want people who subscribe to one of three magazines. Architectural Digest, Sunset, or your city magazine if there is one. And you want your area. You can rent them by zip code, did you know that? Dinesh: Yes, I also got some information from a mail list broker. I called them up and they are sending me some information. I want to show you my ads. Jay: How did this do, nothing or a lot? Dinesh: Just a few calls, but I didn’t sell anything. Jay: This ran where? Dinesh: In the whole run, the whole city. Jay: What did it cost you for the ad? If you want to run ads, you might be better off consigning the merchandise to a chain of stores, say a chain that has 8 stores all over the city. So if you are going to run an ad, you pay to run the ad for them, and it says: “We just acquired in liquidation 150 oriental rugs whose retail value is 2 million dollars that we are selling for 90% less than their market value. Here’s the story: We’re going to sell them all today. Here’s an inventory of what’s at each of our stores, the sizes, and they are all being offered to you on a 30-day money-back guarantee.” That might be good and the deal you make with them is that the cost of the ad comes out first, and you split the profits. That is an idea, don’t you think? Here’s another: You might go back to your supplier and tell him you want to try a lot of things, but you need more inventory. Tell him it may not work and it may take you a year and a half to get rid of, but if it works, you are going to test things that could bring in $100,000 in a month, or two or three. See if they will cooperate with you. I think to do this you don’t want to go and get rugs to try things out and have yourself be in hock where 30 days later, you have to come up with $100,000 if if doesn’t work. My recommendation—and I have done this many times—is just let everybody in on the deal. Say, “I have some ways where I could actually send you $100,000 a month, but in order to do that, I need to try a lot of things. Let me tell you what I would try, and I’ll figure a way to finance the advertising costs, but I need the merchandise and if it doesn’t work, your investment of fifty or eighty or a hundred thousand dollars today could pay a 10 or 15 times return to you every year for the rest of your life. I’m willing to put my money out and I’ll be willing to be on the line for you for 2 years to pay it off. So if you want to do it, you have to work really long with me and I would do that.” I don’t know if that is something easy or not. If they won’t work with you on it, if they put pressure on you, I think I would get me to tell you about how to do something else to make money, because you need some help to make this thing work. You need to try a lot of things to find the answer. You are going to lose on probably 3 out of 4, but the 4th you can win big. In the meantime, you can be down very badly and you need somebody to help you out; you need someone to be at risk with you, and it would seem that they have a chance with your clarified perspective to make $100,000 a month. I think that is realistic if you can make the thing go. And if you could make the thing work, you could take it all over the country. If it works here, it would work in Chicago, it would work in New York. You just keep trying a lot of different things. If you are going to spend 4 grand on an ad, what you want to do is to have merchandise in 5 or 6 places and refer the reader to these locations, and the best way to do that is to have a tie-in with a chain. Just go to them and say, “Here’s the deal: I’ll put up all the money, you have copy approval. I’ll lay all my carpets in, you provide the retail stores, the outlets, the salespeople,and we’ll split the profits.” I can’t believe somebody will say no because then you can point out to them that if 100 people come in to buy an Oriental rug, probably they are going to look at other things. So you are building their business at your risk. Their salespeople get their commission first, obviously. Then the ads are paid for, and then the product is paid for, and any profit you split, and you tell them what your costs are. That’s fair, don’t you think? If it works, it will be a hell of a concept, wouldn’t it?

Dinesh: Another idea I had was that if we got this specialized mailing list, we could send them... Jay: Is the idea about an insert in a newsletter or something? That same rationale would work with cable TV. So why don’t you think about doing it there also? They could show 3 or 4 different rugs on TV and it could really be hot if you have standardization. “The rug will be made for you specifically.” You could also have sewn on the back of the rugs, “custom woven for John Smith,” or whoever. That would probably be really powerful, having someone have that in their home. That’s a good idea to come with to the cable people. Dinesh: No other cost is involved. You just get your shipment and you just ship them out. Jay: The cost involved is the marketing, the conceptual cost. What I said earlier I am going to repeat. I think that consignment or something like that...even a newsletter insert is not as good because that has a marketing cost. You go to the cable TV, it is a great idea. But the problem you have is you need to show pictures. You have to show pictures and that is expensive. Full color. TV is the best place to do it. Cable shopping, I think that is the best thing.I’d go to all of them with the concept—not rugs in stock, but rugs that are going to be woven just for them, their check won’t be deposited until their specifically woven, custom-created carpet comes in, clears customs, and is shipped out to them, and it will have a customized label saying that it was crafted especially for them, and they can put it on their floor, on their wall, in their office, under their dining room table for 30 days before they consider owning it. That’s a powerful offer. The cable TV could be a hot thing to do. Also, something else. You could get people to go to groups and do the same thing. I have never seen Oriental-rug parties, but I bet you could do those. Dinesh: Some people, in fact, do that. There is one guy in New York, that’s what he does. He pays somebody to throw a party. He picks up the tab. Jay: You could run ads in Entrepreneur Magazine offering a wonderful part-time business with any investment that you want to start with. And you send them a packet telling them you have a way to make Oriental rugs. If they agree to buy a minimum amount at one time, $2,500 or $5,000 worth, they get the rugs on a money-back, 30-day refund basis, but they also get 25 plans of how to sell it. All of these things we are talking about, you sell them. For example, “If you want to do it part-time, we’ll show you how to put them out in 30 stores and then once a month you just replace them and you collect a check. If your wife wants to work part-time, you do Oriental-rug parties or you put them in retail stores.” That’s a possibility and you don’t care what the minimum is. Dinesh: I ran an ad in the newspaper that was to show people how to make money selling Oriental rugs and I didn’t get any response. Jay: Maybe it was the way you presented it. The idea is to tell them: “This is an exciting way to make money part-time at your convenience, and there are 20 different ways you can do it. We’ll give you a whole plan; in fact, we’ll send you the plan for $2. Read the plan first and if you don’t like it, we’ll give you the $2 back. If you like it, you can buy any quantity of rugs you want over $500. We’re in it for the sell-through, and if you buy $500 and you try out 3 or 4 concepts in 60 days or less and it doesn’t work, we will give you your money back.” Because you want sell-through. Dinesh: How about this? “Make money selling Oriental rugs. Get into this exciting and prestigious business with $200. You can buy wholesale from manufacturer/importer. Sell them to your relatives, friends, through classified ads, etc. etc. Make good profits as you set the retail price. You will buy the rugs at a low price.” Jay: Where did you run that? Dinesh: It was in the local paper to test. Jay: Try it in the Sunday paper as a display ad. Big display ad or oversize classified ad in the Business Opportunities section and then if that works, try Entrepreneur Magazine. Add to the offer: “Complete plan

including 7 different profit approaches sent to you free (or for $2),” and try that on a 100% money-back basis. Give them all these plans we are talking about because most of them can’t think of how to do it. See, the problem is that you are expecting them to have the vision of how to sell it once they buy it. Just because you are giving them a chance to buy something worth a thousand dollars for $200 doesn’t mean that they still understand how to sell it. Send them a booklet that shows them technique. “If you are not a salesman, you put them out on consignment. If you are not a salesman, you hire women to have parties. If you’re not a salesman, here’s the turn-key approach. In fact, before you buy any merchandise, why don’t you just try it? Go out and call on a bunch of retailers and see if they would let you put a carpet down. Go out and call 5 people cold.” One little ad, see if there is any response. If no one responds, you don’t invest a dime in inventory. If they do, if it validates the concept, then order some rugs. That’s pretty powerful, isn’t it? Dinesh: I agree. Jay: In my opinion, there are two ways to make money. One is scam, where you basically rip somebody off and the poor guy has a room full of Oriental rugs. The other is you sell through. You give him a way that when he buys it, you show him how to move it out to market so he has to reorder and he makes a lot of money and you make a lot of money. If you can’t sell through, and if you have the integrity that I perceive you to have, you don’t want to be in this business. That being the case, who cares if you don’t get any money until after you prove it to him, presuming you can live tomorrow. Get a plan or report in his hand. Tell him you will send the report free provided they agree to try it out. In the report, you tell them how to call on 12 restaurants and ask if they would let them put the carpets on the wall for 25% of the sales. Go to a designer and ask if they would let them put beautiful rugs in their showroom for sale and they keep 25%. And if they say no, what pitch to try. So they validate it first. If it doesn’t work, obviously they shouldn’t buy the rugs and they can send back the report and if they sent $2 you give them back the two bucks. If it does work, doesn’t it make sense that they should buy $200 or $500 or $1,000 worth, considering you are going to give them a 60-day money-back refund privilege? It is a pretty irresistible offer, don’t you think? I’d really focus on that. You might run an ad in Entrepreneur for $500 or $1,000. While you are waiting for it to hit, I’d write this report. Just because you are selling them a value, they don’t know how to resell it. Dinesh: I’m going to change the topic. Jay: What do you want to know? Dinesh: How do you specifically get your own clients? What do you charge them and everything? Let me give you a little background. I have also done a lot of ad writing. I have some experience and I have done fairly well. Jay: I’ll give you some ideas. First thing I would do is I would look for people who run ads often that are expensive but where you can tell either: A) They don’t test, or B) Their headline is terrible, or C) By restating the offer, you think you could pull a lot more orders. You get a hold of those people and you make a simple proposition. You give them a little education in leverage. The fact that the biggest area of unexploited or of untapped opportunity in leveraging is marketing, because you have fixed cost in a radio commercial, you have fixed cost in a mailing piece. If you can make them pull 10 times as much, it’s all leverage for you. And you sell them. You think you can help them. Make them a proposition. The proposition is very simple: “I’ll create for you new ads, new headlines, new programming.” When I create the rights for mine, I lease them to the client for usage which is paid to me in the form of a negotiated percentage of the increased profit. How do you compute that? Every situation is different. However, you ask the person to show you his or her records, presuming they have been running enough ads that they know how many sales, or how many people, or how many dollars, or how much profit per week, per month, whatever the ads are currently pulling. And you measure the increase that your ad generates. You have them show you evidence so you feel comfortable in that. You call that your base period. You get nothing for that. If they are used to doing $10,000 a week, the first $10,000 is theirs. You clearly evidence to them, “I’m not trying to supplant, only augment your profits. I don’t want to take a dime away

from you, but if I can give you a dollar you didn’t have, all I want back is a quarter. You have copy control. I’ll do everything, but I’ll do it with you having editorial approval. In other words, I can’t go crazy and promise the moon. Anything I want to do and you don’t understand, I’ll always advocate and explain to you.” They say okay. So you try out 2 or 3 of these, then you wait and see. When you find a winner, you get hold of other people outside of his market and you sell the thing over and over again. Does that make sense to you? And just keep doing that. You can probably make yourself 70 to 100 thousand dollars a year doing this, and it would be a great laboratory for you where you could experiment and learn. Also, you come back and say, “I want 25% of the increase. However, if I can find ways to add layers of other products, services, and sales to either the customers you don’t resell or the prospects you don’t convert, I want half of that.” And you start playing with those. You try a lot of programming. If you are getting a cash flow from some of your ad deals where you are getting 25% of the increased profits, don’t be afraid to hire people to try to telemarket and experiment. What you are doing is analyzing and experimenting with all sorts of offers and pitches and deals, and you are a laboratory of analysis and data. I mean you get winners and you immediately take the winner and go across the country and you see how you can sell it to 18 other people in similiar but not competitive, not geographically competitive, endeavors. This is the easiest thing to do. It’s not a hard sell. But you have to show them why. You have to give them a little education first of all as to why they are not leveraging their potential. They are not using reasons why, most of them don’t even use headlines, but a change in headline could mean a 10 to 20 times increase in profit, in the number of people coming into their facility, and in phone calls, in orders mailed in. You can teach them that just by adding a few little things like: “If you can’t come in, call, and if you call and register, we’ll honor the deal for you 2 days later. These are little things you could try and one little sentence you add may boost profits by 30—40%,” and you would get 25% of that. Just let your imagination wander, try all sorts of things. You could have 100 things going for you that you could manage, but you have to select them. Don’t take anything unless: A) You have a good feeling about the people, B) you have a written agreement, C) They are open-minded and they will let you try a lot of things, D) You can spend enough time and you really believe you can help them. Don’t go to them unless you have 2 or 3 or 5 ideas. Don’t give them to them. If you really don’t feel you can help them, you will do them and yourself a disservice. Also secure from them one more caveat. That is, if you do make them at least 20% more profit in 6 months, they agree to be a great testimonial to your career or whatever you want to call it. And then start doing it. I’d do that tomorrow and Sunday. I’d look at every ad. You can do it other ways, by the way. Not just retail, you can do with employment ads, you can do it with ads for all sorts of different things. Think about it. Even though it is not until next year, you could probably call everybody in the Yellow Pages where you’ll re-do their ads and next year ask them to give you a base and sign an agreement. If they usually get 50 calls a week—as long as they will be honest with you—and if you get them 100 calls, will they give you whatever—and if they can’t seem to quantify it in dollars, in profits, then talk it through with them and get the most conservative assessment. Say, “Well, if you get 50 people a week, how much do you make?” And they will say, $1,000. Say, “If I got you 100, you would probably make $2,000, right?” They will say, yes. “Well, let’s say they are not as good quality, and you only make $500 more.” But if you got 25 percent of that, you would get $125. So you get $25 a week for the deal, and you could make 100 deals like that. Do you get the idea now? Dinesh: Yes. Jay: The possibilities are quite literally limitless. I would just look for deals. Cut out ads and look at them. That young lady in your office—does she work full time? Dinesh: Yes. Jay: Is she pretty competent?

Dinesh: Yes, she is pretty good on the telephone. Jay: Does she type? Dinesh: Yes. Jay: I’d have form letters on computer, printed out letter quality, not dot matrix. Every time you come in on Monday, you give her 500 Sunday paper ads and you categorize them, letter A, letter C, letter D. One says, “I bet you are not getting a lot of store traffic.” Another says, “Your sale didn’t work, I know why. Or if it did work it didn’t pay off very well. I know why and I can probably help you turn that around next time and I will do it strictly on a contingent basis meaning if it doesn’t work, you don’t pay me. I’ll let you use my concept with the understanding that you don’t pay for advertising, you pay for results. I’m not an advertising agency, I don’t charge production fees, all I do is get paid if I make you more money than you would have without me, and I have a simple formula where it’s unquestionable on your part how much my contribution is because you determine it in advance. It’s risk-free and at the very worst, you will learn a lot from me and you’ll grow to appreciate leverage.” You might say, “You are a businessman who knows how to leverage your bank and your real estate, shame on you because you are not leveraging your ad. I saw your ad on Sunday. I’m not trying to start this relationship off wrong, but it was terrible. It was terrible for 4 reasons. It didn’t have the right headline, it didn’t show the reason why, it didn’t offer a Unique Selling Proposition, it didn’t compel them to action, or whatever. I know how to craft ads that should outpull yours—same space, same dollar investment—by 2 or 3 or 4 times. I am willing to create such an ad for you strictly on a contingent basis where I only get paid a percentage of the increased profit above and beyond that which your ad would have pulled. I have a formula, you can compute it. If you are interested in paying for results instead of for advertising; if you are interested in leveraging your potential, call me weekdays after 11 a.m.. Ask for this name.” and the name will be keyed so you will know what ad they got it from. Is that an idea for you? Dinesh: Yes. Jay: At the same time, every time you see a lousy employment ad, write a letter. Ask your secretary to call the number and get the name of the company and address and send them letters saying, “I saw your employment ad. You probably either got a lot of people who weren’t qualified or you got no people. I know why. Even though you only spend $500 on the ad, I can give you an ad that every time you run it will probably pull 10 times more people of 3 times better quality, and I’ll do it for you on a contingency basis. I will let you try it out one time and if it works, pay me. If it doesn’t, just agree to never run it again.” If you do that, you can create all sorts of ads. You can have all sorts of fun, you can go wild. The possibilities are limitless. Dinesh: You’re absolutely right, but some people are myopic. Like I told you about my friend. He has a print shop and I asked him if he wants to increase his printing business, and I gave him some ideas from your marketing reports. For example, I told him recently, “Why don’t you advertise and just say, ‘get into the printing business for $2,000’ and make a package of the forms and costs and whatever, so the people can act as outside salespeople for you.” Jay: He said no, right? Dinesh: Yes. Jay: Here’s what you do when that happens. Let me tell you how to avoid that. Play the numbers. You don’t need 100% of the people in order to make a lot of money. You get a great idea like that through the newspaper or go through the Yellow Pages, and have your secretary call every print shop and get their mailing addresses and the names of their presidents. Send every one of them a letter saying, “I have an idea I think could bring your printing business an extra million worth of business a year that should yield a 20% profit. I am willing to give you the idea strictly on a contingent basis whereby you can make 25% of the profit after sales expenses if you use it. I’m willing to reveal it to you on a non-disclosure basis as long as you agree that if you use it in any way, shape or form, I get my share. If you are interested, call my

secretary and we’ll schedule a telephone meeting, we’ll get acquainted. If you feel comfortable, I’ll come out to you or you can come to my office and I’ll explain the idea fully. It’s up to you.” It will take almost nothing to try it. You can validate it very quickly. If it doesn’t work, you’re out a few dollars. If it does work, it could add a million dollars or more to your busines and you could grow as rapidly as you want with it. Every time you get an idea like that, don’t worry about the myopics. You mail it to 100 people and you are looking for the 3 or 4 who are open-minded. Do you understand that? Dinesh: Actually I wasn’t chiding him or anything. I think it’s a good idea because he was saying he needs another machine and all that and I told him, “If you had 20 people from different areas, adjoining areas and they give you $2,000 each, you have $40,000. And you can buy the machine you want, and you are giving them the chance. They can offer all the services you can, but without having to buy printing equipment. And you are making a good profit.” Jay: This is very important for you to understand. If your premise is sound, if you base your concept on a sound foundation, the law of averages always works to your advantage. Years ago I worked for a company that sold lead-generating services to companies on a contingency basis. Every time we saw an ad, we’d do what I told you, we’d send a letter to them, and every time we saw a good potential client we’d call them. We just worked with numbers. I had at any given time 100 letters out, 100 phone calls out, and I didn’t just give up if they didn’t call me. It’s never as important to someone else as it is to you. I would send a series of 12 different follow-up letters, even if they didn’t call me. I’d send a letter: “You didn’t respond. Maybe it’s because you didn’t understand this concept: By changing just the headline, you can increase your business by such-and-such percent, Mr. Blank.” (If I can, I learn his name). “Moreover, without being too critical, you don’t even have a headline, so I think I can help you. If you’re going to spend $4,000 on Sunday at the same time don’t you think you owe it to yourself to get the most and not the least out of it? If you agree, call me.” And send out a series of letters. Don’t give up prematurely. Does that make sense? Dinesh: Yes. Jay: What else do you want to talk about? Dinesh: I just want to come up with all the ideas I can. Jay: I want to give you a comment. It’s good and bad. You know what a left-handed compliment means? A left-handed compliment means it’s good but it’s with a criticism, too. I can tell you’re such an entrepreneurial spirit that you go like this all the time, and you’ve got to get something working for you and a cash flow or you’ll never really hit it big. You remind me of myself in that you see opportunity everywhere. Dinesh: Right. Jay: I see opportunity everywhere. The problem is that unless you harness it and exploit it and perpetuate that exploitation, you just basically spin your wheels. Do you understand that? You don’t accomplish anything, in fact you get frustrated. I think your insight is fabulous, but again, I have this concern that unless I can get you really programmed, you’ll be going this way and then you’ll see something else and you’ll go that way. I’ve got a different philosophy for you. I like big-deal philosophies, but also where I don’t have to do a lot of work. A lot of littles can be better than a little lots. Do you understand what that means? A lot of littles are harder to kill. You have deals where every month you get 3 checks for $5,000, that’s probably going to last a lot longer and it’s more certain and dependable than the one big deal that may make you $40,000 or $50,000 or whatever. One more point of philosophy. You can’t blame human beings for being human—and the best you can do, the greediest you can be is to be selfless. Do you understand that? It pays off. Me caring more about you more than me will make me much more money than me caring about what’s in it for me right

now. Does that make sense to you? Long term. I’m not fixated about how am I going to get something out of a deal, how much am I going to make. My main focus is how how can I serve your needs? Most people don’t understand that. They worry about me, me, me. What am I going to get out of it right now, for me? And it’s so amazing. Because the price you pay is opportunity. Do you understand that? Dinesh: Yes, I do. Thank you, Jay. * * * * Leverage is a recurring theme in these transcripts. Why? Because leverage is all about getting bigger returns from the same marketing dollars. Both parts of this consultation were about leverage. In the first part, I urged Dinesh to use consignment as the lowest-cost, lowest-risk way of reaching the greatest number of people with his products. In the second part, I told him how he could sell his ad-writing skills by exhorting prospects to maximize their own leverage by paying him for results only. Chances are, you can adapt these concepts to increase your own leverage. For example, is consignment—or some variation of it—a viable way for you to do business? (Think about it. You may be surprised to find that you can, indeed, find other people to “sell through” for you if they don’t have to pay for inventory.) And what about your ads? If you feel they could be pulling better for you, try improving the headline, or the promise, or the explanation. If you can get the same size ad to pull in 2, 5, or 10 times the number of qualified buyers, that’s leverage!

Furniture Store Fabian and his brother are owners of a furniture store that specializes in rare, one-of-a-kind pieces. They special order and customize to make different pieces match into a set. Their print ads were bringing in some business, but weren’t conveying the uniqueness and high quality their store has to offer. They also were using a mailing list, but felt their list contained a lot of “deadwood.” In this consultation, I gave Fabian a wide range of innovative ways to approach prospects, showed him how to resell to existing customers, and told him how to word a compelling message to convert his “deadwood” into live buyers. If you want to reach more prospects or convey a stronger and more compelling message, read this transcript! * * * * Jay: I read the PR article that you ran in one of your local papers, but give me a little background real quick. Fabian: My brother and I opened the store a couple of years ago. We doubled the size of the store last December, and have continued to add people and merchandise ever since. Jay: Is it making money? Fabian: Yes, it is. We’re doing fine.

Jay: It looks like you really enjoy what you’re doing. Fabian: We like to introduce some thing new and unique - something that’s special. We have some things that you just can’t find anywhere else. That’s what our whole idea is. Jay: Tell me more of the background. I’d like to know how you got into it, and how you’ve grown so far. I’ve seen the ads, but give me a little more flavor of what’s gone on so far, what caused you to choose your new location. Give me the whole background real quick! Fabian: You bet. We had the store in another area for eight years. That was a whole different concept in terms of the store. Then we moved here and thought about setting up a different kind of store. We decided on the country theme - something that would be right for this area and started to look for a contemporary country application incorporating Southwest country, which is very strong in our area. So American country and Southwest are really the theme areas for the store. We specialize in those areas with a contemporary flair vs. the Early American look. We try to be more like the metropolitan home look vs. the country-living look. Jay: I understand. Fabian: It’s an up-scale look. It’s an expensive look but we try to do it in an affordable manner. Jay: Delineate what that means. Fabian: We do the light wood finishes, and the detailed pieces. We do it with a fairly simple, clean design, but we do it in a variety of different finishes so you can get one piece to match something you already have. Generally, on the floor - as you’ll notice in the photographs - we’ve got light-colored finishes throughout the store. Jay: I noticed that. Why? Fabian: That’s what we’re trying to put on the floor. We do a tremendous amount of specialorder volume. About 80% of our business is special-order. Jay: No kidding! Where do they see the items? Fabian: We’re showing some that have a lot of impact. Jay: But you’re not delivering off the floor? Fabian: We do. We’re happy to, but it’s a pretty strong look and sometimes people would rather go with the bread-and-butter version of it. Jay: I understand. So you use the look just to be provocative. Fabian: It’s pushy but it works. Jay: You made a comment in the letter you sent me that you have a trial special-order arrangement. Fabian: We do not require our customers to accept special orders that come in.

Jay: But do they have to put a deposit down? Fabian: Yes, but if they don’t like it when it arrives, they can walk. We give them their money back. Jay: How do you handle it? What is the incidence of that occurring? Fabian: I would say one time out of a hundred and fifty. Jay: Because? Fabian: The fabric wasn’t right. The finish wasn’t what they expected. Jay: But as long as it comes within their expectations . . . Fabian: They’re sold and they really want it. Jay: Good. Fabian: What we have done so far is to identify the people we really want to talk to, but getting out to them has been very difficult. Jay: Who are they? Fabian: The upper income of this area. And this area doesn’t have a tremendous amount of upper-income families. Jay: So you know where they live and who they are, by name? Fabian: No. Jay: Because? Fabian: We could get our hands on that information, but blanket mailing has not been effective. We’re a specialty store so our look doesn’t appeal to everybody, obviously. It’s very specific. Jay: How many people would you presume in the radius of your store, a hundred miles or whatever, would be prospects? Would there be ten thousand? Fabian: We would probably want to talk to around thirty thousand people. Jay: You’ve got a marketing budget of $25,000 right now. A finite amount is automatically prespent in the Yellow Pages? Fabian: Yes. Jay: So that’s what? Fabian: Right now we’re into about $250 a month. Jay: So $3,000. And the remaining twenty-two or twenty-three thousand dollars, how is it currently being allocated?

Fabian: Direct mail pieces that we’re doing - about $1,000 a pop. Jay: To whom? Fabian: To our mailing list. Jay: When you mail your specific offer to your three thousand or four thousand customers, what happens? Fabian: We get about a 10 to 15% response in terms of customers coming in the store and purchasing. Jay: So, for a $1,500 expenditure, you get something in the vicinity of forty to fifty people who will walk in the store and buy something - at an average order of how much? Fabian: Our average month, when we run these mailers, is fifty-five to sixty-five thousand dollars. Jay: So of 100% of your current business, how much emanates from your past customers and prospects? Fabian: About 75%. Jay: And you want to bring new people in who will reorder? Fabian: Right. We want to bring in new people. Jay: Have you ever done a personalized mailing to your old customers? Do you keep them on computer by delineation of what they’ve purchased and/or what they’re interested in? Fabian: No, we do not. Jay: If you know somebody has a bedroom suite or living room suite and you have a program that denotes what they don’t have, it would be very interesting to send them a letter saying, “John Wells, 6182 Main Street. Dear Mr. Wells: I hope you’re thoroughly enjoying the bedroom suite you bought from us last year. I’m writing today to tell you that starting in two weeks, and running for fifteen days, Forest Furniture is trying something rather unusual. We’re going to have a special-order, special sale solely on living room and kitchen suites. It made sense to me because I know how much you enjoyed your bedroom suite - that perhaps you’re ready now to consider it. If you are, this would be a wonderful time to get the exact suite of your choice at twenty per cent off.” Try that. Fabian: Interesting! Jay: Or, if your customer was sort of eclectic, or on a budget and bought one piece, you could have that piece coded in your computer. Then, you could write them a follow-up letter and the computer would tell you what to say. The letter might read, “I hope you’re loving your whatever. I haven’t seen you lately in the store. That tells me you might be waiting to buy the perfect whatever complementary suite. You might be delighted that we just got a manufacturer in and I think their pieces would be a perfect complement to what you already have. I’d like to invite you to come in one afternoon or evening to have a cup of coffee and talk. I can show you

some really innovative ways you can have the piece in a custom-order version to complement the such and such.” See what I’m saying? Fabian: Sure do! Would you suggest only going out to the people who have purchased? Jay: Did you read the material I asked my people to send you? Fabian: Yes. Jay: Did it register with you? Fabian: There were lots of good things. Jay: The one thing I hope that I can teach you in the context of this consultation is that you let your marketplace tell you what the best approach would be by picking a lot of suppositions and conservatively dividing your customers into test groups or cells. Try one approach to 500, another approach to another 500. Then analyze which approaches are the most profitable and go forward. Perpetuate those that work and reject or stop the ones that don’t. I can tell you what to test and give you suppositions, but the only vote that is really important is whether the market embraces it. Fabian: One of the problems I have right now is that we’re going out to 4,500 people; we’ve been working these people for two years. When it’s really cooking around here, we add 200 to 250 names a month to our list. The point is that there is a lot of deadwood in our list and it’s getting more and more expensive to pop these big mailing pieces out to them every month. Jay: You should have a formula established until you get more experience, because right now you’re just sending them all the same printed material. You should bite the bullet and try a couple of personalized offers to all of them. If you can track by correlation, you can follow up and see which names responded to which offers. What you want to do is fine. If somebody doesn’t buy for a year or two, purge them off the mailing list. But there’s the theme of a moving parade. People’s needs change; consequently you may be premature if you purge them off the list too early. Fabian: We’ve been thinking we’ve got to get rid of some of these folks. Jay: That may be a mistake. I think you just might want to change your thrust to them and make it more personal. Make a specific offer they feel is individualized to them and throw the gauntlet down. Fabian: Okay. Jay: What you’re doing is always playing - you’re radar-scanning 100% of a market at any given time. I like your copy but I think it can be made to be much more exciting. I see that your store is sort of on the precipice of artistry and almost a studio-sort-of-an-exhibit setting but I don’t fully pick that up in your marketing pieces. I think you should tell stories - give your customers some background. For example you could say, “Let me tell you a very fascinating story that is close to my heart.” Start imbuing your promotion pieces with more dimension. If you say, “We’ve just uncovered a manufacturer of Southwest furniture that is just short of being incredible. Let me tell you about him. First of all, the design is made by a man whose work is in the Smithsonian,

it’s in this and in this. The man typically, on individual custom pieces, gets $10,000 a piece and it takes him as much as four months to hand-carve the piece and he personally stains it. Then this company that we’ve found recreates, true to form, every exacting carve and curve, and he supervises and he specifies the exact mixes of the dyes and the finishes and the sanding techniques. He looks at twenty-five different samples of wood before he finds the piece that’s sturdy enough and rugged enough and handsome enough. The manufacturer told me that when they’re done, the artist is such a fussbudget that he’ll reject one out of every ten pieces that are finished because it isn’t up to his standards.” Then you say, “We can only get perhaps ten of them a year. We have one on display that we won’t sell at any price, but we’ll take nine more orders - and consequently we encourage anyone who might want a one-of-a-kind, beautiful reproduction of a custom-art-formed piece of Southwest artistry furnishing to at least visit our store.” You see, that has more dimension than what you’re sending out. Fabian: It certainly does! Jay: Tell stories about everything. Get into it. When I was in Acapulco with my attorney, we went to an art gallery and saw an incredible piece of art. We thought it was nice and found out it was $35,000. We were going to leave but the guy who ran the art gallery was best friends with the artist and he started telling us about the collectors around the country who had it, and the background, and the inspiration, and he showed us the write-ups. I didn’t buy it, but my attorney, smitten by the story, bought not just that one, but $45,000 worth of art. Right now, you’re doing a lot of work, but you’re inversely leveraging. You’re not getting these people into the store. You’re not telling them why you love it. You’re not telling them the story about what goes into it. Tell them your buying criteria. When you find a line that you introduce on a rotating basis and the line’s only going to be available in limited quantities, or you only have a piece in the showroom one or two weeks a year and you can only get twenty-five pieces of it - it is, in fact, like an art form. Moreover, you go to the Mart and look at 500 manufacturers before you even consider one. These are things you look at when you buy. It’s just not price-points. Fabian: Exactly. Jay: You look for fabrics that are not only designed to endure for five or ten years, but are literally works of art - the dyes, the patterns. That starts getting exciting, doesn’t it? Fabian: It does! What would be a new approach for us? Do you think by telling a story, we’d be opening up a new market for ourselves? Jay: You’d be doing two things. You have two problems as I see it. (1) You have to help the people who have bought. You have to verbalize and articulate and get them resmitten as to why they’ve bought. They’ve got the feeling, but it’s not necessarily clear to them. You’ve got more to gain than they do by helping them to clearly and crisply articulate the reason why they bought. (2) For people who have not yet bought: seduce them and get them smitten with the whole genre of Southwestern furniture. Fabian: Right.

Jay: You’ve got to be willing to experiment. You could do a wonderful, personalized letter telling a story. Maybe the letters would cost $3 apiece to send first-class, and you start getting lists of people in the affluent areas. Consider mailing 500 or 1,000 of them inviting people to come in. Maybe you could offer classes or courses in “How To Buy Southwest Furniture,” “What To Buy And How To Look For It,” “How To Collect It Instead Of Just Buying,” “How To Collect Art Forms.” Make your store sound like a modern museum. When I was younger and crazier, I used to own a lot of exotic sports cars and my rationale was that it was an art form you could drive. Fabian: That’s true! Jay: So there’s got to be some correlation to what you’re doing, doesn’t there? Fabian: An art form you can use, literally. Jay: But you’ve got to get people smitten. Here’s the best example I can tell you: You’re paying me a certain amount for this consultation. But I’ve got to pay for printing and shipping the mailer I sent you. I’ve got to pay a percentage to the guy who endorsed me in the mailer. I’m probably making only 20% of the fee for talking to you, which is not bad money but it’s nothing like the full amount, is it? I do it because for every 15 or 20 Fabian Joneses I talk to, I’ll find one who’ll pay me twentyone thousand dollars for the privilege of talking to me for a year and I’ll find one who’ll trade me something I want that’s worth ten or twenty or thirty thousand dollars for consultation. There’s what I call the back end, okay? Fabian: Sure. Jay: So I’m basically doing this, and I’ll go through two or three hundred consultations and do a great job and do a noble service, but I’ll not make any real money because I want the back end. The same strategy should apply to you. You should say, “I’m willing to spend a hundred per cent of my profit on a new customer, all things being equal, to bring them in the store and put them on the books.” That should be your attitude. If you can buy them for less than that, all the better, but up to and including breakeven, you should be willing, as long as they don’t buy a whole houseful. Anybody who’ll buy at least one piece of furniture, if you don’t make a dime on them but don’t lose a dime, you’re accruing repeat sales. Fabian: Our real success rate on the first-time prospects who come in the store is very, very low. We’re introducing a new concept and educating the customer. Let’s face it! We’re scaring them half to death when they walk in the door. They’ve never seen anything like it. Jay: Let me give you some ideas. You might try a couple of different things. First of all, let me pick up and embellish what I’m saying. What I’m saying is, you’ve got to work backwards. If it takes twenty-five people coming in the door before you sell one person, and one person’s average sale is $1,000 and of the $1,000, you make $500, then that means 500 divided by 25. You can possibly spend as much as $20 apiece to get somebody in the door. Does that make sense?

You’ve got to experiment. You’ve got to have deep enough pockets and play enough numbers to not give up when only ten come in.

Fabian: Right. Jay: That means you should be willing to do a lot of experiments. Again, it may not hold up, but if you can buy new customers at or below the cost of the average profit that you’re making, you’re accruing a fortune over the next six months or the next two years forever, right? How can you bring them in, at least at cost or better? You can do it a number of ways. One way is getting the list of the people in the affluent areas and trying a number of different letter approaches. Let’s say there are thirty thousand people in the prospective residential area. If possible, identify that list of thirty thousand by names, not by occupant or resident, but by actual names of the head of the household. Take a thousand at a time and send a thousand different people an experimental letter, personalized, computer-engendered, laser-printed, inviting them to learn how to collect an art form they can use. Tell them the story. Tell them about the manufacturer. Tell them about the inspiration. Tell them about how you shop. You’ll shock, startle, and probably take them aback the first time they walk in the store, but isn’t art designed to polarize, galvanize, and mobilize people’s thinking? Your furniture does. It’s got to grow on you. Just tell them, “It’s an ever-changing showcase of different - ” and use verbiage that conjures up this same connotation - “artistry-inspired manufacturers.” This month you may be showing this designer, next month, somebody else. The reason is very simple. You deal with manufacturers who don’t have nine million pieces sitting in inventory waiting for immediate shipment. Most of them are made to order. They’re artistryinspired. They’re very limited editions. The closest thing imaginable to owning art that you can use. Something that you owe it to yourself to at least experience. Every Tuesday evening between blank and blank, you have an orientation, special-exhibition night where you offer wine and cheese, or coffee and cake. And you’ve got people there, not to sell them - you won’t even take orders then - it’s just basically an introductory educational period. You’d like to invite them and their spouse, girlfriend or boyfriend, or whatever to come. “It’s by invitation only, but consider this your invitation.” That might be very interesting. Fabian: It could work. Jay: Maybe not. But what happens if you send a thousand letters off and it doesn’t work? You don’t continue. If it works, you start mailing and every month you mail another thousand or five thousand. You see what I’m saying? Fabian: I sure do! Jay: Another idea. You might bring somebody on and make it a low-paid, highly-inspired man or woman, whose job it is to organize special closed-door, before- or after-hour breakfasts and/or lunches and/or dinners where you bring groups in. You have a special room where you use your own furniture to feed them and have orientations to teach them about it. Do that in sponsored groups. Maybe the women’s auxiliary or the hospital women’s auxiliary, etc. Does that make sense? Fabian: It could if we had the room! Jay: But other people have the facilities. What if you had a roving lunch? Make a deal with some organization, let’s say the library, that every week you had one meal there. Then each week you bring in different furniture.

Fabian: Possibility. Jay: Again, it may sound off the wall, but that kind of crazy stuff really works! Fabian: We’re starting to tie our business to builders or realtors as a resource for new customers. Jay: I see that you do showcases, model homes, and the like. Fabian: We’re successful in doing the Parade of Homes idea. Jay: Did you pay them or did you just put the furniture in? Fabian: We just put it in. We did that for free. We fill a house, literally, and do it the way we want to do it. We leave our guest list out during this period for people to sign up to know about our next sale. We acquire close to a thousand names doing that - people who are interested in our product. We put them on our mailing list and away we go. Jay: You’re on a very good track. One of the most overlooked and profound ways you can build your business is to work host-parasite relationships. Go to the builders, realtors in the area, and to all the home people and make a deal. If they can get business for you, you will give them a very generous share. If you get business you otherwise would not have had and you make a dollar that heretofore wasn’t available to you, how much will you give up? Go to a salesman that sold a house, say the following: “You have a person who has to outfit a house or embellish it or expand it. If you can make an arrangement where they will come in and buy from me, I will give you 10 or 15% of the profit. Typical sales are $5,000, we make $3,000 on it. It’s like an extra $300 in your pocket. You will be doing them a noble service.” At the same time, get all the realtors who sell houses, and after they’re sold and closed, work with them on arrangements. You warrant to them for their referral, you’ll indemnify them if anything goes wrong, you’ll make good, you’ll take anything back. You assure them that by entrusting their reputation to endorse your company they have nothing to lose and everything to gain. Give them an overgenerous commission by referring all their new sales to you. If they lose a sale, ask them to refer those people to you. You should work them all the time. Send out a letter saying, “John Schmidlapper told me you just bought a new house and he was very happy for you. He also indicated that you probably need to partially or completely furnish at least three rooms. He didn’t know if you were ready for this or not, but he asked me if I would take the time to give you a short, quick, fascinating education on Forest Country furniture and what we’re all about. So in the course of this letter, let me tell you the basics. Let me tell you what we’re all about. Let me tell you what our furniture is all about. Let me tell you what we look for in a manufacturer. Let me tell you what you should look for when you buy.” After you have every realtor, home builder, or carpet salesman referring people to you, send out a letter saying, “I heard you just had a new carpet installed. They thought you might particularly appreciate visiting our store and learning the story behind it.” Every situation triggers a quasi-personalized, computerized letter that acknowledges some transaction, some purchasing or buying that has just transpired in the life of the recipient of your letter. Another thing. You might go to the magazines read by the people you most want to reach. For example: Metropolitan Homes, Southwest Living, etc. Then find out if they would rent to

you the list of their subscribers within the geographic confines you market to. That really cuts out the deadwood, doesn’t it? Fabian: Absolutely! Jay: Most of them have a minimum of five thousand names you have to rent. There may only be a thousand people in your area who qualify, but it’s worth paying the five thousand minimum. It’s going to cost you fifteen cents apiece to find out your best prospects, don’t you think? Fabian: Sure! Jay: When you get them, you can spend a fortune on great, personal letters or telemarketing, or inviting them to come for a cocktail party, or whatever. You might try some very zany things experimentally. Are you loaded with furniture right now? Fabian: No. We’re real shy right now. Jay: It would be very interesting to speculate on three or five pieces and send a qualified prospect a letter saying, “I’ve got a rather audacious proposition I would like to make to you. We find that of most people who come to love Southwest furniture, it first needed to grow on them. We’d like you to use one of our living room chairs for the next thirty days just as an experiment for us. If you like it, you’re very welcome to buy it; we’ll take it back if you don’t. It doesn’t matter. We just want to see if it’ll grow on you. If you do need to replace furniture and you’ve been contemplating something that has beauty and conveys a message. . .” Or say something like, “You’ve been looking and thinking and decided that you don’t really want Early American and you don’t want this or that but you don’t really know anything about Southwest furniture. The best way to do it is to let it grow on you. You’re obviously a creditworthy and quality person. You’re the kind of person we would love to have as our customer. I’m very willing to let you use a chair or a this or that. Just call up. I’ll ask you to sign an onapprovalship but you have every right at the end of thirty days or before to send it back. If you like it, I’ll give you a very fair price on it. If you like it but you’d like to have something much more dramatic or less dramatic, we can easily do that for you. Most of our customers special order.” That’s very interesting. I mean, what’s it take? Try ten people. Fabian: Nice idea, Jay. Jay: If it worked out that every time you put ten chairs out, you found that within thirty days you sold two of them and took special orders for five thousand dollars more furniture, what would that be worth? Might not work, but your downside isn’t very much! Fabian: True. That’s a possibility. Jay: And if it doesn’t match anything they own, you might say, “Hey! It may not match anything but try it out. See what you think about it. See if it grows on you. See what kinds of comments it gets from your friends, your neighbors. See if it’s comfortable. See if it’s sturdy and enduring. See how it contrasts to your home, your furnishings, your aura, your wall hangings. . . “See if it gives you a rich, warm, fuzzy feeling. If it does, and you like the feeling and not that particular piece, we’ll spend some time developing a piece that’s you. If it isn’t, we’ll take it back. No problem. No questions asked and no hard feelings. It’s an experiment on our part. Most people say it needs to grow on them. We don’t think you should have to risk on us. We’re very willing to risk on you.” That’s a wonderful premise, don’t you think?

Fabian: It sure is! Would you suggest that we try any general ads like the Homestead House uses - big, blanket, half-page ads? Jay: They do some really heavy-duty stuff! I don’t know if you can be cost-effective. The only way it makes sense for you to do ads is to make specific offers; either a price-purchase offer or a specific event. If we could come up with an event that you could invite people to attend, that might be very powerful! As an example: “There’s a show we’re kicking off next month. We have Dan Martinez who builds furniture coming in on November 14. He will be here for the day. On the 17th and 21st, another man who builds furniture for us will be here for the day.” Would that be powerful enough? Tell a neat story and make a specific offer. It’s incumbent on you, not the prospect or customer, to be the guide. You’ve got to guide them. You’ve got to give them a compelling enough reason with benefit inducement and then, suddenly but firmly, direct them to action. There are wine-making dinners. It would be interesting if you had furniture-making dinners, wouldn’t it? Fabian: Sure would! Jay: Or cocktail parties. What if you got a big room at some auditorium and invited people and you talked about it. There are wine-making dinners and those are quite fun. An evening with the winemaker - a lot of restaurants do that. “This is, in our opinion, a much more fascinating thing. Would you like to spend an evening or an afternoon, Saturday afternoon, with a furnituremaker? He is, in our opinion, one of the most artistic furniture builders in all the world. They have limited production. Everything is an art form. It’s made out of. . .” Tell the story, not dissimilar to what we talked about earlier, if there is such a story. Tell the story, “This man is only available..., he only rarely does this, but we’ve found for some reason that the people in our area seem to have greater interest and want to learn more. They seem more progressive-minded, so we’ve induced him to come down. He won’t be back for a year. “Whether you decide to buy Southwest furniture or not, you’ll learn about how quality furniture is made, and they’ll teach you how to be discerning when you buy any kind of furniture. They’ll tell you what to look for in comfort and durability and beauty. They’ll show you finishes and wood styles. Altogether, anybody who’s thinking about remodeling, thinking about changing their furniture, redecorating their furnishings, just sort of looking, or just somebody who wants an afternoon or evening of informative, educational, interesting fascination would be advised to attend. We’re very limited in our seating; we only have two hundred seats available and it’s on a reservation basis. There is no cost, no obligation. We won’t try to sell you one thing. The whole afternoon or evening will be dedicated to teaching you about Southwest furniture first and foremost; secondly, about the wonderful pieces being hand-crafted or individually crafted by Arroyo Furniture Artisans and you’ll get to meet personally with the artist. He’s spent . . .” Tell a little bit about him and his background, “He’s a master craftsman who’ll tell you how the furniture is built. How they chose the wood. They’ll go through all the components of how they make their furniture, plus how all furniture should be made. They’ll tell you how certain manufacturers cut corners; what to look for; what to feel.” That would be very fascinating I would think, wouldn’t you?

Fabian: Yes. It would work well. Jay: If 100% of the people showed up, it would be great prospects for you. Fabian: Have you got our sale mailer in front of you from our anniversary sale from last January? Jay: Hold on. You put a lot of things out. You sent me a lot of material. All right....“Anniversary Sale. Largest Showroom Selection. Everything on Sale Including Stock and Special Orders.” Fabian: That went out last January. It worked very well and drew very strongly. It’s basically what produced all the sales for January and February. Jay: And you mailed this to existing customers? Fabian: Yes, existing customers. Jay: Let me tell you something else I thought of, a very powerful approach. It’s pretty cute really. I’ve a friend who’s done something very innovative and it’s worked very well. He creates either a full-page newspaper-type article on his business or he takes an ad that he would ostensibly run full-page on his business. He has somebody reproduce those ads on newspapertype stock with some other ads on the back page so it looks like it was authentically torn out of a publication. He has it jaggedly cut, he has it mass-produced so it looks like it was individually cut out. He rents lists of people who are prospects for him. He has home-workers personally write across the ad or article, “Worth visiting, Worth calling, Worth sending for, Worth buying, Worth trying out,” depending on the product he’s selling. He puts the names, personally typed, on white envelopes and stamped with a first-class stamp and mails them out. It says, “Worth doing” and it’s signed J or R or T, because almost everyone knows a John or Robert or Rita and it has a powerful effect. It looks like somebody thought enough of you to take the time to tear an article out and send it to you. If you wrote an article, one that encapsulated this romance and the background that I chronicled, and you had it set like a full-page tabloid and you got the list of all the people, for example, who subscribe to Metropolitan Home, and you had that article quasi-produced on newspaper stock, you had written across the top something like, “Worth sending for, Worth visiting, Worth...” Let’s say it was an article about the fact that you had Tuesday night furnituremaking classes or furniture-appreciation classes, “Worth Signing Up For” and then signed J or R and just sent off two or three thousand of them, that might be very interesting, don’t you think? Fabian: Yes. Jay: All you need to do is get them in the door and on the mailing list and you can be talking to them regularly. Do you ever do trades with anybody? Fabian: We tried it a couple of times but it hasn’t been very successful. Jay: Tell me what you’ve traded. Fabian: We trade products with the printer, for instance, because we do a lot of printing. Jay: Did it work out? Fabian: It was cumbersome for both of us so we stopped doing it.

Jay: Is it worth trading furniture to be used perhaps in the lobby of the radio station? When you trade, what do you trade at? Retail? Fabian: Yes. Jay: Suggested retail, not sale price? Fabian: Or sale price if that’s what it’s going for. Jay: You should trade straight retail. If you trade retail for something that you want, you’re buying it for one-half price, aren’t you? Fabian: Pretty close! Jay: I wouldn’t trade at sale price. I would trade it at regular retail market. If you could go to people and trade furniture for certain desired advertising, that could be wonderful. Another thing I might suggest is that you go to certain people who are non-competitive and would have a customer base that would be right for you. Get them to do an endorsed mailing that you furnish custom-made. What if you wrote an article about Southwestern furniture that included an offer? Get a retail store that was not competitive, but had a very kindred customer base, to allow you to do a special-mailing invitation to their customers ostensibly emanating from the retailer. Better yet, what if you did an offer for something like a furniture-appreciation luncheon with the proceeds going to charity and you got a retailer to give you his mailing list with a cover letter that you write that he would approve and sign that went to all his mailing list that said, “I bought you and a friend of yours two tickets to attend that luncheon. Just call and confirm that you’ll be there. I did it because I think so highly of the furniture and so much of the charity or something,” what do you think would happen? What if you gave the retailer a deal where he got a percentage of the business that emanated from it? Fabian: That might work. That non-competitive aspect is important, as opposed to another furniture store. Jay: You can go to retailers. You can go to service people. You should have a deal where you can do endorsed mailings, endorsed with a letter – not just a printed letter but a personal letter. Every carpet cleaning, every remodeling company, everybody who has customers who would have regard for the endorsing company. Just go through your Yellow Pages and start calling. Say, “How’d you like to make ten-thousand dollars during the next year for doing nothing? From business that long ago you had already given up on? Here’s what you do. You’d read and sign an endorsed letter to your own customers extending them specific offers that we’ll prepare. Everybody coming in, we’ll keep track of it, you’ll get twenty-five per cent of the profit we make. Conservatively speaking, if you have a thousand old customers, you’ll probably make yourself ten-thousand dollars in the next year and we’ll do it twice a year with you.” That’s pretty powerful. You’re leveraging off of all their good will and good work. Clothing stores, carpet stores, expensive automotive stores, real estate people, anybody who is doing anything kindred to remodeling! Furnace and air conditioning people, swimming pool people, swimming pool people who do maintenance, gardening people, gardening centers. Think about logical relationships.

You’re leveraging. Instead of spending a lot of money trying to find, you’re using their endorsements. By the way, you might also work backwards. Go to people and say, “Look, I’ve got a customer list of five thousand people. I spent three hundred thousand dollars getting it. I’ll endorse your products to them for half your profit.” You’ll make money on that. Or do trades. Say, “I’ve spent half a million dollars building this customer list. I’ll mail them an offer for you, but I want fifty per cent of the profit.” Does that help you? Fabian: Looking at that Anniversary Sale Mailer, what would you suggest we do to put some punch together? Because we’re working on that next. Jay: A few things. First of all, visually it’s hard to read. Your headlines, your “Anniversary Sale” squiggles and things, it’s cute but you want your piece to be a progressive greased chute of flowing, directed inducement. You don’t want to make it hard to read and have their eyes go left and right and get all astigmatized. So make it real clean and don’t let the esthetics kill the effect. Have your thoughts be progressive and move down. I would give examples. Instead of, “Everything on sale,” you might say inside, “Here’s your chance to buy an $825 dollar table for $413 dollars. Here’s your chance to buy a $5,000 dollar Habersham Plantation furniture item for $3000 dollars or less.” Embellish it more. Give it more embellishment so it comes alive. Give more dimension and take the time to illustrate specific examples with enough descriptive language. Do you read the Wall Street Journal ever? Fabian: No, I really don’t. Jay: There’s a guy who runs ads in there who’s a car dealer and he’s the only one who seems to be successful selling used, exotic cars because he describes in detail. He doesn’t just say, “Rolls Royce.” He talks about “an ’83 Rolls Royce that was owned by a famous oil baron; specially ordered and the hides were specifically chosen by him. The piping was an unusual color that had to be redyed three times to get the right color before they hand-sewed them on. It’s not the normal gear-changer; it’s one that has an extra gear in it.....” In your ads, I would embellish them rather than just listing them. Otherwise, they don’t come alive. Give them dimension. Say, “We have three pieces,” and talk about units if they’re limited. Say, “We have one of the only pieces in existence. The only Dan Martiney hand-carved sofas in a seven-mile radius. It’s normally seven thousand dollars. For the next three weeks, it’s yours for thirty-four hundred and twelve. The same “Try in Your Home provision applies.” I don’t think you make enough of the special-order provision. To have special orders on sale is wonderful. You don’t do justice to what you’re offering. Does that criticism help you? “This may be the only time you can get a five thousand dollar Beaver Works dining room set that’s hand-finished for twenty two hundred dollars and have the privilege of trying it out in your home for thirty days before you’re obligated to keep it.” That’s very powerful. Fabian: Basically, what would be your best suggestion on how to cull out our current mailing list by testing? What would be the best piece to send out to make that happen? Jay: I wouldn’t send a single piece. I’d break it into four segments. Try a thousand letters to each one and see which ones produce the best response.

I probably wouldn’t purge anybody out for two years or you’re doing a disservice to yourself. You should test offers before you summarily eulogize the death or invalidity of a customer. I would see how activatable those people are with different approaches. They need to be led. They need to appreciate the value. They need to have more verbalized understanding. You need to give excitement about the furniture so that when they’re alone in their house and somebody’s there and it’s shocking to them, they can pontificate all the neat things about it so they can sound like real heroes. I have a very good friend I consult with who’s an interior decorator. I got him to do something he didn’t want to do. He thought it was pooh-pooh until he tried it and it made him about (I won’t tell you the amount of money because you’ll cringe) but what he does is he has a file on all his old customers. Whenever he gets something in (and he doesn’t stock, he just goes to the Mart here and sees something that might work for them), he sends a note to them that I wrote saying, “I was at the Mart for a client and I saw something that made me think of you. I don’t know if you’re interested but let me tell you about it. Here’s a picture of it. If it sounds like something you’d like, give me a call because we’ll order one special. They’re hard to get but they’re very beautiful. Admittedly it’s very expensive but I don’t think anyone else you’ll ever see will have anything like it.” What would happen if you called someone and said that or sent a little note like that or you sent little pictures out to those people? Fabian: We have done that. Jay: With success? Fabian: It works. I’d said about ninety per cent of the time they buy something. Jay: Your list is your best list. You should try different approaches. The most important thing you should do is have real critical files - that are easy to correlate using your computer - on the buying history of your customers so you can make letters. If you know with certainty they have bedroom sets and they’re interested in this and they want that and they are really into wild stuff, next time you see something that’s really wild, you go to the computer and sort through and find the twenty people who really like crazy stuff and you write them a letter, or call them and say, “Eric, I just saw a piece of furniture that is so audacious but it has bold and dramatic beauty and I just had to tell you about it. I don’t care if you buy it or not, but you at least have to see it. I’ve got the only piece in four states. I don’t know if you want it or not but you just have to see it. It’ll be here on Tuesday.” Stuff like that could double your business. So in review here, we don’t cull our mailing list. What we do is keep trying new pieces to make the people act. There are no rules. Experiment with all sorts of assumptions. Take a hundred people and call them on the basis of what I said and analyze what happened. If it works, great. All you want is something that is cost-effective. Maybe the most important thing you can do is put knowledgeable counselors on the phone and pay them six dollars an hour plus commission. Get new people for the mailing list by working with realtors and builders and carpet stores, clothing stores, etc. Do personalized letters and do not being afraid to spend. Or go to people and say, “We’ll give you the lion’s share of the profit on the first sale.” Or you can say, “Here’s a great deal. We’ll give you a share of all the business that ever emanates from the customer if you get him to us.” Why do you care?

Experiment. Try ten people that way, five people this way. Work people who have ins with people who are prospects for you. Send letters that are personalized. Fabian: Thank you very much. Jay: The very best of luck to you, and to your brother. I hope this changes the whole philosophy you expand your business on. Fabian: I really appreciate it. Jay: If I can help you, my pleasure. Help yourself by being real logical in what you do. Good luck to you. * * * * What’s the right marketing strategy to get your business the attention it deserves? Let your marketplace tell you what the best approach would be by picking suppositions and dividing your customers into test groups. Then, analyze which approaches are the most profitable. Do personalized mailing to your old customers. Keep a buyers history file and target special offers to these customers by offering something they don’t already have. When you use ads or mailers, turn your business into a legend. Tell a story using embellished details. Run special events that get people to notice you and don’t be afraid to experiment. Crazy events attract attention. Act like a guide to your clients and give them compelling reasons with benefit-inducements to buy from you. Do not be afraid to spend. Understand that you can spend a lot of money to start a new customer because they’re worth so much on the repeat to you.

Hardware Product Simon, a retired engineer, had a dynamite product - a kit that turned an ordinary saw into a sensitive mitering tool, at one-third the price of tools of equal performance. But he couldn’t get people to buy it. In this consultation, I explained to him why his marketing had fallen flat, and showed him how to give his advertising dimension and make his headlines irresistible. Simon’s capital was running low, and he didn’t know if he could afford to try these techniques, so I also showed him how to sell his business and make more money from it than if he kept it. This transcript will show you how to entice buyers to a business even when sales are low. And regardless of your situation, you’ll learn how you can get other people to solve your marketing problems for you. * * * * Jay: What does a full-blown miter tool box cost? Is it expensive?

Simon: An accurate miter box, which will do most but not all of the things mine does, costs probably anywhere from $35 to $75. For a compound miter, you’re talking $150-160. Jay: And yours, at $27.50, will do everything that either of them will do? Simon: Yes, and it’s very accurate, and takes about a third of the time. Jay: And it has incredible portability. Simon: Oh yes, absolutely. And economy - the only real competition, a powered miter saw, costs anywhere from $110 on up. Jay: I have great empathy for you, and I have some ideas. First, you said that something like 2-3 million circular saws are sold per year. Simon: Yes. Jay: Have you contacted the people who sell them to see if their warranty card names are available for rental? Simon: No, I haven’t tried that. Jay: That might be a very interesting way to go right to the user, don’t you think? Every time somebody bought a saw, you’d get the names from the warranty cards within 30 days of their being turned in to the manufacturers. Then you’d send out a personalized letter that said, “If you want to triple the usefulness of your saw, here’s a great way to do it. You can try it in your workshop for 90 days at my risk.” That might be a very powerful approach. Simon: Okay, it’s certainly worth a try. One problem with it, though, is that the company with the mailing list also sells powered miter saws, so they might see this as somewhat of a competitive. . . Jay: Well you might just check and see. A lot of manufacturers actually do have their warranty card names up for rent. I’m not saying for certain, but if it is - boy, it would be wonderful, wouldn’t it? Simon: It sure would be. Jay: Next, why do you think that no one wants to buy this? It sounds inexplicable to me. Simon: Me too. I’m really stuck. I was working with a leading department chain, and after they turned me down I wrote to them and said, “Be good enough to tell me why.” Jay: And what did they say? Simon: The buyer’s response was, “Because we have plenty of tools for measuring angles already.” He never understood my tool at all. Jay: Okay, here’s a hypothetical situation: You’re sitting with me at a bar. We’re having wine coolers, or gin & tonics, or coffee, or diet colas or whatever you imbibe. I ask you to tell me, in

one paragraph or less, the essence of what makes your product more useful, appealing, exciting, and attractive to a carpentry-oriented person. How do you respond? Simon: First of all, my tool is extremely portable. You can take it anywhere that you want to cut with your square cutter or miter. Second, it works with any portable power saw. Third, it’s extremely accurate. It’ll cut things like compound angles that you simply can’t do with the other tools. That’s a particularly valuable asset when you’re trying to do a ceiling molding, which is very, very difficult to cut with most tools. And it’s inexpensive. It also could be used as a gauge - you can check out slopes and angles with it. Jay: When your ad ran in Progressive Builder - that’s the one that’s read by carpenters, builders. . . Simon: Yes, right, generally small builders, and remodelers, and single home builders. Jay: How did it do? Simon: We got a pretty good number of inquiries, maybe 140-160. But when we responded to all the inquiries, we sold only about 6-8 units. It was a net loss. Jay: Okay. You told me in your letter that you had tried TV, right? Simon: Right. Jay: With what kind of a commercial? Simon: Well, it was a 60-second commercial. Jay: Did it really demonstrate the product extensively? Simon: It wasn’t the greatest, but it wasn’t bad. Jay: Where did you run it? Simon: It was run through an outfit that put it on the independent networks, the cable networks. Jay: And did you watch it? Simon: Well, I’ve seen the commercial. Jay: Was it run on networks like Lifeline, or was it run on just the . . . On what channels was it run, do you know? Simon: I really don’t know. Jay: The problem is that a lot of those people - and I’m not necessarily knocking your particular cable operators, I don’t know them - but a lot of them, while they’re not scams, are also not offering the best thing in the world. A lot of the cable operators have independent channels that are so localized, nobody watches them. Was it a profit-incentive deal, where they’re supposed to get a share of the profits? Simon: Yes.

Jay: But they charged you $2,000-$5,000 to produce it? Simon: Right. Jay: It’s possible that it never had its day in court. I would think that your product would be very demonstratable in a 60- or 120-second commercial, wouldn’t you? Simon: I demonstrated it at the show. Jay: I’d like to see a VHS dub of your commercial. It’s possible that it never ran in a place with enough viewers for it to be meaningful. That’s a possibility, if it was produced correctly. As for the ads you run right now, how often do you run them and what do they cost? Simon: I’m not doing much advertising. Jay: The $40,000 you do in sales - where does it come from? Simon: From reps. Jay: Selling to hardware stores? Simon: To hardware stores and to wholesalers. Also, through the direct mail catalogs, and through what we pick up from the general PR we’ve gotten. Jay: From the $27.50 you charge, what does it cost you to manufacture the product? Simon: It depends upon how you count your numbers, but figure $8.50. Jay: Okay, so you have a nice margin. When you wholesale it, you double your money, right? Simon: We sell to the wholesalers for $13.67. Jay: So it’s about $5 profit. Simon: And we take the commission out of that. Jay: You said in one of your letters that you had done a mailing two times and. . . Simon: I mailed to some major home centers. Jay: And you’re disenchanted. Simon: I just didn’t get any positive responses. Jay: How many did you mail? Simon: 150. Jay: In the packet you sent me, you wrote: “. . . sent a new fact sheet to stocking stores - no help.” “Made offer to hardware chain” - what did that do?

Simon: That chain runs something they call a relay. It’s a monthly note that goes out to all of their stores. Jay: So you put one of these in their relay, right? And you sold 250 units. How much did it cost to print the 7,000 inserts? Simon: It probably cost $600. Jay: 250 units at a little more than $5 profit means you netted something like $1300, minus your $600. Simon: I made $692. Jay: It’s terrible. . . Simon: With 7,000 stores out there. . . . Jay: I think what you have to do is demonstrate in words or pictures the product in action. What you’re offering is “How to turn your portable saw into a miter box that you can carry with you anywhere.” I think that may be your offer, along with “try it at my risk for 60-90 days in your own home, workshop, or on the job.” That might be the offer right there. Make it more risk-free, make it visually more perceptible. You’re not selling a device, you’re selling a result. Simon: Really, yes. Jay: My first suggestion, to apply whether it be in direct mail or in display advertising, is this: change your marketing angle so that you’re selling the result. Instead of your current approach, try this: “How to turn your portable saw into a miter saw instantly, and triple the flexibility, with complete portability. Carry it in your back pocket, and do it for less than one-fifth the cost of a conventional miter operation. More importantly, try the unit out in your workshop or on the job for 90 days at my risk.” Give them a 90-day money-back guarantee. That might be a powerful little offer. Simon: Yes, it might, but it isn’t that much of a departure from what I’ve been doing. Jay: Let me tell you a story. I had a client one time who was running ads in the Wall Street Journal. They were selling gold and silver on a leveraged purchase package. Their ads said, “Two-thirds bank financing on gold and silver,” and they did okay. I changed one sentence in the ad, and it increased their return by five times. Here’s what I did. Instead of saying in the headline, “Two-thirds financing on gold and silver,” I said, “If gold is selling for $300 an ounce, send us $100 an ounce and we’ll buy you all the gold you want.” I did the same thing for silver: “If silver is selling for $6 an ounce, send us $2 an ounce and we’ll buy you all the silver you want.” It was a much crisper articulation, and it was more three-dimensional - it was more vivid, graphic to the customer. And it worked. Sometimes just changing the way you say something to something not that different, but with one little twist - will make all the difference in the world. Your current headline - “Faster, more accurate than a miter saw” - doesn’t pinpoint what you’re really selling. What you’re really selling is a result - “How to turn any circular saw into a miter saw instantly with 10 times the flexibility, 1/4th the cost, and 1/10th the cumbersome problems. You can try it out, so don’t take my word for it.” Also, you can build your ads around yourself, and turn yourself into a personality. It would be interesting to run a display reader ad, where you tell your story, with that headline. But then the sub-headline is, “Don’t take my word

for it. Try it out at my risk in your workshop or on the job for the next 90 days before you decide.” Then you tell a story. “I developed a device that turns any circular saw into a mitering tool. More importantly, it’s extremely accurate.” Is it more accurate than a miter, or as accurate as a miter, or do you know? Simon: It’s equal to a powered miter saw. Jay: And a powered miter saw would cost how much? Simon: Anywhere from $100 on up. Jay: And what does a circular saw cost? Simon: A portable saw costs $35-$160. Everyone has one. Jay: So for probably 1/3rd the cost they get the equivalent of the best. I think that’s a powerful point. Let’s see who else has customers. Here’s something you could do right now. Go through every magazine you have ever, ever, ever run ads or press releases in. Go through all the back issues, and cut out the ads and mailing pieces from everybody who has sold anything by mail. They have probably accumulated lists of viable prospects for your product. Contact the people who possess those names, and propose a joint venture to them: You furnish them with the ad and/or mailing piece, and they either send it out with their signature and endorsement to their customers, or include it in their packages for you. And rewrite the piece to focus it more on what I’ve been saying, emphasizing the result and the guarantee. Tell the mailing list owners that you’ll stand by all the guarantees and honor all refund requests. Just split with them on the profit. Tell them that for every time they bring in $27.50 -is $27.50 what you charge right now to mail out the product? Simon: Yes. Jay: I would charge $27.50 plus $2.50 postage and handling. Tell the other company that you would give them 40% for selling it, maybe even 50% if you had to. Imagine if every week you had 20 companies mailing your promotional piece, or including it with their package - sending it out to1,000 prospects, plus mailing all their old customers a promotion for you, all on contingency. True, you have to furnish them with the inserts or the artwork, though they might be willing to pay for the inserts. In any case, you’d be doing quite well. That approach might be very interesting. Simon: That’s a possibility. I’m trying to work a similar kind of scheme with America’s biggest saw blade manufacturer. We’re trying to promote the idea of their putting a mailing piece in with their saw blade. Jay: What have you proposed to them? Simon: Something like what you just outlined. They put the mailing piece in with the blade, and the order comes back either to them or to me. Then we ship the things out, and pay them $5-6 a copy. Jay: What is their reticence?

Simon: Beats the heck out of me! The people I’m dealing with sound very positive, but they say they have to work it out with their new products people. . . Jay: Keep in mind that there’s a very simple way to overcome objections - that’s to have a better approach. I think selling the result and guaranteeing it - “Don’t take our word for it, don’t take my word for it, try it out in your workshop or on the job for 90 days at my risk” - is much more powerful than what you’ve been saying here. And your headline is not as good as this: “How to turn your circular saw into a $140 miter saw instantly, plus have 10 times the flexibility, 20 times the portability, and be just as accurate, including doing the most difficult jobs like the angles” putting all that in some way into a headline. Then have a sub-headline with, “Try it for 90 days in your own workshop or on the job.” Any time you approach a business to do a joint venture and they seem reticent, go to them with a very simple and non-threatening counter offer. Say, “Look, I’m not asking you to put this through your system. Instead, let’s do a quick, simple test. Take 5,000 names in one sales region, or have your salesman try it in one geographical area” - whatever is the minimum, analytically validatable test you can get them to do quickly. “If it doesn’t work, we won’t pursue it. If it works, you’ll want it because you’ll know instantly that for every 5,000 packages you’ll make X amount. If the deal comes close, maybe I’d be willing to renegotiate. Why pooh-pooh it when for so little, without jeopardizing the integrity of your operational system, you can test it in one segregated test unit, almost instantly for almost nothing?” Get them to at least test it. You have nothing to lose, because it will live or die according to whether it works anyway. If they put out 200,000 packages or letters or saw blade sets a year, have them test 5,000 first of all. If 5,000 generate X, then they can extrapolate, and know that 250,000 will generate 50X. And if it doesn’t work, you’ll know. But rather than let them sit and dally, get them to try it in a simple test environment. This approach works very well with a lot of people. With it, you don’t have to sit there and they don’t have to make a major commitment. Just say, “Look, we shouldn’t make the decision for the market. We should let the market tell us whether it wants this product. Let’s stop fooling around with the conjectures, and start letting the market determine whether to go with it. Let’s try it in batches of 5,000. Let’s try mailing to a couple thousand people. Let’s try this, let’s try that, and then let’s just wait and see. And if it works, we’ll go forward.” What other marketing activities are you implementing? Simon: Actually, they’ve tended to shrink because I used up my time on those press releases, which went to the better magazines. Jay: Here’s an idea for you. Take that press release that worked well, reprint it on the back of a postcard with a better headline above it - the one that I gave you, for example - and get the rights from the magazine to use it. You could rent the subscriber lists from any of those magazines, and send out 1,000 postcards, or whatever the circulation is. If it’s controlled circulation, you should be able to rent the list. Call the magazine and see if they have their subscribers broken into categories by the kinds of businesses they’re in. You could try a postcard to multiple businesses, and you could also try a mailing where you say, “If you have a crew of 10 carpenters out in the field, I have a product that could make their work10 times (or 25% or whatever it is) more efficient, for a maximum investment on your part of $250.” Tell them about the product and how it can turn a circular saw into a miter saw, and tell them that what you try to do is get construction firms to buy one unit for every three carpenters on the construction site. Let them

try it, and use a test mode. “Test three of them for 90 days. If they don’t save you at least $1,000 a week in efficiency and time, send them back, and I’ll give you your money back.” That’s pretty powerful. My gut feeling is that you have to demonstrate it in words or action or in mental imagery. That’s why I think you have to restate and rewrite your whole ad. Do you have money for marketing? Simon: We’re very limited at this point. Jay: The $40,000 in sales - which means you’re making $10-15,000 a year - does it still exist or are you drawing a salary out of it? Simon: No, I’m not. Jay: When you retired, were you an engineer? Simon: Yes, in manufacturing and in tools. Jay: Do you enjoy this business? Simon: Well, I would if I were succeeding at it. Jay: Well, you’re close. I think part of it is a function of finding somebody else who’s a good host. What you want to do is find somebody else with an incredible market who’s making a marginal amount of money selling their own product, and who would boost their aggregate profit if they added your tool. In other words, say someone is selling blades. If every time they sell 10 blades, they sell one of your tools, and the10 blades make $10, then if they sell one of your tools they make $10 more. It doubles their profit literally. You have to be able to express in a more vivid way why it makes sense to try your product. It’s never as important to the customer, or to the business you’re making the joint venture overture to, as it is to you. Consequently you’ve got to package it and present it so clearly that it becomes titillating and exciting to them. Simon: I understand. Jay: If you go through the dynamics and say, “Here’s why you have everything to gain by at least testing it, Mr. Prospective Joint Venture Partner. If, for example, on every 5,000 packages you sell right now, you make $5 a unit, then by adding this as a back end, either as an enclosure or an insert or something, you could, at $10 profit on this, as much as triple your profit.” For them to see the potential, you have to express it for them clearly, and you have to take them down the path. You have to take them to where you’re going - to the end result. Don’t expect them to see it. Then bring it back down to a risk-free proposition. “All I’m saying is: try 5,000 pieces. If it doesn’t work, I’ll personally indemnify you for the loss. If it works, you’ll make the profit and we’ll go forward. You’ve got nothing to lose by at least finding out whether it can be meaningful to you.” That’s a powerful approach. Simon: One question I guess I’d have to ask is whether there are other alternatives besides the direct mail approach. Do you have any thoughts on why this thing has not succeeded in the stores? Jay: Yes. I think it needs to be demonstrated. There are a lot of products that only succeed when they’re demonstrated. What if you designed, for an experiment, an end display to go in the

stores? What if you tried something with 5 or10 stores, Simon, where you said, “I’ll put into your store a free-standing display that I’ll design. It will be loaded with 25-30 of these instruments.” The free-standing display says (in essence what I’ve told you to say in your new headline), “How to turn any circular saw into a miter box saw in 15 seconds. Plus have more flexibility, more portability. . . and do those difficult jobs, including. . . .” And at the bottom there’s a picture of you, or somebody else. And give the 90-day guarantee: “Don’t take my word for it. Try my product in your workshop for 90 days at my risk.” Have the stores agree, as long as you make good, that they’ll sell them on a consigned basis. That might be a powerful approach to try. Do what I just said, test it in 5-6 stores locally, and see if it makes any difference. I believe people don’t perceive your result visually - they don’t see the result you’re offering. You’ve got to make it come alive, and I don’t think you can do that unless it’s displayed. But if that works, then once every three months make a deal with all the stores, and, at your risk, run the free-standing displays. The stores only have to pay if the product sells. Put the display in for 40 days, and then take it out, because it takes up a lot of their space. Simon: It’s tough to get them to give that space. Jay: But if you rotate your material, by putting the display in one store this month and another next month, they might go for it. Am I giving you a few ideas? Simon: Yes, some things I’d like to chew on a bit. Jay: If you’re going to be in the business, maybe we can get it up to $200,000 gross per year for you. What’s break-even for you, do you know? Simon: About 300-400 units a month, and I’m not doing even that. Jay: Okay, we have a long way to go. Are you hell-bent on getting it there? Maybe the easier thing to do is figure some way to help you sell the product off to somebody else who would give you royalties. Simon: Well, if I could find a good way to do that, I would accept it at this point. Jay: Okay, we’ll talk about that too. Anything else you want to talk about first? Simon: I’d like to flush out any further marketing ideas we might come up with to get this thing going. I have this feeling that I’m just not saying anything to anybody. It isn’t that I’m saying things that are marginally good or marginally bad, it’s that I’m not getting any message across at all. Jay: Well, let me ask you this: you do have great testimonials from people, don’t you? Simon: Yes, and I’ve demonstrated this thing at the shows and people come by. . . Jay: But no one buys it. Why? Simon: That’s the whole question. Jay: You don’t sell the product at the show? Simon: I take orders. Most of the people do not issue orders at the show.

Jay: Let me ask you another question: have you price-tested the thing? For example, if you charged $40 for it instead of $27, do you think that would make a big difference? Simon: I don’t know. Jay: What if you brought in distributors, reps, and salesmen who could buy it from you for $13 and sell it for $39, where all they had to do was go around to construction sites, and in the morning, walk up to the foreman and say, “Try this for the next two hours at my risk and I’ll come back and either get it back or get $39 from you.” What would happen? Simon: I don’t know! I’d like to find those salespeople and try that out. Jay: I’ll tell you how to do that too. Just keep in mind one thought. You have an analytical background from your engineering. There are a lot of seemingly audacious things you can try inexpensively. If they work, then apply them. For example, get one gutsy man or woman to go to construction sites and say, “Here, I’m going to leave you with these four tools. All I ask is that you sign a receipt for them. But put them out in the field. On Monday I’ll come back for them, and you can either say you don’t want them or give me a check.” I have a belief, Simon, that a business lives or dies through the performance of its product or service. If it performs, you should be willing to say, “Hey, pay me afterwards.” If you can do that and it works well, you may be able to sell it. Price alone may not be that critical, particularly in a performance-based environment. Simon: I don’t think it is. We’ve been selling reasonably well through one Canadian outlet at $35. Jay: That’s what I said. At $39, you may find that there’s more demand. Here’s another approach that may make your job simpler: You may be able to run an ad, to make a deal with certain kinds of people who sell to the trade, where you’ll consign to them. You’ll give them 500 units. All they have to do is put them out for consigned testing, and you’ll bill them 30 days later. What sells, they pay for, and what doesn’t, they return. You can do some fun things. You’re only limited by your imagination. Simon: Jay, before we go on, I’d like to review what we talked about so far, just to make sure I was hearing what you were saying. Jay: Okay. Simon: You suggest that I get in touch with the big tool manufacturers and see if I can use their warranty cards as a source for mailing lists, and that I also get in touch with people who advertise in magazines for direct sales. You also suggest a new headline, “1/5th the cost of a powered miter saw, 90-day no-risk money-back trial. Don’t take my word for it, make your own trial.” You suggest that I approach top tool makers with the idea of a sample test of including the miter ad with their blades. Again, keeping it on a minimal-risk basis for them. You also suggested another headline like, “Turn your circular saw into a $150 power miter saw.” We talked about how nice it would be if we could demonstrate this thing. You also suggested the use of jobbers to go out on the job site and sell to the contractors. Jay: At an enhanced price. Simon: Those are the basic ideas that I’ve grasped so far. Did I leave out anything significant?

Jay: That’s pretty much the essence. What I tried to give you was a way of thinking emphasizing experimentation. Also, I’d like to see the commercial that you had made because I’m not certain that it is as bad as you imagined it to be. Simon: Well, it wasn’t effective, let me put it that way. Jay: I know, but remember, it depends a lot on where it was run. When you talk about cable, most people think of Lifeline, of USA Today, or of CNN. People don’t realize that the cable operators have these little funky stations that nobody watches, where they’re continuously programming time and temperature and a community forum and things like that. And 12 people watch it. If that’s where it was run, you may not have had your day in court. You could find out by running it, on a major station or an independent, with a fishing show, or something like that. See if, on a mail-order basis, it brings in almost all the advertising costs plus the cost of the product sold. You could tie it in with the retail promotion by having it say, “Send in, or buy it at SuperX or Acme Retailer.” You could probably run the advertising free, in effect. Does that make sense? Simon: Yes, if it could break even I would be delighted to do it that way. Jay: It may be a terrible commercial, it may be a good one, I don’t know, but I’m not sure it had a fair day in court. I believe the people probably ran it on the localized access cable, which is nothing - not like being on Lifeline. What many of them do is one gradient above being a scam. I’m not suggesting with certainty that your operator is, but although a lot of the people who say, “Let us run your commercial on 400 cable stations; you only pay us a percentage and $5,000 to produce the commercial” sound very impressive, they are taking advantage of people, I believe, because they run these things where no one watches. Simon: It’s very possible. I did have my attorney check on their reputation, and they have a very good one. Jay: Did they tell you when it ran? Simon: Not specifically, no. Jay: I may be wrong. I’m just suggesting. . . . Simon: No, I agree. Jay: Just for your own peace of mind, it would be worth asking them to furnish that information. Who paid for the commercials, by the way? Simon: I did. . . oh, you mean for running the time? They did. Jay: Well, it would still be interesting, even though they paid for running the time, to ask them to furnish you with documentation as a service to you. Let’s just see where it ran. If they ran it on good stations, so be it. But if they ran it on a local community station that no one watches, that’s a whole different story. Simon: I’ll check that. Jay: Where do you want to direct the rest of the time we have today?

Simon: I guess my general impression is this: Most of the things we’ve talked about are things that I have done in one form or another, and either I’ve been terribly ineffective, or I need something more dramatic to really turn this thing around. Jay: Well, let me respond two ways. Many people, when they hear my advice, say, “I’ve done that.” I ask them to specifically chronicle the exact means they employed, and I find out they didn’t do anything close to what I had in mind. The exact way you implement and execute is infinitely more important than you would imagine. So: how did you do it? Chronicle some examples on how you did it. Simon: Okay. I sent you some of the examples, like the follow-up from those ads in Progressive Builder magazine, where I used different letters and different approaches, and included the triple-folded one that I sent you a copy of. Jay: The yellow-folded one that says, “Portable Precision Mitering at 1/3 the time.” This was sent out along with what? Simon: Along with the letters I sent you, the three different letters. Jay: These went to the inquiries? Simon: Right. I had a pre-selected audience, and I sent them this information. I sold a total of 6 units. Jay: And how many did you send out? Simon: About 150. Six out of 150 is a heck of a poor batting average. Jay: It is, you’re right. But it would be interesting to take the 144 people who didn’t respond and send them a personalized letter that says, “I’m perplexed, exasperated, and intrigued all at the same time. Mr. Smith, 3 months ago you responded to an article in Progressive Builder about my product. I sent you a very simple letter with what I thought was an irresistible offer. You did or didn’t comprehend it, or you weren’t interested. Let me tell you one more time about my product, and then let me make you an offer that is absolutely irresistible, and see if maybe it makes better sense to you now. The product again is this: it allows you to turn an old $35 or $27 circular saw into a $150 miter saw in less than 30 seconds. It has 10 times the portability, and it takes up 1/10th the space of an expensive miter saw. You can man everybody on the job site with it - it fits in a back pocket. Its flexibility, accuracy, and adaptability are so extraordinary that words really don’t do it justice, which is why I want to offer you the following trial provision. I’d like you to try my miter on your job site for the next 90 days solely at my risk. Here’s the deal: Send me a check for such and such. I’ll send you my product. I want you to try it on the most grueling and complicated jobs - the crown moldings, the roof framing. Try it beveling, try it on angles, try it in the most difficult situations. Give it to every one of your guys. One day have one guy try it, another day have another guy try it. Then decide whether it saved your construction firm money, time, and labor. “If it did, keep it. If it didn’t, send it back after 90 days and I’ll give you a full refund, no questions asked. I can’t believe you’d refuse such an offer. I only have a limited number of tools, but I’m making available a reserve of up to 10 of them for you at this price. Send your check for . . . to me in the envelope. P. S.: By the way, even though I’m giving you 90 days to try it on my money, I’ll give you a quantity discount to boot, so if you want to buy one for every two or three

of your people on the job site, which is what I recommend, instead of costing $39 apiece, it’ll only cost $27 apiece.” That might be very interesting. That’s a very fast, definitive test - you’ll know instantly whether or not it’s the offer or the product. I think that as soon as you put the phone down, you should write such a letter, go to your printer, have him make up 144 of them, label them, mail them out tomorrow morning, and then see what happens. Did you mail these out first class too? Simon: Yes. Jay: Okay. Simon: Well, that’s certainly worth a try. Jay: Let’s reclaim anything else you’ve got in process. What other people, inquiries, and contacts have you set up? We talked about free-standing displays. . . Simon: It would be nice if we could get that one done. Jay: Yes, but it’s very expensive and time-consuming. These other approaches are much easier. Let’s talk about other logical possibilities. You said you had to sell 300-400 of them a month to break even. Simon: That’s right. Jay: Okay. Who has the closest competitive product to you, anybody? Simon: Probably Stanley’s Quick Square. Jay: And is it like yours in use? Simon: It’s designed specifically for doing roof frames. Jay: How many units of your product are being sold in the marketplace right now? Simon: To the consumer? I don’t know - I don’t know the rate they’re selling off the shelves. Jay: Let me ask you another question. Are there any TV shows oriented to the handyman? Simon: There are two of them. One’s put on by the guy who wrote the newspaper article on my tool. He also writes a syndicated column . . . Jay: And have you ever been on his show? Simon: No. Jay: Why? Do you know him well? Simon: No, I don’t know him at all. Jay: What if you went to him and offered to let him try the product on a test basis? If the product works, he could do a commercial and say, “Try it at my risk” - have him make the 90-day guarantee offer. Instead of $27, charge $39 or $49. If it works in big enough numbers, offer him

exclusivity on it. And make it a joint venture. That way you could show it and demonstrate it to lots of receptive people. Who has the other show? Simon: Someone in New England. I’ve tried to reach him but I’ve been unsuccessful. Jay: Have you written him? Simon: Yes, and he doesn’t respond. Jay: Does he own the show himself? Simon: I really don’t know. Jay: You might try a letter to both of them, saying, “How would you like to have a $50,000 a month advertiser for life? Here’s a simple deal: I have a product that will sell only if it’s demonstrated. It needs an audience. Here’s the product. You figure a way to sell this thing at a profit, and I’ll run all the advertising you want, or give you all the profits less a modest amount for myself. I’ll send you the product. You figure out how to demonstrate it, and then come back to me with a plan.” Let other people work on the dilemma for you. Here’s another idea that might be interesting. What if you put a little ad in one of the trade publications, looking for innovative representatives? You could say, “If you can figure out how to sell my product successfully, I’ll give you 75% of the profit.” Tell them you have a product, that it’s great, that when it’s demonstrated it sells like mad, but that you can’t figure out the best way to sell it. You’re exasperated, and you’ve spent all your money on it. If they can figure out how to sell it, you’ll give them 75% of the profit. And if they want, they not only can take it on a trial basis where they get 75% of the profits for a certain period, but for a minimum amount of time you’ll even give them the option to buy it on a royalty basis. Put all the emphasis on some other person coming up with ideas. A couple of people I have counseled have a business that is losing money. They’re in the red, and they’re trying to figure out how to save it. I said, “Find somebody who wants to buy a business. Offer them 90% of the profit for taking over yours, but don’t give them any salary.” The other way you’re paying $10,000 in subsidy. Wouldn’t you rather get a check for $3,000? Most people don’t understand the logic behind it, but it’s very logical to me. Do you do anything else by day besides this? Simon: No, this is all I do. Jay: So then, what if you could pick people’s minds all day long? Morever, you aren’t trying to be covert or surreptitious. Anybody who wanted to try to sell the thing could try right now. Selling a unit and making $3 is a lot better than having it sit in your inventory, isn’t it? Simon: Sure is. Jay: I think the ticket is to be what appears over-generous. I once got involved with a product called “Icy Hot,” which is an analgesic balm, like Ben Gay or Mentholatum. The only way I was able to turn it into a $13 million product was to give people 10 times the normal compensation they would get for facilitating something. Since we would get all the repeat sales, the residuals, it didn’t matter that we didn’t make anything up front - because we weren’t making anything up

front anyway! And when the dust settled, we started making millions of dollars. That’s what I suggest to you. What else do you want to talk about? Simon: You said that you know how to find people who call on contractors. Can you give me some clues on that? Jay: Yes. There are a couple of approaches. Do you have an office with personnel, or is it all you? Simon: It’s mostly me, but I do have secretaries who respond to the phones. Jay: Do a couple of things. First of all, get back copies of every trade publication, and have your secretaries skim every article and ad. Tell your secretaries to look for the following: people who rep; articles by reps; articles about people moving from one thing to another; articles or ads in the back for rep groups looking for lines; and full-page ads for companies that have rep groups or field salesmen. Then start sending out a barrage of quasi-personal letters to everybody who could possibly fall into one of these categories. And use different letters for different things. When you find a rep group, write them, asking them not only to rep you but also, if they’d like, to be a partner in your business. Tell them that anyone can give them a 10% commission if they can sell at least - give them a minimum. But with you, if they sell $500,000 a year, you’ll give them half interest in the business, or 75% of the profit. Tell them it’s very simple economics. Right now you have a great product. You don’t know anything about distribution, and you’re sitting there exasperated. If they can figure out how to run with it, you let them take the product over. Write everybody who could possibly have a rep calling on a relevant market. You can find the people who call on contractors just by looking at the ads for rep groups in contractor magazines. Write them and say, “I have a product that has absolutely no competition. I have a proposition that is irresistible. As long as you convince me that you’re credit-worthy and have good moral fiber, I’ll collaboratively consign to you a finite amount of my product every month for you to put out in the field. You’re responsible for it only to the extent that if it doesn’t come back, you have to pay for it. If it comes back, it costs you nothing. If it stays sold, you get 50% of the profit, or 60-75% of the profit. Here’s what I want you to do, and here’s what I’m looking for. To make the thing worth your while, you should have contact with enough companies that you can access1,000 carpenters. If you can do that, you can make yourself $50,000 extra dollars this year.” And try to draw them in with that: “If you can reach 1,000 carpenters, I’ll make you an extra $50,000 in addition to what you’re already making, just for playing Santa Claus. Let your people try our product for 90 days at my risk.” Ask them to either write or call. And then when they respond, give them the particulars. And have a letter that tells the story. Make yourself available. Remember, you’ve got to work the numbers. People are going to frustrate you - you’re going to lose 10 people here and 20 there. Just allocate that to the cost of sales and don’t let it get you down. You just keep working the numbers. And when you get somebody, it’s always going to be worth more to you than to them even though they can make money on it. So it’s up to you to nurture them. I constantly have people doing deals and contingent things for a small fee and a large commission. But it’s never going to come to fruition as well for them as for me, so I’m always nurturously following up, pushing them tactfully, nudging them. You have to do that, but you also have to know that if you find people to take the deal on, maybe only 3 or 10 will come through. You have to work them all the same way. Does that make sense?

Simon: I suspect that somewhere out there is an organization with the kind of people you’re talking about. It would be easier to reach them if I could just identify that organization. Jay: Well, do you go to the trade shows? Simon: I have gone to them, yes. Jay: When’s the next one? Simon: March. Jay: Call the trade association. Are you a member? Simon: No. Jay: Is it expensive? Simon: I don’t think so. Jay: If it’s not, join and avail yourself of your rights immediately. Get all the books from last year, and a list of all the attendees. Pick their minds. Get all the past issues of their newsletters, their reports, and their mailing lists. That’s what I would do. Be more efficient and ruthlessly resourceful than anybody else. That’s really what I’m saying. Simon: Okay. We also mentioned the idea of possibly selling the whole works - finding a marketer and selling the whole thing to him. Jay: Right. You might very simply run an ad that says the following: “I’d like to sell you my business with no money down. All you have to do is find a viable way to develop a market demand for my product, and the business is yours.” That’s pretty powerful, isn’t it? No baitand-switches. Tell the truth, the whole story. You’ve spent 20 years of your life and $200,000. You’re only selling a modest amount of the product. You know the product only sells if it’s demonstrated. You can’t figure out how to do it. You have a great product, but you’re tired. You’ll do cartwheels to help them. You’ll help them buy the business from you on a basis that’s irresistible. All they have to do is figure a way to sell it. And if they want to take a conditional approach, you’ll give them an option on it for a finite period of time so that they can experiment. If they find a way to move it, they’ll make almost all the profit during the experiment. It’s up to them whether they want to exercise their option afterwards. All the purchase price comes out of the profits. It’ll cost them nothing. If they’re going to buy it, they’re going to buy it with the money they make off your product. That’s a powerful approach. Run an ad in the Wall Street Journal, and mail to everybody who could be in your field, everybody who calls on carpenters. You have to do a lot of brain-picking. Every day I would allocate $50 for telephone calls and for sending letters off. Get typing services to send100 letters to reps trying to hire them, or asking them if they want to buy your business. “If you can figure out a way to help me build the business, you can buy it from me for no money down.” Just keep trying all sorts of assumptions and making sure you correlate backwards. In other words, keep good files, so you know who you solicited for what. And let the law of averages work for you. Charles: All right, well, that’s another interesting approach. I don’t think I’m going to find them from among the reps, though, from what I’ve seen of the reps we’ve worked with so far.

Jay: They’re not enterprising? Simon: I don’t find them that enterprising, no. Jay: What would happen if you ran a provocative blind ad in the trade magazines? Simon: That’s possible. Jay: “If you’re tired of running somebody else’s company, or being the top salesman and making a meager living, then figure out how to successfully sell my product, and you can buy it from me strictly on a percentage basis.” Sometimes the difference between success and failure lies in how well you present a concept. I’m not necessarily saying it will be great, but do you understand what I mean? Simon: Oh yes, there are a lot of good things around that just aren’t sold properly. Jay: I used to have a business that specialized in looking for people who couldn’t sell their publications, their courses, or their newsletters successfully. I made deals with them where they got almost nothing, but I didn’t feel I was being hard-hearted. “You’re sitting with it making nothing. If I make you a dollar a unit, that’s a dollar more than you were going to make.” And when I found the right way to sell the publication, I’d make a million dollars a deal on it. If they thought I had taken advantage of them, I would say, “Well, look, you were selling 2,000, and I sold 25,000. You wouldn’t have sold more than 2,000 with it, and I didn’t take a dime for the 2,000 you sold. It’s only incremental sales, it’s just add-on, so how did you get hurt?” Unless you can take that same dynamic and restate it, people don’t see the potential. All you have right now is a product you want them to sell. Turn the dynamics around. Make it a business you want them to buy, with you financing 100% and them only buying it after they’ve found a way to make it successful. * * * * In writing your ads, remember that you’re not selling a product or service - you’re selling a result. This is true whether you’re selling to the end consumer, to distributors, or to other businesses. To motivate the buyer, you have to make your product’s benefits so vivid and clear that they can’t be missed. In some cases, this will only be possible if you can demonstrate the product in action. Store displays and TV ads are good ways to demonstrate products, but costly. The right ad or mailer can work well for much less. Another way is to let the customer try the product at home for a finite period of time, with their money refundable if they’re not pleased. If your product is truly valuable, the money-back guarantee will only boost sales. If a customer or business doesn’t respond to your first offer, don’t give up. Overcome the hesitation by coming back with a counter-offer that’s too good to resist. With a slight change in angle, especially when you make the proposition risk-free, the second attempt can yield big sales. Selling your product is always going to be more important to you than it is to anyone else, so it’s important to nurture and motivate your reps, salespeople, and distributors. Give them strong incentives, by structuring things so they feel they have as much to gain as you do. A small base pay with a very high commission can often accomplish that.

By offering the right incentives - large commissions, or even a share of your business - you can get other people to solve difficult marketing problems for you. Tapping their brains doesn’t really cost you anything - any percentages they take come out of money you wouldn’t have had without them.

Mexican Restaurant Chain Cal’s Mexican restaurants had been in business for years and had a loyal following. But his attempts to expand weren’t working, and his narrow margins wouldn’t let him spend large amounts on marketing experiments. In this consultation, I gave him 6 powerful marketing approaches that can be operated on a shoestring. * * * * Jay: You’ve been in business what, sixteen years? Cal: We’re in our seventeenth year. Jay How’d you get started and what gave you the idea of doing it cafeteria-style? Cal: I wanted to get into Mexican food. When people ask, “How’d you get in it?” I say, “Well, I just didn’t know any better.” That’s really true. If I knew then what I know now, I wouldn’t be in restaurants. It’s the hardest business in the world. Jay: It’s terrible and you can’t depend on anybody. You have to constantly watch over it. Do you have a lot of good management people? Cal: I have excellent management because I pay very well and we care about them. I’ve got three of my children in management. They’re tougher than the others. Jay: They would be. You’re lucky. Cal: They all care a lot. I did my flight training down in Texas and got to like Mexican food. There was an old man here in town who sold chili and tacos and things. I paid him $5,000 and worked six weeks in his restaurant to learn how to do it cafeteria-style. Jay: That’s smart. You probably were ahead of the trend, weren’t you? Cal: That was in 1969. There are a lot of Mexicans out here, so Mexican food has been here for a long, long time. But it was never popular and never developed in large restaurants - just little “Mom and Pops.” Jay: How big is your main store? Cal: Well, my largest volume restaurant is about 4,500 square feet, and seats 180. My other newer store is about 5,800 square feet and seats about 190. Jay: The latter one doesn’t do the luncheon business, I saw. Does it do good dinner business?

Cal: No, it doesn’t do good business either time. It’s $10,000 a week lower than my original store. Jay: In your business, when you get into certain volume levels, the marginal profit’s very lavish, isn’t it? Cal: The incremental profit approaches 70%. It’s over 60 and under 70. Jay: That’s incredible. Okay. You spent $6,000 a month on radio. What do your advertisements say right now? Cal: We feature a jingle that I had written ten years ago by a country and western singer and my advertising man, who then was a PR man with the school district out here. He’s really brilliant. The jingle they wrote was in the running in Chicago that year against McDonald’s for top jingle in the United States. Jay: Really? And you’ve been able to use it continuously? Cal: I didn’t buy it from him. They wanted $10,000. The words were written by my advertising fellow here. He molded a very large PR company, but he works with me because we’re good friends. Jay: That’s wonderful. Cal: We’re pushing things like, “We’re not fast food; we’re fast service.” or, “We’re not just Mexican; we’re better than Mexican’s ever been.” We push our lunches... Jay: Is it really delicious food? Cal: Yes. It is definitely. Jay: How many different offerings do you have? Cal: Almost a hundred. Jay: Wow! Cal: We have over ninety items that are fresh when they’re put on the line, though some of the items have to be pre-prepared and reheated in the microwave oven. Jay: I understand. I saw your little comment about it. You said that using the microwaves is really an art - knowing how to do it right. Cal: It is, and we pioneered it years ago when Litton had the only commercial microwave out there. I threw away literally gallons and gallons of products, just learning how to use it properly. Nowadays there isn’t a successful Mexican restaurant out here that doesn’t have them in their kitchen. It’s just that nobody sees them. Jay: The radio - is that your chief source of advertising? You said you tried discount coupons, two for one or whatever?

Cal: The only coupon I ever found to work is to let someone buy any item and get any item of equal or lesser value free. Jay: And what does “working” constitute to you? Cal: Well, to bring in any response. I used that coupon in newspaper advertising. I get a one to two percent response on their circulation. Jay: That’s remarkable! Do you see any increase in business thereafter? Cal: Not for long. We keep good records when we do the coupons. About eighty per cent of those who come are already customers. Only twenty per cent of them are new, and most of them seem to shop where the coupon is. Jay: They’re just coupon-oriented. What else have you tried? Cal: Well, we’ve tried other offers and weren’t unsuccessful with them. We’ve used radio. I’ve used billboards, but that’s impossible to measure. Jay: It’s also hard to make any offer. Cal: They wanted me to do that, and I said that in good conscience I would have to give whatever offer was on the billboard to every customer that comes in, whether they saw it or not. Jay: That’s exactly right. Cal: I haven’t really tried much else. I’ve had contests in the store. I’ve always maintained there are three ways for me to increase business. Jay: Which are? Cal: One is to get more new customers in the store - that’s the hardest. Second is to sell them more while they’re there. Jay: And the third? Cal: The third is to get them to come back more often. Jay: I absolutely agree with you, and I’m sure most people don’t do enough of the last two. So let’s take the easiest. You’ll do my job for me. How do you address the last two? Cal: We do a tremendous amount of up-selling in the store. Jay: How? Cal: My kids suggestive-sell on the line. They’re trained in techniques to sell on the line. If we have an untrained person up there, we’ll see a variation. Jay: The average order will drop? Cal: About ten per cent.

Jay: That’s incredible! Do you take them immediately and train them? Cal: We watch them very closely. We do things inside. We post the revenue per person. “Keepers in our line one position,” we call it, and we post that shift to shift and keep the competition going. Jay: Is there any benefit? Do you give rewards to people? Cal: We haven’t, because we didn’t know how to tie it to the other kids in the store. We tried it, but the other kids resented it. Jay: Shift to shift? Lunch and dinner is too hard to compare, isn’t it? Cal: Yes, they are. Jay: Are the prices the same all the time? Cal: We don’t mess with our prices. I am the lowest-priced in the city. I’m definitely under any full-service place and I’m very little above the fast-food places. Jay: That’s incredible! What’s the decor like? Cal: Well, it’s nondescript. I used to call it early Montgomery Ward, because I didn’t have much money when I went in the business. Jay: Can you enhance it, make it more pleasant? Cal: I did and I think I almost overstepped. My understanding is that you must be congruent, that it’s incongruent if you have a very nice place and sell at low prices like I do. People don’t trust you. Jay: You might be correct and you probably are. You don’t want to jeopardize the integrity of your store. But one of the most fascinating things to do is to let the market tell you. You don’t want to run your business into the ground. You’re saying that when you upgraded there was a profound negative correlation? Cal: Well, the people wondered about it. We have been there for so long that we know most or at least a large number of our customers. We even start preparing their food when we see them at the head of the line, before they order what they want. Jay: They’re that predictable. Cal: They have commented on it. I tried to use metal, glass, fabric, and all sorts of things. Jay: It didn’t make it more comfortable for them? Cal: It did, but I understood fairly quickly from the comments that I could go too far. Jay: Did it also tend to slow down the turns on the tables? Cal: No, it didn’t. I used what I call high-density seating. That means I cram the tables so they won’t sit around and feel comfortable.

Jay: I understand. Tell me about the decor of the new place. Cal: It’s very plain and they seem to like it. It’s very airy in there. I have plants in the windows in both places, lots of plants. There was a chain Steak House there before. This was a long building. The dining room is very long, maybe twenty feet wide and about a hundred feet long. Jay: Long tables? Cal: No. We have spotted booths around the outside and then four-tops and deuces down through the middle. It’s very airy, the walls are all brick, with a few things on the walls. It’s very plain. We use a lot of pink, coral in there and some cherry colors on the wood. The people like it very much. It’s very comfortable. What I try with the decor is to make it disappear. Jay: I understand fully. Let’s go into your specific questions first of all. What do you want to ask of me before I ask things of you? Cal: Hopefully, I can find some way to reach newer customers with better ideas on making an offer than just the two-for-one coupons. My feeling is that if I discount my food, a couple of things happen. One is distrust on the customer’s part. His subconscious response is, “Well, if he can sell at this price now, he can do it all the time.” Jay: One of your stores is close to a very high-density business and office area? Cal: That’s the original one. Jay: Okay. Which one does not do well at lunch time? Cal: The new one. The one in the high business concentration does about 45%. When I say lunch, I mean from eleven o’clock ‘till four o’clock, five days a week. Jay: Now the new one that doesn’t do quite as well, what kind of density, what kind of a locale is it situated in? Cal: It’s on one of the highest traveled traffic strips in the area. There’s a lot of business up and down it, but they’re retail. There are no significant concentrations of offices out there, except about three miles from me. My other restaurant is within walking distance for people’s lunches. I have about sixty-three offices within a one-mile radius. Jay: Let me tell you what I’ve done with a couple of clients. It’s worked very well even though it seems very unusual. Some of the things I’ll advise seem non-traditional. By the way, did you get that material that I wanted you to read? Cal: Yes, I did. Jay: And did you read it? Cal: I read the one piece, the original one, and the other one I have in front of me. Jay: Good, good, good. People install what I’ll call customer service or PR officers in their offices to go out with groups and arrange special promotional activities to get people acclimated to coming in. For example, I had one restaurant client about a year ago for whom we set up an arrangement where they dispatched an operative to office buildings. Also, once a week, the

employee of the week at participating businesses got a free lunch or dinner at their restaurant, but usually four or five people would come with them. They had a regular ongoing program where they worked all the businesses. In another program we set up, they arranged with civic organizations or women’s organizations to have breakfasts or lunches - usually at off hours - to get people there and familiarize them. This place was more of a breakfast, luncheon, bakery-type thing and they had special breakfasts for introductory purposes for groups. They used marketing dollars they would normally dissipate on wasted advertising, and instead would expend them on a correlatable basis. In other words, instead of wasting $5,000 a month, they would figure $5,000 would buy 2,500 lunches at cost or whatever. They would place a certain number of them and experiment and analyze how many of them brought more business. It was very interesting. I don’t know if that’s something you think could be done for your organization. Cal: Ours is a little more difficult to promote that way since we use the cafeteria-style. If someone comes when we’re fairly busy, there’ll be twenty to thirty people back in line. It’s a little different. Jay: You could bring on a young man or woman who would be the liaison between you and offices, and you can still set up programs where offices gave employees of the month a certificate. .. Cal: We could do that part. Jay: The point is, if every week you were placing 500 meals for example - no, that’s too much. Start with fifty or a hundred or five, whatever you can comfortably correlate. If somebody at each office got one meal a week or two or whatever, then probably, unless they’re the most antisocial leper, they aren’t going to go to lunch by themselves. It’s going to acclimate people to come there, don’t you think? Cal: I never see them come alone. Jay: There’s also the intangible effect of your involvement with the office. The office has a tendency to promote you just by the fact that you set up something with them. By the way, remember that most people don’t have vision and don’t have the ability to actualize anything, so it’s incumbent on the person performing it - you or your designate, a young man or woman - to go and set the whole thing up. Tell the businesses why you’re doing it. You want to stimulate business. You want to get involved in the community. You want to help them help their people, and for good business to accrue to you. So for the next 52 weeks, you’ll set up for them an internal program where once a week, the employee of the week gets lunch or dinner - or whatever they want - on you, and through them as a compliment of the business. You could have different multiples and different combinations. You do it all for them. Don’t expect them to even know how to implement it. You guys put it all together and tell them what to do, formulate it. Believe me it’s a very powerful, albeit seemingly understated, program. Cal: I agree. That’s a good idea. The other idea is a little difficult, though - the civic organizations. Jay: Because you’re so busy. I understand. I’ll tell you how to overcome that in a minute. That’s one approach that’s been very effective. Are there any specific kinds of foodstuffs that you’re very well known for? Unusual things?

Cal: I don’t know how unusual. We do have things we’re known for, one of which is called chili con queso. Do you like Mexican food? Jay: I love it! Cal: Chili con queso you’re familiar with? Jay: Uhhh. . . . Cal: It’s a cheese sauce - nacho cheese, they call it at the ball park. Jay: I’m not familiar with it. Is it hot? Cal: No, no. It’s a cheese sauce that’s not even spicy. It’s just very rich. Jay: And it’s really delicious? Cal: Well, yes. We’re known for it. One of the food critics, who is no longer here, years ago compared it to the finest French sauces he had ever eaten. Jay: Are the stations you run your advertisements on talk radio? Cal: We usually run 60 seconds, of which 20, 25 seconds are voice. Jay: Okay. Cal: We always push something, either a margarita or a Texas burrito, and we have featured the chili con queso. Our guacamole too. We have real guacomole afficionados come in and tell us that they’ve eaten all over the world and have never tasted guacamole as good as we make it. Jay: How big is your city relevant to the radio market? Is it cost-effective to use radio? Cal: Well, it’s over a million. Jay: So it’s almost marginal because you’re paying for the whole area, aren’t you? Cal: We are paying for the whole area. We do draw from the whole area, though, because I have two restaurants. Last time, I really tried to determine where people came from, but we have such a fast turnover that it’s hard to get people to talk to you very long. Jay: Sure. Cal: But our average customer was driving six miles to dinner. Jay: Do you ever do direct mail? Cal: I haven’t. This same advertising man, my friend, is trying to come up with a little program to put 4,000 mailers out for the new restaurant with an offer. It could be coupled with this. Jay: It would be very interesting. I’m just telling you the things I’ve done that have been successful. But everybody’s situation is kaleidoscopically unique. What works in one environment has a high probability of success elsewhere, but everyone’s market and execution is

going to be different. When we’re done with this consultation, you should sit and reflect on it and distill, then factor a discountability rate of between zero and 100%. It depends on how it’s applicable. I advised one restaurant, a nice restaurant. We drafted them a wonderful letter from the husband and wife who were the owners, the personalities, and we sent it word-processed, laserprinted, to the 40,000 people in their town. We invited them, and really romanced the foodstuffs, telling, in a very human way, the story of how the restaurant started. We transcended totally the typical, superficial, non-descript mono-dimensional rhetoric and hyperbole of most advertising. We got into a very personalized proposition. The letter looked like a personal letter coming from an individual. It was a letter telling about my hopes and dreams and why I started the restaurant, about the ingredients we choose and our favorite meals. It was very successful. It’s possible you could do something similar experimentally. You could do a laser letter that looked personal, but was computer-engendered and bulk-mailed. No one can really tell bulk rate if you do it right. What if you did something that looked Mexican? What if it looked like it came from Mexico? Maybe you can put a foreign mailing address on it. Check the postal rules. Cal: What kind of an offer do you think we could make? Jay: Do you subscribe to a lot of newsletters? Cal: I read two. Jay: I’m asking you for a reason - not to take you on a tangent. What else have you read lately? Personal Finance? Any of those things? Cal: There was one other but I can’t really remember. Jay: The point I was going to make is that I’ve done a lot of things for Howard Ruff, and what I have found effective is giving the rationale and the explanation, letting people in on your thinking. Most people in business don’t think the marketplace should know their angle or motives. But when you let them in on your dreams, your hopes, your thoughts, your angle so to speak, it’s disarmingly effective because then people really trust you. I think you should try a charming letter, from the heart , that introduces you and says, “My name’s Cal. I’m not an ad writer, I’m a restaurateur. Sixteen years ago, I came here after flight school.” You tell the story of how you did it. You tell almost what you told me. You tell them from the heart, very charmingly. A really easy-to-read letter that’s computer-typed with some sub-heads and a lot of separation. Tell about everything. “A lot of people have never visited our restaurant. They don’t understand that it’s fast service but great food.” Invite them. What I would do frankly - do you understand the concept of testing and interpreting? - you don’t say, “Let’s mail to the whole city.” You say, “Let’s try 5,000 people in the area and analyze the response. The worst it’s going to do is be moderately successful or unsuccessful. We’re probably not going to lose everything.” Take 5,000 people in a contiguous area. Mail a letter out that tells them your story and makes them an offer. The offer that I think might be good is: “I’ll buy one member of your family dinner on me,” or “on me and my wife” or “me and my kids” or whatever you want. “There are no strings attached. Frankly, why am I making the offer? Because I know from experience that if I get you, your spouse, one of your kids to come in and taste our” - and then talk about the foodstuffs - “they’re going to love it. They’re going to want to come back for lunches, dinners, on weekends, when they’re driving by thinking about something good to eat. They’re going to really like it. It’s a good investment on my part to invest in you. So I’d like to buy a member of your family a . . .” Tell them. “It doesn’t mean ‘buy one meal, get one free.’ It doesn’t mean that when three of you in the family come, you get a discount. It means that I’ll buy one member

of your family the dinner of their choice up to fourteen courses” or whatever you want to do. Make it very liberal and non-threatening. “On me and my family. It’s our investment in you. It’s the way I want to introduce you to our food.” It’s a neat letter from you with a little Mexican theme. You might start by saying something in Spanish in the beginning and then explaining it. That might be really charming, don’t you think? Cal: I could do that. I’ve thought about doing direct mail. Jay: Let’s look at the cost. Do it laser-printed. By the way, do not, do not, do not rent “occupantowner” lists. People try to save money by renting compiled, generic lists. Get the names. It’s better to mail fewer letters and make the thing really work. Make it look as if you really drafted a letter to them. The envelope should be addressed, and so should the letter. There are services that will do that very cost-effectively. Send off 4,000. Say it costs 40 cents apiece to send out, okay? Cal: Okay. Jay: Say, “Bring this letter in. Ask for me.” Are you ever at the stores? Cal: I don’t work them, but I’m at each one of them. Jay: Still, say, “Ask for me. I may not be there, but if I am, I’d like to introduce myself.” It would be very personal, you see. Cal: Right. Jay: If you mail 5,000, it’ll cost you two grand. What do you need to get back to break even on that? That’s a question. You don’t have to answer me. The question is, “Will it work’? Cal: Our profit per full-paying customer is $1.75. I pioneered a long, long time ago - and I don’t know anyone else in the industry that still does it - pricing based on profit. Jay: So we have to figure. Maybe it isn’t efficient to do it. Cal: If two people came in, even if one was free, I’d make a profit on that transaction. Jay: Okay. I can’t promise anything will work, but let’s say you try it and it almost works. What you do is fine-tune it. Cal: Right. Jay: If it does work, then every week you just mail to 5,000 more people. Cal: We get about 50% of the people who come in to come back. Jay: Here’s another thing. If they have to bring the letter, then you’ll have their name. You can have on your computer another little letter saying, “I’m sorry I wasn’t in the restaurant when you came, but I’m so glad you visited. I hope you brought your family. I hope you liked it. I hope you’ll come back. By the way, next time try the blank, blank, blank.” People love to be acknowledged. You know that? Cal: Yes, that’s true. We really school our staff to recognize people who are repeat customers.

Jay: I’m saying, again, that’s one approach. Your cost may be so high that it doesn’t work. It may be that you have to go to a more mechanized approach. Maybe you have to do it on a postcard or something, but still looking like it originated from you. You should experiment. Don’t automatically assume it will not work. Let me tell you why. Years and years ago, I did the first discount newsletter offer of all time. It was a $19 offer back when newsletters were selling for something in the vicinity of $100 apiece. I was making a profit of three lousy dollars per transaction, but I wanted to see what would work. Up until then, I’d typically sold 500 or 600 newsletters at a time. Cal: Yes? Jay: The first time I did this offer, I sold 15,000. The numbers may sometimes startle you. They may not. The point is that people are used to getting a lot of junk mail. They’re not used to getting a neat, personal letter from a principal inviting them and buying a member of their family a meal. Again, it may not work. The downside is that on a $2,000 investment, it may only bring back $1,000. Try it! Cal: I agree. You see, for years I’ve wanted to tell my story to people. Jay: Your story is very interesting. As you tell it to me, it’s even more interesting than the way you wrote it in your letter. I think you could tell the most charming story in a one- or two-page letter. Tell them, “It’s a labor of love.” Say that they can’t appreciate it unless they come in and try it. By the way, the whole theme of a series of ads you might try, even on radio, could be that you think it’s wrong for them to have to miss out on this. To correct it, you’ll buy them a dessert. Maybe you could try a couple of different approaches. One approach would be a little postcard from you, personalized to them. There are services that can do that. There are people who can do them by computer, and people who can handwrite them. Maybe one of the approaches is. . . do you have creme caramel or custard or whatever? Cal: Do we have what? Jay: What do you have for dessert? Custard? Cal: We just have sopapillas. Jay: So tell them. What if you try another 5,000 and say, “The next time you’re out, I’d like to buy your whole family a dessert on me.” Or, “I’d like to buy” - is there a college close by? - “I’d like to buy you and your date dessert.” You’ll find there’ll be trends. One thing will work better than others on a combination criteria of cost, response, and residual sales. That approach is the one you use. But experimenting is very essential. Let the market tell you what works best. I’m going to ask you about the radio. Tell me a little bit more about the stations you’re on. Cal: Presently we’re using two middle-of-the-road stations that provide background music for offices. We’re also using two country and western stations. Jay: Can you track how well various ones work? Cal: No, it’s pretty difficult because we don’t put offers on them. I hadn’t used that jingle since l981. When I opened the restaurant , it was unsuccessful and I lost $550,000 dollars in fourteen months.

Jay: That hurts, doesn’t it? Cal: Yes. It hurt a lot. Jay: Why did it happen? Cal: I decided I was going to add liquor, so I added a very large restaurant, a 300 seater in a more affluent area. Just made a lot of mistakes. Jay: Just closed it down? Cal: Yes, I closed it down, took Chapter 11. I’m fifteen months away from paying that off. Jay: That’s wonderful! Cal: By the way, I’m the only guy I know that went through Chapter 11 and came through paying 100 cents on the dollar. Jay: I counsel a lot of people and not just clients. Even if you get in a jam, if you handle it responsibly, it’s not only the best feeling, it’s selfishly great for you, because the effect it has on your integrity is profound. It really improves your tensile strength. Cal: It sure causes you to do a lot of soul-searching. I just started using the jingle again - I hadn’t used it since l981. My second restaurant was doing $16,000 a week, and in the three weeks I ran the jingle, it jumped to over $20,000. Jay: Is it holding there? Cal: It’s holding at a little over $18,000. In September, when school starts, we take sizeable drops in volume, eight to ten percent, because we’re largely a family business. When school starts, families change their habits for a period of a month or so. My older store went from about $26,000 or $27,000 to over $29,000 and it’s holding in the area of $28,000. Last winter, it dropped to about $25,000 and we held at $28,000. So it did pull an additional $20,000 to $30,000 a month in sales. Jay: Is this the jingle you told me about or a different one? Cal: Yes, that’s the jingle. Jay: But you’ve never really made specific offers on different stations just to see how they pulled? Cal: No, we haven’t. That’s a good idea, but again, I don’t know what kind of offer to make. Jay: Any kind of non-published offer. Say, “Just ask for it when you go to the check-out stand.” Anything, just to see if anyone listens. Cal: One specialty is that all of my peripheral items are free. My desserts are free already. I’m the only guy in the United States I know of who has a free self-service sopapilla and honey bar. Jay: Do you tell people that? Cal: Oh yes. Most definitely. All my advertising ends with “Free Sopapilla Desserts.”

Jay: Do you charge for beverages? Cal: Yes. The beverages are where I make all my profit. The chains who make special deals on the beverages are really losing an awful lot of money. Jay: I understand. Cal: I have advertising specialties. I’ve used everything from frisbees to special openers. Those could very easily be re-used. Jay: Let me tell you what we tried at one of those other restaurants. We got them to start a service where every day at lunch and dinner, they had a young man deliver meals to the disc jockeys. What happened was that over the course of thirteen or fifteen weeks, the disc jockets would talk about them more. It was incredible. We got a lot of free mileage out of it. Cal: I hadn’t thought about that. That would be good. Jay: It’s very effective. You can’t just do it and stop, though. You go to the station and say, “We appreciate your advertising, and we’re going to buy your disc jockeys lunch and dinner from now on.” Even if it’s a pain in the neck, you get a young man to take over a smorgasbord or call them, and every day you send it over. It’s a pain in the neck, but believe me, if you do the right kind of stations, you’ll end up getting a lot of free conversation, a lot of excitement. That’s worth more probably than the advertising. Cal: Okay. I hadn’t thought of that. Even when you’re not on that station, you mean? Jay: Preferably, ones you’re on. Cal: You see, what we do, we’re on two weeks, we’re off two weeks. Jay: Okay, as long as you advertise on a regular basis. If you’re a regular advertiser, go for it! As long as they know you’re going to be there for at least thirteen weeks in the course of a year, heavens yes! Cal: I hadn’t thought of that. Jay: Set it up with your account agent or agency, or set it up with the station direct. That’s a very effective technique. Think about it. Cal: That’s true. Most of them love our stuff. We have several TV stations, oh, a mile away, and they all eat here. Jay: The problem is that you really don’t have a lot of money, so you have to spend it carefully. You’ve got to really correlate it with results. One of the things I learned years ago was that if you’re going to spend X amount of dollars, it’s better when you’re able to correlate each dollar to some specific result than to have some nebulous expenditure that may or may not come back. Here’s something else. When people solicit you for charity, it’s probably a negative. Maybe you give coupons for dinner and maybe you don’t. It’s sort of an irritating, cringy, probably not a real positive thing. But remember what I told you earlier about having this operative who is your PR person or liaison? You could actually set up people to work full-time with organizations, setting up really powerful arrangements where you got involved. It wouldn’t be a

hit-and-miss thing. Instead, you’d mastermind a whole charitable program built around you. You set up a hundred of them around your community. Even though you give modest amounts of food as the prize or drawing, you get all this benefit, from the association, of all the good will. I’m being very abstract. Cal: No, I understand what you’re saying, because it’s something I do for an organization here. They meet at my newer restaurant twice a month. What they do is grant whatever dreams a terminally ill child has. We help collect money for those who meet at my place. Jay: Think about this. You get your person to find all sorts of charities and go to them. If your off hours between two and four are basically empty, then on Mondays and Wednesdays, you could invite groups to meet there in those hours. You could buy them coffee and sopapilla. That’s the first thing. Second, you could organize fund-raisers where you give dinner for two for a whole year as a prize. You can mandate that it has to be on a certain day or something, because the probability of having to really deliver the whole thing will be less. You’ll end up having to put out only half of it because nobody’s going to come every Thursday for a year. Also, it’s not transferrable. Do you serve breakfast? Cal: No, we tried that and it didn’t go over very well. Jay: Really? Cal: Yes. We had it in for a month and had an outstanding breakfast but no one came. They decided they just wouldn’t come to a Mexican restaurant for breakfast. Jay: Boy, Mexican breakfasts are delicious here. Cal: Yes. But we just couldn’t get it across. Jay: Well, the point is, to have this person working with all sorts of groups. You go to schools and do fund-raisers. Just don’t do it blindly. Try one each month or each week, or have a fund of experimental money. Maybe twenty or twenty-five thousand dollars a year. Experiment with derivatives of what I’m saying and create your own. Maybe the first thing is, your person goes to schools and charitable groups and gives certificates. Maybe the certificates have ten dollars’ worth of dinner and you give it to them for two dollars. Or you give it to them free and they sell it for fund-raising. You see what happens and you analyze. What I think you’re saying is that if people get acclimated to visiting, a finite percent of them are going to keep coming back X number of times a year forever. Cal: I haven’t tested the frequency, but I would guess that my regular customers return about every two or three weeks. Jay: The problem is that you don’t really have the dollars. The frequency and the dollars are more limited, so the dynamics are going to be more difficult to handle profitably and costeffectively. I assure you that if you try four or five of the derivative kinds of concepts we’re talking about here, some of them - one, two, or three - will work and be replicable. They will either produce immediately, or on a residual basis they’ll yield enough cumulative profit that you can take the concept all over the place. Cal: I’ll tell you where I have part of the problem. We opened the new restaurant and at $18,000 a week, I break even. I don’t have any profit from that, and I’m still paying $12,696 a month on my old debt settlement. So this hurts. To increase that one to $25,000 a week is my goal. My

older restaurant is doing between $27,000 and $28,000. If I can increase it to $33,000 a week, then between the two of them I’d have $48,000 a month total free cash flow above what I have now. Jay: Are there certain hours? Are you open continuously? Cal: I’m open from 11 AM through 9 PM Monday, Tuesday, Wednesday, and Thursday, 11 AM through 10 PM Friday and Saturday, and 12 noon through 9 PM on Sunday. Jay: There have to be segments that are very light. Cal: Between 1:30 and about 4:30, we do very little business. Jay: Could you experiment with Happy Lunch Hour too, where it’s half-price during that period? Cal: Well, we can but I would lose money. Jay: Really? Cal: The margin is low enough that it wouldn’t take much of a drop in price for me to lose my shirt. Jay: Let me keep thinking. You’re facing a challenge. You understand that, don’t you? Cal: Some of the things you mentioned. . . I wrote down eighteen different ideas I was going to try to put into effect. Some of these were in organizing for scholastic achievement. We were going to give small, not big, scholarships, maybe $200 or something. Jay: You even could do something else. You could have a service to help people raise money. If it costs someone a dollar for a certificate, and it’s roughly a thirty-five cent cost to you for the food, you could have a division that just organizes for fund-raising, where people sell dinner coupons. You’d give them the lion’s share of the return, but take enough so you break even. If one month, every school in town was selling certificates, and you sold 10,000 of them, how many new customers would stick? You might really find that hiring somebody to work on this could pay off. Cal: I hired a lady for a short period but she took another position with a guy in California producing television shows. Jay: Let me tell you what I’ve recommended that people do. I’ve had them hire a young man or woman who was intelligent, resourceful, ambitious, hungry but scrupulously dependable, honest, and then have that young person read my Marketing Genius course. Give them coolie wages, $200 a week or something, against some kind of variable commision based on increase in volume over what you ordinarily get. Right now, if you’re doing twenty grand, that twenty is yours. If they get you to thirty, they could make $1,000 a month or $1,500 a month, since it’s incremental profit anyhow. Have the person you hire study my marketing reports and then try all sorts of cost-effective ways to implement the approaches they learn. The way it works is by making these programs ongoing. Every Monday, the person works charitable groups. Every Tuesday, they work the schools. Every Wednesday, they host coffee and sopapilla at two o’clock or at ten o’clock. Every Friday, they go to the offices and work the Employee of the Month program. They keep doing it

and doing it, advancing it and advancing it. In between, when they’re not out in the field, they’re working on test mailings. They have to do it on an ongoing basis. You need somebody who is motivated by a large commission. They only succeed if they earn - not by spending your money but by making your money grow. It’s very important that you do it that way. Cal: Yes. Jay: How big is your organization of people? Cal: Right now, I usually have five full-time managers at each store and an assistant who runs my computers and things. My Director of Operations . . . Jay: Can you afford to put somebody on, at maybe a $1,200 or $1,500 a month base, to take on full responsibility for what we’ve been talking about? Cal: Cash flow-wise I can’t at the moment. They’d have to pay for themselves fairly quickly. Unless I took it from the other advertising budget. That’s what I could do. Jay: I don’t ever want to recommend that you divert money that is making money. It is a shame you don’t yet have a lot of analysis to know what brings the most returns. Let me ask you another question. Who else can you play off of? Let’s talk about ethical parasiticism. What other kind of businesses or associations or relationships can you play off of? You don’t do catering, you don’t do banquets, you’re not set up to do anything more than what you do, are you? Cal: We do some catering. Jay: Is it profitable? Cal: Well, we just started getting into it. Mexican food is very hard to cater unless you have a lot of equipment. You can’t prepare it ahead of time - it just goes soggy and it’s a mess. You have to make it fresh while you’re there, so it’s difficult. But we’ve started doing some. In fact, this Sunday, I’m meeting with my daughter, who runs my older store, and we’re going to put together a package of three to five set deals where for $3.50 a person, we will do this, for $4.50 a person, we’ll do that. We’ve never done that previously but now my customers are demanding it. They’re coming to us and demanding that we take it on. This Saturday, we’re doing an auto dealership out here. He’s buying enough tacos for 600 people. Jay: Did they come to you? Cal: Yes they did. Jay: Maybe for your expansion person you should have a strict commission basis - not even pay a salary but pay a generous commission. Bring on some people to set up programs like that. Have them in the field. I don’t know your sales background. Do you have a big sales background? Cal: I sold for years and years. I owned three industrial sales companies at the time I got into restaurants and had to sell them because my restaurant partners weren’t any help here. So I sold my other companies and took this over and bought my partners out. Jay: What I find is that when you hire people for a new, uncharted business, you’re better off imbuing the job with all sorts of perceived value and respect. For example, hire them to be a

catering director, strictly on a commission deal. Work a neat commission where their job is to work special projects. They go to groups, car dealers, all sorts of people. Get someone who is inventive. Give them at least half the profits for the first, oh, $3,000 - $4,000 of the profits so that they have every incentive to get up to a certain level and make a good living. Then give them a lesser amount above that if you have to. Pay their health insurance, whatever. Put them on pure commission if you can do it. There will be a lot of people who even can do this part-time. You might experiment, bringing people in and giving them the knowledge of trying all sorts of different areas. There are a lot of people who don’t necessarily need the money but need fulfillment. Cal: Yes. That’s true especially of housewives. Jay: Give one person special projects. Put one in charge of fund-raising activity. Put one in charge of banquets. Again, I’m trying to grope for you. It sounds hokey, but if you mobilize it all together, make it cohesive, allow it to become a perpetual, ongoing function so each one is allowed to develop in forward directions, it will be incredible. Cal: What types of parasitical relationships with other people did you have in mind? Jay: Let’s see what kinds of businesses could be useful to you. You could have specials where you do combinations. Is it hard to do deals with movie theaters - special promotions where you put combinations together with theater tickets or something? Cal: There are probably deals that we could do on theater tickets. Jay: That’s probably tertiary. I’m going to make a suggestion to you and it’s up to you. Cal: I did want to spend a couple of minutes on the other new business that I was starting up. Jay: Let’s move on to your new business - it’s interesting. How are you going to make that a temporary help agency work on a $250 fee? Cal: Well, it has to be by volume. Twenty years ago, a friend of mine and I put some money together and started a company that did professional inventory-taking at all sorts of stores. We did fairly well with it and found that every three months you needed a hell of a lot of people and in between you didn’t have anything for them to do because inventories are taken on a quarterly basis. So we started a temporary help company to use these people the rest of the time. I found out it worked pretty well. We could see then that the average fee for a personnel agency to place a secretary was $1,400. That’s ridiculous. They don’t earn $1,400 in the first place, but a lot of people who are desperate will go to them. There are thirty-nine of them here making good money. I’ve maintained for twenty years that there was a tremendous need and of course, everyone that I mention it to now, my law firm and everyone, they want to sign a contract on the spot that they won’t hire from anybody but me. Jay: And your idea is they pay $250 and you guarantee to find them an employee. Cal: No, we wouldn’t guarantee it, but when they hire someone, it’s $250. Jay: If it came from you? Cal: We send them someone and they hire them - then it’s a flat $250. They can’t do it themselves for that. They aren’t skilled at screening - which is really what the function of an

employment agency is, pre-screening. They aren’t good at that. They don’t want to do it. There’s time out of their regular business day. They almost always end up hiring the next warm body. Then, because they’ve run an ad, the phone will ring off the hook for three weeks, even though the job’s been filled. Let’s say I’m placing ten girls per week. That isn’t much volume. That’s less than two people per day. Jay: Okay. Cal: I can run that office on a commission basis with a full-time manager, another part-time person inside, full advertising, full expenses on under $50,000 a year. At ten people per week, my revenues are $125,000. I think I can make 60% profit. Jay: That’s incredible - if you have the tonnage. Cal: My break-even is just under three girls per week in placement. Jay: Wow! Are you factoring enough money to advertise for the positions? Cal: Yes. Jay: Where are you going to find all the employees? Cal: There were only two ways I was planning on doing it. I can make double-mileage out of a direct mail to offices because the girl that opens it is going to be appalled. Jay: I agree. I agree. Cal: Then the guy that she’s going to give it to is going to need to replace her. Jay: I agree. Cal: Second, the newspaper, at $200 a week, can give some pretty heavy mileage off small ads in the Help Wanted. Jay: When is your new service going to start? Cal: I’m trying to start it up two weeks from Monday. Jay: You already have your office? Cal: Yes, I have no additional overhead there. It’s just going to be the advertising. A girl I’ve known for a number of years was going to run it, but she turned her nose at the travel agency where she was working and they raised her salary tremendously. Jay: So you have to find someone. Cal: I didn’t know, other than direct mail to offices and advertising in the paper, how to do two things - namely, get the job orders and get girls in to fill them. Jay: There are a lot of different ways to do it. I’ve found in start-ups for businesses that sometimes by almost shamelessly bribing people - people who have a presence in the market you want to access - you can parasitically play off of them. If you give them an incredibly lucrative

share of any business they generate for a finite period of time, that can bring customers very quickly - a lot faster than you could get them yourself. Maybe there’s an office products company that is the biggest in the whole marketplace. They may have a hundred salesmen in the field. Or someone who sells to personnel managers? Cal: How about a quick-print company? Jay: That would be very good. The person you want to reach is the personnel manager, right? Or the employment manager? Human resources director or whatever it’s called. Make yourself a grid of all the products and services that that person would buy from anybody. The ones they’re buying. Maybe they’re buying printed employment applications. Maybe they’re buying psychological tests. Maybe they’re buying I.D. cards. What would they buy? Then try to identify who locally would be selling it to them. Then find those companies that have a lot of representatives in the field. Go to the local branches of the company and see if one of them wants to take on the semi-exclusive or exclusive representation for you on the basis that in the first three months you’ll give them 60% of commission. You want to get the thing going. Be honest with them. In the beginning, it’s the hardest and you’ll give them the most. Thereafter, they’ll get a little residual as long as they keep the contract. Somebody who’s got the presence, who could, in one fell swoop, have a hundred people blitz and already has the ear of the employment manager. Doesn’t that make sense? Cal: Would that be of all the income we took in or . . . ? Jay: No, just income from the people generated by that business. Cal: We’d have to have a way to identify that. Jay: That would be simple. They would basically set up a client for you. Every client they set up, they get a commission. Would you have discounts? If someone hires ten a year, could they get it for two-hundred? Cal: Most of the bread and butter would be people that would be hiring only one, two or three people a year that don’t have a regular personnel director. Jay: Yes, but if you had people on a contract for ten if they paid you less, you might make more total. You could have all sorts of different experiments. You could experiment with prepaid. If you had affiliates who were only doing it on a percentage basis anyhow, you could do some wonderful market experimentation, couldn’t you? Cal: Sure. Jay: What if you could get somebody for a thousand dollars to prepay up to ten hires a year? Then you’d have prepaid money you could use. I don’t know if it would work but it could work fine. Cal: If they’d prepay us on discount. . . Jay: You’re transcending the credibility problem. It’s no problem if you’re accessing people whom they trust and currently do business with. Cal: Right. We want to expand from office-clerical into data-processing, then into accounting and bookkeeping, and then into health personnel.

Jay: That’s simple. All you do is take every area that you want to go into, reduce it down to a grid where you first find the person who would make the employment decision, then think about what other products or services that person is responsible for buying, who they would be buying it from, who they would be buying it from locally, who they would be buying it from locally who has incredibly large penetration, who they would be buying it from locally who is relatively entrepreneurial and still family-owned in a way that if you went to them with the proposition, they would be willing to take on your product or service for a share. Give them a big share initially and a small residual after that for as long as they represented you. You work out the deal very simply. For new clients they brought in, they could get for the first hire 60%. They could get 10% thereafter, or it could be nothing thereafter. Does that make sense? Cal: Yes. Jay: You could also find people who send catalogs, brochures, and mailings to the people you want to reach. Make deals with them where you furnish them with inserts. The inquiries go back to them, and they ship them to you and get paid a commission for all the business that generates from them. Jay: Or if they come directly to me, that same. . . Cal: They get full credit for it. You also have deals where they’ll do endorsed letters. You’ll write a letter and furnish it to them. Tell them, “How’d you like to make $50,000 a year just for sending a letter out to your customers?” Leverage it like mad. I think we’re about to run out of time. Did you get anything out of it? Jay: Yes, looks like quite a few things. Cal: Good luck to you. Jay: Thank you. Cal: Thank you, Jay. * * * * Let me review the 6 marketing approaches for shoestring budgets that I gave to Cal: 1) Get a full-time expansion person. Have them study my Marketing Genius course materials and put its ideas to work. To whatever extent possible, have the person’s salary depend on the amount of extra business they generate. This will motivate them to promote your business as if it were their own. If you can’t afford a full-time person, you might find one or more people willing to work part-time on one particular area of expansion, purely on commission. 2) Personalize your direct mailings. People see a lot of junk mail, but personal letters, addressed to them, apparently typed (though, in fact, laser printed), and signed by the business owner, will get their attention and keep it. In your letter, tell your story and make your offer in a human, personal way. Let the prospect in on your angle - the reason why you’re making the special offer - because honesty wins their trust. And don’t rent “occupant/owner” mailing lists. Spend the extra amount to get names and addresses. The investment will pay off. Also, don’t do large mailings until you’ve isolated the elements that pull the best response. Find out what these are by doing experiments with small mailings.

3) Have local businesses offer your product or service as a reward to employees (the “employee of the month,” for example). In Cal’s case, this would generate extra business, since the winner would bring friends in to eat with them. Think about whether something similar might work in your case. 4) Turn charitable contributions into an effective way of getting good PR and extra business. Make your contribution a discount or free service that costs you little or nothing, and systematically develop this as a form of marketing. 5) If you do radio advertising, culture the announcers by giving them special services from your business. This might generate free talk time. 6) Use host relationships as an inexpensive, low-risk way to get new business. One approach is to give related companies large initial commissions for any business they find for you. You don’t have to be on a shoestring budget to make use of these strategies. In fact, you might miss some great opportunities if you don’t.

Patio Room Sales Phil had been building his business the hard way - by working 15 hour days, 7 days a week. He had just begun delegating and hiring assistants when he came to me, but what he hadn’t yet learned was how to get the maximum yield for the minimum expenditure of time and marketing dollars. The strategies I gave Phil should let him work less yet earn a whole lot more. * * * * Jay: Tell me a little about what you’re trying to do, what your strongest and weakest marketing abilities are, and where you’re most challenged or frustrated. Phil: The biggest part of the business is patio rooms - aluminum patio covers with either totally open sides or screen and glass sides. They can be insulated or non-insulated. We also have solarium types of things, but the bulk of the market in our area is patio rooms. A few years back I realized that my business is usually a sideline or part-time business for home improvement companies, which mainly do roofing, siding, gutters, and storm windows. To do just patio rooms is a lot harder, so there are very few people in the country who try it. Jay: Why is it harder? Phil: It’s hard to get the kind of volume you need when you specialize in one type of room. We were doing okay with normal publicity media, and then we started doing mall shows about 6-7 years ago, and they increased business a lot. Jay: What is a mall show? Phil: Promoters in different parts of the country go around and develop a show. They’ll book all the space in the mall. It may be a boat show, a camping show, a home improvement show, or a van show. They’ll go around with maybe 30-40-50 exhibitors, who will, by the way, make good money. We were doing quite a few shows, and the responses were really good.

The nice part about the shows is that they separate you from the rest of the competition. I have ten competitors, even though they do it as a sideline, in a 30- to 40- mile range from where I’m at. But by doing the mall shows you create the desire and the need, better than a black and white newspaper ad can do, and better than the much more effective TV ad can do. We take a whole room to the mall shows, a 10 x 20 or 12 x 20 room. We carpet it, furnish it, put in shrubs and lighting, have patio furniture, the whole thing. They’re walking down the mall not looking for anything, and then they see this room, and they say, “Gee, that’s what we’ve been looking for,” or “Gee, that would be great,” or whatever. It creates a desire and a need. In the beginning we did only a few shows a year - maybe 2, 3, or 4 shows at most. Then we made some contacts and realized we could book mall space on our own. It wasn’t necessarily the promoter, or the advertising he or she did for the show - it was just the traffic. In other words, you get thousands of people walking past this thing, whatever you’re selling. They see it. The exposure is there. And they can go up to it, they can touch it, they can feel it. We have a salesperson there, though we don’t give any prices, but of course we try to generate the lead and see how good the lead is. Jay: And then how do you work the lead? Phil: I or my salesmen go out and work the leads. Jay: Is it easy for a customer to finance a patio room? Phil: It’s 90% cash. Jay: That’s wonderful. What’s a typical sale? Phil: Oh, $5,000 to $7,000. Jay: That’s very nice. And your work is high quality? Phil: Yes, it is. Jay: How do you approach a prospect? Phil: Obviously, from what I read about you, you have some in-depth knowledge about closing a sale. First, I try to sell by telling what we do, how we do it, the quality used - what the benefits are for them. Then we hit them with our price to see if they’ll bite or not. If they don’t bite, then we give them a good reason to buy today - not in the future. Jay: Good, we’ll go into this more today. First, I’d like some more background information. How many leads do you go out on, you or your people? How many will you generate a day, a week, a month? Phil: On an average day, we get 5-10 leads. Some days we get 25. If I’m up there at a mall, I can get 25-30 leads with no problem. Jay: How long does a mall show go on? Phil: I’ll book it for 2,3, 4 weeks at a time sometimes - when we can man it seven days and seven nights. When we do that, we usually get more leads than we know what to do with.

Jay: Is that inability to handle all the leads a function of not having enough salespeople, or just. . . ? Phil: It’s a growth process. We’re in the process of offering two more showrooms in other areas. We’re going into a nicer residential area now, and we’re doing a pretty good business up there now. Once we get some exposure with a showroom we’ll do tremendously up there. And also in the out-of-town areas, which are closer to a big city. Jay: Does the showroom generate a lot of business, or does it all come from out in the field? Phil: Well, most of our business is generated from the malls or through advertising, and of course from referrals. But we do get some showroom walk-in trade. We have fairly good traffic here, but I’m thinking about moving this showroom and putting a new one up in a higher traffic area to generate more walk-in trade. The biggest thing I’m looking for is a way to improve my black-and-white newpaper ads. Even though the malls generate a lot of leads, we still need to have media exposure, I feel, so that when people think of a patio, the first name they’ll think of is ours. Jay: Let me ask you a question. Right now, how frequently are you running those ads, where are you running them, how much response does a typical ad bring, and what does it cost? Give me a little overview. Phil: Okay. We never really track each ad, because we run it in about 5 or 6 papers, 2 or 3 ads a week. If nothing else, just to keep our name out there. Jay: Again, what do you spend - 50, 60 grand a year? Phil: I think it’s $60,000. I’m pretty sure that includes the cost on the malls, too. Jay: Well, that’s not bad. Do you correlate back to a percentage you want to spend of sales, or how have you done that? Phil: I’ve done it by the seat of my pants for the most part, but I think I have a pretty good feel for what I make relative to spending. Like this year, we’ll do about 1-1/2 million dollars of sales, so if we spend $75,000 - $100,000. . . Jay: I understand. Let me ask you a question, though. Are you willing to track your stuff? Did you read the Marketing Genius material I sent you? Phil: Yes I did. Jay: If you’re going to spend a grand or two a week or a month in the newspaper, you might as well get the most bang for it, so that you either get more sales or need to run the ads less often, whichever you want to do. Phil: I have been trying to do some tracking, but a lot of people just say, “I saw you in Sunday’s paper,” or, “We saw you at the mall, we’ve seen you around, we know of you” - that kind of thing.

Jay: I know, but there are still ways to track easily, and you can use a couple of them. Let me tell you the easiest ways to do it, okay? If the ad eliticits a phone response, if they’re going to call in, put a key code in the ad, a department number, an extension number, or a person’s name - “ask for Jim.” In each different paper have a different name. It would be very interesting, if in fact one newspaper generated twice the leads of another, but the leads from that second newspaper only converted one-fourth as well as the first one. If you knew that, it would be more practical, all things being equal, to put more money in the newspaper that brought in the conversions, wouldn’t it? Phil: Right. But see, both my towns have daily papers, and I know which is the best in each town, and those two are pretty much superior to other papers. Jay: Yes, so you have to run both anyway. Phil: Maybe you get some advantage from tracking, even if the tracking comes to dollars and cents. . . . Jay: Well, that might be the case. But if there’s no doubt, what you might want to do is use the key coding to track not the better paper but the most winning ads. If every week you’re running a $500 ad or cluster of ads, wouldn’t it be nice to know that one headline outpulls another? Consequently, if you ran one ad in the one paper and another version in the other paper, at least you’d know by tracking which one produced more responses, and you could know which was the one to lead in with and keep repeating, couldn’t you? Phil: I agree with you. But up until this past year, I was doing everything. I was running the business, doing the all the outside sales work, all the material.... Jay: Are you married still? That’s very taxing - what do you work, seven days a week? Phil: Seven days, 15-16 hours a day. Jay: That’s grueling. Phil: It was, up until this past year. Then I hired an administrator. I started having the office girl do the inside sales. We have an inside salesman now. We’ve got three outside salesmen now. So now we’ve got at least a structure to work with. But the fellow who was answering the phone is the inside salesman. He could track these things. Jay: You can do the most rudimentary system. All you really have to do, Phil, is have a tally, a daily chart where you show which ad they’re coming from. The data will start telling you some incredible things. They won’t tell you the first day. Phil: 6 months or a year, I realize that. Jay: The point is, if you’re committed forever, if you’re going to spend 50 grand a year, you may as well put out the ads that are going to make ten times the yield instead of one-tenth the yield. That’s the first thing. Right now, what approach, what offer, what articulation seems to pull the most when you run a newspaper ad? Phil: Well, you have a few of them in front of you there. And all my ads have some kind of a percentage off of them.

Jay: Some of them are cute. Have you experimented, does the cute stuff work? Phil: Well, when I used to do the ads before, your standard blase ad, I found that they didn’t draw as well. My thinking in these “cute” ads was that for the most part, anyone who is already looking for a patio is going to find me. These ads are for the guy who really hasn’t thought about it. Maybe the guy just had his weekend rained out, and he’s fed up with it. Truly we are his alternative. Jay: Okay. Remember, what you’re paying me for is to clarify your thinking. What you just said may or may not be true. I’m not taking any sides, but I’m saying you owe it to yourself from today forward to never again just conjecture what you think the market wants. Instead, let the market tell you. Wouldn’t it be interesting to find out that 90% of your business is from people who have already decided they want a patio? And there might be different suppositions. What I’d love to see you do when we finish this conversation - maybe not at this moment because you probably have 9 million calls to go out on - is to start keeping a log of hot-button headline themes you might experiment with. For example, “How to add a sunroom or a Florida room or a patio to your existing structure for less than $100 a month.” “How to have a beautiful insulated sunroom before Christmas.” Different headlines for the ad. Again, I’m not going to impose my thinking on you, but most people want information, they want knowledge, they want specific facts, they want to know why you product is superior. You have to take them on a journey. I have a feeling that by experimenting with different headlines you might come up with something so powerful that you can run rings around your competitors. And whenever you run the ad, you’ll get two, three, four time the quantity of response you’re used to, and the quality will all be superlative. My gut feeling is that when you analyze it, you’re going to find out that you’re paying a lot of money for the calls that come in from the cutesy ads. For example, I’m looking at one from the Sunday paper, and it looks like it’s about a sixth of a page. What does that cost, roughly? Phil: Our rates around here aren’t too bad. Probably around $130-$170. Jay: That’s cheap. What’s the circulation? Phil: 50-60,000. Jay: That’s fabulously good. How many calls, roughly, will that produce? Phil: One to ten. I look at a lot of it as down-the-road advertising. Again my real lead generator, guaranteed, is the malls and the. . . . Jay: I understand. But remember, I’m not trying to fight you, I’m trying to introduce. . . . Phil: I don’t know what the returns are. Jay: Right. Here’s another point. If every time you run an ad, you know for certain that the ad will make you money, then the down-the-road institutional value is gravy. Does that make sense? Again, it’s a lot of work to focus on it, but maybe you can bring somebody in and give that person no salary, but a variable on any ads they create that work, and test the ads they create. You give them a form of thinking. When I send you the tape of this, I’ll suggest some books that you might want to read or have that person read. But the point is, why be satisfied

with what you have, even if you’re too busy? Why should you be satisfied with ads that may be just institutional when, for a little more effort, every time you run that $100 ad , it could produce for you an immediate $5,000, plus the residual value? Does that make sense? Phil: Sure. Jay: It’s a way of thinking. Sometimes it’s a lot of work, because you’re running your business and making the calls. While I’m looking at your ads, let me give you some ideas. First, as I said, a lot of people I counsel don’t have time to do it themselves, but they bring somebody in, and pay that person nothing or coolie wages against an incredibly generous variable rate for coming up with, managing, and sustaining the advertising functions. In other words, they don’t hire an agency that charges big fees. They hire somebody who understands direct-response marketing, who understands that the headline is all important, and that the ad should make a complete offer. It should direct somebody to action, it should be very specific, it should make a proposition. You experiment all the time with different propositions to see which ones outpull the others. But this person’s job is to be constantly coming up with new approaches, comparing one against the other, tracking them carefully, and keeping you running the most productive and profitable and high quality lead-generating ads. And that person gets a good share of the profits from the qualified leads their ads produce. They don’t get anything else - their rewards are tied to the results they produce. That’s the way to have somebody really worry about it for you, and it works. Phil: If you can find somebody who’s willing to work on percentages. Jay: You say to the person, “You want to make 30 grand a year? Fine, you can do that if you bring in this much business.” You work it backwards, and somebody will follow it. What’s the economy like there? Phil: We’ve never been in a great economic area, but I don’t have any problems getting work. Jay: If you doubled your business right now, could you handle it? Phil: No. Jay: How much business can you handle comfortably? Phil: Every year we’re expanding, so next year we can handle more, but I would say we could handle another 50% next year. Jay: Consider this - and then we’ll switch off to other subjects - consider bringing in, finding somebody, running an ad for somebody. . . Phil: Let me stop you one second. My inside salesman had his own advertising business for years, was in advertising for years, and he’s been doing this. This is what I’m trying to get him geared to, but I didn’t want to do anything until I talked to you. Jay: Of the ads I’m looking at, who wrote “The Smith Family”? Phil: I did. He did the back yard one.

Jay: How did that do? Phil: We didn’t run that until after Labor Day. Not a lot of leads, but everyone we got we sold, and big bucks. Jay: It’s an attractive ad, but I would just like to know, if I were you, how the cutesy ad compares yield-wise and productivity-wise to factual ads. In other words, it would be interesting if you took the same amount of space and had a headline that said something like, “How to add a deckspot or gazebo to your backyard within 30 days.” Talk about the options, and about how you do things, and about how you can do it in all sorts of different sizes, and about how it costs an average of $50 a month (or whatever it costs). Tell people exactly what to do, and say that they can come in to you or you can come to them. And then compare that ad against this one that uses the same amount of space. It would be very interesting. Phil: That’s what I call an institutional ad - an information kind of ad. Jay: That’s not how I mean it. What I mean is an ad where you direct them to action. Not at the beginning of the ad, but at the end, you should tell them what to do. “If you’ve been thinking about adding a deck, if you have a scrubby back yard, if you have space you don’t know what to do with, if you don’t know if a deck would work, if you have an unusual piece of property, if you have a limited budget but want to do something exciting with your back yard, you ought to either come in, and we’ll show you examples, or if it’s inconvenient, call us, and we’ll schedule a risk-free no-obligation appointment right on your site, evenings, weekends, whatever.” Direct them on what to do. And then compare that against sales. See what happens. Maybe run a sale that says, “$6,000 decks half-price for the next two weeks only. We overbought on materials, we need to pay our salaried labor whether they work or not, and we’ve got available time for the next two weeks. If you’ve been wanting the deal of a lifetime on a beautiful deck, and you’ll take redwood, we can have it installed. . .” Phil: How do you get all that into an ad? You’re talking a lot of copy there. Jay: Some of the best ads ever, that have pulled the most, are long copy, “reader” ads. But, because of the field you’re in, you need an illustration to show them the contrast. I think you’ll be surprised if it’s set cleanly. One of the greatest ads ever run was about 2500 words in a fullpage ad, so it can work. What you do is tell a complete story not unlike what I just told you. You write it down and then edit ruthlessly so that you don’t waste words. Now, what I just said is no more than three paragraphs, right? Phil: Probably. Jay: And if you took three paragraphs and set them cleanly, but reduced your name a little bit, and reduced your logo a little bit, and reduced the picture a little bit, then as long as you had good spacing between each one of those paragraphs, it would fit right in there. Again, I think you owe it to yourself, all things being equal, to experiment. Phil: Oh yes, I agree with that. Jay: Everyone’s situation is unique, Phil, but my experience is that the ads or mailing pieces that bring the biggest yields are those that make specific offers, that educate people and give them facts which distinguish you from your competitors, and that then give them a specific directive to action. But in giving a directive, you have to eliminate the fear that they’re going to get pounced on and sold to. In other words, you tell them that if they come on in, you’ll show them examples,

or if it’s inconvenient, you’ll come to them and show pictures. And you give them a rationale and a reason to buy. “A $10,000 back yard decking complete with spas half-price for the next 3 weeks” gives a reason to buy. A rationale that might be really powerful is that you bought so much material and you have all these guys on salary and they’re going to cost you whether they sit around playing cards in the back room or whether they are on your site working. Your problem can be the prospect’s opportunity. That might be a really powerful approach. It may not be, but it would sure be interesting to try, wouldn’t it? Phil: Yes. Jay: Try a lot of different rationales like that. I think it could be fascinating. A lot of companies have had great results with display advertising that always tells the complete story. They tell about why their products are unique, about how they’re designed and how they’re constructed, and about the extra effort and extra material they put in. I think you owe it to yourself to experiment with a lot of different themes. Try being specific and giving the people directives to action. It’s not institutional if you tell them what to do. But cover all the bases. Tell them to come in or call, and “if you can’t come in, we’ll come to you. At the very worst, we’ll send you pictures of our product. But we’re not unwilling, at our expense, to send our engineer or our architect out to look at your property, your back yard, and the construction of your house and make suggestions. There are a lot of ways to cut corners without compromising on quality. We’re specialists at that. Most people come to us because they’re on fixed budgets. If you want to do a spectacular job at a reasonable price, we’re the experts.” Plant seeds, overcome the doubts, get them to act now. “At the very least, let us design and do blueprints for you, let us do a plan for you.” Get a commitment, a trial commitment, from them. What else would you like to talk about? Phil: Well, one of the things I wanted to talk about is how to make the ads more lead-generating. So you’ve given me a feel for that. Jay: But try a lot of different things. Don’t try to pre-judge. Let the market tell you. Try a lot of different approaches. And headlines are very important. Your best results will likely be from information, specific offers, and specific propositions. Is a typical deck pre-cut stuff that you buy? Phil: No, it’s custom-made. It’s all made on the job site. Nothing is pre-fab or pre-cut. Jay: How are you priced compared to your competitors? Phil: Well, we can be either way. We can be cheaper than anybody, or be the most expensive. We don’t have standard prices on anything. Usually we get pretty good bucks. Jay: Do you do direct mail? Phil: No, and that was another thing that I wanted to bring up, because it might be the right way to go for our new winter business - we replace windows. Jay: Is that lucrative? Phil: Oh, yes.

Jay: Let me tell you about something that virtually no one does, and a lot of people are afraid of, but is very powerful. It’s a form of direct mail, but it’s not typical junky mailing pieces. Get a list of the best locations of prospects in your market area. You know, what kind of houses pose the best replacement window prospects. Maybe it’s a location, maybe it’s an age group - whatever, you can rent the list of almost any kind of area you want by the name of the owner. Find a service that does. . . . Phil: I’ve already been in touch with them. What I need, though, is the right mailing piece. Jay: I’ll tell you how to get it. I wouldn’t do a mass printed mailing. I would do a computer laser-printed letter. I would test two or three different versions of it. Let’s say that there are 10,000 homes that seem to be the best prospects. I’d start with 3 or 4 thousand of those names, go to a mailing service that specializes in laser letters, and try three or four different experimental letters, such as the ones I’m going to talk about now. One might say, “John Smith, 123 Main St. Dear Mr. Smith: If you looked at last month’s gas and electric bill, you probably blew a gasket. That’s because your windows are leaking out energy and leaking in cold. Until you take care of that, your bills are going to keep going up and up and up. We know, because people call us in to take care of that very problem. We’re specialists in it; in fact, we’ve done houses down the street. (You can actually write about some of your past people if they’ll let you.) Next time you drive by that house, Mr. Smith, look at it, and you will see the work we’ve done. “Right now, because of winter, this is a slow time of the year for us. But we bought for the whole season. So we’re in a position to make you an offer,” and then go into your offer. But try specialized introductory letters like that, where you then go into your sales pitch at the bottom. At the end of the letter you tell them what to do. “If you’ve been frustrated with your utility bills, if your gas and electric bills have been going through the roof, I strongly suggest that at the very least you give us a call to schedule an appointment. We’ll come out, we’ll walk you through your house and we’ll do two things. Not only will we give you an estimate and make a recommendation, but in the process we’ll give you information that will probably help curtail your wasting of heat, because we’ll tell you a few shortcut tricks you can use until you replace the windows. That’s our gift to you. But we’ll show you how to solve the entire problem at a fraction of the cost you might have been imagining, and have it done within a matter of weeks. Our number is . . . ., call between such and such an hour. If you’re in the neighborhood, stop by our showroom. We’d be glad to show you examples and pictures. And again, if you’re driving down Main St., take a look at 12345. It’s a yellow house we did 1-1/2 years ago, and Mrs. Schmidlapper thinks it’s the most wonderful thing in the world. By the way, her electric bill dropped 50% within 30 days after having our installation.” That might be a very powerful approach, don’t you think? But don’t have the letters mass printed. It comes to life when it’s personalized. Another really powerful approach is a letter saying, “I’ve been told that you’ve been thinking about replacing the windows in your home, Mr. Smith. I’m not sure whether it’s because you’ve got incredible heat loss, or whether you’re just frustrated with the windows because you want them to look more up-to-date. You probably have been thinking about it for a long time, but every time you think about taking action, you put it off. Well, you might be interested to know that by taking action now, you can probably save yourself $1,000 a year on heating and air conditioning losses. Moreover, the cost of doing it is a fraction, financed over five or six years, of the savings in utility bills, so not only does it pay for itself, but it yields a profit on the transaction. We’ve done so many jobs in your neighborhood that we ought to know, and we’ve got the statistics to prove it. For example, we’ve done this job at this house, this job at this house. Don’t take our word for it. Drive by or (this is very powerful if you can get your former customers to let you) call these people and ask them yourself.”

Phil: We really don’t have established clientele. Jay: You’re not in that business right now? Phil: No. Jay: What does it cost to do windows? Is it very expensive? What do you charge people? Phil: Most guys try to get sixty dollars a window. A typical job can be in the $400 and up range. Jay: Would someone typically do the whole house at once? Phil: Well, you try to get them to do as many as possible, obviously, but sometimes you end up doing only three or four windows. If you can get at least six windows or more, eight to twelve preferably, that’s better. Jay: Right now, do you get any jobs of that size? Phil: We have done some. Jay: Where did you get the business from? Phil: Just from referrals. Jay: You indicated that you have quite a few past customers. Do you work those names at all? Phil: We sent out a letter, like a flyer. It was a cartoon kind of thing where a couple is sitting at the kitchen table, they’ve gone through the bills, and he’s frazzled. And it shows heat going out the window. The offer was a percentage off the windows. Jay: How did it do? Phil: We had two responses out of I don’t know how many thousands. Jay: And out of the two responses, did you get two jobs, or just two inquiries? Phil: I don’t even remember, to tell you the truth. It was a couple of years ago. Jay: I think it would be very interesting for you to take the thousand people you have - most of them would be happy with you, right? Phil: We’re working on the list now. We’ve been thinking about trying it again. Jay: I think you should mail to them again. Because it’s such a small quantity, I think a personalized letter is much more effective. You might send letters saying, “I haven’t talked to you for a long time, Mr. Smith, but I was thinking about how your house is doing. I was thinking about it for a couple of reasons.” Let’s say you break up your 1,000 people into five different segments, 200 each, and you try five approaches, one on each segment. “The other day I was talking to my sales manager, because we got in some new material for building decks, and I was thinking, honestly, about your house. You had the perfect setting for a deck, as I recall. I don’t know if you’ve ever thought about it, but I’ve got an idea that will probably bring your back yard

to life, and could change the whole look of it. I know you’re probably busy, and I don’t know if you’ve ever thought about upgrading, but this is a fabulous concept. The cost is modest, the way I have it in mind. And the change it would make in your back yard and the joy it would give you, recreationally, on summer evenings, and even in the winter, could be wonderful. If you get a chance, I’d like to show it to you. And moreover, I’m going to be in the area some time in the next three weeks. Why don’t you call me, or I’ll call you,” and set the stage, lead people to action. That’s an approach. Another approach is just sending to another 200, saying, “I haven’t talked to you for a year or two, Mr. Smith. I assume you’re very happy with the patio and spa we put in. We’ve got so many people asking us to do windows that this has become a big part of our business, and I was thinking about your house. I have this terrible feeling that you may be wasting a thousand to fifteen hundred dollars a year on energy loss just because of your windows. I was thinking, who could better use windows than you? Very frankly, our business is booming, our crews are working continuously, and we’re working six to seven months ahead, but we’re getting ready to do a push in the future for windows. Before I did that, I thought I’d offer you, one of my valued customers, a chance to get the service first before I go and spend the money advertising in the newspaper. I also think it’s only fair to give you some price inducement, just because it’s going to cost me money to go outside, so I’m writing this letter to offer you, if you’d like, an early appointment. I can schedule it at your convenience. We’ll do your windows some time in the next three months, and I’ll give you 20% off.” If they’re interested, then tell them how to act - tell them to call you back or send in the card and you’ll have somebody come out to them. “PS: By the way, a lot of people on a tight budget have us do the more critical windows in the winter, and the less critical in the summer. We can do it over a period of time so it’s not as inconvenient and it’s more affordable.” Plant seeds of options or possibilities for people. I would work that mailing list of yours with these quasi-personalized letters. I have a feeling that I’d also try a letter for referral. You can try two kinds of letters. You can try one based on a service, and another appealing to greed. The first approach: “It’s been a couple of years since we did your patio, Mr. Smith. I’m writing for three reasons. First, to follow up. I hope you’re still delighted with the patio. I hope it’s giving you a lot of pleasure, and that you’re getting a lot of compliments. I hope you’re even more happy and satisfied today than you were when we put it in. I personally think it changed the whole look of your house, and it’s one of my proudest installations. The second reason I’m writing is to ask a favor of you. We’re constantly spending a fortune on advertising. We’re spending $10,000 on people looking for 5-6 people who are interested. Then we have to sell them, because everyone’s going after them. We have to garner their trust, we have to spend a lot of time, and it’s very costly. If we can put them in touch with people who have already seen examples of our work and who trust us, we can save a lot of time and expense on our part. Quite frankly, since you had your deck done, prices have gone up enormously. They’re even more expensive because we have to factor into those the cost of all the advertising. I’m experimenting on a very limited basis, as a service for those who give us referrals, with giving a very favorable discount off our current prices to those they refer. If you have a friend, a relative, maybe one of your children’s gotten married, or a parent has been seriously contemplating adding a sunroom or deck, or who would like to have their windows done, either give them my number or give me their number or send me back the card I’ve enclosed, and I’ll send to them material on the subject matter they’re interested in, and we can do them a service. All our work, as you know, is totally guaranteed. We’re delighted to give them all the counseling and the advice and make all the recommendations and do preliminary work at no obligation. We’ll answer any questions, and they can decide between us and anybody else, or against doing it themselves. We try to be there to help them, and again, you know better than I could ever tell you the kind of work we do. If you know of somebody, why don’t you give them our name or give us their name?” It might be very interesting, you know.

Mike: Yes. Jay: Then there’s the second approach, the self-serving one. “If you can help us expand our business without our having to run ads, we’ll pass along to you the expense that we had to pay.” Give them an intimate, very private and honest assessment of how you have to spend $1,000 in advertising to find your two customers. That means that it costs you $500 a customer to make a sale. If they can introduce you to people, you’d just as soon give them the money that you spend on advertising in the newspaper to find a lead - not that you don’t like the newspaper, but you know that they would appreciate it, and you can give them the commission in the form of cash, or you can give it to them in a larger form, in the form of patio furniture or something. If they know somebody, you’ll give them a wonderful prize, but you’d like to reward them for the service, so if they know of somebody, they should give you their name. Experiment that way. Are these helping you? Phil: Yes. Jay: With direct mail, work your list. Is your showroom very nice? Phil: Yes, it is. Jay: It would be nice to invite your past customers on a Friday evening or Saturday, particularly when it’s slow in the winter, to a cocktail party or some kind of a party, ostensibly announcing some new facet of your business. Invite them all to attend. It would be really fun, and it would seem like you really appreciate them. Send them a little invitation, telling them there’s a cocktail party, or there’s a showing of the new patio line for the spring. Or there’s a special show of spas and gazebos, or you’re going to have a display and get a bunch of pictures blown up of all the installations. Maybe have them almost like exhibits, and have coffee, wine, and cheese if appropriate. That might be very interesting. Another approach, going back to prospecting, to direct mail, is to get a list of people in more affluent areas that would be perfect for decks and patios, and send them a letter that says, “I have a design for a deck, gazebo, and spa combination that would be perfect for your style of house, Mr. Smith. A few weeks ago, my firm was putting in a deck, spa, and gazebo installation at a house in your neighborhood, about three blocks away. The address is . . . . (it would be better if you can put the actual address). Maybe you’ve seen our people there. Anyhow, I designed a couple of different layouts and possibilities for the owner, Mr. Jones, who liked them all, but settled on one. One of the ones they were unable to use is a little more elaborate than their budget, it’s a little more expansive than their yard could accommodate, but in driving down the street and seeing your house, I think it would be perfect for yours. I don’t know if you’ve thought about putting a deck, gazebo, and spa installation in, with or without a winterized enclosure. If you’ve ever contemplated it. . .” Phil: Isn’t it hard to personalize these things that much when you start talking about jobs? You’re talking about an awful lot of time. Jay: Only if it doesn’t work. You should be able to do this through zip code analysis. For example, you know you have jobs in the 9099 zip code, so you send to people in that zip code. Let’s say there are maybe10 zip codes in the marketing area you’re in. It only takes a lot of time if it doesn’t work.

Phil: We could do that with the patio rooms, but the decks are so new that we don’t have enough out there yet to really cover ourselves. Jay: Every time you did a job in a nice area, wouldn’t it be interesting if you could rent the names of 500-1,000 people within a 25-block radius, and work with some of the other owners? Send a letter out saying, “We just completed a job. It’s beautiful, and it got us to thinking that maybe you’ve been thinking about putting one in your house. With the permission of the owner, we’d love to take you on a tour of this job, and show you pictures of others . . . .” That would be a really fabulous approach, don’t you think? I understand you’re doing 9 million things, Phil, but that doesn’t mean you can’t bring somebody in who could do this on variable pay. Somebody who knows that by making the system work and experimenting and finding the right combination, he or she could make 25 or 30 grand. Is that good money there? Phil: It’s good money, yes. Jay: Somebody could make 30 grand just for maximizing the marketing, so find somebody who loves to do that stuff, but doesn’t have the wherewithal to go out and really sell, or doesn’t want to sell. You’re going to find somebody who’s very motivated. If it works, by the way, let me tell you what you can do with it. If you can spend the money to put the concept together, you could probably sell licenses of your techniques to all the non-competitive people outside your marketing area. Don’t you think 100 other guys selling stuff like that in the South, in the East, and the Southeast would love to know ways to improve their business? They would be glad to pay you 5 or 6 grand, or so much a lead, to have you sell them your actual proven techniques. Phil: Something similar we’re looking at - we’re hoping to franchise our patio business. Jay: If you have a proven, analytically-based marketing package that goes with it, don’t you think it’s going to be a lot easier? You say something like this: “All you have to do, if you’ve got 50,000 homes in your marketing area, is use these letters and use this and this approach. You know with certainty that you’re going to get this number of leads. All you have to do is work them properly and you’ve got a set-up. As long as you seed it with $5,000 to start with, and you keep working it, and every month you keep mailing 2,000 of them, and keep running, every Sunday, this ad first, this second, and this third, and then you send this and this to inquiries.” By the way, how do you work people who inquire but don’t buy? You have a lead, but you don’t close the sale - what happens afterwards? Phil: We haven’t followed up. Jay: Shame on you, but get somebody for whom you make the follow-up invaluable by giving him or her huge commisions. Do the follow up through telemarketing or direct mail. The best investment you can probably make is an Apple Macintosh with a laser printer. You can probably lease it for $200-300 a month, and if you just work the heck out of all of these direct mail ideas, it would really be powerful. What if every time somebody didn’t close, a week or two later a letter came back? You could have different kinds of approaches. One letter could say - you should experiment - “I felt bad that we weren’t able to help you, but I’ve been thinking about it and even though you’re not ready now, we’ve got a couple of other suggestions on ways to accomplish what you want for a little less money, with a little better effect, without compromising the quality. . .” Phil: We do that when we’re there. I myself used to follow up the leads when I had the time.

Jay: I know that when you let them go, you think you’ve lost them, but I bet you a $100 bill right now, if you take 1,000 leads who didn’t convert, and develop a really powerful service-based, empathy-based letter suggesting some other alternatives, because you care about them getting their objective, and send the first letter five days after they leave, and start sending to them every couple of months, you’re going to find that you can convert 5 to 10% of those people a year. Phil: Are the numbers that high? Jay: Yes. But you have to do it right. The letter says, “John Smith, I felt bad, not because of the lost sale, but because I felt that you really wanted to put in a room but were worried about the cost. I’ve been wracking my brain about how to give you what you want and be able to do it ourselves, and I finally, last night, came up with an answer that’s pretty ingenious. Without compromising, I can do a couple of little things and I can give you just what you want at less. We can install within 4 weeks if you want it, and I’ll have saved $2,000 for you, and have given you the same thing you wanted.” Phil: We go through that when we’re there. I agree with you that there are probably some people who could be turned around, but I don’t think that the numbers are anywhere near what you’re saying. Jay: Okay, but what if it’s half of what I’m saying? What if it’s 2.5% and you’re spending. . . how many non-converting leads do you go through a day? Phil: Our ratio is pretty decent... Jay: I bet it would pay the cost of a full-time marketing person for you. I bet you’ll find you can make an extra 50 to 100 grand just by sending out a couple of follow-up letters after you think you’ve lost the customer. It doesn’t cost very much once you set up a system for it. And it may be very much greater than that. Phil: Or again, if we have a person tracking the ads and doing some of these other things, there’s no reason they couldn’t do this too. Jay: Remember an important principle: Half the people’s circumstances will change over time. So if you keep the system ahead of them, it may manifest itself in referrals. What you’ll find out is that to get a lead probably costs you 10 to 20 dollars. It costs you another 15 or 20 or 50 dollars to go out on the site and bid. For another dollar or so in follow-up expense you might be able to salvage one out of every 20 or 30 that you gave up on. Over the course of a year that may throw $50,000 to $100,000 more on your bottom line. Phil: How soon would you follow up and how far do you go after that first letter? Jay: The answer is simple to use: It’s self-regulating. You’d follow up as soon as you had a rationale to do it. Let me ask you your experience. How quickly, when they call you, would they call other people too? Give me the scenario. They call you, you pitch them. . . . Phil: It depends on where the lead is from. The worst lead is the Yellow Page lead, because they’re checking everybody. Next is your normal media, your newspaper. Again, a lot of times, once you become the leader as we are in our area, they call you first. They’ll wait two to three weeks for you to get there.

Jay: Something else you might do, if that’s the case, is to use letters to set them up, too. In other words, when they call, if you know it’s going to be two weeks before you can get out, confirm it now, send them a letter telling them what you’re going to talk about, giving them ideas. Send them pictures. Get them locked in. I’m a street-savvy salesman and you are too. I’m very proud of it, but the truth of the matter is, if you’re going to work 15 hours a day, and you have a wife and kids whom you want to do good by, you may as well get the absolute maximum out of every dollar you’re spending, Phil. When customers call up and you can’t get out to them right away, there should be another quasipersonalized letter that seems to come from you. “I just wanted to tell you that I’m excited. I’m sorry it’s going to be a few days before I get there, but in the meantime, let me just tell you the possibilities, focus you a little bit, show you some examples, get you excited, give you some thoughts to think about, and I’ll be out on such and such a date, and then I’ll give you all the time you need. We’ll walk through your house, we’ll come up and do this, and we’ll give you all sorts of alternatives. I think I can come up with a recommendation that will be very, very satisfying.” That sets the stage, and will probably block almost all the other people from coming in. Phil: Well, it’s going to really give a good impression, that’s for sure. Jay: It’s going to be a pain to set it up, but once it is set up, then every morning, you just have different categories of letters that are coordinated and printed by your computer. Does that make sense? Phil: It all jibes. It’s going to take a certain amount of equipment and people to handle this. Jay: What you want is somebody who doesn’t want a dime in salary but wants to make 30 or 40 grand on performance, whose job it is to develop that stuff, to follow up with it. After this consultation, I’ll recommend five or six books that you should get. And I would have whoever you install read those, too. And you can have a deal: Anyone who comes up with a winning ad that outproduces yours, you’ll give them $200 (and let all the ad agencies in on this too). Anyone who writes an ad you can track that outpulls your best ad by at least 20%, you’ll give that person $100 for the ad and $50 every time you run it. Give everybody more incentive than even you have. Same thing with follow-up letters and solicitations. Have everybody working for you on contingency and on performance. Phil: We added spas on this past year, hot tubs. . . . Jay: How are they doing? Phil: Poorly. That’s one thing we can’t seem to get any draw on. Jay: Is that a function, do you think, of the limited time when the weather lets you use them out there, or. . . Phil: I don’t know if we weren’t running enough ads, or if they were the wrong ads, or if it’s that we’re new in the business. I’m not sure which way to go. Jay: In the winter, can the hot tubs be enclosed? Is that practical?

Phil: Sure, you can build enclosure rooms, there are bubbles you can put over the things, but a lot of people are putting them in rooms, or homes, or on top of their decks. They can be used year-around. You have to cover the top of the spa itself.... Jay: Let me give you two suggestions. One, why don’t you talk about that, keeping in mind that most people don’t understand the possibilities? You’ve got more to gain by making sure they see the result clearly. In the wintertime, you might say, “How to have a spa in your back yard you can use all winter long at a better price than we’ll ever be able to offer you in the summer.” The new thing is the bubble-enclosed spa. It’s year-round. In the winter it’s bubble-enclosed, so they can walk out to it and find it’s a perfect 70 degrees inside the enclosure and120 degrees in the spa. In the summer you’re going to be so busy, you’re not going to be able to make this kind of offer available. You have your installers on salary year-round, so in the winter you’d be glad to pass on some savings because it keeps your people working. Here’s the deal: For a package price, you’ll do the spa, plus the winterized bubble. Or, for just a little bit more, they can actually have the enclosure attached to the house. Another approach might be to try a mailing where you actually show some enclosed possibilities. And the letter is, “This promises to be a long cold winter. When you’re working until dark at the office or the factory, wouldn’t it be nice to know you can come home at the end of the day to a wonderful spa, and relax? Up until now, it wasn’t very practical, because people had to go outside. Now we have two options to make it a wonderfully practical thing for everybody in the area. We can either enclose it and make it a sort of Florida room, or we can have it bubble-enclosed. We have two examples and pictures here for you to look at.” Then you go into an offer. Why don’t you ask me a couple more things? Phil: This past year was the first year we really had great internal growth. All the years past have been external growth and we were just running everybody to their limits. What you’re talking about doing is the right way of doing it. Jay: And it’s so simple that it’s disarming, but it works if you will permit it to, and if you sustain and perpetuate it, and if you make somebody responsible for it. Let me suggest something else, another overlooked area. I’ve made people literally millions of dollars by doing this: identifying other people who could be host devices for you. For example, there are probably, in the Sunday paper or the Yellow Pages, three or four other kinds of generic businesses that don’t really compete with you. If you could contact all of those people and get them to refer to you and give you leads that you could work, you probably could make a fortune. I don’t know who they would be, but you could go to them and say, “Look, right now you don’t think a lead is very hot after you walk away from it. I’ll buy all the leads that you don’t work or that you don’t convert or after you convert them, either way. Refer people to me.” Go to people who have sold something expensive who have a good reputation, who are not in your field, and offer to write a letter for them to be sent out personally to all their old customers, making a special sale offer of your products. Give these people a percentage of the business that comes from it.

Phil: I’m not sure what people to contact in that respect. Jay: Let’s talk it through real quickly. Heating and air conditioning? Anybody who is providing an expensive upgrading or cosmetic or structural service to the home. Think about it. Toolmakers, pool sellers - that’s a good one. Get a mailing list, tell them you’ll do a letter, which they can approve, on their letterhead, to be sent to all the people who bought pools from them.

The letter will offer the spa, the deck, and the other things you have, and will recommend you and offer the customer a special value. You’ll give the merchant a share when one of the leads he gave comes in and buys from you. Go to people who’ve done remodeling, go to people who’ve done fireplaces, anything that shows people willing to spend money to upgrade their house. Air conditioning, fireplaces, fences, landscapers - doesn’t it make sense? Phil: Yes. Jay: Go to these people and say, “Look, how would you like to make 10 grand for doing nothing?” Most of them are going to say, “Sure.” And you say, “All you do is give me a list of anybody you ever sold anything to in the last year or two. I’ll write a letter that will come from you on your letterhead, personalized to those people. It will tell them about my services, and suggest that I’ll come out and give them counseling and recommendations with no obligation. If they buy, tell them that you have worked out a special preferential rate.” Sound good? Phil: Yes. Jay: I hope I have helped you. Phil: Yes, this has been a big help. Thank you. Jay: My pleasure. Thank you. * * * * Ads or mailers that explain your product’s specific benefits, make specific offers, and then give a directive on how the customer should take action, usually bring much bigger yields than “cutesy” ads. Also, “long copy” ads have been much more effective than most people realize. Many of the best-pulling ads have had a lot of text, but the text told people information that was vitally interesting - because it appealed to their wants and needs. This warning about “cutesiness” especially applies to headlines. The headline should be an ad for the ad. Different people will have different “hot buttons” and will respond to different propositions. Keep a log of “hot button” headline ideas, and then test them to see which ones pull the best. Always test your ideas - never try to figure out what will sell just by conjecture. The only way you can know what the market wants is to let the market tell you. Systematically vary your headlines, your copy, your offer, and keep track of how changing one element affects the response. In the action step that closes your ad, “route” people’s responses. Have them ask for or write to a specific name or department (the “department” can be made up just for this purpose). This makes tracking your ad easy.

Mom-and-Pop Grocery David’s little grocery/deli is in a rural, but fast-growing area. It’s the only store in about a 3-mile radius. Population in the vicinity is just a few thousand, and he gets 170-200 customers per day.

David works more than 90 hours each week, grossing around $268,000 a year, of which about 10% is profit. His 73-year-old mom works there, too. The products he offers are standard — nothing outstanding or special. Surprisingly, his prices are competitive with the big chains, although he of course can’t match them for variety. David has tried advertising in the local Moneysaver, but the ads haven’t pulled well at all. He rarely gets new customers, and those he does get are mostly transients not within the established population. * * * * Jay: Based on your income, I’m honored that you’re doing this consultation. I would imagine that the money you send me is much more important to you than to most people. David: No, it’s worth it. This is what’s important. Jay: What do you feel is your unique selling proposition? David: Knowing what people want. Jay: For example? David: Well, for example, they’ll come in for a sandwich and all they have to say is “the usual.” They just have to tell me once and I know what it is. Jay: Everybody knows you there? David: Yes, it’s pretty much a first-name basis. Jay: Have you explored renting a list of all the residents? David: I’ve thought about it, but I haven’t explored where to go to get that. Jay: Okay, let me ask you a question. If you were to put together a little mailer to the community, do you have a marketing budget you can afford to spend? David: Yes. Jay: There’s a company here called Trader Joe’s. It’s a very successful chain of little specialty stores and they focus on cheese, wines, and healthy type things. Ever three to eight weeks they send out an 8-12 page brochure that’s more like a little delightful homespun communique where they talk about their products and about price comparisons and about the value per ounce and the value per nutrient. They tell stories and they educate you about the content of the food and how cheese is made. About why one wine is different from another. It’s called preemptive advertising, here the first person to tell how something is made gets the advantage even if everybody makes it the same way. Well, these people do a lot of that sort of thing. And it’s written like one person, Trader Joe, telling his story. It’s warm, folksy, comfy, and I think that might be a real neat little approach for you to take with a mailer. And you could invite people in and have free coffee or a little cheese or something for them to taste. Something that makes it warm and personal. Do you like writing?

David: Yes. Jay: The question is cost. The first thing is to see if you can get a list of all the names and addresses. Then try a couple of things. First is that brochure/communique idea. Don’t get nervous and try to make it an advertisement. Just tell them from the heart what your store is all about, why it’s an institution. How your mom has been there 40 years. There’s always a pot of coffee, a block of cheese to nibble on, Show such interest and such knowledge that it becomes implicit that if they’re going to spend a dollar on a product they might as well spend it with somebody who really reveres and loves the thing. Take the time to educate the people and let them see that you’re charming, gentle, caring, homespun, and tell them that when you get married you wouldn’t be surprised if your son or daughter some day wind up taking over the business. Is there a radio station in the community? David: Radio intimidates me. You see I look at things and figure I’m just a small operator Jay: That could be an advantage. You can invoke empathy. See, I’m not a great author, but I think I’m a great teacher and I think I teach with passion and verve. I think it’s very important you get smitten with what you’re teaching and then it becomes contagious, and I think it would be very, very effective for you. It’s the principle of extending yourself to others without any anticipation of what you’ll get back. It’s profoundly lucrative psychically, and you find that the most selfish thing you can do is be selfless - you know, be more concerned with the well-being of the other person and their equity in a transaction, their satisfaction and their pleasure. You worry about that and you’re always going to end up doing well. Do you know most of your customers? Do you have a file on them by name, address, phone number, and the like? David: Yes, I’m working on one. Jay: How many do you have so far? David: 25 or 30. Jay: The first thing you want to do is register all your customers’ names. Have them fill out a card - I don’t know whether it’s a drawing you want to have or a regular special purchase club where you inform them ahead of time of special values or one-of-a-kind gourmet type things you might get in from time to time - some inducement to get as many people as you can to give you their name, address, and their day and night phone numbers. That’s the first thing. Second, if you can’t find a mailing list for your community, you can usually rent names from the people who publish the Yellow Pages. You can rent them with or without phone numbers. Or you could hire high school kids to compile a list of names and addresses from the local phone book. David: Okay. Jay: You might also as part of a mailing tell people next time you’re hungry, instead of going to a fast food place, give us half an hour or 15 minutes advance notice and we’ll fry you 2 pounds of chicken. Is that practical or is it a pain in the fanny?

David: No, it’s practical. Jay: Here’s another thing you can do: You can make an arrangement with some local vendors. Maybe you can do a deal with a carwash or a theater where you can’t get a ticket or something especially where it’s improbable that someone would use it without buying another one. Or you could buy some delightful little gift item that costs you almost nothing but has a high perceived value that you then give to your customers as an unexpected gift or with a minimum $25 or $20 or $10 purchase. It’s great to do things like that because people appreciate you for it. David: Yes, I realize that. Jay: Let’s see if we can find some other things you can do that could really increase your profits. Can you presell things to your customers through a mailing or through phone calls where you tell them you’re getting in special cheeses or meats or a special wine that you can presell before you order? This way, you get yourself a guaranteed profit in advance. David: On some products I think I could do that. Jay: If you wanted to curry the favor of new neighbors and people in your community, you might try having all kinds of chips and salsa and tasty items in the store - like teas and candies and special kinds of fruits and things - and have little plastic spoons and little cups so people can have a taste. I don’t know how practical that is for you, but you could surely try it for a week or two. And any items you want to move, you might say as you’re walking through, “How’d you like to try this delicious turkey, Mr. Schmidlapper,” and you cut a tiny piece off and put it on a little piece of plastic and give it to him. If you did that to everybody who walked in, I wonder how many more pounds of turkey you’d sell. David: Quite a bit, I bet. Jay: You might want to buy some neat things that are different - not necessarily wild or too gourmet, but things that are a little bit special that you can charge a little bit extra for. And you can let people taste a sample, and even if they didn’t buy that item right then, they’d be so flattered that you made it available to them that they’d patronize you in another way. There is a tendency in human nature always to reciprocate. Most people like to give back. Try one week having some special kind of coffee. Another week some punch in a bowl. One week cheese and crackers. Make sure it’s something you’ve got plenty of so you can sell them a couple of pounds of it. David: There are lots of things I could do that with. Jay: Another thing: Your prices are good, but people may not appreciate that unless you evidence it to them. For example, go out and do some price checking. If you can prove definitively that your prices are demonstrably comparable or superior to a big chain, wouldn’t it be fun to have signs in your store that show how your prices compare? Does that sound like it would work? David: It does. Education is important. Jay: It’s helping them appreciate the values they get from you. You need for people to learn more about you. I think I would invite people, say, every Saturday or Sunday for apple cider or cheese or some little things that are different. It may cost you $20 for the day - maybe $10 for a kid to serve it and $1 worth of cider and cinnamon and stuff and some cups, and invest one time in a

ladle and a serving bowl. Or you could do it as an occasional special event. Either way, it brings people in and it’s got charm and more of a festive, social sort of context to it than just merely a place to buy your bread and get home. That might be fun, don’t you think? David: It would be fun for me. Jay: We talk about unique selling proposition. One part of yours is that you’ve been around for 40 years and you know everyone has this urge to go to computerization and 18,000 square feet and the cheapest service and the lowest grade products to get the maximum profit. Maybe you’re crazy, but you just don’t see anything wrong with doing it the way your dad did. You may not ever be traded on the New York Stock Exchange, but you’ll have a lot of happy and satisfied customers who will keep on coming back over and over because they know real value and because they know you really care more about them than just making money. David: That’s exactly how I feel. Jay: Now let’s explore another angle: making deals with your vendors. Find some of those little obscure ones who have more to gain than the big ones and ask them to put some money up or some merchandise. Ask each of them to give a pound of ham or a pound of cheese or something. Tell them you want to help them sell ten times as much cheese in your store, but you’d like them to help you by giving you a pound for promotional purposes. Find ways to work your vendors, work your customers, make affiliations with other people for things you can give to customers that don’t really cost you anything. You can even do things like if there’s a new vet in town and he wants to build his business he can give you some gift certificates for an initial visit and you can give these away to customers who purchase a certain amount of cat food or flea collars or whatever. Do you merchandise things very nicely? David: Pretty well. Jay:

Is it very inviting?

David: Yes. People do stroll and browse. Jay: It would be neat if you could get vendors to pay for demos, where they give you money to pay people to demonstrate their product in your store. You could have a different one each night, each day a different demo. And the demonstrations could be done by people from local community organizations like women’s auxiliaries. They’d demonstrate the vendors’ products or give samples, and the money wouldn’t go to the person doing the demo, it would go to their club or organization or charity. The main thing is to try a lot of approaches and gauge how each one pulls. Analyze how many people come and how many come back. Do a lot of experiments. It can be as simple as, “You know, Mrs. Jones, I’ve got this special today on this really delicious turkey. Have a taste.” Whatever you try, always keep track of the response. * * * * This consultation is the epitome of creating a USP where there doesn’t seem to be one. David needed to make his store special in the eyes of the community, and I gave him a whole lot of ways of doing it - plus ways of getting vendors and community members to help him do it at little or no cost.

The advice I gave David applies to every business, including yours: Do extra things for people. Treat them as special. Make it an absolute pleasure for them to do business with you. Then they will favor you over your competitors.

Specialty Chemical Product Mona was smart to recognize the high-profit possibilities in her uncle’s unique chemical cleaner. She purchased the small business from him and proceeded to sell to workmen in her home town. She also placed advertisements in a few trade publications, but the returns were disheartening. I helped Mona pinpoint her biggest markets and showed her how to target those markets. I told her what her Unique Selling Proposition is and how to state the proposition dynamically in ads and mailers. This consultation shows that how you articulate your offer is as important as the offer itself. * * * * Jay: I read your material and it’s intriguing. I want to ask you a couple of very quick questions. Mona: Okay. Jay: First of all, am I correct in my assessment that what you did was buy a distributorship or do you own this exclusively all over the country? Mona: It’s our exclusive business. Jay: Is it your own product? Mona: Yes. Jay: You created it? Mona: No, I bought it from my uncle. Jay: And the product really works great? Mona: Yes. Jay: Basically by dipping a file or a rasp in the solution for a finite period of time, it has the same effect as having it hand-burred or hand-whatever? Mona: Yes, sir! Jay: Could you or I put our hand into the solution without it pulling our skin off or do you have to wear gloves? Mona: No. You could put your hand in it and it won’t pull your skin off. It washes off with soap and water. It’s biodegradable.

Jay: Please give me the background on this business you bought from your uncle. But first, tell me your background. Mona: I have some sales background, door to door sales person, that sort of thing. Basically, I work in the restaurant business. I owned a restaurant with my parents for four years and had another one for about a year. Jay: How old are you? Mona: I’m 22. Jay: That’s incredible! Tell me about your uncle’s business, how he started, what he did with it, what you really have bought, and whether you have existing clients - just give me some overviews. Mona: Okay. Basically, my uncle makes mandolins. He heard about this product and thought it could save him money if he used it in his business. Jay: How did he hear about it? Mona: A chemist who invented it was working for an aircraft company. My uncle met him and they became friends. He told my uncle about his invention and how he sold it to his company but they never marketed it. When the aircraft plant shut down, my uncle approached him to buy the chemical solution. Jay: So your uncle bought out the rights, the patent, whatever? Mona: There’s no patent to it. The inventor felt that in spite of having to tell the patent office absolutely everything about it, even if a chemical engineer took the product and broke it down, he might be able to see what was in it but he could never calculate the percentages. Jay: They could screw around forever trying to duplicate it and it wouldn’t work? Mona: Right. Jay: So unless it’s a certain combination, it doesn’t work? Mona: Right. My uncle through the music business has about ten or fifteen customers he has sold to. Jay: What kind of businesses would they be? Mona: People in the music business - anybody who makes their own instruments. But we found that it works on rasps so we’ve gone to horseshoeing places and big ranches. Jay: Is it very expensive to use? What are the alternatives? Instead of using yours, what would they have to do? Mona: There aren’t alternatives. What people have been doing for years is throwing the tool away and buying a brand new one. The only other alternative is sand-blasting, and that’s not economically feasible.

Jay: Okay. So for $18.95 a quart of sharpening solution, what

does that do?

Mona: It will sharpen approximately thirty ten-inch files. Jay: Then what happens? Is the solution still usable? Mona: Basically yes. You put the files in it and the residue from the file will gunk it up. You can use it forever; the product never actually breaks apart. You just don’t get the best results. Jay: So it’s better to buy another quart or gallon or whatever? What does it cost you to make it? Mona: A quart costs me around $5.0l. Jay: So it costs that much? Does that include the packaging too? Mona: Yes. Jay: What about a gallon? What does that cost you? Mona: About $7.38. Jay: Do you make it yourself? Mona: Yes. Jay: You said horseshoers are a prospect. What does it cost to buy a new rasp? Mona: They estimate anywhere from $15 to $25. Jay: How long do they typically last if they don’t use your solution? Mona: Once it gets to the point where you would throw it away, our solution can sharpen it giving it another life. We can do that five times. Jay: If I were a horseshoer and I bought a rasp but didn’t have accessibility to your product, how long would that rasp last normally? Mona: The easiest way to figure it is on your usage. With some people a rasp might last six months and with some it might last a week, but they average two months. Jay: So you make a rasp, instead of lasting two months, last almost a year. Mona: Right. Jay: So, if you have to buy them every two months and they’re $15, one rasp sharpened five times . . . you can do thirty in one quart. So the savings could be hundreds of dollars. Do you have a lot of analytical studies that will show that? Mona: No, basically all I have is proof of people using it. Jay: Who’s been using it so far? Tell me the clients you’ve got? What they do?

Mona: Well, I have several of the ranchers around my specific area. Jay: And they use it for what? Mona: For the the files that they use on their animals. Jay: Who else? Mona: I have some clients in the music business who use it for custom-making mandolins or guitars, and some cabinet makers - people who work with wood to make cabinets - and some machinists and locksmiths. Jay: And do you have letters from them? Testimonials from them? Mona: No. Jay: Okay. First thing I want you to do is get letters from them. Get testimonials from them. Try to quantify specific performance. In other words, a letter saying, “Before I bought your product, I had to replace my rasps or files every two months. Now because you’ve prolonged the life, I have to replace them once a year. Conser-vatively speaking, I believe every time I spend eighteen dollars on your product, it saves me two hundred dollars on files.” Get analyses like that. I see the ad that you ran. Where did you run this ad? Mona: I ran it in Fine Woodworking and Western Horseman. Jay: Okay. Now, you’re saying it pulled only four responses in one of them. Did any of those responses buy anything? Mona: No. Jay: I’m looking at the one from Fine Woodworking. Mona: I got a little over fifty from that magazine. Jay: Of the fifty people, how many bought? Mona: Around thirty. Jay: How much did the ad cost? Mona: Seven hundred and ninety-five dollars. Jay: Just at eight hundred dollars; you got fifty responses and how many orders? Mona: Thirty. Jay: The average order was how much? Mona: Thirty-one dollars.

Jay: So an eight hundred dollar investment brought in nine hundred and thirty dollars in sales. It cost you probably a hundred and fifty dollars to manufacture the product, right? So you actually almost broke even! Okay. Let’s start a couple of things. There is no other alternative other than sandblasting. Files you can’t resharpen either, right? Okay. We’ll talk about ads and we’ll talk about mailing pieces. We’ll talk about focusing the market. Do you know anything about marketing at all? Mona: I don’t have any marketing experience at all. Jay: Did you get the material I asked my people to send you? Mona: Yes. Jay: Did you read it? Did it give you any ideas? Mona: Yes, what I need is a Unique Selling Proposition and I’m not sure I have one. Jay: Yes, you do. Let’s put it together. Your Unique Selling Proposition should be, “Amazing Chemical Solution Prolongs Life of Files and Rasps Up to Five Times.” That would probably be what you offer is, isn’t it? A sub-headline under that kind of a headline would be, “An $18.95 investment in our sharpening fluid or etching solution can produce annual tool savings of $200 or more.” That’s the first thing. Next, you should try the same size ads, but you should experiment. Do you have money to spend on marketing? Mona: Not massive amounts but I do have some. Jay: Try two different things. You should try ads and mailing pieces very conservatively. The ads are going to be more expensive and slower because it takes two or three months before you know how it does. The mailing pieces will be easier to do. They may be better. Go to a list broker. I’m sure you can find one in your area who can get you lists of the kinds of people you would want to reach, like machine shop owners, musical instrument manufacturers, horseshoe and tack owners and suppliers. Then draft little letters or long letters and say, “How to Prolong the Life of Files and Rasps Up to Five Times. Our amazing eighteen dollar etching solution will increase by five times the useable life of your files and rasps.” Explain the essence behind it. “It’s a chemical action that brings back the . . .” Talk a little bit about what it’s all about and make a specific offer. “Don’t take our word for it. Try it in your shop. Try it in the field. Try it in your horseshoeing business for thirty days at our risk. Try this simple little test. Next you time you’ve got a rasp, the next time you’ve got a file. . .” Are those the only two things it works on? Mona: That I know of. Jay: “Next time you’ve got a file or rasp you can no longer use, instead of throwing it out, throw it in a container of our etching solution for thirty minutes. Take it out, dry it off, then do one thing. Try it out again. If it’s been rejuvenated, if it’s sharp and usable again, keep the solution. If it isn’t, screw the cap back on, put it back in the box it came in, and send it back and we’ll give you your money back. If we’re right, you’ll get five more uses a year out of that rasp or file. That’ll save you in the vicinity of one to two hundred dollars a year per tool. If we’re wrong, it won’t cost you anything. We’ll even reimburse you the cost of sending it back. You’ve got nothing to lose and you could be saving two hundred dollars a year if we’re right. Put us to the test.” That’s pretty powerful, don’t you think?

Mona: Yes. Jay: Modify your letters to blacksmiths and tell them what it is. I’d send a letter to blacksmiths and say, “If you shoe thirty horses a month or week or whatever, you’re probably going through x number of rasps or more a year. How would you only like to go through two or less? We’ve got a product that makes it possible.” Then tell about the product. “One quart of our product will do thirty rasps. On average we can prolong the life of your tool by five times. What does this mean to you in dollars and cents? It means that a tool that you would normally get two months use out of and then have to throw away, now can give you almost a full year’s worth of use. I know this sounds impossible. The only way you can appreciate it is to put it to a test yourself. “So we make you a proposition which you’re going to find irresistible. Send us $18.95 plus $3 postage. We’ll send you, by immediate return shipping UPS, a quart container of our etching solution. Take your most worn-out rasp or file, drop it in the solution for thirty minutes, take it out, wipe it off, put it back to the test. If it isn’t just about brand-new, if it doesn’t have the same effect a rasp and a file really should produce, if it doesn’t hone things down, if it doesn’t form and smooth the finish or whatever the same way it did when you first bought it, we’ll give you all your money back. In fact, you can even send your check to us post-dated for thirty days. Then you can try it out at our risk, not yours. If it doesn’t work, just ask for it back and we’ll send you back your original uncashed check.” Those are very powerful approaches, don’t you think? Mona: Yes. How would you approach a corporation? I’ve been sending out a lot of flyers and enclosing letters that I wrote to General Dynamics and Boeing Aircraft. Jay: What happened? Mona: I never heard anything. How do you find out who you need to talk to in situations like that? Jay: Do some research. There are certain trade magazines that are read by the person responsible for tools in big companies. I don’t know what that person would be, whether he would be the maintenance man . . . Maybe it’s Machinist Magazine, but some magazine like that. What you want to do is find out what that magazine is and either (a) run ads in that magazine, or (b) get the mailing list of the people who subscribe and try mailing a thousand or five thousand of them a personalized letter. You can rent mailing lists of the prospects and you can get lists of anybody you want. Somebody who does filing at home probably won’t appreciate the value as much as a machinist who goes through rasps and files really fast. So you should probably go to the most probable, reconsumable market first and cap that before you go to the more secondary ones. It’s just logic. Sometimes you’ve got to step back and think logically. Get a list broker or if you don’t want to use a list broker, go to the library and get the Standard Rate and Data Service Directory of Mailing Lists. It’s published by a company out of Skokie, Illinois. It should be at a good library or you should be able to call and buy a set. They’re about sixty or seventy dollars and they are directories of every mailing list available on the market, and there are thirty thousand mailing lists that you can rent by designation. Go over this and find the mailing list you feel would represent the best prospects. Maybe it’s subscribers to a trade magazine, maybe it’s machinists, maybe it’s horseshoers, maybe it’s musical equipment people. Go to the magazines that are most read by the people who most probably are the prospects for your product. You either get their names or you run ads in their publication.

If you’re talking about aerospace . . . You want to get the person. You don’t want to just read Aerospace; you want to go to people who make the buying decisions. You are probably better off reducing it down and looking at all the different trade publications. . . There’s a Standard Rate and Data Service Directory for Trade Magazines. You might want to get that and see what trade magazines they read. Or go to machine shops, horseshoers, and musical instrument people and ask them what magazines they subscribe to or what newsletters they subscribe to. If there are newsletters, write to the newsletter people and tell them about it. Ask them to publish a press release for you. Press releases, by the way, are wonderful things for you to do. Send press releases to a lot of the publications. I would think that a lot of manufacturing-type trade magazines would dearly love to write articles about something as fascinating as your product, wouldn’t you think? Mona: I would think so. What does a press release constitute? Jay: A picture of the product. A release talking about how the Mona Sanders Chemical Company has a chemical etching solution that rejuvenates files and rasps and prolongs their life up to five hundred per cent. “Maintown, USA, Sanders Chemical Company announces a file sharpening system, a chemical etching solution that for the first time offers an alternative to throwing away rasps and files when they seem to be worn out. By re-immersing the tool in the chemical solution for thirty minutes . . .” Talk about what it does. Talk about the fact that “in tests it’s proven that it will increase and prolong life five times which means that all of a sudden it’s saving companies as much as one to two hundred dollars per tool per year. The company offers a thirty-day, proven-in-your-own-shop guarantee wherein you get to try the solution on your own files and rasps. If it doesn’t work instantly, the company will not only refund your money but they will refund the cost of shipping it back to them. It’s a simple system. One quart will normally do thirty rasps. One jar will save you four hundred and fifty dollars.” This is what you’re saying really, isn’t it? Mona: Yes. Jay: That’s another approach you might try. “An $18.95 investment in a quart of our etching solution will save you $450 in replacement files and rasps.” That’s pretty powerful, isn’t it? Mona: I sure think so. Jay: That might be your Unique Selling Proposition too. When you write your letters to people and when you write your ads, tell them, “Don’t take our word for it. Prove it yourself in your own shop. Here’s a proposition that’s irresistible. Try this test. Send us your check for $18.95 post-dated thirty days if you like. We won’t wait for the check to clear. We’ll send you, by immediate return UPS, a quart of our product. The moment it arrives, take the top off, take your most worn-out rasp or file, drop it into the solution for thirty minutes, take it out, dry it off. Then rub your hand over it, visually observe and more importantly, try it on a piece of wood, try it on a hoof, try it on a piece of metal or whatever you do. Either it works or it doesn’t. It’s either been rejuvenated or it hasn’t. If it has, keep it and keep buying it from us. If it hasn’t, pack it back up, ship it back to us, we’ll include a return label with the box. We’ll send your uncashed check back plus three dollars for your trouble.” That’s a powerful offer, don’t you think? Mona: I like it. Jay: What you’ve got to do is get people to start using it. Once you get them started, they should keep reusing it, don’t you think?

Mona: Yes. Jay: You might also say something else. You might create a small container that’s long and lean good for one usage or something. You might write an ad: “We’d like to save you a hundred dollars. Here’s the deal. We’ve created a solution, we’ve got a product that will increase the life expectancy of every rasp and file you ever buy by five times.” Stated differently, “We’ll save you $100 per rasp or file you use. The only way we can prove it to you without you having any risk is for you to send your name, your address, the name of your business, and your title to us. We will, by return mail, send you a one-usage vial that you can put to the test at our expense, our risk. It costs you nothing. Just put your name on this coupon and send it back to us. As long as you’re a decision-maker and you have the capacity to keep rebuying the solution from us if we prove our product works, we’ll send you a one-usage vial for you to try out in your machine shop, in the field, on the range, in your musical shop, in your woodworking shop. You decide.” That’s pretty powerful, isn’t it? Mona: Yes. Jay: Am I giving you some ideas? Mona: Yes. Lots of them. Jay: Did I help you a little bit and give you some direction here? Mona: Yes. I think I’m a little overcome. I’m excited about some of them. Jay: What I want to do is make this consultation so valuable that I get a letter from you in six months saying, “I’m making two hundred thousand dollars. You were right. It’s so simple and logical.” Keep in mind all you’re trying to do is give people a chance to sample your product. If your product can perform - and I’m taking you at face value that your product can perform what you’ve got to do is get them to try it out. Once they try it out, the product will sell itself over and over again. So you want to make it as easy, as non-threatening, as risk-free as possible for them to try it out. If they ask for their money back, you deserve it because it didn’t perform for them. If you make a pact with them that’s fair and they’re intelligent people, they’ll put it to the test. If it works, they’d be a fool to ask for their money back. That doesn’t mean that some people won’t, but by and large, all you have to do is get a lot of people to try it and you’ll be accruing reconsumption orders forever, right? Mona: That sounds great! Jay: Some people don’t see it. A lot of times it takes somebody like me to explain it. Don’t be afraid to buy people trials. If it really works they’ll reconsume it. Try a lot of different approaches. That’s why direct mail is usually very efficient, because for a thousand-piece mailing to a targeted audience, you spend $400 and you’ll know something really quickly. If it works, you might get 3, 4 or 5% response. If it doesn’t, you might get 1/2% but because it’s a reconsumable product . . . You just can’t judge the ad - how it did in those magazines. You’ve got to look at the reorders that’ll come from it. You ran it for $800 and got back only $900, but you got back 30 customers, and if you knew that three out of every ten were going to reorder forever look what you’re accruing in the future for yourself. Do you see that?

Mona: Yes. Jay: So you’ve got to not only look at it just for the moment but forever. If you had to stay in the restaurant business for a year but meanwhile you keep running ads for the chemical solution and every time you ran an ad, you break even but you keep bringing in ten new customers, a hundred new customers. . . Then you start a series of follow-ups. You follow up with a letter that tells them what they should do. You’ve got to keep them reordering. Every three months you send them a reorder form. You come out with more suggested buying and applications, finding new markets. You keep bringing people in and breaking even or losing a little bit on the front end. Everybody that comes in, every hundred people you bring in, you keep forty of them and those forty keep buying three times a year forever. Look what you’re accruing in year two and three and four. Mona: I see. Jay: Do some research, some experimentation. Write some new letters or ads. Before you waste a lot of your money on it, send them out in small quantities as a test. Mona: I’ll do it. Jay: Good luck! * * * * Having a great product isn’t always enough. To earn high profits you must also have a great marketing strategy. Do some research and target your product to a specific audience. Use print ads conservatively because it takes a longer time to see the effects. State your Unique Selling Proposition clearly. Your offer should be very easy for the reader to understand. Tell the reader exactly how much money he will save by using your product. Leave no doubts in the reader’s mind. Do whatever you can to get people to try your product. Offer a free sample and include order forms for their first purchase. Offer a money-back guarantee so there’s no risk to the customer. Don’t worry if you only break even on the front end. If your product is a great product it will sell itself over and over again.

Real Estate Education Linda sells books and conducts seminars about powerful but little-known real estate techniques. At the time of her consultation, her direct mail efforts and promotional ads were sputtering, and she was getting less attendance at her seminars than she was used to getting. She was looking for any additional spark or boost I could inject into her business performance. I pointed out that like many bright, successful business people, Linda had used her particular vehicle for success for many years. What she needed to do was take a closer look at its inner workings—to find new mechanisms already there for her to use, and to see old situations in a new light. Within a few minutes after this consultation began, I uncovered some high-powered marketing opportunities she has been sitting on without even realizing it.

* * * * Jay: Let me ask you some questions. How much direct mail do you do and have you really done in the past? How has it fared? Who, categorically, have you successfully and unsuccessfully mailed to? Linda: I have been spending a lot of money on postage. That alone tells you what we’ve been doing. Jay: I saw that, but you said you used first-class postage. Why? Linda: Because I’m one of those people that doesn’t open anything that isn’t first class. Jay: But are you sure comparatively that everybody in the world is like you? Linda: No. Our last mailing we sent low-priority. Most of our mailing efforts we haven’t even tried to make winners, because we’ve done it to augment our seminars. Jay: Why? Linda: Because the bottom line is that we keep dangling lines in front of a lot of real estate agents. We sell a lot of books. Jay: I understand that, but why wouldn’t you want the... Linda: I’ve just been so busy, and we haven’t hired additional staff to assign somebody to track these results. Jay: Are you all doing very well? Linda: Yes. Jay: This may be a little fragmented in the beginning, but that’s all right. Most of the people that I deal with have this incredible ability to rationalize to themselves that they’re too busy and maybe so successful that it isn’t important. I try to help them understand that if they themselves can’t facilitate it, they should bring on somebody who is mature and aggressive. Give them almost coolie wages but with an incredible variable compensation. Let them make themselves $100,000 if they worry night and day and really manage it. But don’t give them too many things up front. Bring in three people and give each one of them a specific assignment. Make them develop it. Give them a budget and make them come to you, one hour or one day a week, and give you an overview of what’s going on. Make them advance the program, keep worrying about it, do joint ventures, insert programs, or whatever. Give them a compensation package with many variables and incentives. Your people should be expected to handsomely and continuously pay their own way. They should speak to prospects and sell direct. Plus, as a no-cost aside, you may draw an extra 100 people to one of your seminars. That’s wonderful. But why be content just to have people attend the seminar so you can sell them tapes, when only one of 100, 300, or 500 recipients

are even going to attend. Maybe 1 out of every 299 who don’t attend would buy something direct. You should allow yourself to experiment. I strongly believe that every component that impacts your business should be judged solely on its own merits. It shouldn’t just serve to augment something else. If it augments the process, all the better. But you could make $30,000 every time you mail to a market. Linda: We have experimented somewhat, but haven’t tracked the results. Jay: Without giving you a wet-noodle-flogging admonishment, I think you should immediately start experimenting and tracking everything you do. Try to learn its relative worth or non-worth, so you can comparatively try to learn or expand and enhance. It’s very difficult to facilitate marketing improvement until you know how something is doing. You’ve got to start quantifying everything. Linda: Well I know how many pieces of this big envelope I’ve mailed. It approached 5,000. Jay: Let me make some comments. I think your headlines could be vastly improved. Linda: I do too. I need help in that. Jay: Most of the headlines I’ve looked at, which are basically derivatives of the same one, are a passive statement instead of an active expression of a benefit the customer is going to receive. My gut feeling is that what you offer is, “How to increase the amount of sales you, as a real estate broker, close by understanding how to utilize the options available in finance.” Is it something like that? Linda: Right, but you used the word “broker.” Jay: Salesperson. Linda: Brokers don’t give a hoot about this. They’re interested in recruiting. Brokers have been there, and they have risen above it. The warm bodies that are actually the foot soldiers are the real estate industry. They’re not brokers, they’re the real estate agents. Jay: Is there a guarantee you folks make on your material? Linda: Yes. Jay: What’s the guarantee? Linda: Well, it’s stated in several ways. It’s just a 100% money-back guarantee. It just says, “If you’re unsure if this course is everything I have said it is...” Jay: Are you the one in the drawing? Linda: No. Jay: Is this a figment of someone’s imagination? Linda: Yes.

Jay: It’s cute. You need a better headline. A better headline alone would probably just loft your sales. I think it needs to be more exciting, more benefit-oriented, more crisp. “The Comprehensive, Residential Finance Course” is pretty mundane. It doesn’t really give me any great promise, and it sounds very academic and complicated. Linda: Should I change the name? Jay: At least change the headline. Change the description. What is it you’re really selling? What is the real promise? Linda: How to sell more houses, and how to make more money. Jay: How to sell more houses by closing more deals and making it easier for more people to get financed. I think you should experiment with a bunch of derivatives of 1-, 2-, or 3-part headline, and then go into the body copy. Do your letters work well? I like a lot of the components of your letters, but I don’t like the way a lot of them begin. And I definitely don’t like the way they’re typeset. They’re hard to read. I would open them up more, use more pages. You’re using a sans serif typeface. I think you would be better off using serif type. Linda: Do you have any specific recommendations for headlines that would get more attention? Jay: Well, let’s talk about this. You have to help me understand what the big promise is that you’re really offering them. Even if you’re doing very well this way, I think you can do extraordinarily better. My comments are not made to decimate you, they’re just constructive critiques. I don’t know the order of letters. I’m looking at the blue, black, and white letter that goes in with something. It’s about four pages long. Linda: Yes, that’s the letter that goes in the big envelope. Jay: First of all, my eyes go past the headline. Your headline is so overpowerful that it doesn’t draw my attention. I don’t even want to read the first half of it. It’s almost gaudy. Linda: My graphics people did that. Jay: A lot of people do that. No one gives a hoot about who you are. They really want to know what the promise is. If my eyes go up there, you lose me. I would bring that down about half or one-third in size and use subtitles. It diverts my eye movement. I would have a prefacing headline that said something like, “Close twice as many sales” or “Salvage 60% of the people that you can’t close the sale on.” It’s almost like boiling off the fat right down to the marrow. You could have 20 words, but they would have to be 20 good words, like, “Close more sales by making the financing work—through the techniques revealed in this risk-free course.” Then you get into it. I don’t dislike your letter. You’re telling them a nice story, but I would go right for the meat. I would tell them that most realtors lose 60% of the sales because their idea of being creative is to offer a lower price. Then go into the things they don’t know. You give them a free sample or part of an expert’s talk right there. You said this particular expert, Fred Johnson, gives the seminars for you. Give your readers free samples of his knowledge. For example, say he taught people how to do this and this, and then give specific examples. Tell them how to handle the corresponding brokers so they will pitch it right to their buyers. Tell them how to list more, how to get your customer or your seller to understand the agreement going in. I presume that’s what the course teaches. Give them some samples in here, but make it real.

Do you know the difference between serif and sans serif? To me, sans serif is very hard to read. It’s cluttered. If it’s hard for me to read something I didn’t ask for in the first place, do you know what I do with it? I throw it away, or I certainly put it aside. You want to make it easy for somebody to read your letter. Even if it’s thrown together, even if it’s down and dirty; if it’s got a lot of white space, it’s still pretty easy to read, isn’t it? Graphics people can be so foolish. The recipient could give a flying you-know-what about what Johnson seminars are. Subordinate that so it’s more subtle. Have a sub-headline prefacing it. You have a lot of tangential stuff in your letter. Give them a free seminar sample right there. Tell them about some of the things Johnson’s done and how he’s done them. Then contrast parenthetically. Tell them he provides you with all the forms, examples, languages, pitches, and techniques. Tell them he provides them with presentations and posturing approaches when they’re trying to predispose the seller into an attitude of being receptive to all the things they’re going to do. You’re making it hard for them to understand, read, focus, and respond. My eyes go from “Fred Johnson Seminars” to “Here’s how my students have been motivated.” I totally skip all the prefacing 5 or 6 paragraphs. Make the balance right. There’s a phrase I use called the “greased chute.” You want it to go sequentially from one paragraph to the next. Linda: Can I change the subject a little bit? It just hit me the other day that an avenue I haven’t really tried to sell in, but is a real natural, is to market a license course to real estate schools. It’s something I don’t really know anything about. Jay: You want to know how to do it? Linda: Yes, a little bit. I’ve got catalogs of lists, but I don’t even see anybody that’s got real estate schools. Jay: Somebody has either got those lists, or you may have to do it manually, but somebody’s got to know. Maybe you go to the state where they’re licensed. There’s got to be some device. Somebody should be able to give you a state-by-state list. Get the list, names, owners, principals, and presidents. I would do a combination of a letter and follow-up and say, “Look, after you have sold them this course, you probably don’t have much follow-up.” Linda: I’m not sure what you mean. We want them to use the course in the curriculum so we can sell more books on an ongoing basis. Jay: I think you’re making a mistake. I think you should make it a follow-up course to sell to their people after the licensing course for about a hundred dollars. You want the back-end. You want the book sales, right? You could make them the following proposition. “We’ll give you a turn-key license within a tight geographic area to sell our course to your graduates in a very favorable way, and let you retain such a preferential amount of the profits that you would be a fool not to accept it. Why are we doing it? Because we make our money selling people books and ongoing supplies. And introducing our way of thinking and getting them oriented is worth a lot to us. What we are willing to do is the following: We’ll teach you the curriculum, we’ll organize and provide you with letters to send to all your graduates inviting them to buy our course—we’ll do everything for you. What do we want for it? We suggest you sell it for X dollars.” I don’t know, what’s the course sellable for? Linda: $159.

Jay: “We suggest you sell it for $159. What do we want for it? A very modest royalty of $19 to $20, and, of course, the name of the attendees after they’ve completed the course. If you sell it by mail, we want a slightly larger amount, but we must be fair to both parties. We’ll turn-key the whole thing. We require no minimum investment and no money up front. We do require a warrant that you make a mailing to at least X thousands of people a year to keep your licensing rights intact. Depending upon the geographic parameters you market it to and the number of people who take the course, we will even entertain giving you exclusive rights. How would you like to make an extra $65 (on the average) per attendee on the back-end from everybody you normally run through your real estate class? We’ll provide, free of charge, statistics confirming that our materials work. You can use letters that we write, reproduce them on your letterhead, and send them to your students within 45 days of their graduation. You could, on the average, compel one out of every three graduates to come back. They would be worth a lot to you. “We’ll do it all for you, and you’ve got nothing to lose except you’ve got to learn the course. We’ll come to your facilities and train you for nothing more than our expenses, or you can come to us. We will work very intimately with you. We have an expansive inventory of other products or services we can also market through your schools, if and when we validate that this program works. The point of this letter is, you’ve already spent the money, and, as you know, you will never see most of your students again. We’ve got a way to reclaim as much as 60% of the value of the students for you on a turnkey basis with us doing most of the work. We’ll teach you, we’ll train you, we’ll turn-key the marketing. Our people will manage it for you. All you have to do is pay for the printing and the postage. Conservatively speaking, if you run 1,000 people a year through our course, we’ve just made you $60,000 a year. If you run 5,000 through, you would make $300,000. You owe it to yourself to at least try us out.” That’s a pretty powerful offer, don’t you think? Try it, and follow up on the phone. Don’t just let the letter do the work—follow up on the phone. You may send your letter to the real estate school, but the letter winds up sitting on somebody’s desk and they just never get around to doing anything about it. Give them a call. I used to believe that the power of everything I did was such that all I had to do was send out a letter and people would just come in droves. A lot of people do respond, but my assistant recently proved to me that there was a better method. She got on the phone and sold $60,000, $70,000, or $80,000 to people who never responded to my letters. They just needed to be gently nurtured. Think about that analogy because it certainly applies to you. Follow up—with telemarketing—the letters you send to realtors or mortgage bankers. I would strongly advise you to immediately do an experiment and hire a telemarketer part-time. Linda: I do that for seminars. Jay: It works well, doesn’t it? Linda You name the city, and I could get a seminar set up in it. Jay: How many seminars does Fred do in a year? Linda: I keep him on the road all the time. He’s really dynamic, and he gets a rush from the crowd. He has fun performing. Jay: What’s a typical attendance at a seminar? Linda: The numbers are going up. The average would probably be 125.

Jay: And they’re all realtors, right? Linda: Yes. Jay: Do you have other products you sell them? Linda: Not really, just the books, the tapes, and the newsletter. Jay: How much do you get for everything? Linda: $159 if they buy it all. Jay: And do you sell them anything else later on? Linda: The ones that are successful using our materials buy a new book every year. Jay: And the book is updated with new techniques, laws, and everything? Linda: Yes. It sells for $40. Jay: How many people subscribe to the newsletter? Linda: About 5,000. Jay: And how much is it, about $40? Linda: At the seminar, Fred will let them subscribe at an introductory rate of $20. Jay: And do you renew them at that rate? Linda: By the time the year is up, most of them aren’t in real estate anymore. That’s the sad fact. Our renewal rate isn’t fantastic, but we do renew a small percentage. I’ve even sent questionnaires to the people who didn’t renew with a postage-paid envelope for them to send back. A huge percentage said that they were no longer in real estate. That’s the problem— there’s a ton of people in the field, but they’re moving prey. Jay: How much money does Fred back-end at a seminar? Linda: Well, that’s not been determined. Yesterday he had almost 200 people and sold almost $5,000 worth of stuff. Jay: Does he schlepp all his stuff with him, or does he just take orders? Linda: He makes sure at least 75% of the audience is able to get a book. He uses it as a text, thereby giving a hands-on demonstration. At the end of the program, most of them (over half) don’t want to give the books back. His numbers have gone down recently, and he doesn’t know whether it’s the economy or what. Jay: A lot of people will write to me about certain things, but it is clearly evident when I look at the material that they are overlooking all sorts of other opportunities that they’re already

involved in. I feel an obligation to tell you what you’ve got right in front of you that you’re not capitalizing on. Linda: Tell me. Jay: If you’ve got that technology down pat, why don’t you bring two or three other people into your sphere and manage them concurrently so you can be going around the country? It sounds like you’re limited to how many seminars Fred can do. Linda: You’re saying clone him? Jay: Maybe not clone him, maybe just pick up other people. If today you had four other people making $5,000 a day, maybe each one keeps $1,000, the house gets $2,000, and the rest is gross profit for you. You’d be making $8,000 a day from those four people. That wouldn’t be so terrible, would it? Linda: I was listening to a Zig Zigler tape earlier today, and he said almost nobody but the author of the material can deliver the material as effectively. Jay: I know somebody right now (I don’t know if he’s available), but the guy would be a wonderful person. He’s got original material that would be very good for realtors, and he has never been on the road. You could tie up somebody like that, and he’s an original author. Linda: Are you suggesting to me that I have them go do Fred’s thing? Jay: No, I’m suggesting you should step back and say to yourself... Linda: Put a different realtor on a different topic to Fred’s audiences? Jay: Yes. Linda: I think you’re right. Jay: Do you know who Sam Wyman is? Linda: Oh yes. Jay: Sam Wyman wants to get into real estate. He wants to do seminars, but he doesn’t know how to do them. He’s been trying to find someone to help him. Linda: He needs to talk to me. Jay: That’s what I’m thinking. He loves to travel around the country. If the two of you got together... Linda: I told my associate just the other day that Sam Wyman and I needed to get our heads together. Jay: Why don’t you let me try to get the two of you together. You’ve already proven you know how to do it. You know the back-end; he doesn’t know how to do that stuff. He doesn’t have an infrastructure.

Then, if that works, you find some others. If you had four of those guys on the road, you could manage them, and each one of those guys could make a quarter of a million dollars, or whatever. The house and you could make $100,000 apiece. That’s when it gets exciting. You already know you’ve got the methodology down. Plugging in another guy with a topic is good, and you know how to get the people to attend. You know what to send, how to titillate them, and with the right pitch for every 100 people, you’re going to back-end $50 apiece. That’s exciting. Linda: I’ve always been in awe of Sam Wyman, so it never occurred to me that I could ever teach him anything. Jay: I’m saying there’s a 50/50 chance I can get the two of you together. A month and a half ago, he said, “Jay, help me get into real estate. I don’t know how to do it; I love speaking; I’ve got this course I can sell, and I’ve got other things I can sell.” Linda: I bought his course, and I’ve even considered going to some of his seminars, but I’m too busy. Jay: The point is, he’s got sympatico with realtors. You know realtors. Linda: You can tell from his tapes that most of them are realtors. Jay: The point is, if you put him on the road (or somebody like him), you might be able to get that same amount again from Sam as what Fred makes you. As soon as you get Sam going, then you look again for another guy, and you get four different subjects and you “crisscross”; you’ve got Fred’s letter going to your people recommending Sam’s course, and Sam’s letter going to his people recommending Fred’s course. Look at the back-end, Linda. And it’s not just a bunch of tricks with mirrors. You have the methodology. You have the hard part licked. Just plug in three or four more speakers. It’s probably not a lot more effort to have four guys in four different places with four different subjects as it is with two, really. What if you had three other people who were original authors—with not similar but kindred subjects—that would appeal to a market you know like the back of your hand? All of a sudden, you could make yourself a half million or a million bucks. You get the names coming, and you could cross-mail. Isn’t that exciting? Linda: We have had a number of speakers write us and tell us that they want to be like Fred, but they were nobodys. We didn’t want to associate our name with theirs. Jay: What if you send a letter to somebody who is a known person who either has a product—or you could put together a product for them—and the letter says, “If you’re willing to do a hundred speaking engagements a year and give informative, interesting, enjoyable ninety-minute speeches, we could make you approximately $200,000 a year. We’re willing to do it either in a partnership with you, if you’re willing to put up money, or we could finance it and give you a lesser percentage. We could do a smaller or a larger number of seminars. If you want to make $50,000 to $500,000 a year, and in the process keep advancing your fame and celebrity status amongst core groups, contact me.” What do you think that letter would do if you sent 100 of them to 100 great personalities, or to once-great personalities who maybe have fallen to tertiary status? Do you think you could find three or four? Linda: I know of a couple.

Jay: It’s a test. If they don’t want to put the money up, you put up the money. But you get the first monies back, and then you split the rest with them in some way where you get half or threefourths. The point is, the ones that work, you keep doing, and the ones that don’t, you give them the right to take it back. They still have to give you a royalty (for putting the thing together for them) so you don’t lose on anything. It’s not bad, is it? Linda: Jay, if a company has a personnel shortage, how would you suggest that they hire a serious person to come in and run their direct-mail program? Do you sit them down and have them read all the old issues of “Your Marketing Genius At Work”? Jay: As a matter of fact, yes. First they hire them on a conditional or probationary basis for three months. The first four weeks, they do nothing but read that stuff. Then you put them to work. Linda: It seems now that I don’t even want to talk to anybody who doesn’t think the way that you think. Jay: You put them in for a month. You pay them 8 hours a day to read my stuff—and read it three times—and then they report to you and tell you what the report taught them. You then have them write a quasi-report so you can see whether they comprehended and understood it. You’ll pay them $1,250 or $2,000 for the next four weeks to do nothing but come to your office for 8 hours a day and read and interpret what they’ve read. If they pass muster at the end of that time, if they’ve read it all, you’ll understand that they understand what it’s all about, and they’ll then employ what they’ve learned and evolve to a chance to make themselves $50,000 or $100,000. That’s what I have had clients do, actually. You program $1,000 a month for two months, and maybe you’ve got to go through three people until you find somebody who’s right. You have got to find somebody who’s got innately and naturally the fundamentals who would augur it well. You might also look for retired people. Former direct marketers. A lot of people have different motivation than just money. Someone who had a direct-market company and just sold it. There are a lot of people I have come in contact with who were very, very large and then they blew it. They mismanaged their business and blew it all, but they’ve got the knowledge and they’ve been humbled. If you can make sure that they don’t bury you as far as your staying in control of the operation, I would just run with it. Look at 500 people. The right person can triple your income. Don’t be in a hurry. Nurture them and put them to the test. The first thing is to give them copies of “Your Marketing Genius.” Have 100 people take it home and come back with a report. If that evidences they understand the principles, and if they show a realistic understanding of how to apply them, then extend to them a one-month probationary period. Be very nurturing about it, because the right person is going to make you a lot of money. Look at what you’ve got. It sounds like you and Fred put a lot into this business. It sounds like you’re prime, you just don’t know how to leverage it right. Let me tell you something else. You said no one reads the ad you ran in the National Association of Realtors. How much did that ad cost you? Linda: Maybe a couple of thousand bucks. I talked to a woman yesterday, and she told me she used to be a real estate agent. She confessed that she never once opened any of her trade papers. Jay: That’s probably true; however, that’s no excuse for a lousy ad. Linda: Yes, I know. Who reads the ad? The answer I’m coming up with is, “Well, people like me.” I should have written an ad that gets the attention of some of the other trainers.

Jay: You want some arrangement with the state agencies. There’s got to be some service that costs very little where, within weeks of people getting their licenses, their names are made available. You get the names and mail to them right away. In direct mail, there’s a phrase called “hot lists.” These are people who respond because the subject matter is of keen, burning, yearning, and just incredibly high interest in their hearts. Their interest diminishes in seven or eight months. If you could get the name of the states where people are getting licenses continually, and if every month that the licenses are issued, you could get a list from two or three states (and it won’t cost too much) of 1,000 people that got a license during the month, then you should instantly mail a letter (not a form letter but a computer letter) with the right headline and the right money-back proposition. “My name is Linda and I know the problem. You’ve probably struggled, and you’re ready to go on the market. You have limited capital and it’s going to be hard to get leads, etc. I’ve got a technique that could double or triple your chances of closing sales, getting listings, and making deals come through. The process may be able to make you an extra $30,000 in commissions this year that you otherwise wouldn’t have. Let me tell you why.” Then go into the details. Linda: Do you specify that they could potentially make thousands of dollars? Jay: Talk in specificity. You should make it so crystal clear and powerfully appealing on all levels. They should see the potential of the dollars they could make. They should see how your course will help them close more deals and help them list houses that are salable.” Linda: I’ve noticed that everybody seems to show pictures of limos, Lear jets, and fancy cars in their mailing pieces. This bugs me, and I don’t want to do it. I think that telling them how they could spend these big bucks isn’t going to help them make it, and it’s an insult to their intelligence. Jay: I agree. But if they’re going to put in eight hours a day, talk to 10 people a day, and have 50 deals in play a year, don’t they want to increase and enhance the probability of closing those deals by 6 or 7 or 10 times? Tell them, “You can, with the material we offer. In fact, we’ll make you the most rewarding and irresistible proposition imaginable. Send us $149 (or whatever the price) and promise you’ll read it at least three times until it becomes ingrained. Try using it on the next 10 problem deals, unraveling transactions, or nonmakeable whatevers. If it doesn’t work, or at least bring you close to getting the results you want, call us and we’ll give you the money back. The typical guarantee is 30 days, but we’ll give you six months. If it works and makes you money, or if it keeps you in the business or even doubles or triples your income, it’s worth every cent and many times more. If you need help, we have a hotline you can call.” Linda: Did you notice that I put that in my letter? It’s not a hotline, but they can call me. Jay: Why don’t you make it more specific? Offer it as a service—a hotline. “If you have a problem negotiating, if you have strategy problems...” Linda: I’m afraid somebody’s going to put me in jail for practicing law without a license. Jay: Okay, did you talk to an attorney? Linda: No. Jay: Why don’t you ask an attorney if there’s a language or particular phrasing you need to use? How about trying a recorded hotline?

Linda: The hotline is something I can use, because people call me all the time. I take a couple of what I call “loan-officer” calls every day, but I don’t charge for them. Jay: Talk to your attorney and see what you can and can’t do. If you can’t have a hotline, don’t. But if you can, that’s a pretty powerful benefit. You could offer free advice for the next year and just say, “We’ll tell you how other people have used it, and if it has any application for you... In other words, if a deal starts unraveling, pick up the phone and discuss it with us. We’ll tell you how other people in other situations have applied our techniques, how they salvaged their deals, and how they made deals work.” That, to me, is very appealing. Linda: That’s an idea. But I said to myself, “Do I really want to increase the number of these pesky calls I get?” Jay: The question you should ask yourself is, “Do I want to profoundly increase the number of sales I get?” If you don’t want to increase sales, don’t offer the service. If you do, try it. If it doesn’t produce, stop doing it. There’s no law saying you have to continue forever. If you make that offer, make it very appealing. Integrate it into your new sales letters. If that doubles or triples your yield, if you mail to hundreds of names of new licensees, and if you end up selling a million dollars worth of whatever, isn’t that worth having to hire a full-time person whom you pay $15,000 to talk about case studies using whatever disclaimer language your attorney recommends? Remember that $15,000 is a fraction of the $3,000,000 in course sales you did before. I would say that’s a tenable expense, wouldn’t you? Linda: Yes. Jay: If it doesn’t work, stop doing it. It’s a test. It doesn’t require a whole change of operating systems for your whole life. It’s an experiment. Linda: So what I do is what you’re doing with me right now. I get a call from somebody who wants me to talk like you’re talking to me about how to make their deal work. Jay: Exactly. That’s fun, isn’t it? Linda: Yes. That’s why I do it for free. Jay: Of course, you understand it’s possible you can even migrate it out. It’s possible that you could charge for that service. If your attorney lets you, what if they paid $200, $300, or $500 a year to subscribe to the counseling service? What if you had 1,000 people paying you $500, and you sent them updates and case studies? What if every time you did a transaction you recorded it and that became something you could send to people as a product? Think about it, it’s possible. Linda: It sounds do-able. Jay: Well, I’m planning on calling Sam Wyman for you. If I could put you two together, you could start with him and easily prove your program works. Then you could bring three more people into your stable, so to speak, on not the same, but related subject matters. That would appeal to the market. You understand the realtors, and I think you’d triple your income. Linda: I think that’s a neat idea. Why don’t you go through some of the ads I sent to you and suggest a better headline.

Jay: “The Comprehensive Residential Finance Course.” It’s too general. Who do you really want to reach, a residential salesperson? Linda: Yes. Jay: “How to close more sales, make more deals, salvage more...” That’s what you’re really teaching by restructuring the overlooked finances. You want to clearly delineate yourself. The idea about shaving down points is brilliant. It’s so logical it’s a wonder that the homeowners don’t do it more often. It’s brilliant. Linda: That’s what the builders use. Jay: But I think you should tell three or four stories. I think it’s not just the headline, but the way you do it. I think you should start and say, “Sometimes people overlook the obvious.” Give them enough information. Do you remember the very first promotion you got from my “Marketing Genius” newsletter? By the time you got to the end, there were four, five, or six examples so you could put that letter down and never ever send any money to me, and you would have learned a way of thinking that you could have applied. Linda: You’re right. I read it a couple of times and I thought, “Wow!” Jay: Why don’t you try to put some examples into your letter? Don’t be afraid to give some good free samples. Tell them what you just said in the beginning. “You know that one of the most overlooked ways deals get made when they’re tough is on a buy-down. It’s funny, in even the most sluggish economies in parts of this country, people still keep building. Why are they building? Because the builders there know how to buy-down. We teach realtors how to teach sellers how to buy-down. That’s one of 100 things we teach.” Give them enough insight and practical, transaction-based material to make them enthusiastic. Linda: Let me tell you about a problem. The builders have it all over the realtors, because the builders have learned how to attract buyers. They’ve got consistent radio ads and full-page ads every weekend in the paper. The realtors’ problem is an industry problem. They don’t work for providers, they work for sellers. They don’t care how the buyer buys, they just want somebody to come along and give them a listing. Jay: You might have a special bonus report. You could work for the buyer, couldn’t you? You’re not mandated, are you? Linda: If the builder would pay the commission. Except for me, the regulatory agency is dead set against buyer agencies. They all work for sellers. Jay: Try an audacious offer. I’ve done this before and it’s almost always worked very well. “Buy this on a six-month trial basis. If it doesn’t actually work for you or for somebody in your office in at least one application, send it back for a refund. No questions asked, no hard feelings.” If, in your ad, you expound on that kind of a strong provision, you could triple your up-front sales. It could also double the number of refund requests, but who cares? Tell them, “Admittedly, this is a subject that most real estate salespeople don’t understand. All I can tell you is this: I am so convinced that if you buy this course and listen to it at least three times during the next three months; if you unbridle your thinking cap and stop thinking in limitations, and if you give yourself the open-mindedness to try the techniques we advise when you see certain flashpoints emerge in an unraveling deal (and we’ll teach you these flashpoints so you’ll know when and

when not to try the various techniques), then the course will never cost you your profit—it will only salvage the deal for you. The course cannot fail to make you many times its investment, because the minimum commission is probably $1,500 or $2,000 or more. If it works, it’s only right that you keep it, because you made a great profit on your investment. If it doesn’t work in six months, I will gladly accept it back for a full refund. No problem, no questions asked, no difficulty. The check will go out within three days of getting your course back, as long it’s in good condition. “How can you lose? You’re starting a career in real estate. You’re obviously not doing it just to have the business card, you want to make money. You want to make the most sales, close the greatest percentage, and make the largest and most cumulative number of commissions. This course will salvage so many more sales and will add so many thousands or tens of thousands of dollars to your paycheck. It will be the critical difference, I believe, in whether you stay in the business and build a fabulous career, or whether you’re just a casualty. I’ll take all the risk and put my faith in you, instead of you putting your faith in me. Yes, you have to pay for it, but consider it a deposit for six months, until you prove to yourself that it works.” Maybe that kind of offer is too bold for you. Linda: How well, in your experience, would this work? Should I try pricing the course differently? I could try pricing it where they just bought two tapes for practically at-cost, and then order additional tapes later. Jay: Yes, you could do that. There are no rules. There is a kaleidoscopically unique series of variables. With the market you’re addressing, the way you express your offer, and the attitude and purchasing ability of the market, you could even charge $495. Ask for $115 down and bill them for the rest in six months. I don’t know. Tell them to send $19 down, and you’ll send them a tape every month. Linda: I’ve gotten to a point where I don’t think price is ever really the objection. If you really want something, you will find any way to obtain it. Jay: That’s true. However, I do think it’s more pivotal and critical in the field you address, because I think a lot of realtors are not doing well, and they’re certainly not doing well in the embryonic stages. Almost 99% of them are on strict commission. If you turn the tables and you say to them, “I’ll take the risk,” and offer it as a $395 course where you want $195 down and the rest you will bill them for later, then that would be interesting. You tell them, “The first bill will come in three months, hopefully after you’ve made a few sales using the course. The next one will come due whenever. Anytime you want to pay the whole thing off, you get a discount.” You could try a lot of experiments. Linda, there are no rules. The only limitations you’ve got are your ability to experiment and the capital you’ve got to finance the experiments. But what if you find that by one different approach, by one different pricing schedule or manipulation of terms, you get five or ten times the yield? Linda: I agree, except that I’m afraid I shouldn’t start experimenting with price until I get a promotional piece that pulls pretty well. If they’re not reading it, they’re not going to notice. Jay: Work on it. Redo your headline. Make your proposition crystal-clear. Use effective graphics. Your free bonus gift of the ticket is okay, but I would say, “If you can’t attend, you get something.” Make it irresistible. “If you can’t attend the seminar, you get the seminar mailed to you on tape.” I think you don’t convey a big promise in an easily perceivable, highly visualized manner. Don’t protract your letters. Avoid, “Me, me, me.” Don’t waste time telling them about

all sorts of asides. Get to the meat. Get to the compensation that you render. If you can’t redo the ad yourself, bring somebody else on. Pay that person a lot if they improve the ad and improve the results it brings. Linda: You’re right. Thank you. Jay: Good luck. * * * * Always experiment and track everything you do. This will help you accurately learn the relative worth of all the different facets of your marketing efforts. Based on that knowledge, you can then expand and enhance what works. For example, in your print ads, try different headlines. Move your benefits up front. Make all your communications easier to read. Experiment with different offers, such as higher or lower prices, longer or shorter guarantees. And quantify all your results. Another area in which you can experiment is in education or training, especially if you have an informational or educational product. Approach schools or clinics that have students or graduates who may be interested in what you have to offer. Get the names of these people. The more recent the list, the better. Send a personal letter. Offer a money-back guarantee to get them to try your program. Then, follow up with a phone call. If you already have a successful educational seminar and have your methodology down pat, set up a joint venture with people who can give seminars for you in different cities. Pay these people to learn your program. Then give them a healthy percentage of the revenue. After all, they’re bringing you income you couldn’t have without them. The financial reward they bring you could be substantial.

Villa Rentals and Sales Lester is a sales and rental agent for a number of resort villas in Mexico. He was a classic example of a person who was succeeding in spite of himself. Helping him was a matter of getting him to see the untapped profit potential in what he was already doing, then showing him how to tap that potential at a low cost. * * * * Jay: I’ve spent probably an hour or so listening to your tape. I’m intrigued because I think you really have an interesting possibility there. What I’d like to do is take the first 10 or 15 minutes and focus on some very specific questions. Then we’ll try to talk through a working strategy that can help you fulfill your objectives. I have a very interesting idea that I’ll propose to you afterwards if this goes well. But right now, I’m more interested in trying to give you as much of the answers and the programming you require in the limited time we have, okay? Lester: That’s just fine.

Jay: First of all, you’ve got two different operations going for you. It sounds like the one that’s replete with the most under-exploited potential is the rental operation. Is that correct? Lester: Yes, that’s the only one that I’m interested in building now. Jay: You have a finite number of previous and repetitive customers who have patronized your villas. That would total how many? Lester: Gosh, I would guess 200 to 250. Jay: What is the frequency you re-mail to those people, and what kind of mailings do you do, if any? Lester: We don’t do anything. Jay: First thing I’m going to suggest is probably going to put $50,000 in your pocket. That’ll give you a good return on your investment in me! Every year, you should mail the previous customers a very friendly, charming personal letter from Acapulco. It will tell them that the season is forthcoming and your villas are getting spoken for. As has always been your policy, you always give preferential bookings or reservations to previous customers. You don’t want to disappoint them, but if they were intent on reserving with you this season, you’re reminding them to reserve in advance. You’ll hold a villa for them temporarily for at least one week during this period. You request, however, that they get back to you. You can add, “You may not be aware but we’re offering you two options this year: you can make reservations for just the villa alone, or you can reserve to have all the food and everything provided. Just let us know what you prefer.” I think just sending that kind of a charming, personal letter every year will generate extra income for you. Keep in mind, I don’t care if you’re dealing with an ultra-affluent marketplace or what, but people are begging to be led and programmed. They want you to help plant seeds for them. Tell them, “There’s even more to do than when you were here last year. The villa that I’m thinking about for you is clean and it’s waiting. The charming houseman Miguel will take you around the countryside.” See what I’m saying? For 200 people, you can send pictures of the intended villa. You can say, “We have 40 villas, but this is the one I had in mind for you. In fact, I’m putting pictures of ten of the ones that I recommend in this envelope for you.” With this approach, two things will happen: A) people will think you care about them and B) you’ll deftly and delicately and gently program them to visit you again. We’re not as impetuous and as spontaneous as people imagine. We need to be programmed, don’t you think? Lester: Sure. I agree 100 percent. Jay: Now, when somebody inquires, you send them back what? Lester: I send them a pre-printed “villa information bulletin” that tells something about the villas that we have available. Jay: Is there a cover letter? Lester: Probably a brief cover letter.

Jay: If you read the material that I sent you, you’ll realize that people are looking for expensive high-tech answers to improving their business, when sometimes the biggest yield comes just from improving what you already have going for you. In other words, if you get 50 or 500 inquiries a month, even if you’re spending $100,000 on a massive ad campaign, you’ll improve your response just by adding to your current lead management program a wonderfully charming cover letter that gives examples of your villas. Then you could have a series of follow-up letters that advanced your original offer. In other words, I get the material, but you don’t hear from me. Two weeks later you write me another letter, saying, “I thought I’d write you this interesting story about the Schnidlappers from Boston who just left. They told us this; they told us that. They spent the evening dining out in town. Sarah the cook made them exotic dishes. They experienced wonderful weather, dazzling entertainment,” etc. Just keep advancing the letters from different focal planes. Considering what a renter is worth—and I don’t imagine you get besieged with that many inquiries—you could justify probably ten successive letters before you would give up on somebody. It would be a good investment when you consider what a lead probably costs you to acquire. Lester: What you’re saying certainly makes sense. Jay: In the beginning, the problem is crafting them all. Once they are written, it becomes a mechanized, automatic system that somebody in your organization generates with a computer. If your computer is being used for management and administrative purposes, it’s worth your while to also use that computer for marketing or get another system exclusively for the marketing function. That $2,000-$3,000 one-time investment will probably pay for itself in the first month just with one conversion coming in. Now, you have around 40 villas? Lester: Yes, about 40 villas that are good ones. Jay: And how many are currently being rented at a given time? Lester: At this time of year, it’s very light. Everything available will be rented over the holidays. Jay: The season runs through Easter. Will they be rented continuously through Easter? Lester: Oh, good heavens, no! During that period, I would guess we’d be running about 60%. Jay: I’m trying to put a bunch of threads together that I can weave into a safety net for you that will hedge you and achieve your goal with a minimal of capital dissipation. First, I need to ask some more questions. Of the inquiries you get in a month, where do they emanate from? Lester: I can’t honestly answer that question for you because I’m not close enough to that operation to be able to see that. I think our biggest market is up through the center of America, up through the Midwest. Jay: When you generate rental business, what do you make. Lester: We get 15% off the top. Jay: Is that 15% of the net or gross? Lester: 15% of gross.

Jay: But if you give an outside agent a commission, who eats that? Lester: Their commission is, in effect, added onto the price. If it’s a $500-a-day villa, the agent gets 15% above that. Jay: So he gets $75 a day. Lester: The agent takes a $75 mark-up. Let me explain how this works. This is not like a hotel, where you have people in the next room and all the rooms are the same. The villas are not right next to one another, and every villa has a different price. So the fact is that we can allow them to take a 15% mark-up without anybody... Jay: But it is a little unwieldy in that you have a double price point. You may charge me as an individual $500, but as an individual through my travel agent, you may charge me $575. Lester: That’s true. Jay: I can see why it’s hard for the travel agency, because it requires packaging at which they’re not experienced. Lester: Yes. Jay: If you spend a lot of money to engage in an aggressive marketing campaign, will the villa owners cooperate in it financially? In other words, what would happen if you said, “I’m going to do something that’s going to cost a lot of money, but it will manifest itself over the next 10 years, and probably double or triple your rentals. We’ll all win. All I want you to do is to match usage of your house against my investment in cash.” Are they amenable to this, or do you have to organize and sponsor it all yourself? Lester: We handle the units pretty much ourselves. Some of our owners have been amenable to going along with us, but I would say, generally speaking, everything is our job. Jay: Yes, that’s a lot of responsibility for 15%. But you could leverage that occupancy to 100% in the season, and if you could double the occupancy you now have during rest of the year, the net to you could be very profound. Lester: True. That would make our conversation extremely worthwhile. Jay: Now what about sales of the villas as opposed to rentals? Do any of the sales migrate from people who rent, or is it virtually none? Lester: We get some sales from the rental people. Jay: You understand my feelings on marginal net worth? Lester: I think so. Jay: Most people don’t try to compute what anything is worth. In other words, what’s a lead worth to you? For every 10 people that come there, if you get a repeat factor of 20 percent without ever working them with letters or anything, you’d probably get another 15 or 20 percent by sending them follow-up literature. If you know that every time you bring in $10,000 worth of

rental income that makes your company $1,500, you’re also accruing a sale or one-half of a sale that will make you $20,000—that’s very interesting, too. Lester: That’s true. I would guess we may make one sale a year out of our rental people. That’s pretty good. Jay: It’s to your advantage to know that, because if that’s the case, when you double your rental income, you double your sales. Lester: Sure. That’s true. Jay: And, what is a typical sale, $200,000, $300,000, or 500,000? Lester: I would say a very typical sale would be $350,000. Jay: You get commissions the same as for your rentals? Lester: We work on a 6% commission, which would be roughly $19,500 on $350,000. Jay: Would you normally handle the listing and the sale too? Lester: Sure. Jay: Out of 100% of your sales, where are the people coming from? Break it down percentagewise for me. I don’t mean their geographic location, but in the context of how they came to you, where do the leads come from? Lester: I need to get that from my secretary. Jay: Give me your intuitive projections. Lester: I would guess that 50%of our business comes through agents, and that probably the other 50%is repeats or referrals from repeating customers. Jay: What if a letter you send to your past customers is a charming referral-based letter? You could say something like this: “John Smith, 1-2-3 Whatever Street, Dallas, Texas. I’m writing to alert you to an opportunity you may want to pass on to somebody special. Mr. Smith, as a preferred guest, you’re always entitled to preferential reservation treatment at any of the villas we manage. You may not know it, but the season is forthcoming and it tends to be incredibly booked. During certain holiday weeks, it’s not uncommon for us to be overbooked and turn people away. Nevertheless, we always have adhered to a philosophy of giving first and preferential reservations to our guests and their friends.” Lester, their friends are a key element here. “I’m writing to alert you that if you or any of your friends have contemplated spending a week or longer at our villas, you should probably schedule and reserve the time right now. I’m also writing to tell you that anybody you wanted to refer to us would receive the same preferential reservation treatment that we give you. It’s very important for you to tell your friends who may be contemplating visiting our villas to acknowledge their interest and their preferred dates to us as soon as possible. “By the way, I’ve included in this letter a few pictures of some of the villas you’ve never seen before. I think you and your friends will find these thoroughly delightful. Already the season is

starting to really build up. If you or any of your friends were contemplating staying with us, I suggest you or they contact us immediately, preferably by letter, telex, or phone call. If they’re calling instead of you, please make certain they use your name to ensure that their reservation request gets honored.” That would be a very powerful way of getting referrals, don’t you think? Lester: It sounds good. Jay: And whether you’re known to them or not personally, is your company known to them? Lester: Yes, our stationery carries our name. Jay: Because you are dealing with such a small quantity of people and you’ve got that computer, I’d personalize the living daylights out of all your marketing materials. When they come into the villas in the beginning, instead of giving them a pre-printed introductory letter, give a personalized letter that you’ve knocked out in advance, and have your housepeople deliver it. Put in little things that you know about them at certain stops in the letter, things that you pick up from the conversation or something. “I hope this is a great contrast to you in”—stop—”Chicago, where it’s windy and cold. I was told you really like”—stop—”wine.” This may sound like a lot of work in the beginning, but thereafter it’s just mechanized. The difference between dehumanization and the charming perception of personal acknowledgement is like night and day, don’t you think? Lester: You’re absolutely right. Jay: Send a follow-up letter three days before they’re supposed to return home. Your letter could say, “I hope this letter gets to your home before you do. I just wanted to tell you that we really appreciated your stay. We’ve tried as ardently as we could to make your visit the most special and relaxing adventure of your life. We certainly hope you’ll come back, and we hope even more that you received more than your money’s worth during your stay with us. If there’s a chance that you come again, whether it’s next year, next season, or next month, you’ll always be a guest of ours and receive the same preferential reservation treatment. That means, whatever time of year you come, you’ll have a comfortable place to stay as long as you get your requests in.” I think •that’s a wonderful service you could offer, and it doesn’t require much money. Lester: You’re absolutely right. Jay: I tend to be really ruthless about this kind of stuff. It lofts you to such positive pre-eminence in their eyes. It shows you care about them; you appreciate them. Now, when they typically stay there, what does the stay entail? Isn’t the easiest way to leverage your profits to get more repeat business out of those customers you already have? The second easiest way is to get more conversions out of those people that inquire. The third and least is to go to the outside market and spend a lot of money on marketing. That makes sense, doesn’t it? Lester: That’s good advice. Jay: Okay. So, let me ask you, what’s a typical stay? If I come and stay at a villa for 5 or 6 days, that can be with or without food, right? Lester: Yes. Most of our renters buy their own food. Jay: Why?

Lester: Because that’s the way the program’s always been run. When you quote them a price that includes food, I’m inclined to think they get scared away. Jay: How much more is it? Lester: About $28 more a day per person. Now, when you break it down, it’s nothing, because you spend a whole lot more than that if you eat out. For you or me to take friends to dinner, we think $40 or $50 per person is fine. So $28 a day per person for three meals—plus all the domestic help, the liquor, refreshments, and soft drinks—it’s not that much. Jay: Do you make any profit on that? Lester: Sure. Jay: If you do make a good profit on it, my suggestion is that you immediately offer an upgrade option they could elect after the first night. In other words, on the first night, they just rent the villa. On the morning of the second day, however, a messenger comes from your office to deliver a neat little letter. It says, “Dear So and So, this is a courtesy service we’d like to offer you. Many people don’t opt for this at first, but after they’ve been here for a day or two, they realize that going out to restaurants costs a lot more. An alternative that would be just as much fun or more is to indulge in dining at your own villa.”—Stop—”Juan, the chef, or the houseman may already be tied up elsewhere. But if not, and if you would like, I can re-extend this option to you. We can arrange to modify your stay to cover the cost, and we can add the modest expense to your credit card.” Don’t mention the price at this point, but tell them what they get. “I’m just reminding you that we’ll serve you papaya and eggs for breakfast, this and that for lunch, etc.” If you did that and if 50% of the people opted for that program after the second day, it adds up to another $200 a week profit to you. If you’re• running, say, 100 people a year through that service at the rate $200 a week, it’s not inconsequential. Lester: True. We have good profit in the food end of this. Jay: What do you welcome them with when they arrive at the villa? Lester: Customarily we have welcome cocktails—margaritas, tequila cocktails, etc. Jay: Is there decent but inexpensive Mexican wine? Lester: We have lots of wine in Mexico, but the problem with our wines is largely a problem of consistent quality. If you buy the same wine two weeks later, it is a little different. Jay: Nevertheless, it would be really neat if the personal letter that I’m suggesting you deliver the second day came with a $4 bottle of wine that had the perception of being valuable. Lester: Good idea. Jay: What I’m suggesting is that you try to offer sensitivity and service. Tell them, “You’ve been to the villas, you know what it’s like, you’re probably enjoying the scenery, and all of a sudden you think, ‘Oh, gosh, I have to go out to the grocery, or we have to go out for breakfast and lunch. It would be so nice to indulge ourselves here.’ I wish you could have used this option the last time you were with us. If you’d like to purchase food service this time, you won’t be penalized just because you didn’t make the choice back in Chicago. If you’d like, you can

authorize Miguel to sign you up for the program. We can’t provide you breakfast this morning, but we’ll deliver a delightful meal by lunchtime and serve you exquisite cuisine for the remainder of your stay.” If you did that, would you probably get 50 out of 100 people to buy the food program? Lester: A lot of people like to have dinner out, because part of being in a new area is dining out at different places. We could work out an option package where, if they’re going to be there 6 days, they could have dinner out for three days and only be charged $16 a day. Jay: Or you could offer another option which would be very charming. Could you work package deals with all the restaurants? Is that hard, is it not worth the negotiating efforts? Lester: I think it’s not really worth the negotiating effort. It’s not a high price to eat out at the restaurants there. Jay: I know. I’m just suggesting that if they’re going to spend $30 or whatever, you might be able to make $10 for yourself out of their $30 dinner. Give them a nice voucher or something. Keep in mind that you may try 20 different approaches with this letter. If you have 25 or 30 villas rented, try ten people one way with one option, and ten people with another option, etc. Even if you lose on ten of them this time, their favorable or unfavorable response will tell you the action to take next time for the next group of people. In the course of a couple of weeks or months of experimentation, you’ll probably find one or two approaches that maybe add $50,000 a year to your bottom line just for giving the market what it wants. That would be fun, easy, charming, inexpensive, and easily facilitatable by using a really good letter-quality printer and a computer. Another approach is to use other people’s leads. It’s a powerful approach and it’s wonderful for them also. If they don’t want to take a percentage, offer them a few dollars for their leads. They don’t realize what leads cost them. They probably spent $30 to get someone to inquire. You offer them a dollar apiece for the name of every person who inquired but did not buy. It’s a lot less than what you could buy them for yourself. Lester: That’s right! Jay: So, experiment. Offer some of them a percentage, and pay others for their leads. It could be very interesting, couldn’t it? If you can ply a better rate, don’t be afraid. All the concepts I’ll give you should encourage you to experiment. If something doesn’t work, change it. Don’t be discouraged because something doesn’t work. What I’m all about is trying a lot of suppositions very conservatively, validating or invalidating, and when it works, making that an ongoing part or procedure of your business. When it doesn’t, shrug your shoulders, jettison that, try something new. I want you to grow hybrids that work, and see how much better you can do with them. Lester: I think one of the things I’m getting out of this, Jay, is the formulating in my mind as we’re talking, that I am going to have to find an able person to help me with the marketing. I have one or two in mind. Jay: I strongly recommend it. You don’t want to do it intermittently, you don’t want to do it disconcertedly, you don’t want to do it without continuity, and you don’t want it to be incongruous. If you can find somebody there who’s got ambition, and I know there are a lot of

ambitious people out there, pay them coolee wages but give them a big variable so they can make out very well if it works. Lester: That’s right, and I need to have someone who really handles this sales program because the problem with this outside rental organization at the present time is that a rental organization, it’s all oriented towards administration, and the rental business comes in as business that just happens to come in. Jay: It may be it’s to your advantage. The first thing you have to do is analyze, out of 100 percent of the sales you do, how many really emanate from that because if you found out that it’s 4 a year, instead of 1, and you could triple your rental business, what you’re doing is tripling your sales too probably. Lester: That’s right. Jay: Then if you add some back-ends to it and it really works—for example, say you make another $20,000 a month from art sales—then it gets very exciting. Lester: Sure, it really does. Jay: But I do think you want somebody who can be taught a way of thinking, who can be nurtured, who can be depended upon to follow through, follow-up, execute, and when things work, integrate them into an ongoing perpetual programming arrangement that will endure. And that person can’t be paid a lot of up-front money, but can be paid an incredible amount of variable incentive. We have about five more minutes or three more minutes, what do you want to do? Lester: I feel that I’ve gotten my money’s worth here. You’ve generated a lot of good ideas. Jay: Like I said, when I read your material and listened to your tape, I could have given you very powerful advertising techniques, but I think that’s too expensive for you at this juncture, when you probably can work what you’ve got—referrals, and work other people’s leads. You have enough to keep you busy. Lester: I think you’re absolutely right, and you’ve engendered some of these things in my mind,and they’ll be mulled over and so forth, and when I get the transcript from you, I will go over that. You’ve given me some ideas that were really worth having. Jay: Great. I’m glad about that. I hope, if I never talk to you again, that you will apply and test the things I’ve recommended. We’ll send you a tape right away to listen to. I hope you will be able to not only follow-up on the specifics I’ve given you, but that it will commence a series of experiments and it will gestate a way of thinking in your mind that will make you more efficient and make you covet and reclaim more of what you’ve already got. I hope that I’ve been useful for you. Lester: Well, you certainly have, Jay, and it’s been a pleasure visiting with you. Jay: I enjoyed it thoroughly. * * * *

You don’t have to rent villas or deal with wealthy customers to benefit from the advice I gave Lester. Everyone—rich or poor, man or woman, old or young—is begging to be acknowledged as special and important. If it’s not feasible for you to solicit business via hand-delivered messages, you still can write a personalized, warm, and conversational letter to your prospects and customers. The simple step of writing a personalized note to a new customer offering a related product or an optional extra can pay for itself many, many times over. If you’ve never tried it, I urge you to do so.

Business Broker/ Restaurant Consultant Steve is a business broker who specializes in buying and selling restaurants. Prior to his consultation, he got most of his qualified customers from his company’s newspaper and Yellow Pages ads. To get further leads, he occasionally sent out letters or put on seminars. Few clients, however, responded to either of these approaches. It was easy to see why. Steve’s formula was limited and generic, along the lines of “How to Buy and Sell A Business.” In the course of our conversation, I showed Steve a number of specific approaches that would effectively draw qualified leads and make Steve a powerful, profitable broker. * * * * Jay: What happened when you sent out the sample letters you showed me? Steve: I got two or three leads out of a couple hundred letters mailed. Jay: Did the leads evolve to anything? Steve: One evolved into a listing. I think I’m about ready to sell. Jay: Give me an overview of the marketing area that you really address. How many companies are there? Steve: Two hundred a year are listed. Jay: How many are handled by you and your competitors? How many are sold direct? Steve: About 50-50, I think. Jay: Is your commission on the total sales price of the business? Steve: Yes. Jay: You seem to concentrate in buying and selling restaurants. Why?

Steve: Restaurants have a high turnover, and I have a lot of connections in that area. However, I have listed other types of businesses. Our company goal is to have only quality listings, i.e., businesses that are in high demand and are priced right to sell. Jay: Do you extol that philosophy in any of your letters? Steve: I don’t think so. Jay: Where do you get your buyer prospects? Steve: We get a few leads from our newspaper ads and a lot of leads from our Yellow Pages ads. Jay: Are you a good speaker? Steve: Yes. Jay: Have you ever put on seminars? Steve: When I first joined this business, we tried to do seminars. But it was hard to get people to come to them. Jay: Were you charging for them? Steve: No. Jay: What was the subject of the seminar? Steve: “How to Buy or Sell a Business” and “Things to Know When Buying a Business.” Jay: You ran ads in your local paper? Steve: Yes. Jay: And no one showed up? Steve: Well, we had a couple where 15-20 people turned out. Jay: Were any of them qualified buyers? Steve: I think we had a couple of people who tried to buy but didn’t. We only ran the seminars for three or four weeks. Jay: What about mailings? When you do mailings, who finances them? Steve: The company. Jay: What is the budget? Steve: It’s pretty unlimited. Jay: Could you run an ad every week in the Sunday paper offering a seminar?

Steve: If I could demonstrate that it would work. Jay: If you put on three or four pilot seminars addressing different thematic subjects, you could see the kind and quality of people each one attracted. You could put on one and call it “How to Buy an Existing Restaurant and Turn It Into a Gold Mine.” Your ad could say, “Who should attend? Anybody who is seriously contemplating buying or starting a business, who has a modicum of capital to invest, and who wants to buy a business, should attend this intensive, 90minute short course primer. It is given by someone who’s very well qualified to teach you. He gets paid $100 an hour to advise restaurants on how to turn around their profits. He’s head of the restaurant division of (here, give the name of your company), and he’s a former owner/operator of four businesses, etc.” Anyway, you get the idea. You qualify who should attend. State that it’s strictly on a limited or reservation basis. Tell them that they’ll emerge from this seminar with more knowledge— about ways to turn around a restaurant, maximize the dollars they spend, promote better response, manage personnel better, totally eliminate pilferage, hire the best employees for the least amount of money, and get all sorts of free publicity. “This is all the kind of information you’ll need to know if you want to buy a restaurant from anybody.” Or you could put on a seminar like “How To Decide Whether To Sell Your Business Yourself or Through a Broker.” Offer a comprehensive 90-minute program where you objectively evaluate both sides—the pros and the cons. I’d keep trying different special vertical approaches. I wouldn’t use a catch-all title like “How To Buy a Business With No Money Down.” I think that’s too general. How much does a sixth of a page ad in the Sunday business section cost? Steve: It’d probably be $200-$300. Jay: O.K. If a $200 ad produced 20 people and you got one buyer, it’d be fabulous. Qualify all your ads by beginning with a statement like, “Attendance is limited to serious-minded individuals who have contemplated investing in or starting a restaurant. In order to benefit from this seminar, you should have the serious desire, the ability to spend $25,000-$50,000 as a down payment, the managerial expertise, the vision, etc.” You see? Make it very elitist. Steve: O.K. What should I charge? Jay: Test it to see what combinations work best for you. Put one on and charge nothing. Then try another one at $49 or $95. Here’s another idea. You could send a letter to every accountant and attorney and invite them and a client of their choice to attend a Saturday seminar on business acquisition. You can show somebody from an investment standpoint how to take $25,000 or $50,000 down, buy a business that will service all the rest of its own debt, and throw off a great return to boot. Then you could take a different approach and talk about how to buy a business as a passive investment. You might make a case where the right kind of businesses have a low probability of collapsing on passive investments and show how a $10,000 or $20,000 investment can make a 300% annualized return, or whatever you can say that’s true.

Or you could send a letter to every restaurant owner saying, “How would you like to trade your equity in your restaurant for another restaurant?” It might be a very interesting proposition. It would certainly get people to call you. And it would draw people who wanted to own more or larger restaurants. Steve: Yes, I could try that. Jay: Here’s another idea. Go to restaurant owners and say, “If I give you a dollar you didn’t have, will you give me a quarter?” That’s a pretty powerful offer, isn’t it? Here’s how the offer works. First, you find a restaurant that is succeeding in spite of itself. Make sure that it’s making—not losing—money each month, but that it’s making much less than it should be because the owners are inept at marketing. Set them up for an 18-24 month business deal. Get them to acknowledge in writing that what you are about to teach them is your intellectual property. Determine what they’ve been averaging in sales each month. Whatever that figure is, you don’t get a dime of it. However, every time you take their sales over that average, you get 25% of the increased profit. If it’s possible, try and convert this percentage of profit into a percentage of the gross so the owners can’t play any funny games with the money. For example, let’s say that you found 20 restaurants that are doing $20,000 a month and really should be doing $30,000. You take them through this process, and you end up making, say, $1,000 a month from each restaurant for a two-year period. That’s pretty good, isn’t it? Now, halfway through the agreed-upon time period, you’ll usually find that the client starts getting mad at having to pay you your agreed-upon percentage. Offer to cash them out. Tell them that you’ll sell your contract to them for half the price and give them terms. Does that give you an idea? Steve: Yes, it gives me a great idea. Jay: By the way, don’t be afraid. You may have to approach a lot of restaurants, but be selective. Create a grid of the restaurants and their criteria, and only set up a deal if the restaurant satisfies all of the criteria. Steve: How do you I approach these people? Jay: Find the ones that are obviously deficient and say, “I do the most interesting kind of restaurant consulting imaginable. I do contingent consultation where I only get paid if and as I increase your sales and profit. You only pay for results, not for consulting. You only pay me if and after I’ve made you money and you’ve banked it. You only pay me out of the profits at an agreed-on percentage. The deal is simple. I’ll put up all the effort for a fixed amount of time. I want my payoff to run for 18 months. At the end of 18 months, you’ve got a choice. If you want me to continue, we renegotiate. If you don’t, you can buy out what I’ve done for half of what you’ve paid me.” Tell them that if they’ve contemplated selling the business, it would be a lot easier if their sales were higher. That’s where you come in: you can probably double their business. Put a provision in the contract that stipulates if they sell it, you get a buy-out bonus and the first shot at listing it. Cut five or six of these deals and if it works, you can take the concept all over the country.

You could also do a mailing to all the restaurants in your area. In it, tell them about your seminar. Use a headline like “How to Grow Your Restaurant Profits Like Crazy.” The seminar will show how to maximize their gross and their corresponding profits. At the seminar, you tell them just enough to get their feet wet and then you offer your services. You tell them, “The reason I’m putting this seminar on is very simple. I’m looking for three restaurants who are currently doing $10,000 to $15,000 a week but should be doing $30,000. These restaurants have the right management, they’re solid, and they could really grow to five or six locations. What these restaurants need is someone to really take charge and counsel them, but they don’t have the money to pay this consultant $5,000 or $10,000 a month. I’m willing to do it strictly for a percentage of increase in the profits.” Does that give you some ideas? Steve: You bet. Jay: When you do contingent consulting, you end up leveraging yourself because you might spend a week getting a system all set up for the client, but then you only spend an hour every couple of days just managing it. But you’re collecting $1,000 or $2,000 a week for it. That’s what you want. You can approach it two ways. If you’re good in person, you can make cold calls. If not, send a personal letter saying, “I’ve been to your restaurant and I’ve seen 10 ways you can improve your business. I don’t know what your volume is, but if you’re doing $30,000 a week, I think you should be doing $50,000. I think I can get it for you and I’m willing to do it where you only pay me for the results. If you’re interested, let’s talk.” I can’t imagine that a restaurateur wouldn’t be interested in that approach. Let’s talk about direct mail. Let’s say you got a list of engineers either by renting them from compiled lists or by renting the subscription base of some engineering trade publication. You could write a letter that asked, “How would you like to make $80,000-$100,000 a year and get out of engineering?” The point is to draw a correlation where you show them that all their seniority means is probably retirement money. Yet, if they were to own a business, every year that they enhance their profitability, they also increase their own net worth. When most people think about buying a business, they just think about being their own boss. Most of them don’t understand that they can almost instantly increase their income by 50-100% if they buy the right business. Now, they might have to pay off a loan, but the net result is that their income is ahead. Moreover, they’re building their net worth and their security by a factor that isn’t even comprehensible. For example, if you buy a business that makes $80,000 in profit and you increase its profit to $100,000, you’ve just increased your net worth by $100,000 the first year alone. I think you can show people how to use a business to build incredible wealth by increasing its net worth. Tell them that even if they don’t want to own a business for the rest of their life, the trick is to grow the business. Tell them, “As an engineer, you’re probably incredibly organized. Most businesses aren’t well organized. Just by bringing your organized, disciplined thinking and structure to a business will usually increase its net worth.” You see what I’m saying? Just tie in different thematic analogies to the generic kind of person you’re writing to. And you only write to people who have the kind of income that would allow them to come up with $30,000-$60,000. Another slant on the same kind of letter might say, “Is owning your own business right for you? Maybe. Maybe not. One thing’s for certain: you really owe it to yourself to at least talk

about the possibilities. My name is Steve. I’m a business consultant and a business broker. I specialize in helping businesses improve their operations and profits and in finding viable, solid, moneymaking businesses that people can buy and build new careers on. I may be able to help you. “The least you might want to do is talk to me. I know a lot about the market in your area. I know about the opportunities and the pitfalls, how to read between the lines, what opportunities can be leveraged to greater income and cash flow, and what’s a fair price. I know, for example, five businesses on the market today that you can buy for virtually nothing down and almost instantly get back your investment. I know of three businesses that may take a lot of sweat equity, but they could be the absolute sleepers of the year. “If you’ve ever thought about owning your own business, or if now you’re starting to think about it because of this letter, it might be an appropriate time to meet either by telephone or in person.” Steve: Where would I find these lists? Jay: In a good public library, look for the Standard Rate and Data Service List Directory published by a company of the same name in Skokie, Illinois. There’s a business and a consumer directory. Just rent 1,000-5,000 of the accountants, doctors, or engineers. You might also call Entrepreneur Magazine and see if they’ll rent you all the subscriber names within a 100-mile radius of your home. That might be good. Try this also for Success Magazine, Money Magazine, Venture, or Inc. Magazine. Remember, direct mail is very useful if you use the right lists and you establish criteria to qualify the responders. You can do a lot of experimental things. If you want to work hard, you can bring in a lot of unqualified prospects and work them like mad. If you want to work easy, then you qualify all your prospects before you mail. Steve: Great. * * * * To get qualified leads, build criteria into your marketing. For example, in your ads and letters, state the characteristics you want your customers to have. From your direct mail list, choose the names of individuals who meet your income requirements. For the businesses you approach, determine how they can use your services and whether they have the ability to make a greater profit than they’re already making. Once you’ve qualified your customers, entice them with different specific thematic approaches, not generalizations. In Steve’s case, I suggested “How to Buy an Existing Restaurant and Turn It Into A Gold Mine” and “How To Grow Your Profits Like Crazy.” Having enticed your qualified leads, sell them on the invaluable services you can perform. For example, Steve has the expertise to give them seminars on making business acquisitions. He can offer restaurants the experienced advice it takes to increase sales and profits. And he can write letters to lists of professionals and offer to show them how to build wealth by growing a business.

Brainstorm on how each of these areas relates to your business: the criteria you want in your leads, the different specific approaches you can use, and all the different services you can offer. Then, test until you find the combination that works best for you.

Health-Oriented Newsletter This consultation will give you a clear understanding of the concept of “back-end” sales, something that’s critical to the success of a newsletter—and, for that matter, most other businesses as well. At the time of Chuck’s consultation, the economy was in a downtrend. To help him minimize his risk, I told him how to ferret out priceless marketing information—for free—from people already knowledgeable about health-related newsletters. You can use the same techniques to gain information about the market you’re operating in. I also gave him a whole slew of joint-venture possibilities and alternative marketing avenues that he could test out at low cost. These, too, can probably be adapted to your own situation. Pay close attention as you read. This consultation alone could be worth many thousands of dollars in increased sales and profits for almost any business I can think of. * * * * Jay: You’re an enterprising soul. It sounds like you’ve got a very interesting background. Chuck: I hope I’ve sent you enough information for you to get an idea of what I’m looking to do here. Jay: You write very good preliminary copy. Have you ever written before? Chuck: Well, in my business, I have a newsletter that I send out once a month on lighting reflectors and the lighting industry. Jay: How is it received? Chuck: Very well. Jay: You’re very articulate and you write in a very humanized yet provocative way. I like it. Chuck: No one ever comes back with any questions. I don’t know if I’m losing them or I’m explaining it properly. That’s the only problem I have with my writing. I’m never sure. Jay: Well, you probably at least slightly intimidate them. O.K., you have an hour, and I have gone over all your material. You posed an enormous amount of questions. Do you want to ask me, or do you want me to ask you? Chuck: Let me give you an overview. Where I am right now is I’ve developed two of the special reports to back up the mailing and what I want to do right now, hopefully before Christmas, is to start a direct mailing to test the market and see what kind of market there is.

Jay: Why do you want to do it before Christmas? Chuck: That’s a good question. Jay: I would wait until January 1. It’s true you can spend the money now and write it off and drop it December 29 or 30 so you can get the tax benefits at year end. But I think you’re going to dilute whatever effectiveness you can realize by mailing it in the Christmas season. Chuck: Well, I was thinking that maybe it could be used as a gift. Jay: You’re better off trying to purvey it first and foremost as a user-subscribed-to product. You’re so constrained timewise, unless you mailed it out first class and moved like mad and compiled your list yesterday. I think you’re better off getting ready for a drop and there’s nothing wrong, particularly if you had a good year and you want to mitigate $20,000 or $30,000 worth of taxes or whatever you’re going to spend on the venture. However, I wouldn’t do it late November or early December. I would wait until the very last days of December to legitimize the tax deduction and I would have it hit in January. Chuck: O.K., what I want to do then is issue a mailer. You have a copy in front of you of the proposed marketing promotion. Jay: It’s a good initial letter. Chuck: I’m hoping to generate a beginning of subscriptions to that point. I obviously need help from you on the introductory statement. “Now You Can Be Responsible For Your Own Health” doesn’t do anything for me, even though I wrote it myself. Jay: It doesn’t. Your headline should be conveying an expected anticipated result. I urge you to read (many times over if you haven’t already) that Claude Hopkins book called “My Life in Advertising.” It’s extremely illuminating and illustrative because it chronicles the actual empirical experiences the man embraced and had to navigate to evolve the formulas he developed. It will be very useful particularly in the area of selling curative and preventative products because he had a lot of experience in that. Do you have collections of the competitor’s mailing pieces? Is it mailed out nonprofit? Chuck: Mayo Clinic you’re talking about? Jay: Yes. Is that letter nonprofit? Chuck: I don’t believe so. The profits are supposed to be used for research at the Mayo Clinic. Jay: Is it mailed out under the nonprofit mailing rate? Chuck: I didn’t notice. Jay: You should check, because that could give them a profound advantage over you, like 50% reduction on the mailing cost. Let me dominate for a few minutes and we’ll go back and forth. First, I want to ask you a question and my style may seem curt and rat-a-tat and I’ll ask a lot of questions and you’ll start to answer and you’ll give me enough insight that I’ll jump to another one. It’s not to be rude—it’s to maximize your investment in me.

A) Do you have a terribly pressing time imperative to get this done? B) Give me an idea of what you want to spend. You said something like $150,000, but maybe I misunderstood that. Tell me how quickly you need this vehicle to really be profit-rendering to you and whether you want it to supplant everything else or augment everything. Give me an overview of what you really want this to be for you. Chuck: The timing is not critical. I don’t have any problem with spending the money. My real concern right now is the economy falling apart before something gets going. Jay: True. If you mail this month and do very well and you get seduced to think that it’s indicative of how the market is going to respond and you go back and spend $200,000 on a xmillion mailing, you may get creamed. You’re better off mailing to smaller units to get an indicative feeling of how the market is going, don’t you think? Chuck: Yes, and my real question is, where is that market? And what is the right market for me? Jay: Also, I think that the truth of the matter is A) there’s always a core market that you can access in any good or bad time. B) depending on the offer, in a downward economy, people start becoming more fearful of their health and they become more aware of their mortality. All those factors actually augur well for what you’re doing, but I wouldn’t do anything until I monitored the living daylights out of my competition. For example, do you have every mailing piece on file and every issue of health-related newsletters on the market? Chuck: I’m not aware of any, except the Mayo Clinic. I have the magazines. Jay: We know that there’s “Cardiac Alert.” Did you know about that? Chuck: No. Jay: It’s published by Phillips Publishing in Washington, DC. It’s a wonderful publication which may or may not still be in existence. There’s a newsletter called “Health View News” that used to be really hot and they have a very provocative, semi-holistically predicated subject matter. They had incredible headlines, like “Heart Attacks Can Be Seen And Prevented, Up To Two Years Ahead.” They would interview these provocative, radical, medical experts on everything under the sun. They had these incredible headlines that were provocative as can be, and every mailing piece was predicated on them. They ran ads in the Wall Street Journal, and everywhere else. At one time they had their subscriber base up to a couple hundred thousand. But I’m told that they didn’t have good back-end follow-ups and they went out of business. If that is the case and you could identify them, you would be wisely advised because most of the material they have is probably timeless and the copies are probably incredible. With the right back-end melded into a break-even proposition... There’s no reason to reinvent the wheel. If I were you, I would spend all my time right now going all over the place and finding anybody who has a newsletter that’s breaking even or on the verge of collapse, and I’d interview all the list brokers that I could find. Do you have an SRDS (Standard Rates and Data Service publication)? Chuck: At the library, yes. Jay: In the front, there are something like 95 or 120 list brokers. Call every one of them or send every one a formalized computer letter telling them that you’re looking for information on any lists on health letters, or buying health-related letters, and that you want to see all the hundreds

of lists they have, and start soliciting them to help you. After the consultation, I’ll give you the name of a list broker who is also a newsletter broker; he knows all the health newsletters around. He would be able to give you a comprehensive amount of advice and you would probably pay him $100 for an hour of his time. Tell him that you want to know everything he knows about what’s available or already on the market. What’s been written, what mailing pieces exist that maybe broke even in the first 6 months, and maybe people whose newsletter collapsed because it didn’t make money. You understand back-ending, I presume. Most people don’t. It’s a bear to make any money with a newsletter. A newsletter is nothing more than a device qualifying people for a host of other things you can offer—in your case, vitamins, health sabbaticals, selling leads to health spas, doing by mail all sorts of things. If you get enough people and localize them in communities, you can offer special $1,000 health evaluations, medical clinics, special seminars, trips—all sorts of perpetually expansive, concentric circles of profitability. People don’t understand that. You could sell them insurance and everything else, but first you’ve got to come up with a big promise that’s unique, and you’ve got to convey it in your headline. Rather than operating blindly or trying to reinvent the wheel, I think you should cut out every ad in every issue of Prevention. I’d get the last 4 or 5 years of it. I’d get all the mailing pieces from Prevention. I would find out what list brokers specialize in medical type publications. I would go to the library or write the National Enquirer and get all the last 3 or 4 or 5 years’ copies of the Enquirer, because they’re great on headlining. I’d get all the copies of the last 10 years of Reader’s Digest because they’re great on headlining. I’d get copies of Cosmopolitan for the last 5 or 8 years because they’re great on headlining. I’d peruse the living daylights out of all those headlines looking for thematic subjects you could use for your headlines. Why don’t you leverage the fact that those people probably spent millions of dollars on great copywriters to come up with their headlines? Instead of just trying to sit there in a vacuum, the first thing I would do is emulate somebody who knows better than you. I’d pick people’s minds. I would use $5,000 for the first month, tickling minds and putting together a data base. When I say a data base I don’t mean in a context of hard data but all sorts of things. I would go to list brokers who normally get “X” for their services, and I would tell them, “I’ll pay you a premium if you give me information that works and I use it. Instead of paying you your regular fee, I’ll pay you double.” Seduce them, ethically, to be much more motivated than just to make $1,000 on list rentals. I would want them to send you copies of all their sample mailings for anything that’s health related. I would want them to introduce you to people with any activity that’s related to what you want to do. You would pay them some variable compensation that you and they would agree upon. Since at best you’ll probably come up with a break-even piece (that’s the way it usually works out in the newsletter business), I would try my hardest to hedge your bets by doing all sorts of parasitical arrangements with other people. Include such things as in-package inserts, newsletter inserts, magazine P.I.’s (ads paid for on a per-inquiry basis). One of the things I did that was really fascinating was the original mailing piece for my series of reports called “Your Marketing Genius At Work.” I don’t know whether you had it mailed to you, and it doesn’t matter, but it was 12 pages long and it was quite an expensive piece to mail. The mailer was basically a break-even proposition, but it brought me a ton of business later on— consulting and so forth. I had this wonderful idea one time of taking that piece, consolidating it down to 8 pages instead of 12, buying 8 consecutive pages at a very preferential rate in Entrepreneur magazine, and putting those pages in Entrepreneur magazine because we had

tested the mailer and it broke even when we paid 60 cents to reach a reader. If we could get our access cost down to a dime by using Entrepreneur instead, we would probably make 50 cents on every person who read it. We did, and instead of breaking even, we made tens of thousands of dollars just on the initial sales. What I’m suggesting is something very daring. I would try, once you get yourself a piece that at least breaks even in the mail, I would go to all the big magazines that are prime prospects and negotiate 4 or 6 or 8 prime pages and take the mailing piece and consolidate it in there. No one understands that this is a powerful approach. Chuck: What would you say the break even would be? Jay: Let’s take Prevention magazine. Let’s say you rented the Prevention list, and you tested 5,000 names or 10,000 names and it broke even. It cost you 50 cents a piece to mail. And breaking even is deemed as getting back all your money plus what it cost to fulfill with no profit. Are you with me? Chuck: Yes. Jay: Let’s say you can work a deal where you can run 6 or 8 pages in Prevention and all it’s going to cost you is $16,000. For $16,000, you’re reaching a million people. To mail to a million people would cost you $500,000. Do you see the leverage? But most people use space ads. These one page space ads are so highly abbreviated, they don’t give you enough room to tell your complete story. So that’s a suggestion, after you’ve tested it out. But I’d pick the brains of everybody who already knows this market. Tell them that you’re interested in A) buying marginal, losing, existing health newsletters, B) getting affiliations with kindred but non-competitive health-related publications or product sellers who would be great host devices. Since you basically want the back end anyhow, you could go to anyone and offer them one-half interest in your newsletter proposition (which is probably not going to do more than break even if they’ll let you play off all their customers or their newsletters). Do you see that? And what do you care? It’s better off to let them. If you find a magazine and you give them one-half interest in exchange for a 4-page insert every month, then, all of a sudden, instead of spending $50,000 in the first month, you’ll have that $50,000 to reinvest in other avenues of marketing. If you make a lot on the back end, even if you have to give them a share of it, you’re home free. Otherwise, I’m terrified you’re going to dissipate your capital with more rapidity than you’ve imagined. One of the things I’m very into is host-parasite relationships. Right now, the market conditions are so difficult. They’re so ambivalent, they’re so omni-competitive for new people on the street, that even with an inspired, impassioned idea, you’re going to be lucky to break even. If you acknowledge that, you’re better off to start by playing off everybody who has already spent a ton of money to get a customer. In other words, they’ve already spent a million dollars to mail 5,000,000 people to find the 23,000 that were interested in their newsletter, or they’ve got a magazine and they’ve spent years building a solid core of repeat subscribers. Do as many host or joint venture arrangements as you can. If you have to pay them to host or joint venture with you, that’s better than going out into the real world with your own money. It’s like a protective harbor to you. Does that make sense? Chuck: Absolutely. Jay: And in the beginning, while you’re building up, you can go to somebody and say, “Look, my newsletter sells for $39. It costs an estimated $15 a year to fulfill. Why don’t you take it, you

pay for inserts in your magazine, or you pay for special mailings, and every time you get $39, send me $15 and I’ll be delighted and I’ll stand behind it. If we have refunds than we’ll prorate it backwards.” In other words, let someone else make all the front end money. Truthfully speaking, if that is what it takes for you not to be naked on the downside, it’s worth it. Are you tracking with what I’m saying? Chuck: I think what you’re saying is that I should use their advertising capability. Jay: Or their packaging or their customer endorsements. You can go to somebody and say, “Here’s my offer. I’ll give you my standard promotion. You can improve upon it and do whatever you want to do. I’ll typeset it and I’ll furnish you mechanicals. You print it, you either insert it or you mail it to your customers on an endorsement basis. You can give them my typical deal of $39 for one year and $78 for two. You can offer a more preferential amount. I want $15 a year and you get everything above that. You can even give them more bonuses, but then you take the extra risks. In any event, you can have all the first-year profits.” Chuck: But Jay, isn’t someone going to be less than excited about that prospect? Jay: Well, the big ones won’t take it. But to increase your chances even with a small publisher, you might first do some tests. I would mail the list to make sure it shows some life. If the list comes close to breaking even at 40 or 50 cents per unit, you can extrapolate, provided you know that the bulk of the people you are going to reach in the magazine are in fact subscribers instead of newsstand buyers. If 50 cents breaks even on a mailing, 10 cents per insert should make you 40 cents for every reader, assuming around the same percentage respond. Does that make sense? Chuck: Yes. Jay: The first thing I would try do is get a good piece. Your body copy is very compelling. Your beginning is weak. I think you’ve got to come up with a more provocative result-based approach. I think that the best way to do that is to study those who are masters of understanding this market. Pick people’s minds. If I wanted to learn a field when I was younger, I would find all the people working at different strategic positions and offer to pay them $100 an hour to pick their minds. I was a very good interrogator and interviewer and I would interrogate the living daylights out of them. I had two different approaches. One, I would pay them hourly. That really flattered their ego and they didn’t see me as a direct competitor. Pick somebody who is in the health field. Ask them who all the players are, name all the people who had packages who would be compatible, all the list people, all the contacts at all the magazines, etc., etc., etc. Second, I would track down the people that they would introduce me to and I would approach them with some kind of a variable or contingent or result-based deal. For example, once when I did a deal in a magazine, I went to somebody I knew who knew the people at the magazine. The rate was, let’s say, $4,000 a page. He got it for $2,000 and I gave him 10% of the savings. He was excited. There were 8 pages, so he got a check for $1,600 for making the deal for me. I saved $16,000 and it cost me $1,600. I didn’t care. But you have to learn how to compile all your contacts in a very comprehensive master file or computer data base or a little black book. Then you get all the players, all the resources, all the assets down pat, and you get all these people sending you sample pieces from all the people in the field. They’ll tell you what’s the back-end—all the things you can offer to your subscriber base. You’ll learn more about what people are doing than you would believe. Start responding to every offer to see not only what they do, but what they send you and also what they do with your name—whether they sell you ancillary things, whether they have deals

with other people, or whether they just rent your list out immediately. Do you see what I’m saying? What I would do, particularly in light of the unsettledness of the marketplace (unless you desperately need to see the thing produced or you desperately need to spend the money), is I would use the next 60 days for information and reconnaissance gathering. I would just pick every mind. I would say to myself, “I’m going to spend $5,000 on long distance calls and on mass-solicited, but seemingly personalized computer letters. I’m going to write every list broker. I’m going to write everybody.” Here’s something that can be very revealing. Get every interesting looking ad on healthrelated matters, write the company and ask if they’re interested in selling their company. Tell them, “If you are and your price is reasonable, I may be an all-cash buyer.” It’s hilarious what you learn by doing that. With a lot of the little people, you’ll learn all the angles that they’ve got. You’ll learn where their back-end business is and where it is not. They may not be knowledgeable. You’ll start seeing trends for your master plan about what to do with your newsletter. And it may dramatically enhance your focus and it may cause you to dispense totally with the newsletter and go to some other product. Chuck: That’s possible. Jay: I would just really and truly do a lot more knowledge-based probing research on the whole health market. I would immediately hire a secretary part time, and any time you see any ad that looks good, I would take the ad and clip it. I would just clip things out and send letters and have files and copies of every letter. Certain things I would buy with refund purchase (send for it and get your money back just to see what they sent you) and see what they give you in the cover letters and what they purported to be and what else they give you. Whether or not you find somebody who’s making a fortune with something that they don’t even know how to market, it makes sense for you to stock that kind of information. Again, I’m not telling you what you want to hear perhaps, but I’m telling you what I would do tomorrow morning if you turned your dreams on this subject over to me. I would see who has done what, and there are 3 or 4 other health newsletters. There’s one in Berkeley, there’s a Stanford Medical Letter. There’s something called Cardiac Alert. I would get a newsletter directory. There are 3 or 4 people who publish directories of all newsletters. One is Gale Research in Detroit. It runs about $200, but supposedly there are 4 or 5 volumes of all the newsletters being published. Some libraries will have it. I’d get that directory to see who else publishes kindred, competitive, or host-related or trade and technical newsletters because there are all sorts of different versions of joint ventures you can do. In the past, I tried all sorts of things. I had a deal one time with a newsletter publisher who had a mailing piece that broke even. I had the idea of taking the mailing piece and turning it into an ad, which we did. I had a friend who knew how to buy remnant advertising at a discount on a standby basis in major newspapers. In other words, a full-page in the New York Times back then was $18,000 and my friend could buy it on a standby, last minute basis for $7,000. I put up all the money to buy all these ads on standby whenever they could run it in Chicago, New York, and a number of other major markets. I had a deal with the newsletter owner where all I gave him was his hard cost to fulfill which was five or six dollars, and I made the difference. I made $25,000 in one month doing that. There are a lot of interesting ways to make these arrangements, but I think the first thing is you have to get your knowledge base much more profoundly expanded.

You should know three things: 1) I think there’s more competition out there than you realize. 2) I think there’s more opportunity out there than you realize. 3) I think there’s infinitely more under-exploited back-ends that you could identify and either acquire or do joint ventures with than you realize, and these could make the whole thing. What if you could find 12 people who have interesting health-related items that are profitable and that aren’t very competitive. Maybe you don’t want to copy them because it’s a pain. You could make a deal to license the use of them and all of a sudden, if you knew that out of everybody that you brought in for your newsletter that maybe cost you $3 per subscriber, you could sell one of them an Acme Widget for $500 and make $200—all of a sudden, every time you lose $60 you’re making $4,000. Chuck: That’s what I’m really interested in doing. Jay: I know. But I’m suggesting that rather than going blindly into the newsletter, that you first find the back-ends. And creation of products is usually more expensive by far than acquiring rights to, or buying somebody’s else’s company who’s flubbed up and dropped it. Why should you be the one that drops $200,000 on jars and vitamins when somebody else has already done it and can’t sell it, and you can buy their whole inventory and align with their manufacturers for a fraction? Chuck: Let me ask you a question, Jay. You say the market right now is kind of wishy-washy and going sideways. Did you mean the whole market or just the health market? Jay: The tenor of the marketplace is a general statement. But I think the whole marketplace is a little ambivalent, don’t you? Chuck: The whole world seems to be, at this point. Jay: I think it impacts every market. It depends. Some are more acutely affected, some are more impervious. I’m just suggesting that if you mailed now, the market is going to drop. I think you’re better off getting your data. I think it’s going to level off at some point, don’t you? Chuck: Sure. Jay: Maybe it’ll take two months, but the market is going to drop again. I think before year-end you’re going to get some trend. Chuck: I hope so. Jay: I think you’re better off waiting until it stabilizes because you could lose your shirt if your erroneously got a good reading and then the market dropped after that and you’re not really in sync with it. You’d be in trouble if you put your energies in the mail and the market dropped 50% and you didn’t have your back-ends locked up. Chuck: There’s no question about that. Jay: Also, there’s probably an enormous editorial you could buy that’s already existing. One of the things that I have done for years is embarrassingly easy to do. You could write to every book publisher around and ask them for a list of all their out of print books they might sell. You’ll find that there’s a ton of timeless material that’s really good stuff. Some dedicated, impassioned man or woman or professional expended maybe 20 years of their life dedicated to something and

maybe a year or two of their time writing a book and maybe another 6 or 7 months editing it to perfection. They put it out and got a $5,000 or $10,000 advance—or worse, they put up their own money and didn’t get any advance. It was put out in the regular conventional book stores and it bombed, or it was mediocre and it’s out of vogue. But you can get the rights to that stuff for pennies. A $1,000 guarantee against a little royalty, but you can turn that stuff into reports and products and editorial that could be very useful. Chuck: Are you talking about copying the entire book? Jay: Well, I would get the rights to the entire book and break it up to 12 different articles. The point is, you don’t have to reinvent the wheel unless you really want to. Chuck: No, hardly. Jay: You can also get reprint rights. You’re going to condense. It’s not a bad idea at all. I think you’re going to have to do a lot of research. Why don’t you ask me other questions you want to? Chuck: You mentioned a mailer would cost about 40 or 50 cents each. I assume that includes the rental of the mailing list. Jay: $400 a thousand roughly. Maybe it’s more, maybe it’s less, it depends on what you’re doing. Chuck: Does that include the paper and the printing? Jay: Normally it’s list rental, printing, mailhouse, postage, addressing, envelopes, return envelopes. What it’s going to cost you depends on the size of your piece and the size of your mailing. Forty cents is cheap, sixty cents is expensive. Chuck: And 4-6 pages would still be about that? Jay: Yes. I think if you figure 40 cents or 60 cents per piece in the mail, you’re going to be relatively accurate. A fulfillment cost per year, if it’s eight to twelve pages as a newsletter sent off twelve times a year, first class, you want to figure it’s going to cost you somewhere in the vicinity of 80 cents to $1.25 per issue. So if you figure $12.00 fulfillment, it’s probably not unreasonable. That probably doesn’t give you a lot of profit to pay any overhead so it probably just covers your hard cost of typesetting and printing. It’s really not enough to cover your incremental cost in terms of the salaries of editorial or clerical people. Chuck: I have no idea about pricing the newsletter. Jay: You should test the price. Chuck: I agree. In a newsletter, in general, is it better to go down to more of a break-even thing and initially try to get a gross volume of people to subscribe or again, does that really cheapen the product? Jay: It depends on what your objectives are. Chuck: The objective is to get as many people to subscribe to buy back-end material. Jay: Then you want to use the price that produces the most aggregate names.

Chuck: Is that the lowest price? Jay: Not necessarily. If you do a price test, you may find that an $89 offer out-produces a $39 offer. My basic assumption is that by the nature of that product, it doesn’t command high price perspective. I think you’re going to find that you’ll be lucky to get $29 to $49 for it. Chuck: O.K.. Jay: Have you been involved in investing for a long time? Chuck: Yes. Jay: I came out years ago with something called the “Marketing Test Concept” and you may or may not recall it. I had a company called Financial Intelligence Reports. Chuck: I remember the Financial Intelligence Reports. Jay: We did something like 700,000 or 800,000 newsletter subscriptions at something like $19 apiece. When I first came out with it, it was like a folly experience. I was in a funny mood one day and wrote this laughable ad for a $95 newsletter for $19. We tried it, and to our fascination, the market loved it. The market actually loved it. That approach may in fact work very, very well for you. You tell somebody, “We want to find out what impact the price has on inducing you to subscribe to....” I think you have to come up with a really nifty titular designation for what your product is. I’m not sure what, but something that’s got charisma and can note some really fabulous result that lofts you to a level of value and need-filling perspective that transcends mere superficial or monodimensional rhetoric. I don’t know what it is, by the way, but something. I would call yourself something other than just a basic health newsletter. I’d really do some serious soulsearching for a better descriptive identification of what kind of newsletter, advisory, alert, or update, or confidential privileged material—something that denotes .... Chuck: Like “Medic Alert?” Jay: Yes, something like that. I don’t know what I would call it. But something like “National whatever it is”, is boring. I’m sure that’s just a working title. I hope it is. Chuck: Yes. Jay: What else would you like to ask? Chuck: Is my interpretation of the marketplace or the medical marketplace or the health marketplace reasonable? Jay: Restate, in one paragraph, what your interpretation of the marketplace is and I’ll answer that. Chuck: Well, I think there is a fairly broad marketplace of adults between the ages of 21 and 75 who are interested in finding out more about health issues because they’re tired of watching TV and getting garbage, and also about reading Ladies Homes Journal or Newsweek and getting

small pieces of pie. They want a complete overview and they want someone to tell them what to do. If there’s something they can do, what is it? Jay: In theory, yes, but what you have to do is validate it for yourself. One way is to go back a couple of months. Do you have subscriptions to all the good health magazines? Chuck: I’ll be getting them. Jay: Go back, about a year is best. You can review and see which ads keep reappearing and that will validate it for you. Just because you see an ad one time doesn’t mean the ad worked. It also doesn’t mean that the people doing it are making any money on the ad because they too could be very much back-end oriented. So, you’ve got to get enough feeling to see how endurable an ad is in the market, or how endurable the market is for a concept, for a generic subject matter. I think the best way to do it is to collect past issues of Prevention for the past 12 or 24 months, and peruse every ad in the last 24 issues of the National Enquirer, and look at the ads that run there, and look at the last year of Self, Psychology Today, or Woman’s Day. I don’t know which ones would have the right stuff, but I would read through all of them. Start looking at all the ads that reappeared. All the little ads too. Look at the little classified display ads on the classified page and write to those people. Just because they’re not running big ads may mean they don’t have any vision, or horizon, or chutzpa, but they may have a really good concept. Chuck: By writing to them, do you ask them to provide them information about the possibility of buying? Jay: I’d do several things, and I’d experiment. 1) If it is really interesting, I would just write and buy something or send for the free details and see what they send. Cut out and make sure you have in your file the actual ad you responded to, and the details of the time it took them to respond. 2) I would do a mailing. I would use different names, by the way, so you can do different things with different addresses. Maybe your office address for one, your home address for another. Your inquiries would be under one address. Your paid responses would be under another one. You’re decoying, you’re buying under a code name so you can track what happens. Maybe you send everybody a different name and a different address. Maybe somebody in your office at a different address. Send a personalized sort of a line saying, “I saw your product. I’m impressed with it. I don’t know the size of your business. I don’t know your level of contentment or profit. If you’re marginally profitable (or think you should be), if your business has reasonable prospects for growth and stability and you’d like to sell all or part and either stay involved or retire or sell other businesses, I am interested. I have cash if your price is reasonable—or if you want a lavish amount and the business warrants, I am amenable to part cash and part terms. I’d like to get a preliminary overview in confidence from you,” and let them educate you. It’s incredible what will happen. Half of them will throw it away. Half of them who have a neat concept who don’t know the power of it will send you everything. They’ll send you their balance sheet, they’ll send you their mailing list, they’ll send you all the things they do. It’s a very interesting technique. Chuck: It would be. I’ll go ahead and work on that. Jay: What normally happens after people talk to me is I turn them around and maybe modify their thinking. They think they want to know something and I’ll introduce something perhaps more efficient—heretofore unembraced ideas—and it can take a couple of days, or a month to gestate. Do you feel good about what I’ve said?

Chuck: Good and bad. Jay: Elaborate. Chuck: Obviously, I’ll have to do more research. Jay: That’s the key. Most people don’t do enough research at the outset, and this is from observed and personal experience. The hardest thing to replace is that initial capital if you do it wrong. Chuck: I know. I don’t want to do that, obviously. Jay: If you can find 100 people who screwed up but they have viable things, you can take over for nothing. Or they can host your newsletter for you and you can save your capital. Isn’t it worth taking 60 more days? It’s going to be the most fascinating adventure in research you’ll ever undertake. I assure you, it’s going to be intriguing and people will open up ideas, concepts, and products you never thought possible that they’ve accidentally stumbled across. Most of them will be little fish that you could really do much more with if you borrowed or just emulated it. You’ll find certain people that don’t have any back-ends and you could put 2 or 3 deals together. I think it’s going to open up vistas that you could never even imagine. It’ll be work, but just hire a secretary. Take $5,000 and say that’ll be your research fee, and you’ll have a secretary for 2 months and maybe another $2,000 in phone calls, and play the numbers and let the numbers work on your behalf. Chuck: I’ve got to do that, obviously, and see what happens. One more question, just a general one. When you go ahead and do a promotional mailer for a subscription and you assume it’s something like a newsletter or book, is 1% still reasonable to expect—a response around 1% or 11/2%? Jay: There is no reasonable amount. It depends on the author, the dollar, the market. When we did the Marketing Genius mailer, I think our best pull was a small percentage, but that was a $500 product. I’ve had mailing pieces that have pulled 5% at $19 and have known people that have had 10% at $15 but I have also known people that pulled such a minuscule amount as a fraction of 1%. It’s not an unreasonable expectation, but at 1% you’re going to lose your shirt on a $39 newsletter. You’re going to need the better part of 2% or 3% at $39 to break even. That’s why I’m suggesting you’re better off to find hosts to take over. What if you find 100 or 300 businesses who are spending $10,000 a month to promote their own businesses and each one generating 500 customers? You could make deals with all those to access their 15,000 aggregate customers and get the leverage play of 300,000 or 3,000,000 units—whatever it is a month—and it costs you nothing but giving them all the profit up front. Look at what you’re achieving. That’s what I would suggest. These are difficult times and I think you’re very talented, but I don’t think you can contend with the ambivalence and the competitiveness of the marketplace. I think you should do a heck of a lot more research, which is what I seriously recommend you do. I hope I haven’t frustrated you, I hope I have inspired you. Chuck: Oh you have, no question there. Jay: Thank you. *

* * *

If you’ve found some good ideas in this transcript, don’t just write them down—act on them. For example, don’t just resolve to contact experts in your field, or editors of trade publications, or owners of failing companies, etc., to see what you can learn from them. Do it! Make a list of all the possible sources of marketing information (for example, who did what ads and what mailers and with what results), and systematically call a few of them every day. The time you invest in this could be worth millions. By the same token, don’t just promise yourself you’ll look into the joint venture possibilities. Instead, go back through this transcript and every time you find a joint-venture idea, modify it to your own situation, write down the names of likely joint-venture partners, and then contact them by mail or phone. As I told Chuck, it’s a numbers game, and the more people you contact, the more likely you’ll hit pay dirt.

Marketing Consultant Sometimes it’s easier to help others than to help ourselves. Murray, a marketing consultant, did a good job of giving advice to his clients, but when it came to marketing his own business, he needed help himself. Regardless of the nature of your business, I think you’ll value the detailed wording I gave Murray for use in promoting his services. The exact words, of course, won’t apply to your situation, but the tone, the flow, and the sequence of ideas I dictated should be adaptable. Jay: What do you really want to accomplish in the hour we spend together? Murray: I think I really want to deal on a better focus, putting my attention not only on more profitable ways to capitalize on the things that I’m already involved in, but to also get an idea of what marketing elements are going to help make us more profitable in the areas where our strengths are. Jay: Tell me candidly, not what you purvey to the marketplace or to clients, but what are your greatest singular strengths, what are your weaknesses, and then tell me how you’re selling your various marketing, advertising, PR wares to people. Give me an overview. Murray: Okay. I think the strengths are, on an individual level, the energy and the hardworking aspect. I put in a lot of time. I think that it’s very easy for me to close people. I’m not a high-pressure person, but I tend to have a very good personal rapport with individuals on a oneto-one basis. Jay: What is your Unique Selling Proposition to the people that you can close so easily? Murray: We have two fairly distinct target groups. One of them is professionals in every category—doctors, dentists, attorneys, CPA’s. The other is corporate accounts. And I’m going to address them separately. To the professionals we offer a more comprehensive type of marketing program, and this may be also part of my catch-22. We offer them not only consultation, but we offer the implementation end. We have the PR expertise as well as the advertising and the direct mail. We can put together a sales program, we can do a lot of things for them, all under one roof, and it’s very inexpensive when you compare it to other agencies or other outside services.

Jay: I’m a doctor or I’m a CPA or a lawyer and you wish to solicit me. Right now, how do you do it and what do you say and who do you say it to? Murray: It depends on how they come to me. If they come to me from an article that I’ve written that has sparked an interest, and it seems to be one of the primary . . . Jay: Where do your articles run? Murray: In all the professional journals. You name it: American Bar Association, Legal Economics... Jay: What’s the typical thematics, what do you preface them on? Murray: How to write a strategic marketing plan, how public relations fits into your marketing mix, and then more specialized topics. Jay: Okay, so you write an article, and it is published in a national or regional type publication? Murray: National. Jay: That’s great. So you got those published. A doctor will call from anywhere in the country, or just local? Murray: Anywhere in the country. I seem to have more strength on a local basis, though. Jay: Okay, so he’ll call or she’ll call, and they’ll say, “I saw your article and...” Murray: “...and I’m interested in what kinds of services you provide.” Jay: To which you’ll respond... Murray: I let them know that we provide a range of services depending on what their individual needs are. Primarily we’re interested in helping them set up a long-term marketing program, although we will service them on a project basis or month-to-month basis. During that time we’re also developing a marketing plan and conducting research in the areas that pertain to their particular marketplace, or their target audience. And we’ll not only provide the steps for implementation but go into the actual writing or whatever may be involved in pulling together the programs. And we do that on a regular consultation basis, where we are in constant communication with them, and tracking these programs as they go along, revising the plan according to our... Jay: Let me stop and see if I understand what you’re saying. You offer the professional that you will a) formulate for them a master marketing plan, b) develop all the incumbent strategies and tactics, c) implement the plan for them, and in the process, presumably teach them how to implement it for themselves. Murray: You got it. Jay: O.K. And for that, how do you charge? Be very specific.

Murray: I try to calculate based on an estimated number of hours and who I have to assign to it and what’s involved. The ranges are very reasonable, to say the least. Right now, it seems to be averaging 5 or 6 hundred dollars a month. Jay: Which is very very modest. Now let me ask you a more specific question. Are you effecting demonstrable and tangible results for your clients? Murray: Not the kinds of results that I would like to. Jay: Why? Murray: In some areas I’m not happy with the results. Jay: Give me some examples. This whole interview is going to help us both find the right direction—you know that, don’t you? Murray: Sure. Jay: Are you maintaining and conserving the clients or are you losing them frequently? Which is occurring? Murray: Surprisingly, I’ve done well there. Again, it could be price-associated, but generally I sell someone on a 6-month basis. The renewal is pretty good. I would say that 60% renew with me, and of those that don’t, I would say another 20% call me back for per-project work. Jay: So you’ve got good residual facets. Murray: Fairly good. The referrals are not strong. Jay: But do you ever advertise for yourself? Murray: Never have. Jay: Let me ask you a question. Let’s take a catagory of professionals and let’s try to sub-stratize them. Doctors. There must be within the confines of doctors different categories that are the most favorably predisposed or the most viable prospects for your services, and there must be other categories that aren’t. Would there not? Murray: That’s correct. Jay: What would the most viable categories be? Murray: More often than not, it is a medical practice that has been around for a few years, maybe 3-4 years, that has either stagnated in growth (and this is where it may split off a little bit) and they’re declining. They’re not really at a maturation stage, but they’re noticing that something’s happening and it’s not quite growing at the rate that they would like it to, or it is a practice that is doing very well and wants to get even more aggressive. I also get a few start-ups. I also offer hourly consultation or per project for people who don’t have the budget. Jay: Is your advice great advice? Murray: Great advice?

Jay: Is it good advice, is it better advice than what they would do on their own? Murray: Without a doubt. Jay: O.K., so you’re useful and helpful in a viable and valuable service commodity. Murray: I believe so, yes. Jay: O.K. If you took some of the articles you have written that were published, and you reprinted those and you did a test mailing to doctors—let’s say 1,000 doctors—you could say something like this: “I am told that you have thought about ways to increase the volume, or new patient load, or just overall expand the size and profitability of your current practice. Dear Dr. Schmidlapper, perhaps I can help you intelligently develop a workable and practical and effective strategy to adopt. And if you don’t have competent staff to handle the necessary execution, I can probably handle that for you as well.” New paragraph. “My name is so-and-so” (you introduce yourself). “You probably have read articles I have written because I’ve been published frequently in Medical Economics and American Doctor, Gynecologist Today, whatever. The subject I’m almost always asked to write on is how to enhance the marketing of a professional practice. I’ve also written articles and have done some seminar participations on the subjects of how to improve patient load, how to retain new patients, a whole stream of professional patient marketing subject matter. I am considered quite expert and proficient at helping physicians increase the number of patients their practice handles, enhance the amount of recurring business a patient represents to them, and preserve and very effectively develop programs to make certain new patients turn into continuing patients. I also am skilled in developing very low-key, but high-visibility innovative public relations for my professional clients. For example, I get my doctors written about frequently in the local papers. My doctors are interviewed on radio shows at their convenience by telephone. They don’t have to go anywhere. My doctors are asked to speak to all sorts of civic groups. I’m able to very subtly and yet very, very effectively get my client doctors prominently in the minds and hearts of all sorts of influential people in the community. Depending upon the specific objectives you’re trying to achieve (and perhaps you don’t even have those objectives worked out in your own mind or heart), I could be of enormous benefit. Most significantly, I am willing to allow you to explore the possible merits my services offer your practice without cost, and without obligation. I am offering you the opportunity to contact me either by phone or in person at my offices or yours, or for lunch or for dinner since I live and work not far from your office location. And we can have a pleasant non-threatening off-the-clock dialogue where I’ll explain to you what I do and how I do it. I’ll help explore and explain to you the various kinds of programming that my various professional clients have asked me to formulate for them. I’ll answer any and all questions including the most probing questions, you may ask me about such hot potato issues as advertising for professionals, PR—does it work? What facets work best? “You’ll be delighted to know that my services, if you decide to avail yourself of them, are offered on the most appealing basis possible. Simply put, I don’t ask for long-term commitment. I ask you to allow me to mastermind marketing programming that is long-term and endurable and sustainable, but your only obligation to me is on a month-to-month basis. Any month or any quarter you decide that what I’m doing for you doesn’t have merit, if you decide that it isn’t making you—after the start-up period—demonstrably more money than it’s costing you, or if you want to close your practice because you’ve got too much business, you can always call me up with 30 days courteous advance notice and say, ‘Murray, I’m really pleased with you but I don’t want to go any further,’ and we stop. No questions asked, no hard feelings. On the downside, the maximum risk is a month. I’ll even reduce that. Instead of selling your monthly programs,

I’ll sell you individual services so you can say, ‘Murray I want you to just do a marketing strategy for me, and then I’m going to sit and contemplate whether I want to implement it.’ and I’ll do it and then I’ll sit patiently and wait. I may, however, be inclined to nurturously nudge you, irrespective of whether you decide to go forward with me, because by and large 90% of the doctors who I ask to counsel with me really could use my services. They could benefit—their practice can handle 10% more patients without a profound increase in overhead costs, which means 10% more bottom-line profit. “We’re talking, perhaps, in repugnant business terms, but face it, doctor, you’re a profit-oriented business whether you want to admit it or not. You’ve got overhead to satisfy, you’ve got capacity to fill, and any day at 6:00 or 9:00 when you close the door, if that waiting room wasn’t filled to capacity every hour, it’s lost revenue that you can never reclaim. I know how to make your offices operate at whatever level of efficiency and capacity you want to operate. I know how to make you more prominent in a very professionally respectful way. I’m skilled in developing advertising and mailings, I’m skilled at developing programming to use with new patients (to sustain them and preserve them), to reactivate old patients, and to get referrals for you ethically and honorably. “I probably have answers to a lot of questions that have been gnawing away at your heart and your mind for many, many months, and maybe even years. As I said, I’d be very privileged to try to answer as many or all of them as I can at my risk, not yours. After spending a pleasant refreshing hour with me, we’ll flip to see who’s paying for coffee or breakfast if that’s what we’re having. You make a decision. You can embrace what I have to say, and try me out for a month or two, or you can just gestate it and be contemplative. All I’m saying is that I think you owe it to yourself to get more information, and I humbly believe I’ve got that kind of information to purvey. “Anyway, this has been a long letter. To summarize, if you’ve been thinking about embracing a program, an intelligent and effective program of advertising, of promotion, of marketing, of subtle public relations, or any combination thereof, I can probably be extraordinarily useful. I’d like to talk about it with you. My number is ________. I’m in the offices normally from ____ to ____. I’m very willing, knowing your complex schedule, to make time available for you evenings, weekends; I’m not renowned for being an early moring riser, but I’ll be delighted to get up early if that’s preferable to you. We can do it by telephone if that’s more convenient. I can give you my home phone number and you can call me after hours if you’re sitting around reading this letter. “One more thing before I close. It might be very inmportant. Unlike most PR agencies who charge their clients $3,000 to $5,000 a month, and unlike most advertising agencies who charge their clients thousands of dollars minimum against 15% of expenditures, and even though the results of my efforts have been, in many cases, extraordinarily profitable, my fees are refreshingly modest. It would be rare for you to spend $1000 a month with me. More likely, a little over half that. Anyhow, I just wanted you to know so you didn’t think I was going to break you in the process of building your practice. If you need my help, I’m there for you at a cost I’m sure you can afford. If you want to just discuss it, I’m willing to do it on a no-obligation risk-free provision. Give me a call. Thank you.” That’s not a bad letter. “PS: To help you get some familiarity with the way I think and operate, I’ve taken the liberty of including some reprints of a couple of the articles that have been published that I’ve written for your journals. You’ve probably read them and maybe forgotten, maybe when you read them you put them aside and made a mental note that you ought to call me. If we don’t get together, I hope these at least help you. Thank you very, very much, doctor. I know you are very busy, and this has been a rather long letter. I appreciate the valuable time and attention that you’ve given to me whether you call me or not.”

Murray: Great! Jay: That kind of a letter should be useful, don’t you think? Murray: Yes, that would be a nice approach. I have not done that, although after I make contact, I do send out a letter. Jay: Let’s say you write to 1,000 doctors. What kind of marketing budget so you have? I remember that your practice does about $100,000 a year, and that doesn’t take into account the overhead you’ve got, probably the assistants you have to pay on a sub-contract basis, but what can you afford to invest in marketing yourself? Murray: It is extremely tight, and we’ve probably got to a point now where I’m probably near break-even. I’ve looked at other things. We have a pretty extensive marketing plan. Most of it is just labor-intensive, writing articles, submitting them. We’re headed for a trade show for the state dental association. There will be about 10,000 dentists there. And I have no idea what to do there. Jay: When’s the dental association meeting? Murray: Early April. Jay: Are you going to have a booth or are you going to speak? Murray: Just strictly a display, a booth in the convention center. Jay: There’s going to be lots of competition for their time? Murray: Not necessarily. The closest company to mine last time was a printer that did brochures. Jay: Here’s an idea. You promote a free seminar you’re giving. Where are the doctors going to be from? Murray: All over the state. Jay: O.K. You could promote a series of free seminars you’re going to be giving. I think you should give some free samples. You should promote a series of seminars you’re giving the next week or the week after, on the subject of how to market, how to build—whatever the most effective buzz words you’ve found through your experiementation in presenting to these doctors—whether it’s how to increase your patient load, how to build the size of your practice, how to advertise a practice, how to develop PR for pennies that produces a thousand dollars a month in business, or something like that. Murray: I have the seminar that we’re doing in May. Jay: For profit or free? Murray: For profit. Jay: Are you doing it yourself?

Murray: Yes. Jay: Have you been promoting it? Murray: No, I have not. Jay: Well, why don’t you promote it for profit, but keep in mind what you really want. My experience with seminars, and I’ve been involved in a lot of them, is this: If you get 10 dentists and you end up making $3,000, you would be better off to get 300 dentists and not make anything, but end up with 20 clients who will pay you $600, $700, $800 a month for the next year. So you have to make a value judgment there. I think if I were doing seminars, I’d do a titillating synopsis, like a 1-1/2 hour or 2-hour seminar at the dentists’ conference—either free or cheap, but either way I would tell enough that it was helpful. Murray: Part of what I mentioned in my questionnaire is that I’m just not happy with the results I’ve been getting with the professionals, so I’m very open to ideas like this. Jay: Let me tell you another thing you have to do. Years ago, I had a full-page article about me on the front page of the marketing section in USA Today, and I got about three phone calls, most of which were flakes. I was very surprised, but when I cut the article out and reprinted it and sent it out to people it had enormous credibility. Murray: You bet. Jay: For you personally, the articles you published aren’t as impressive as cutting them out and sending them with a cover letter directing the doctor to acknowledge and read it, and then call you. Because everybody is more demanded upon than they have time, it’s incumbent on you to mail them a modified version of the letter that I dictated to you, that says something like this: “PPS: As a service to you—because I do believe you’ve been thinking about this and I do know doctors better than you think—you are so busy and prevailed upon that you may be sitting chomping at the bit at the very moment you’re reading this letter, but you’ve got so many files to read and reports to write, insurance companies to communicate with, and direly ill patients, charts and records to read and administer to, that you may just, in the shuffle, not be getting around to calling me. That’s the irony and the quandary of the doctor trying to address other issues that are more subordinate. With your permission, in advance, I’m going to take the liberty and call your office in about five days if I don’t hear from you. If when I call you’ve decided you don’t want to talk, you won’t offend me; just have your secretary or receptionist say, ‘The doctor doesn’t want what you’re offering, Murray.’ But, on the other hand, if my call forces you to take action on something you’ve been putting off, and it’s something that’s important to you, pick up the phone and say, ‘I’m so thankful you called. Let’s sit and talk now, or I can talk to you tonight.’” Okay? Murray: Great. Jay: I think that’ll make a big difference. And then you’ve got to follow up on it. But you set them up so it’s not an offensive call for them. You’ll find that without that follow-up, letters will do poorly. With that follow-up, if you mail 100, you’ll probably get 3-4-5 doctors out of 100 who will sit down with you. Then it’s a function of your ability to close them. Murray: Right.

Jay: The letters shouldn’t be pre-printed. They should be computer engendered on a laser printer so they look personal. Murray: We’ve got that credibility in-house. Jay: I would not fold it. I would send it unfolded in a 9 X12 envelope. Since it’s in the area, it might even be worthwhile to hire somebody who looks like a messenger and have them handdeliver to their offices. You might hire a kid and say, “I’ll pay you $100 for the week to deliver these,” and make the kid wait for them to be signed, and everything else, so it looks authoritative. Give them a little receipt pad. If you demand that it be considered important, they’ll look at it in a higher light, don’t you think? Murray: I like it. Jay: Don’t send 1,000 of them, send 100, and then call sequentially those 100 people. I think that alone will surprise you. And again, you may want to cut the letter down. What I dictated is too wordy for the actual letter. When you type it—and even though doctors are real persnickity and real straight-laced fellows—make your letter be human, break it up, use a lot of white space, maybe it’ll take four pages, but make it real easy to read, a lot of one or two-sentence paragraphs. Murray: Four individual pages or 11 x 17 folded up. Jay: My preference would be four individual pages—11 x 17 folded is obviously printed. Murray: Yes, right. Jay: I’d have it genuinely printed on your computer and try 100. I think you’ll reclaim and harvest if you send 100 articles. Try, by the way, different combinations. Send 50 of the people one version. You can do more; I’m just trying to give you a very modest recommendation, a recommended strategy, consistent with a limited budget. Murray: Right Jay: Send 50 of them one collection of articles, and 50 another, and you might find the different combinations will evoke different responses, and different interests. And you do some experiments. If that works, do 100 more, keep doing it and all of a sudden, the neat thing is you get 20 doctors. You add 20 more doctors to your client base, and you’ve got $150,000 a year increased revenue. Then once you’ve got the methodology down, you start growing pragmatically. You bring in an associate and a real stringent non-compete covenant. If you know it works for 100, it’ll work just as well for 1,000, and you make a deal with your associate where he gets 20% of the billing he brings in, so you mail out another 100 or 200, and you bring in another $100,000, and you get three more associates, and all of a sudden you’re doing $1 million and your people are making $50-60,000 incomes, but you’re making a half million. It may sound like I’m oversimplifying, but it’s really do-able. Murray: I want to revel in that for awhile, but part of the problem is, when you’re dealing with that type of individual, doctors, professionals in general seem to be kind of a tough group. Jay: Not intellectually very stimulating and very difficult to teach, and their marketing execution is usually lousy? Murray: Exactly.

Jay: But they pay their bills very well. Murray: True. Another part of the problem is that I might be working on too small a margin in providing all of this for so little. Jay: Think about this. What if you simply raised your rates to $775 or $765 a month, or some non-threatening amount, on a non-long-term, month-to-month basis, but with all the onus on you. You can even say, “In the first month, if you don’t think it’s worth it, you can pay me what you think it’s worth.” I have this funny feeling, if you experimented, you’re going to find that you can charge more than you’re charging now. And I would stay with doctors. I would address doctors first. Even if you loathe doctors, you’ve already invested a fortune in time, effort, and money in getting potentialized in that market, so if you can’t stand them, you be the PR man and just hire somebody. Say, “Look, I can grow this thing. I’ll give you 20% of the billings. You manage it under my direction. You’ve got to sign a warrant to me that these clients are my clients, you will not take the clients, you will not use my techniques on your own.” You get somebody who’s making $30,000 who’d like to make $50-$60,000, and all you do is you market yourself. Just because you don’t like it doesn’t mean you can’t make money from it. Murray: Sure, sure. Jay: And you’ll probably find that the difference between $600 and $765 a month isn’t going to be profoundly resistance-inducing to the doctor, but it’ll change your margins dramatically if you’ve got 30 doctors on board. Murray: That’s a good way to look at it. There’s one area I really want to touch on. Jay: What is it? Murray: One thing that I feel we have that is a real marketable tool—and I sent you a copy of it— is our newsletter. Jay: Tell me a little bit more about it. Murray: O.K., it’s called, “Building your Practice through Public Relations.” Jay: How often do you publish it? Murray: Monthly. Jay: And what do you charge for it? Murray: $65 a year. Jay: And how many subscribers do you have? Murray: I have about 20. I’ve been real bad at marketing it. Jay: Is it well-written?

Murray: It’s excellent. I think it’s extremely well written. I use another writer also, who publishes it with me. But I haven’t done anything to market it. The only way that I got those 20 is through new product releases. A dental management magazine did a nice little blurb on it, and I’m still pursuing others. Jay: Do you want it to be a profit center? Murray: I want it to be a profit center. My goal is to get up to 3,000 subscribers. Jay: Is it demonstrably superior to what’s on the market? Murray: Oh, without a doubt. To me, the response has been great. As a matter of fact I’ve been surveying the 20 we have on a regular basis just trying to get feedback. And the feedback has been very good. I’ll tell you one problem. I had 100 inquiries out of one magazine blurb. Jay: And what happened with them? Murray: I was only able to convert 10. Jay: What did you send them? Murray: I sent them the newsletter. Jay: The actual issue I’m looking at? Volume 2, No. 1? Murray: I think. No, it could have been any one—I sent them different ones. Jay: And, along with what? Murray: Along with a cover letter which I also included in my packet there. Jay: Ten percent is not bad, do you know that? Murray: Really? Jay: Ten percent conversion on newsletter inquiries is wonderfully good. If you doubled that, look at what you’re saying to yourself. If you could get 100 people a day coming in and convert ten of them, theoretically you should renew 40-75-80% of those people. You understand the trail, the stream of income you’re accruing? Murray: Right, right. Jay: The problem is just generating enough. But you’ve never done an external mailing. Murray: Never have done direct mail. Jay: What issue did you send them? Murray: I experimented. Some of them I sent an issue and some I sent just a few pages from the issue . . . Jay: And of the two ways, did you see any demonstrable difference in the conversion?

Murray: I didn’t try the other way until recently. Jay: So you didn’t get numbers that were meaningful. I think with this you could probably run an ad about this wonderful practice-building public relations newsletter, regularly $130 a year, and you can try two or three different little ads. Years ago I was doing the marketing for Entrepreneur Magazine, and we ran ads all over the place saying, “The world’s most expensive magazine.” This was back in ’77 or ’78, and we showed a face price of $7.50 a copy. Most magazines were $1 or $2, and we offered the latest issue for less than half price, for $3.50 on a money-back basis. We used to generate 10,000-15,000 checks for $3.50 and we converted about 7 or 8% of them to $60 subscriptions, and we ran it every month. Let me ask you a question—are you familiar with the people who do PR on a guaranteed performance basis? Murray: Vaguely. I know of one company that does do that. They send out a release. What they do is they charge per call. It is results oriented. Jay: Let me tell you one other thing to think about. I used to only get big fee income. The last year I got big fee income I made something like a quarter million dollars, okay? But, now here’s the point. The year that I stopped doing that it was because I was involved in the hard money marketplace, and I had two clients—one was paying me $20,000 a month, the other was paying me around $8,000 every couple of months to do little projects. And with the recession they both cut me out because they were hard money oriented, they were involved in the recession-based investment areas that just got killed. I was terrified, because I was used to making a quarter million dollars and I went looking for people to pay me that fee, and it was horrifying, because no one would do it. Out of necessity, I took on clients on a performance-only basis, where if I didn’t perform they didn’t pay. They would pay only after I performed and the profit had cleared the bank. Murray: How did you verify that they were giving you accurate statistics? Jay: I had enough control and I had a signed an 18-month contract. I had total authoritative control over all their operatives and it was relatively easy to reconstruct the dynamics and extrapolate to figure out how close or badly they were reporting to you. The first one I took on I starved for four months. I had nothing in month one, nothing in month two, around $3,000 in month three, $5-6,000 in month four. Month five, I got $10,000. I can’t remember the exact figures, but the essence of what I’m conveying is absolutely correct. Month six, I got $15,000. It got up to $30,000 and leveled off and I was collecting $30,000 a month and I didn’t have to do anything. What I’m saying is you can get a binding contract from enough people who will pay you $1,000 every time you get their name in the local paper or they’ll pay you $1,000 every time you get a radio station that’ll want to interview them. You don’t get anything from them up front, but you have the most binding agreement and you perform like mad and you’ll make 20 times what you would on a fee basis. Variable conpensation can make you so much more, because most people don’t want to pay for non-results. You can say, “I can get you on this show and I can get you on that,” and they’ll say, “Well, but I have to pay you whether you do or not.” If you’ve got the courage to say, “No you don’t. If you just want to get interviewed by KBC or get interviewed by the Daily Breeze, or get asked to address this group. You just give me a list of the things you want done. I’ll give you a list of the possibilities; we’ll value-rank dollar to dollar what they’re worth, and you choose what you want in what period of time. I’ll agree to do them for you stricly on a performance basis. You give me things you want done or you want to do—in a month, in a quarter, whatever period you want—and you agree in advance, irrevocably, that if I pull it off, once it’s been done, I get paid $500 for this one, and $1,000 for this one.” Does that make your mind come alive?

Murray: Yeah, in some regards it does, and in other regards it doesn’t. With the PR, especially if we’re doing a lot of it, we can’t always catch everything that comes through in the papers or gets aired. Jay: There’s a guy that I know who sets up radio interviews in New York. He makes $3 million a year, and he just charges for every interview. No one wants to pay a fee just to try to get radio interviews. He says, “Fine. I want $300 for every interview I set up, “and you prepay him for a certain minimum number, and if he doesn’t do them, you get the prorata back, and if does them, you owe him more. He charges $300 for every interview. And he considers major markets, whatever. Most doctors would give their right arm to be interviewed on their local radio station, particularly in smaller communities. And they just don’t know how to do it. That’s a piece of cake. You call up the station and say, “I have a doctor who specializes in this, this, and this. And he wants to talk for 1/2 hour on the subject of AIDS or whatever. You want to interview?” Not the hardest thing to set up, is it? Murray: Not at all. Jay: But every time you made a phone call like that, you’re making $300! Murray: There’s a dentist who contacted me and was hesitant about a retainer arrangement. He’s one who would be more interested in paying a percentage of the performance of what I did. Jay: I’ll tell you a headline that I’ve used very successfully: “Don’t pay for advertising and don’t pay for marketing. Pay for results.” If you said that about PR and you ran an ad, “Don’t pay for PR. Don’t pay big PR fees. Pay for specific results.” That’s very powerful. That little display ad will probably bring you a lot of inquiries. * * * * In your ads, mailers, telemarketing scripts, etc., speak truthfully and conversationally. If people are resistant to being sold something, try disarming them with an offer to simply sit and talk and share your ideas. Or offer free or low-cost seminars. Even if your seminars barely break even, they’re a good source of future customers. And if you’re confident you can deliver what you promise, don’t be afraid to offer your product or service on a contingent or percentage basis, where you only get paid for results. Most people don’t do this, and it’s a great way to gain a competitive advantage.

Home and Office Cleaning Service This consultation focused on generating “back-end” business: How to lock in a perpetual repeat sale, even if it means breaking even or losing money on the initial sale. In addition to explaining the concept, I gave Barry some suggested wording he could use in selling his offer to prospects. Then I went on to show him (again with sample wording) how to get other companies to generate new customers for him in droves—for little or no up-front cost. * * * * Jay: Which is the best newspaper in your area to advertise in? Barry: The Pennysaver.

Jay: Because that’s the most cost-effective? When you run it in the local newspaper, it doesn’t work? Barry: We don’t get much response from the newspaper. We found we get the best response in The Pennysaver than anything else. Jay: When you run in The Pennysaver, A) What does that ad cost you? B) What would you expect it to produce for you immediately in business? Barry: It costs $185 to run. Jay: When you spend $185, what does it produce for you? Barry: We’re lucky if we break even. Jay: Break even based on gross revenue or based on all your costs of serving? Barry: Gross revenue. Jay: What are the other alternatives that you have available that you have tried? Barry: Early on, we tried direct mail. But we never did any volume off of direct mail. We always did 100 or 200 pieces, not a large mailing. Jay: Another question. You said in your questionnaire that your philosophy is that you’ll spend a dime in order to make a dime. Do you mean that literally or figuratively? Meaning that if you spend a thousand dollars and that brings back a thousand dollars gross of billing, are you happy, satisfied, or terrified? Give me some response and tell me what the residual value of a customer is. Can you tell me for every ten new customers you get how many will repeat and how often? Can you answer that for me? Barry: Fifteen percent of our average clientele are repeat business. Jay: What is the frequency someone will normally clean their house, their drapes, their upholstery, etc.? Barry: Once or twice a year. Jay: When you advertise a $39.95 special in the Pennysaver (or wherever it runs), what does it cost you (not counting the newspaper expense, the advertising)? What does it cost you to render that $39.95 service? Barry: Chemicals cost $5.00 and the vehicle, driving time, wear and tear. Jay: You also indicated that $18,000 is the total volume that you do. Barry: That’s all, because the business is about a year old and it’s never been very successful. Jay: This is going to be an interesting consultation. I did a consultation with someone about 5 weeks ago and it was very interesting. They were in a business that was losing $3,000 a month. They had a 4-year lease on their city retail space in a shopping center in an area which is

economically impaired. The person running it (the daughter of the well-to-do father) had just gotten married and was more in love than she was into the business, and they’re basically losing about $3,000 a month and he wanted me to try to build it up for him. I spent the whole hour trying to explain the fact that he was better off finding someone else to take his lease over on a percentage because anything was better than the zero business they were doing. I am not suggesting that for you, but we will try to explore everything. I am going to give you the most candid and the most objective counseling I can. First of all, how much are you spending on advertising right now? Barry: $50 a week in the Yellow Pages. Jay: How many customers do you get a week? Barry: It varies. Right now the average is 1 per day. But it varies. Some weeks we’ve got 3 customers, sometimes we’ve got about 5, and sometimes nothing. Jay: Are your prices a little more than steam cleaning? Barry: It usually works out a little bit more. Jay: But the cost to fulfill is much more? Barry: Not much more, probably a little more. Jay: I’m going to take 10 minutes to outline some quick-fix strategies that may be very useful. What you’re telling me right now is that you don’t have the money to market. Is that right? Barry: I have capital, but I hate to continue to keep on pouring money into this. It’s a real problem because we don’t want this alligator that’s eating us up here. Jay: The first thing I would try to do is align with people who can be host devices for you. In other words, people who’ve got a kindred market and can refer business to you and compensate for your lack of advertising. If you go, for example, to every private independent carpet selling institution around and you make a deal with them where, for you paying the cost of mailing or telemarketing to their customers, they agree to one-time access of their customer list. You write a letter (ostensibly emanating from the carpet company) recommending you and suggesting that it’s probably time to have the carpet cleaned and that, in fact, it’s a wonderful way to prolong the life of the carpet. That is a very quick-fix way to try to bring in some new business. If you get five or ten or fifteen carpet companies who have an aggregate of perhaps 10,000 or 15,000 people who have bought carpets in a reasonable period, you can solicit their customers with a personalized offer. You can do a computerized, laser-printed letter that is personalized. That is quick-fix concept #1. Do you do a lot of commercial business? Barry: Yes. Jay: It’s very profitable, or is it not? Barry: Yes, it’s the volume. You get the repeat business, restaurants and such on a monthly basis.

Jay: I had a client about a year ago who was in a business like this. He was more successful, but I suggested having salespeople call on commercial accounts and offer that if they would agree to sign a one-year contract, the first month would be free, and they would continue for the year only if they felt your work was as good if not better than the company that was currently doing the work. “Right now, you’re spending X. We’ll do a better job for 15% or 20% less. What’s more, we’ll do the first month free as long as you sign a contingent contract.” He did 3 or 4 or 5 of them a month because it does not cost a lot of money to start a new customer. He had to put out, once a week, $20 or $30 for the free cleanings. He found that his conversion was about 65%, and if you extrapolate forever, you’re accruing some really good business. I’m into perpetuating as opposed to one-shotting people, and I’m into testing. One of the things I got a couple of people to try (and it worked out very well) is to put together a quarterly or three times a year in-home or in-office carpet cleaning whereby you come in 4 times a year and each time it’s X dollars. Perhaps a yearly fee of $100 billed $25 per quarter to the customer’s charge card. If they’ll sign up for a year, they’ll get the first quarter free. You’ve got to do it slowly and manage and analyze the cash flow dynamics of the technique, but it’s a very good way to lock people in and commit them and have a predictable long-term flow of cash emanating from a business that you can depend on and that you can schedule with flexibility. Barry: Jay, one thing you need to know is that we are not starving for capital. We have money. Jay: O.K., all the better for this because the kinds of things that are really powerful require your ability to perhaps not make any money up front. Barry: That’s all right, if we eventually get it back. Jay: That’s the nice thing about it. Let me give you a quick tutorial on my philosophy of testing. Any concept you may entertain that will emanate from this conversation should be very conservatively tested. For example, if you want to go into a neighborhood (and maybe you either do it by an ad or by engaging sales people or by telemarketing or by host devicing, one of those or a combination) and you extend to home owners this offer, “We’ll clean all your carpets the first time for free if you sign up for our yearly carpet cleaning and management service.” One of the other benefits of the service is that any time in between the normal servicing they have an accident or they spill something, you come out for nothing and attend to that. Every time you come out, besides the cleaning, you take care of the minor little loose threads, etc.—the kind of gingerbread things that are really evident and don’t really cost much of anything for you to do, but enhance profoundly the perception of value they’re getting for their money. You set up 10 or 25 or 100 a week (whatever you can afford to comfortably start), knowing that doing the first job maybe costs $20. So if you’re going to start 100 people, you have to put $2,000 out in manpower, labor, and depreciation of your vehicle. But then you analyze 3 months later. When they set up, all they have to do is give you their charge card number, expiration date, and a signature card. You’ll do what I call a TFN or “til further notice.” Every quarter, your people automatically call and say, “It’s time to do your quarterly cleaning on your service policy, Mr. Home Owner. We’re available to come out Monday through Friday at such time” and you go out and you don’t even worry about billing them until their card is expired. When it does, you have to get a new update on the card. But basically you automatically put it through on their charge card. It’s a wonderful cash flow device, but you have to find out how many of those people will stay with you after the first free cleaning. Barry: You’re not going to get too many of them to go by the quarter, you might get some of them to do it every six months.

Jay: Fine, if you say to them “Normally it costs $75 to do a house one time. We have an annual and perpetually renewable program for $100 a year payable $50 a time and it covers this and this.” I’m a great believer in demonstrating and also getting people to start by experiencing something. There’s a company called Hume Publishing that does $40-$50 million a year. What they try to do is to get somebody to send enough money to qualify themselves to get their first report because approximately 70% of the people stay for the remainder—for the entire 25 reports at $20 or $30 apiece. And they make out like a bandit and they just want to get somebody locked in and habitually acclimated into getting this service rendered to them on a frequent basis. This has been a very powerful technique. Again, if quarterly doesn’t work, try it three times, or twice. If you lose money on the first one, it doesn’t matter, if you’re locking somebody in on a long-term commitment and they endure. What you want is not the kind of business where they have to come to you and solicit you. You want to lock them in forever on a commitment whereby it’s up to you to call them at certain intervals. “It’s time to have your carpet done, Mr. Homeowner. It’s convenient for us to come to you either this day between 11 and 2 or this day between 2 and 4 or this weekend. Which of those times is more convenient for you so we can schedule our service man out?” And it’s automatically billed to their charge card. It’s a perpetual stream of cash. Admittedly on the front end, in the beginning, it’s a negative cash flow or break-even at very best, but whether you do it on a reduced basis or they get the first one free, it’s a very, very, very powerful arrangement. Another approach we’ve done with a couple of people and it’s very, very successful is we’ve gotten them to host retail people, like the carpet companies to do a host deal where they endorse you in a letter or telemarketing and they get a share of the profit in exchange for letting you access their customer base. It’s become very big and now it’s a way to generate income when everyone’s selling the same product as you for just over cost. Barry: That’s the same thing with Sear’s operation. Their carpet cleaning, they don’t make anything. Jay: You can do the same thing. Come as a service. Ask carpet companies if they would like to make an extra $100 a sale. You can experiment with all sorts of programs and all you do is conjure up in your mind a deliverable, a manageable, a perpetual service where you either get paid at a discounted rate forever or for 2 years or 4 years, or you automatically bill to a charge card at the time, or right before the service is rendered, until such time as it’s cancelled. And explore getting host devices like carpet companies or people who sell drapes to promote it for you. What a wonderful way if you give them a very big portion if not all of the first sale. Barry: Tell me more about the charge card thing. Jay: Charge card automatic billing is a wonderful device. And it’s not chicanery. For example, I have a very private house and it’s got enormous trees that grow around it and every once in a while I’ll look up and notice that the trees have encompassed the whole house and I’ll get on the phone and call the tree trimmer and it’s $700 or $800. It’s not even the money, it’s the inconvenience of having to make the decision. If the tree cutter had me set up on a deal where every six months he came automatically, trimmed the trees and billed it to my charge card, I’d be

glad to pay the bill when it came. It’s convenient, habitual, and it’s reactive as opposed to proactive where I’ve got to extend myself. I think a charge card billing is the best of all worlds. Barry: Could you explain more how the host devices work? Jay: The money you would normally spend on advertising, you could spend on host devices “buying” people the first quarter or the first 3 months or 4 months of a 3-time-a-year perpetual carpet cleaning service at a discount. “We have instructed Barry Campbell’s Carpet Cleaning service to come in and do your whole house for you, and if you like their work, you can fill out the papers and sign up for their ongoing program at a 1/3 discount.” If every month you were setting up 10 or 20 or 110 or 120 people or whatever your budget could manage to underwrite, on all sorts of starter programs like these and you’re analyzing to see what origins of what groups sustain, converted, endured the best, you’re accruing for yourselves incredible future streams of income forever. That must be apparent to you but it’s much easier to transact if it’s automatically billed to the credit card. It’s a harder deal to stop, it’s more inconvenient than to just say stop the deal. Every time you have to stop and get a check from the customer, it’s more difficult. It’s not an overwhelming or undoable deal, it’s just more problems. Barry: Who’s selling the service? Who’s selling it, who’s getting the order? Jay: It depends. It can be done through a host affiliate. It can be done by you door to door. In the former case, it could be a drapery company. It can be done through any other kind of logical type of generic business that’s not competing with what you do but that has the right type of market. A retail store can do a mailing to their customers saying, “We’ve just arranged something where for a fraction of what it costs to clean your carpet one time you can set yourself up on a regular annualized automatically renewing 3-time-a-year program. And here’s what they do: They come out and do this and do that and if there’s ever an accident in between, they come out for nothing and clean it, treat it and Scotch Guard it.” They make the offer and they can have the respondents call them, book it on their charge card or they can have them call you. It doesn’t matter. The thing to do depends on what you need from somebody. With some people, when you go to them with a joint venture proposition, they’re willing to do it but they don’t want to handle the mechanics. They want you to do it and they trust you. Some people don’t trust you a dime. I’m saying that you do whatever the deal requires. It’s fine with you if all the orders go through them and every week they give you names and checks—who cares? Barry: I think this might be a good idea for car interiors. We do car interiors. We could offer a service contract on car interiors. Jay: Do you really? Well, you could even go to people who do carpets and assure them you won’t take their carpet customers but ask them if they want to make a quick $10,000 or $5,000 by letting you work all their customers with an annualized automotive deal. Sometimes it’s so logical, it seems silly. Here’s another thing that could be very interesting. Certain companies pay a fortune for ads, as you already know. Are your own estimates done on the phone or do you have to go to someone’s house? Barry: What do you mean?

Jay: How is an estimate rendered? Do you have to go to someone’s house or can you do it over the phone? Barry: We go right out and give an estimate on the job. Jay: Let me tell you something that’s so funny. You’re going to find this amazing. Most people who generate leads run an ad in the Yellow Pages, or they run an ad in the paper and that ad will produce let’s say 100 inquiries. So they will render 100 estimates. If they’re really good, maybe they’ll get half of them. Would you agree? Barry: About that. If you’re lucky. Jay: O.K. If you’re bad you get only a fraction of them. Here’s a way to make a lot of money. You’re going to laugh when I say it. Call everybody who runs ads in the papers for housekeeping or cleaning services. Tell them after they have made their estimate and don’t get the job, you will buy the leads from them that they didn’t convert and you’ll try to work them yourselves and you’ll give them 25% of the profit. Barry: Wow. Jay: And what you do, you try to sell these people an ongoing program. Even if you don’t get them immediately you know that they’re carpet-cleaning oriented (because they responded to the other guy’s ads) and you set them up for a later date. Conversely, do a rework. “If you guys for some reason can’t sell somebody, instead of losing them, why don’t you refer them to us and get a percentage of that?” Barry: So you do an exchange deal. Jay: Yes, but not necessarily lead for lead. You do it for percentage. It sounds silly, but I have had people make more money selling their leads to their competitors (who had a higher price or lower price, a more encompassing or less encompassing service) than they made on their own advertising. Barry: How would you exactly go about that? I’m a little unclear about that. Jay: Let’s take an example. You call A-1 Carpet Care. First thing, you go to them and say, “Look, you guys get something like 100 leads every day. You obviously convert a high amount. Maybe you convert 60%, maybe 70%. You don’t convert 30%. I’ll make you a proposition. After you have done your best shot at the 30% people, give me their names. I will work them for my service and I will give you 25% of all the business that emanates. Since you have given up on them, this will be found business for you. It’s quite possible I could close some sales approaching it differently from you. Maybe I’ll be less expensive, maybe I’ll be more convenient for the people, who knows and who cares? It’s possible that I’ll make you enough on salvaging the sales you have already abandoned and written off that you could pay for your ads and then some.” And if you did that with 100 carpet cleaners there, you’d be getting bombarded every week. But you have to set it up—you can’t wait for them. You’ve got to set it up where you say, “What I’ll do is every day we’ll call you at the end of the day or we’ll call you at the end of the week, and you give us the names and the addresses. We’ll sign an agreement with you and you can follow up and find out and we’ll pay you every Friday for whatever we make.” Now, I know it sounds silly, but what we’re talking about, you can pull off.

Are there any carpet cleaners that don’t address the business areas that you do? For example, do any carpet cleaning companies not do automotive? Barry: Most of them in our area don’t. Jay: O.K., if there are any carpet cleaners who don’t want segments of the business that you want, go to them and say, “Let us work your list or refer to us anybody that wants a service you don’t do. If you only do businesses, every time you go to a business, you can solicit everyone there for their home and give them a discount and we do all the work and give you 25%. It will cost you nothing and you maybe make yourself $200 for letting us work our tails off for you.” That makes sense though, doesn’t it? Make a list of every kind of service company that would have an intimate relationship and a trusting relationship with home owners and who would be in there with some frequency and could host or refer them to you for a share. For example, if you got pest control companies, they’re in the home every 3 to 4 months. If you had every pest control company in the area referring their clients to you, what do you think that would be like? Barry: Pretty nice. Jay: Now here’s an important point: No one will understand this in the abstract. The way you get people really motivated is to titillate their profit motive. You go to the business owners and you go to the salespeople and say, “Look, how would you like to make an extra $5,000 or $10,000 a quarter for nothing more than referring us to your existing customers and not taking a dime of your pocket? If you’re calling on 1,000 regular customers, you probably at any given time have 150 of them that could use carpet cleaning. By you calling them, or you letting us put our promotion in your invoice, or by you letting us have a little meeting with your salespeople, you can make money. We could give your salespeople a pitch they could make after they’ve rendered your service (so that there’s no loss on your part) where they tell them after they’ve sprayed all the carpets, after they killed all the bugs, “If you want to have the carpet fresh again, we have an arrangement with a great carpet cleaning company. Because we send them so much business, it’s half the price to our customers, and we can set it up right here and we could schedule it.” You see what I’m saying? And if you start thinking of all the logical people you could play off of and instead of paying exorbitant money for ads when you never know whether they are ever going to work or not, you spend manageable percentages of your profit only after it’s been realized through customers who pay. These other companies already have the salespeople. Take a pest control company. They’ve got $50,000 a month they’re spending for salespeople, for advertising. You can leverage off of that by setting up a variable deal. I would go to every furniture company that does or doesn’t sell carpet. I would go to every interior decorator. They have lists of customers they’ve sold in the last year or two. You could craft a wonderful letter that would ostensibly emanate from them. Get them to let you mail that letter on their letterhead at your expense to their customers suggesting ... (again, it depends on the scenario—you craft the letter to be consistent with the dynamics of their circumstance). For example, if they don’t sell carpet, but they sold somebody furniture, the letter could say. “We sold you some beautiful furniture, Mr. Kleinschnitz, but truthfully to make it show at its best, you really need a beautiful, clean bright carpet. Carpet cleaning tends to be the one service people put off. I don’t think it’s the money, it’s the inconvenience. As a service to our customers, to really prolong and enhance the joy and the visual beauty of the furniture that we sold you, we have made an arrangement with what we consider to be the finest carpet cleaners in the area.

They will come into your home and they will clean. The market value of their service is probably $400, but it’s only $195 dollars, and then they’ll do it regularly for a modest amount for every year based on a special four-times-a-year rate. All you have to do to schedule them is send back this card or call this number. It’ll be taken care of. And of course we guarantee it.” I had another client and we developed a wonderful concept for them. They went to classy retail stores, clothing stores, all sorts of upscale stores, basically clients with nice homes, people with pride in ownership and probably expensive carpets. And we created for them gift certificates good for one room or two rooms of cleaning, and we got the retailers to agree to let my client send out under the retailer’s name and letterhead a letter to all his active and inactive customers saying, “I want to do something nice for you with the holidays coming up, so I’ve bought you with my compliments a free carpet cleaning. Enclosed is a prepaid certificate. I’ve made arrangements with XYZ Carpet. I’ve already paid them to clean the room of your choice in your home. If you have a party coming and you want your living room to look great, I’ve already paid to have that room cleaned. They’ll move your furniture. If you have any other rooms you need cleaned, I’ve also arranged with them to give you a preferential price because you’re my special customer. There’s no obligation to buy anything. I just did it as a nice holiday gift for you. It’s a $25 value and I hope that this little gesture helps make your holiday season a little happier.” Now, you are very logical, Barry. What do you think happens when people get these? If you send out a thousand of those, you end up getting 200 or 300 people, and about one half are going to have you do multiple rooms. Barry: Well, that’s a good one. Jay: It worked very well. In fact, the guy set it up as a regular thing. He just goes around and around. He gives the retailers a percentage of the residual, too. The retailers like it because they get back money. They get residual income, like insurance renewals. If the letter is crafted deftly and correctly, they get wonderful, wonderful results. It has to be done as a genuine gift with no strings attached. If it’s done right, the retailer has the benefit of having the customer think that they really did them a noble service. It didn’t cost them anything. Restaurants can do that. Retailers can do that. Clothing stores can do that. Anybody, by the way, that has got the chance to go into somebody’s home—to install carpet or have an intimate relationship in a service or contracting capacity—if they have customers, you should be able to do that. You could go to every real estate firm in a 25-mile radius and make a deal with every realtor where you’ll send out on their behalf to their new customers a gift certificate for 2 rooms free. Barry: The only thing I’m wondering is, when you’re going to the host company, wouldn’t they be reluctant from a liability standpoint? “I don’t want to be liable if you ....” Jay: When that comes up, which it does sometimes, what you do is you agree to the following: a) You’ll agree that you’ll fully guarantee to stand by any request for any money back if there’s any dissatisfaction. 2) You’ll indemnify and hold them harmless. They don’t have to know that you’re a little business. You may or may not have insurance. That’s a question you have to resolve for yourself. In other words, you offer to make any refund, reimburse or indemnify them, guarantee performance, make good on any problems, resolve any difficulties that may ever arise in favor of the customer and always protect, preserve, and enhance the host’s relationship, reputation, integrity, and perceived image with his or her customer.

Another thing: you have to play the numbers and solicit a lot of people. The kind of techniques I am suggesting are so non-traditional that half the people won’t believe it. When they don’t believe it, the way to overcome that is simply this. You say to them, “O.K., you think it’s off the wall. I don’t. I have a proposition. Why should you so merrily reject something that could make you $10,000 or $15,000 immediately and keep accruing for you forever just because it doesn’t sound right to you? Let’s put it to an inexpensive, controlled, very limited test. “Let’s take 100 or 1,000 old customers. Let’s take the next 5 days and have your salesman just pitch those customers and let’s see what the percentages or instances of those result in success. Let’s see how well it’s embraced. “If it’s absolutely rejected by everybody, you were right. But what if you find in that test that something you pooh-poohed might make you an extra $1,000 this week? Wouldn’t it make sense to do it with the rest of your customers forever?” See what I’m saying? Reduce it down to such an inexpensive, limited, painless, and minuscule little validation process that they have to be real fools to say “No, I won’t at least try it.” And it’s going to work better or worse in different scenarios based on the way you do it. You’ll pitch it different ways. You’re going to have to get your feet wet trying different ways to do it. Is this helping you? Barry: Oh yes. Jay: We have just a few minutes left. The best thing you can do, if you can create and perfect a methodology that works wonders, is to take that methodology and sell or license it to people all over the country outside your marketing area either for fees or by a variable. You can make more money helping other people than you can in your own cleaning company. Do you see that? Barry: Sure. Jay: Let me summarize and tie it together. A) You have to try enough numbers to give it a shot, but not so many that you get promiscuous. B) Anything you set up, try 500 or 50 or 100—just enough to verify. Only make deals with people who can really help you. If you’re going to buy people the first quarter, buy them a free room, try enough of them to see what it develops into but don’t try so many that you waste too much money. Just do the minimum necessary to validate or invalidate the concept. C) The way things are presented and stated are as important as the concept itself, so you have to experiment with the way people are going to execute. You have to write the letter for them. You don’t want them to write the letter for you if at all possible, because they won’t have the passion and the empathy that you will. Think of all the people that already have the customers, spent the money, got the good will, and are selling a limited number of products and/or services, none of which are competitive to you and who you could play off. If you had referral deals or joint venture deals and host deals with 500 businesses in your area, and each one gave you only 3 jobs a month, that’s 1,500 jobs, isn’t it? Think about it because it’s very logical and pragmatic and it works. Barry: Thank you, Jay. Jay: You’re infinitely welcome. * * * *

Does your product or service have the potential for repeat sales? If so, reread the first half of this transcript, and think about how to apply the concept to your business. In other words, come up with an offer where customers get a month’s free service, a free one-week supply, or whatever, provided they agree to sign on for a longer period if they’re satisfied. Assuming you can initially handle the cost of these free trials, you may find this to be a very powerful way to generate new customers and keep them. Even if long-term repeat sales aren’t possible in your business, I suggest you reread the second half of this transcript, again thinking about how to apply the concept to your own situation. Surely there are companies you can contact who would be glad to recommend you to their customers in return for a percentage of the business you derive from the recommendation. And don’t dismiss the idea about contacting your competitors and acquiring all the leads they have that didn’t pan out. Clients of mine have done it many times, often with amazing results. In thinking about these strategies, remember that how you present the concept to the other company— how you overcome their reluctance to try something that may seem unconventional—is just as important as the concept itself. Never be abstract. Always be concrete and specific. Tell your prospective jointventure partner the amount of money they stand to gain, how the profits will be split, etc. Revere the concept and get them to revere it. And be sure to take as much of the risk as possible off their shoulders and onto your own.

Real Estate Alice has been in real estate for many years. She was ready for a change, but didn’t know what to do next. In this consultation, I showed her several ways to capitalize on the knowledge she already had—even if it was in an area she no longer wanted any part of. As you read this transcript, be thinking of ways to do the same thing with the knowledge you already have. Properly presented, that knowledge could be worth a fortune to other businesses. * * * * Jay: I read your material and I have a couple of questions I would like to ask in initiating our conversation. Give me just about a 3 minute background on yourself and what you have done prior to getting your real estate license. You gave a very interesting epilogue to your commentary where you mentioned you’re not locked into real estate. Help me to understand what you want most so I can give you the best counsel possible in the time we have. Alice: I’m not sure how to answer that question. The job I’m currently doing now is working for a developer. Our city is pretty depressed and he is no longer going to be able to afford my services. Jay: How much longer do you have—weeks, days? Alice: Until the end of the year. Jay: O.K., and for the last “x” number of years you have been actively involved in development, contracting, and construction.

Alice: That’s correct, for the last 8 years. Before that I was in real estate property management, principally condominiums. And before that I was a secretary to the same gentleman for whom I work now. Jay: The condo markets all collapsed too? Alice: All real estate has collapsed here. Jay: Let’s go through what you’ve sent me first of all. You are now licensed to be either a broker or sales person. Alice: Yes, I am a broker so I could go solo if I chose to. Jay: Would you go into residential, commercial, or both? Alice: I would suspect that it would probably be exclusively residential. Jay: Let’s overview a little bit. What you sent me were a lot of ads for foreclosure properties. Do companies only sell foreclosures? Alice: If it’s FNMA. Jay: Anything that’s FNMA is all foreclosure? Alice: Yes. That company in the ad is a mortgage guarantee insurance corporation. It’s one of those private mortgage insurance companies who ended up with a lot of property because they had insured a bunch of loans with a lot of different banks here. Jay: When they list a foreclosure property, are they steadfast in the asking price or is there flexibility? Alice: There is a lot of flexibility. I think some of them are going for about half of what was originally owed on them. Jay: So, for example, I’m looking at an ad where they’re asking $68,000. Might that house sell for a lot less or is that a pretty firm price? Alice: It could and we have sold items like that for $35-40,000. Jay: It depends on how desperate they are to get rid of it. Alice: They’re pretty desperate right now. Jay: O.K., is there anybody selling that specializes in foreclosures who is trying to teach the buyers how to more astutely capitalize on the foreclosure? I’m not talking about guys who are trying to sell people courses. I’m just talking about people who are looking for homeowner buying prospects, but are trying to teach them. In other words, “If you’re looking for a foreclosure to buy and to occupy, here are 20 ways you can improve your chances of getting the deal of a lifetime.” Is anyone doing anything like that? Alice: Not to my knowledge. I have not seen anything advertised, and the real estate contacts that I have don’t mention anything like that.

Jay: Give me your strengths and weaknesses. What if I set up an arrangement where you (under somebody else’s shingle or with your own shingle) run ads, put on seminars where you address groups of people looking to buy houses and teach them how to take advantage of foreclosures for occupying homes? Is that something you can do comfortably or is that something out of character? Give me a quick character overview so I can get comfortable with your skills and your desires. Help me to understand your psyche a little bit. Alice: I’m very intelligent and I’m very organized and I would have no problem organizing a seminar like that. I would have no problem getting up and actually being the principal speaker, if not the only one. I’m 57 years old and I’ve got motherhood on my side. What more do you want? Jay: Let me ask you about knowledge. One of the great success vehicles I try to teach people is to be the only ones who will disseminate really valuable and useful knowledge that can be so appealing and profitable that it becomes implicit that if somebody is willing to give that knowledge free without an obligation or commitment, they must be incredibly valuable to retain to advise, counsel, and to work for and with them. If we wanted to put together a strategy based on you either going to an existing broker or just working out of their offices or setting up your own (whichever is the most logical for you from a cost and from a transactionally effective basis), would you have the knowledge to be able to put together a 2-hour or 90-minute seminar on the subject? “How to take advantage and how to get more out of foreclosure properties. When a price is negotiable... when to make offers...How to feel people out...How to know which properties could conceivably sell for half the listing price.” You want to go through a whole plethora of fascinating and very, very interestingly appealing specific how-to based information about optimizing the values you can get in purchasing a foreclosed property. Would you, right now, have such knowledge? If not, would you know how to garner that knowledge quickly, efficiently, and inexpensively? Alice: The answer is no, I would not have it now, and yes, I could get it inexpensively. I know a number of people in the real estate field who are very experienced in doing this type of thing who I know would impart that information on a piecemeal basis. Jay: My first recommendation to you if you are going to go into real estate sales in a market that is competitive, is what I think your USP should be. “If you’re going to buy a foreclosed property just because they say it’s $49,500, you might be able to get it for $25,500. I’m going to put on a seminar. And I’m going to teach you 20 ways to enhance the value you get with buying a foreclosed or repossessed home.” You would either run ads or you would mail letters out, depending on the financial dynamics. You indicated you could afford to put capital in, but the question is do you need to? If you go to a big realtor who has more to gain than you do and you say, “Look, I’ll put together this promotional concept if you front the advertising, and the advertising costs will come off my commissions.” Do you think that anyone would do that? Alice: Sure, you bet. Jay: I’m a great believer in going to people that have more to gain than you do. In other words, a real estate firm that’s got a 10,000 square foot office and an overhead of $20-30,000 a month and maybe really dying out there has a lot more to gain by you being successful than even you do.

By that I mean if you can get them to advance or share the cost of running retail ads to promote seminars which produce buyers—that would be wonderful, wouldn’t it? Alice: Yes, and in fact, one of the largest ones in town already has a full real estate school where they put a number of various things so they are all geared up and set up for that, too. Jay: Do you have an historic familiarity and/or skill in advertising and marketing? Alice: No. Jay: What you have to do is come up with a program that can be repeated often and that spans the whole market for prospects that are the most desirable based on the criteria that you seek. What I think you seek is to identify people who really want to buy a home for personal occupancy who A) have already decided that they want a foreclosed property because they deem that to be a great value but who B) don’t really know all the different ethical ways and angles and devices by which they can bring the final selling price down as much as 50%. In your ad, you want to have a great headline which is a great titillating ad for the ad, such as: “How to reduce the price you pay for any foreclosed property you buy,” or something like that. The body copy would say something like this: “Foreclosure property specialist Alice E. Jones will hold a 90-minute seminar for serious buyers interested in snapping up genuine values on foreclosed properties. The seminar will reveal proven but overlooked ways to dramatically reduce the final selling price.” Then you include bullets that list provocative items that you will reveal at this seminar that are genuinely enticing as can be. For example, “How to tell which properties have the most room for price flexibility (a 10-point strategy that allows you to analyze it). How to make offers that compel the seller to counter very low.” Then at the end you list 20 different very provocative topics or subjects or fascinating negotiating techniques you will reveal at the seminar, plus you offer to talk about the 10 actual case study examples of where this paid off for 50% of asking price, for 20% of asking price, for $32,000 less than asking price and got the seller to advance it at under market terms. You can’t promise that that will happen in every house they buy, but you can tell them that by being armed with this material and by perhaps letting you represent them in search of their desired house or condo, the odds are exceedingly good that you’ll help them effect an incredible buy far below asking price on a wonderful value foreclosed home. Then you tell them, in a separate paragraph in the ad, that attendance is strictly by reservation. There is, however, no obligation, and it will cost you nothing to attend. You tell them about your representation services which are market competitive and the reason you’re willing to give them this education is that you feel that once they get the knowledge and realize that by letting the right firm and the right person represent them with the right knowledge base and the right tactical experience and knowledge, it’s possible that they can realistically reduce their purchase price by 20-50%, and they will end up favoring your firm and you specifically. For that reason, you’re willing to buy them a ticket or buy them attendance at the seminar. But they must call in advance, and when they call in you get a lot of information about them: name, spouse, market price they’re looking for, and a little bit about their background so you see how strong they are financially. That’s an approach and it could be a very powerful one. Does that stimulate your thoughts a little bit?

Alice: Yes, because I can look and see people who think they don’t qualify for a house because they don’t make enough money. They would see the cheapest one I see here at $50,000 and think, “I can only afford $40,000.” Well that’s something else to bring out in the advertising. Jay: I want to suggest something so you don’t get exasperated. I’m all about experimentation, testing, and letting the market tell you what they really want and not trying to tell them. I strongly urge that you don’t go away from this phone call and put all this effort on one approach, because the marketplace is flukey. Sometimes one headline will out-produce another in yield and quality ten times over. What you and I might think is great, the market doesn’t, and all you can do is experiment with it. You’ve got to try a lot of suppositions in small conservative tests before you spend too much money. That’s why I strongly urge you to come up with all sorts of possible approaches and then try them most definitely in concert with some other realtor who’ll bear the cost. Let’s say you’re willing to spend $10,000-$15,000 yourself to go to a big strong real estate firm and make them the following proposition: you want them to underwrite the ads for you and make the ads 50% paid for by them, 50% by you. If they won’t do that, offer them fully paid for by them but treat it as a draw against commission for you. Tell them you’ll indemnify them if you don’t sell enough houses for them to pay all the commission the first 6 or 9 months. You’ll pay the loss out of your pocket, but why should you pay it first if they have more to gain than you? That way you’re playing off of their money. The deal you get is they agree that all the people and attendants will come to you first and if you get more business than you can handle, you’ll be amenable to letting their people work the property as long as you get 50% of the commission provided their people pay their pro-rata share of the cost. For example, if you did such an ad and let’s say the ad produced 30 people who attend and let’s say out of the 30 people, you’ve got 5 buyers who really bought, and let’s say the ad cost $1,000. You would allocate 1/5 of the ad cost to each sale. Every sale you get charged $200. If you get so much business you couldn’t handle it all, and you wanted to share it with other agents, the deal you would make with them is they give you 50% of the price but off the top. Before any commission was divided up, deduct that $200 allocation for advertising, $100 paid for by you, and $100 by them. Does that make sense? Alice: Yes, it does, but I have a question. When I go in to this real estate firm (if that’s the way I decide to go), and say, “This is what I want to do and this is what I want you to do,” how am I going to prevent them from turning around and doing it themselves? Jay: There are different ways to do it. One is a simple non-disclosure agreement protecting your intellectual property rights. Another is to approach a firm with a proposition that “I have a marketing technique which I think could prove very valuable and could sell a ton of property. I would like to explain it to you and make you a proposition to get involved on a basis you cannot lose. It will cost you nothing if it doesn’t work. However, before I reveal it to you, I want you to warrant to me that if you’re not doing it and you can show no real evidence that you have been doing it, then you will only do it through me and on the terms that I want to do it or you’ll pay a usage or a penalty.” Somebody will accept that. If they’re afraid to sign that, I wouldn’t present it to them. If they’re willing to sign, then you present the idea and you present it very specifically. Because a lot of people would say that they’ve already been thinking about doing seminars. You must show them it’s a specific kind of

seminar designed to show people how everyone’s buying foreclosed properties but there’s a certain way to buy them that represents far more potential. Of course, you can’t promise that it will apply to every residential house you will buy. The headline might say “Why pay $50,000 for a foreclosed $100,000 home when, with the right knowledge and approach, you might be able to get the same house for $35,000” or something like that. That’s a powerful approach, don’t you think? Alice: Yes, it is. It’s good not only for people who want to be home buyers but also for investors. Jay: Yes it is, and you know how to do it. So you go to them and you tell them that it’s alarmingly simple, but it’s not being done. And your approach is you just tell them, “Every week I want to run an ad for a Saturday or Sunday or evening seminar. I’ll put all the dollars together, I’ll prepare the material for distribution.” Give them enough information to titillate them but don’t give them so much that they can comfortably do it on their own. Tell them, “We have enough knowledge to save people as much as 50% on the acquisition price, and it’s highly probable that we are going to get a bunch of serious buyers to favor us with representing them.” So with that as the premise you go to the real estate company. You tell them again, “What I want you to do is advance the cost of running an ad once a week, preferably on Saturday or Sunday for 4 or 5 weeks.” And tell them you are going to try 4 or 5 different approaches looking for the one that gives the most leverage—the one that produces the maximum yield for the money involved both on quality and convertibility. In other words, one approach may draw 200 people, but they may only be lookie-loo’s and you may only get 1 sale out of it. Another may only bring 50, but 35 are serious investors who are looking to buy a home or homes. So you want to experiment with different suppositions, different headlines, different size offers, different seminar titles to see which combinations or which one produces the best aggregate compilation of attendees and conversions. You want them to guarantee to do it for 5 or 6 times. You tell them the deal you’re willing to make in writing. Warrant in writing that you have the resources to stand by it. “You, being the real estate company, front the cost of the ads. You furnish me with a space so I don’t have to do it at a hotel. We’ll do it at your office (if they have an adequate conference room). You accrue against me as a debit either 100% or 50% (whatever you can negotiate) of the cost of the ads. I will be responsible for paying that cost out of my side of the commissions for every house I sell and if I don’t pay all the cumulative costs of running those ads in the course of 6 or 9 months, I will make good the difference. So you have nothing to lose.” It’s not just an oral agreement, it will be written and guaranteed by visible assets. Affirm they have the kind of assets you need— since you don’t want to start the connections from scratch—and see that they’ve got that available for you. In order to access that, you’re willing to basically let them access your concept at no risk whatsoever on their part. Yes, they have to advance the money but they’re going to do promotions anyhow on behalf of their salesman and properties. They might as well do this as part or all of it. Because if you’re right, within a month it will evidence to them that you brought in incredible quantities of qualified buyers and you can keep doing it every week. Alice: I should arrange that I have control over the advertising. Jay: Or at least collaboration. You tell them that they will have editorial approval to assure that the content is legal, ethical, and accurate. You’ve got to make sure you have great headlines— great, provocative, and benefit-filled headlines—a series of bullets, a rationale of why you’re

doing it so there’s a reason that’s fully explained. And you must direct them to action. The seminar is limited to 6 serious-minded people, either investors or families contemplating purchasing for occupancy. You might want to experiment both ways. Try one where it’s open to both and one where it’s only open to one and analyze which approach has produced the most attendees. You have attendance strictly by reservation. They’ve got to call in advance to get their name approved. If they can’t attend, they can get a transcript, provided that they give you certain kinds of information about themselves so you know they’re qualified. “The reason we are willing to provide you with all this knowledge is because we believe that if you’re serious about buying a foreclosed property we can absolutely save you between 10% and 50% on the acquisition price you eventually pay and maybe even save you more on the terms and the mortgage you get. There are some wonderful devices that we can teach you for getting the mortgage insurance company to take back all or part of the mortgage at preferential rates.” People don’t usually think like this. They’re just delighted to get a good deal. Why should they be satisfied with just a good deal if you can save another $10,000 on interest on points and all that? “Our goal is not to get you the most expensive house but to get you the very best aggregate on purchase, price-reduction, financing, and terms.” That’s a very powerful approach. I don’t advise people to re-invent the wheel. If the market trend is everybody wants to buy foreclosed property, my recommendation is (if you’re going to sell residential) you be the one person who says “Yes, you can buy foreclosed and yes, it’s better than market but how would you like to buy foreclosed below the foreclosure market? There’s a way to do it. There are techniques that can get you values that are 10-50% less on the acquisition level and you can reduce your interest cost by another 20% and you can get longer terms, and we’ll teach you all that. You make the decision on buying a foreclosure house, you would probably be a fool not to buy it from us because we could probably teach you and guide you and advise you on ways to save tens of thousands of dollars.” The headline could say, “Why buy a $100,000 house foreclosure for $50,000 when we can teach you how to buy it for $35,000 and maybe save you another $10,000 on the financing.” That’s a very powerful approach. Really what you’re selling is a result. Listings are all over the place. There’s infinitely more houses listed than there are buyers, aren’t there? Alice: That’s correct. My next question was, is there any way we could help the people if they could only get someone to take over their existing loan that they could get out and they wouldn’t have to go to foreclosure? Jay: Yes, there is and let me tell you how to do it. How many homes are there in your city? What is the population roughly? Alice: The population is about 200,000. Jay: So there’s roughly 70,000 households. In the area you want to work, there are probably no more than 10,000 or 15,000 homes that would be prospects. You can identify them through various sources. You can get lists of each homeowner by name and address and you create a letter that was computer generated (but for all practicality appeared to be personalized but done by laser printers) and it went to homeowners.

Now, most letters come to your house and they ask you, “Are you interested in this?” or “If you’ve been thinking about such and such, here’s a way.” I’m going to suggest that you bypass that totally and you come up with the following kind of assumptive letter which assumes that the only people that will respond to that letter are people who fall into the criteria you establish so the letter would say something like this: “I know you’re worried about losing your home to foreclosure, Mrs. Smith. “How I found out is not important, but the fact of the matter is that there is a solution that I think is infinitely more plausible, infinitely more practical, infinitely more workable than the embarrassment, the expense, the indignation and the complexities of foreclosure. The answer is to find a credit-worthy buyer to take over your mortgage. “Sometimes we can even get people to pay a premium, either on a balloon or some kind of a creatively structured arrangement where if the house resells in a certain period of time, a share of the enhanced profit goes back to you. The point of the matter is, Mrs. Smith, we are specialists in this area. We help people like you who are finding themselves with their back up against the wall having to seriously contemplate allowing a wonderful home to go into foreclosure, causing them extraordinary embarrassment, extreme problems, financial complexities, and impairment and taint to a formerly impeccable credit record. We help people avoid that and actually come out maybe not unscathed, but emerge as victorious as possible in these rather serious times. “More importantly, we have structured and can structure some really ingeniously lucrative (what I will call bail-out) programs that get you out with no expense, get your credit preserved, and get you sometimes up front and sometimes within two years a very reasonable profit. “Can I help you? Maybe, maybe not. One thing is for sure: If you’re really and truly on the verge of contemplating letting it go back and losing it all, please, please, please call me and let me give you an honest, serious, no-holds-barred, unbiased advisory and consultation and review of your circumstance and a strong serious recommendation of what I would do given your circumstance and given our ability to place people like you with buyers. “If you like what I recommend, and if it’s more practical than alternatives you’re contemplating, and you trust us with your listing, we’ll do everything in our power to extricate you and bring you out as close to whole (or better than whole) if at all possible. For what this is worth, Mrs. Smith, there’s been a couple of cases where people who thought they were up against the wall have come to us and we were able to actually give them a very nice, tidy sum of money to get them out at a wonderful resolution. I can’t promise I can do that for you. Then again, what I offer would seem dramatically better than the other alternative. At least let me review it before you make the ultimate decision. My number is such and such and I’m usually there between whatever. “If the time has gotten that critical and you’re really up against the wall and you need competent and objective counsel and you can’t sleep at night, you can call me at home. Here’s my number. I may have some answers and some techniques that you are just unaware are possible. I hope I can help.” That’s a pretty powerful letter, don’t you think? Given that scenario of those 10,000 or 20,000 households, probably 3,000 or 4,000 are falling off the market and maybe they haven’t put them on the market. You’re playing the numbers, but if you’re right and you got a 5% response or 3% response, you’ll find 600 people when you mail 20,000 letters. The cost to mail about 20,000 letters, by the way, is about $6,000.

Parenthetically, there’s no need to spend $6,000 when at first you can find out if the concept is vital by mailing 1,000 for $400 or $500. If 1,000 produced 30 responses, 20,000 would produce 600 responses. It’s that predictable. Does that make sense? Of all the things that you’re great at, be blatantly honest. There must be something that you are the most talented at and there must be something that you’re really a screw-up at. Tell me both sides. Alice: I have the same problem. I come on very blunt sometimes. That’s probably my worst quality. The good part of it is that I’m very organized and I can put something together. I can do detective work and I can find out what went wrong here, what was there, why did it do that, and come up with a correction. I have good a command of the English language. The best thing I have going for me is my intelligence and I can really go forward doing a lot with that than somebody less amply endowed. Jay: How do you come across? If I meet you in person, are you powerful, are you weak, or are you intimidating? Alice: Intimidating is the word. Jay: Knowledge-based intimidating? Alice: No, I think it’s that I come on strong regardless of what it is I’m doing. Jay: Give me a quick analogy of the activities you’ve engaged in over the years where you emerged most victoriously, most quickly and where you think your skills come powerfully across. What do you do where you can attack something and it’s just fabulously successful and it’s really quick and shocking? What have you done like that? I’m talking very, very abstractly, but I’m trying to focus your thinking. Alice: I would say probably creating letters. When I was in condominium management, I became very well-known (very quickly, within a year) all over town even with people who were not living in condos that I managed. I still have the reputation even though it has been eight years since I did any condominium management. I’m still known as the expert and the best in the field. Jay: And yet, you don’t want to go to back to that? Alice: Absolutely not, I’m burned out totally on it. Jay: Could you teach people how to do that even though you don’t want to do that? Alice: I could, yes. People think I still know more about it than anybody else, but I don’t anymore because it’s changed so drastically in 8 years. Jay: Let me give you a suggestion. If you do something more demonstrably superior, more successfully, more effectively than 51% of the peers you are competing against, and there’s some way you can be quantified, evidenced, and validated, you can turn it into big profits. But I want to plant a gestatable seed in your mind and your heart. Most of the money I have ever made has not been doing things like we are doing. If you’re really good, get involved in projects where you

don’t make any money unless something performance-based occurs. When that happens, you can make a lot of money. For example, if you can teach “How to get a job in condo management” and you get nothing unless they get the job, and if they get the job they owe you $3,000. Or you can go to people who own buildings and you can teach them and guarantee, say, that vacancy will go down 25% if they use your techniques with your employees and you’ll teach them for free as long as they sign an agreement that within one year... Alice: I’m going to interrupt you because you’re totally off on the wrong track with condos here. We don’t have things like vacancy. Jay: What is the biggest problem that you got sick of in condo management? Alice: It’s the 24-hour-a-day on-call type thing. I never resolved it because people didn’t want to deal with an answering service. Each individual condo owner feels like they own you and they’re paying you a phenomenal sum every month and that they ought to have your time 24 hours a day. I just finally got to the point where I shuddered when the phone rang at night, so I quit. Jay: Is there a place for teaching some third party how to form a service for all the condo associations that would handle that 24-hour problem. For example, if they don’t want to be bothered from 5 pm-8 am, is it worth putting together a service and then teaching somebody else (in return for a share of the profits he makes) how to sell a business idea to a third party where you only get paid if it works, so much per dollar. Alice: Condos here are totally different. We don’t have resident managers. The condo association itself does practically nothing. A management agency outside and off the property does almost all of it. Jay: And how is it priced? Alice: It’s on a per unit per month type basis and you charge the association depending on how many units they have and how much you do for them. Jay: And there’s no way that you could go in and rebuild because you don’t want to go back and do that. Alice: That is correct. Jay: Even though you don’t want to do something for a livelihood, you have expertise that could be very, very valuable. If you could contact real estate firms in the area and ask them, “How would you like to have a million-dollar profit center overnight?” I can show you how you can give them for a $25,000 fee, $12,500 down and $12,500 after it validates itself. You can give them, in one month, a tutorial on how to put together their own company and you can show them where the weaknesses are. For that low fee you get to record and transcribe everything you did and you could sell it to everybody outside your city for a $1,000 package, maybe to other real estate companies. Is that possible?

Alice: It’s possible, but I’m not looking favorably on it. I’m trying to figure out why you’re talking about it.

Jay: I am sick of the investment market, I have generated $40,000,000 out of the investment market. It’s gotten to be where one newsletter is no different than the other and I got really tired of it. But yet, I had more expertise than anybody else and I realized to abandon that after I had invested 10 years of my life in that area was pretty dumb, so I found ways to teach what I did and I just taught all the newsletter people how to do it. I still got residual compensation for my expertise, and just didn’t get as much, but I didn’t have to worry about it. If you’re good at it, even though you loathe it, you might try to think through (for maybe an evening or a weekend) how you can teach it to somebody else who wanted to do it but not have to do it yourself and not be responsible for anything after they went and did it. Maybe some real estate firm wanted to get into that field and steal the market. Or if somebody has the field but isn’t really strong, you can double or triple their business. They’re already committed, they have 10 employees but they just didn’t know what to do. You could go to them and say. “Look, I’m not willing to go in but I’ll teach you how to double your business. If I double your business, I want a $10,000 fee for every unit you pick up, or for every dollar increase I want 20% of the profit. That could put $100,000 in your pocket and you would have the last laugh on the industry. How does that hit you? Alice: That’s better because I’ve got a firm that could use some of that kind of help that has a very good reputation, but there’s a lot of things that they’re not doing right. Jay: If you do make such a deal, whatever fee you want, reduce it by about 15% or 20% for the right to use everything you teach them anywhere you want outside their market area. If you come up with some great tutorial you could go with an ad in a real-estate management magazine or whatever your peers read around the country, and for $1,000 or $2,000 or $3,000 sell the same training to other people. Imagine if you sold 100 real estate firms outside the market a $500 package while you were figuring what to do when you grow up it might not be so bad. What do you do right now for the developer you work for? Alice: Right now we’re trying to keep the wolf away because he’s getting a whole bunch of properties back and I’ve learned more about foreclosed properties in the last 6 months than I ever really wanted to know. Jay: Let me ask you a question. What have you learned, and could you teach it to others? How could you resell the knowledge you’ve got without being an employer? Could you go to every other real-estate developer with a similar problem (maybe they’re just on the beginning of the learning curve and maybe you’re on the other side on the way out) and you went to him and said, “Look, I can tell you how to save $20,000 on legal fees, where you’re going to get screwed up, I will sit down and give you a whole review and I want $3,000 for a week of my time.” Alice: Somebody else has already done that in town. Jay: That doesn’t mean you can’t do it better. What if you went to 20 companies that may or may not go into foreclosure and you said, “Look, I’ll give you the training. If you don’t go you don’t owe me anything. If you go you owe me $3,000.” So you take a shot. You’re investing human capital not money. If you sit back with a pencil and analyze what you’ve observed and what you’ve paid through the nose—either in legal, accounting, experiential fees or sweat and adrenaline and anxiety fees, try to capitalize on all that by teaching it to other people.

One thing I want to leave you with is just because you’re sick of something doesn’t mean you can’t find a very pleasant and lucrative way to teach what you know to someone who is deeply involved in it and can’t get out or they view it with more passion because they haven’t been in it long enough. If you can teach them how to enhance it, perfect it, and how to get more business and to save money in the process, that’s worth a lot. What I want to conclude this with is to suggest that you review everything that you’ve ever done well (even if you loathe it), and figure out how you can teach that to somebody else in a passing, quick, concentrated way. Price it either on a fee, or a performance rate basis and you maybe only do it for 6 months. If you taught 25 development contractors how to save themselves an estimated $50,000 if they go into foreclosure, you want $4,000. They pay $2,000 now and $2,000 after it’s validated itself. If it doesn’t validate, they don’t have to pay. You go to 25 management companies and offer them how to garner all the condo management and you want $25,000, but you only want $5,000 down and the rest payable over 12 months and only if it works. You’re making money and you’re using all the stuff you spent all your life sweating and agonizing over. Maybe your family has gotten mad at you because your work was your mistress more than they. That’s one way to recoup your psychic investment. I hope I’ve given you a good, inspired, and strategic direction for you to follow and I hope that you do very well. I hope I’ve planted seeds that will root and germinate. Alice: I’ll water them this week. * * * * Are any of your competitors offering free expert knowledge to prospective customers? If none of them are, why not become the one to do it? Think of all the things you know that could help a prospect make a good buying decision. Then create a seminar or a booklet or a telephone “hotline” that tells people how they can save money, time, or effort in buying and using your kind of product or service. People appreciate being educated, and you’ll be surprised at all the business this can bring you. At the same time, make a list of all the things you’ve learned through your own experience that could help another, non-competing company in your industry. Offer to teach other companies what you know, and get them to agree to give you a percentage of the added profit, savings, etc. that your methods bring them. The fact is, most business people own a huge amount of “intellectual property” that can be turned into profit. Review the suggestions I gave Alice in this consultation, and see how you can apply them to your own situation.

Manufacturer’s Representative Andrew’s situation was unusual. He had been a research and development engineer with a large manufacturer, but the manufacturer went out of business. Looking for something to do, Andrew more or

less fell into an opportunity to become a manufacturer’s rep for a number of product lines—mostly small metal and plastic parts. Andrew had his own territory, but technically speaking, he was a sub-rep for a primary rep who was too busy to work Andrew’s area. (The former sub-rep hadn’t had much success, and had gone on to other things.) In taking on his new role, Andrew was faced with several major challenges (to say the least): He had no prior sales experience, didn’t know the product lines, and was given virtually no sales support from the manufacturers he was supposed to represent. Even if Andrew’s problems aren’t your problems, I think you’ll find this transcript instructive. In it, you’ll learn how you can generate more sales by focusing on something other than selling. * * * * Andrew: I’m just beginning in this business and I don’t know how to start. Jay: I’m going to suggest that concurrent to whatever physical efforts you expend going into the market one-on-one, we develop a strategy for you that entails mailing to your prospects, telemarketing to them, even adding seminars or the like for them so you can try to leverage your efforts. But you can’t do any of that until you have a readily available comprehensive list of all your prospects to be delineated by product line. I think you should really focus on that right away and get that behind you. Andrew: I’m working on that, and as I get prospects down, I list what I think they might purchase. I’ve been on the telephone a lot to these people trying to determine if they really are prospects and for what product. Jay: Of the companies that you are representing, have any of them provided you with their prospect and customer information? Andrew: They don’t have any. Literally, they do not have prospect and customer information. Jay: If you’re going to build for them, do you have long-term relations with them so you will be amply rewarded for putting all this together? Andrew: No guarantees. Jay: Is that indigenous to the industry? Andrew: That’s the nature of the industry. The rep businesses is like that. Jay: Do you have at least reasonable contracts or agreements that give you some protection against being terminated? Andrew: Practically nothing. Jay: Wow. Andrew: This is typical for the industry. 90 days is the kind of protection you get and that’s about it.

Jay: Since you’re just starting out, are you certain that this is the area of the business that you want to function in? Andrew: No, not necessarily. I’m open to other possibilities, certainly. Jay: One thing that I try to teach people is how to perpetuate and residualize their efforts so that the pay-off is perpetual and you’re not exposed or taken advantage of. Now, it sounds like, if you are in the formative stages, it might be worth your while—and I’m not trying to douse the fires and enthusiasm that must be burning in your heart for this particular business—but it might be worth your while to explore other little twists that might give you more control and more perpetuation of income from your efforts. It seems very frustrating to be doing as you are now. So...are you setting up as a rep or are you setting up as a non-stocking distributor? What is it that you’re really setting yourself up to be? Andrew: As a rep—not as a distributor at all. Because as a rep I can drop a manufacturer any time I feel I can do better with another one. Jay: So you have that flexibility on your part. Andrew: I certainly do. Generally speaking, the key to long-term success in the rep business is to constantly to be on the lookout for additional new placement principals. Jay: O.K. How long have you had this business set up? Andrew: One month. Jay: In that month, you’ve basically been working on assembling your contacts and also assembling your prospects, right? Andrew: Right. Jay: Have you gone into the field at all yet? Andrew: I have. There have been a few customers—about 16 or 20 existing customers, although some of them were not real customers because they haven’t bought for 3 years or something. Jay: But those you inherited, right? Andrew: I inherited them from the primary rep. Jay: When you’ve called on those customers, what was the response and the reaction that they gave you? Did you get some business? Andrew: In a couple of cases. Jay: Meaningful business? Mediocre? Andrew: Well, there’s no really meaningful business in the region at all yet. The biggest single customer is worth maybe $1,000 a year to me.

Jay: O.K. Let’s get focused for a moment. You want to A) represent what to the market place? B) What is it that you want to extol when you are calling on a prospect in a given business category? Or, more precisely, when they’re thinking of buying whatever product lines you represent that are applicable to them, how do you want them to think of you? What do you want them to conjure up in their minds? We use the word USP—Unique Selling Proposition—so what is it that you really want to represent in their eyes? Andrew: I’m not sure I know the answer to that. Jay: Are your lines superior? Comparable? Standard? In other words, give me a little breakdown of the lines in comparison to the competitive products you’re selling against. Andrew: I can only do that for a couple of cases. Jay: Why? Andrew: Because I don’t really know, I don’t know how we compare. There’s tremendous competition. Jay: And the manufacturers have not told you? Andrew: I have not asked that question and I must. Jay: Alright. The first thing from a leverage standpoint: It should not be incumbent on you to do all this work since the manufacturer is going to be the greater beneficiary. I think the first thing you have to do is go to your manufacturers and have them furnish you with expansive and extensive and graphic analyses and data about their products. It’ll help you to pick what the Unique Selling Proposition is for their product in their industry. In other words, are they less expensive on a comparable performance basis, are they less problematic, are they made with better materials so the probability of endurance is higher, is their delivery more expedient? Have them start preparing for you as comprehensive an analysis as possible of where they excel and where they falter compared with all their competitors, and who the various competitors are in the region, and why their competitors have business they don’t. Make them do as much work as possible so you don’t have to sit and hit-and-miss fumble your way through the marketplace and have the market tell you and take up all your time. I think you should know going in at least what the market perceives your product lines to be vis-a-vis all the competitors, how they’re judged, how the company’s former reps sold the products. If you can contact the people who had the lines previously in your market, you should interview them. Also I’d want the manufacturers to put you in touch with all the reps who are successfully selling the product in other territories and regions and you should get on the phone with them and pick their minds clean. So all that is the first thing that I would do before I went out in the field. And I wouldn’t be abstract. I’d be as specific and detailed as possible with each manufacturer. You want them to give you as much comparison data as they have available. If they have none available, make it incumbent on them to prepare it for you; it shouldn’t be incumbent on you to prepare it for them. What you want to do is nurturously inform the manufacturer that somewhere within their product line—within any product line—everybody has some advantages and some weaknesses.

You want to identify their advantages and weaknesses from a technical perspective, from a performance perspective, from a price perspective, from a delivery perspective. You want them to furnish you with as keen and honest an analysis as possible of where they sell and where they fell. You’re going to push the strengths. For example, you may say to a prospect, “I understand that on a price-comparative basis, Acme—our competitor—is who you’re going to always favor. However, whenever you’re in a supply bind, think of us. When you need something in your warehouse by Friday and you find out on Tuesday that your production control foreman didn’t keep track and you’ve got about a day’s worth of product left, we’re there. Admittedly, we’re a few cents a pound more or a dime a unit more, but the point is it’ll be there by Federal Express...” See? Figure out an advantage like that for each product. Andrew: I understand what you’re saying. Jay: Now, will any of your manufacturers put up any promotional monies for you to mail or to telemarket with, or is all that out of your pocket? Andrew: It’s going to be all out of my own pocket. However, I think that represents a unique possibility for me as a rep, because reps usually don’t do that. Jay: I know, and I agree with you. Tell me: There must be five categories of types of business you would most probably call on. What would they be? What are the general 5, or the 4 or the 3 general areas? Andrew: The general areas are: people that make metal appliances—for example, metal parts, small metal parts. The second one is anybody that is in the electrical business who usually uses insulators of some sort. And finally, a hard-to-categorize group of manufacturers that use plastic parts for one reason or another, even though they are primarily metal products manufacturers. Jay: What kinds of trade publications would they subscribe to—do you know? I’m asking this question because that might be your answer. You could probably go to the trade publication itself and get lists of either the subscribers (if it’s a paid publication) or the recipients (if it’s a controlled circulation publication) in the geographic areas by zip code or by state, and that would turn you on to certain prospects for each product, you know that? Andrew: Yes, I understand that, but I don’t know what things they would subscribe to. Jay: But what you want to do is make your manufacturers furnish that information to you. Ask them, “What are the five publications?” and then when they give you a list, you call or contact the publications themselves and ask if you could rent or purchase lists of their subscribers in the geographic areas for each product, and that will help you focus on who the mass prospects are, don’t you think? Andrew: Yes. Jay: At least it will be an efficient way of focusing in. Andrew: Yes, it will. Jay: What is the most marketable skill you possess, Andrew, right at this moment in your industry? Define to me what you really excel at. What are you the most expert at?

Andrew: In the marketing sense? Jay: Well, in the marketable sense, not in the marketing sense. What is your singular skill right now? What are you the most skilled at doing? Andrew: Managing research and development activities. Jay: And you understand that very, very well. Andrew: I think so. Jay: O.K., how do any of these products interact with that? Do they at all? Or are you going totally outside of your field? Andrew: I’m going totally outside my field. Jay: Because the company you have been with has closed down? Andrew: Yes. Jay: O.K., now we are going to talk about alternatives for a minute since you haven’t started this rep business yet. Do you like selling or have you sold before? Andrew: I’ve not really ever sold before. Jay: Have you ever gone on a sales round? Andrew: I sure have, I’ve gone on a lot of sales calls. Jay: With reps in these industries? Andrew: With the company that I was with. Jay: Because you were the knowledge base. Their sales reps would take you around to talk to their prospects, so you do have experience in that. Andrew: I certainly do. Jay: You were all the time brought in to come up with solutions to people’s problems and you probably made more solutions for more problems than anybody? Andrew: Something like that. Jay: Here’s a suggestion. If you went to the primary rep and said, “Look, instead of having me just sell for you, what I’m the best at is coming up with solutions, solutions that can help you command product share. Why don’t you and I work a deal where you call me in when you’ve got a prospect you can’t sell because there’s a problem that needs to be researched. I’ll be the research associate, and we’ll split the commission.” That might be an interesting way. And you could approach your own prospects the same way. Other reps might say, “Give me your business. Favor me with the business you’re giving to somebody else,” but I don’t think

that’s how you want to do it, Andrew. You want to give your prospects such product-based information that maybe in the process you’ll come up with ways they can actually save money by favoring you with their business because you give them product suggestions, assembly suggestions, whatever it is that you excel at, and it might be worth lots to them. What I do for a living besides this kind of consultation is I make money in increased sales arrangements with people, where if I enhance the business they already have, I get a very large share of it. Aside from being a rep for electrical and plastic products, you might go back to the people who sell the products you already know like the back of your hand and say, “Look, you’ve got customer X. Customer X has been giving you a $10,000 order every month and is probably going to continue. If I can get that customer to give you $20,000 a month, will you give me one half of the increased profit you make? If you look at it, you’ve got nothing to lose. I’ll come in and look at the deal with you, I’ll come in and we’ll collaborate, I’ll see if I come up with a research or technical solution that will help them, and in the process have them favor you with more business than you are currently getting. If I can get that client to double—if instead of making $1,000 commission a month, you make $2,000, will you give me $500 of it?” Is that practical? Andrew: I’ll have to think about it, but I’m having some doubts. Jay: Really? Andrew: Yes. Jay: Because... Andrew: Because the thing that I’m most knowledgeable about, those people that I go to are also very knowledgeable about and they are competing on price alone. Jay: Yes, but it’s five people competing for the company’s business on price and on quality and components being the same. If you could give that company knowledge, information whereby they could save money or make money in some other aspects of their operation using your product... Andrew: I know what you’re saying. It’s not impossible but I’d have to think about it. It’s going to be awfully hard to find something that I can do for them. Jay: It’s probably a function of just getting you to realize that you probably have one skill that you utilized continuously over the years in your former capacity that you don’t even realize you’re using. I used to sell years ago. If I couldn’t compete on any other basis, I would excel by giving more valuable information. I would give them information that made them or saved them money, irrespective of whether they favored me with the purchase. But I usually did such a unique and distinguished job, above and beyond my competitors, that all things being equal they would favor me with most or all the business because I went out of my way to make them money or save them money or expose to them areas of possibility. Does that make sense? Andrew: Yes, it certainly does. Jay: How can we focus that ability on your part? It may be that in your case the same research and development skills you already have could be used to go to a rep who has customers but

who is only getting a little bit of their business, and you can say, “Look, if I can grow that business for you, would you give me a share above and beyond what you ordinarily are making on your own? In other words, I don’t want a dime of what you are going to make yourself, but if I can go in to your customer with you, not necessarily instantaneously, but over a period of time, and if I can help that customer see opportunities with or without our product but opportunities that will make or save them such money that they would be foolish not to give us a lot more of their business, because if nothing else just the reciprocity for the free savings or the extra money we produce for them, will you give me a share of the enhancement I create for you?” Somebody I would think would take that deal, wouldn’t you? Andrew, if you had built your business and you had 25 customers and each one was making you $500 a month and I said, “Andrew, I have a way I can go to those customers and probably triple the business they are going to be giving you, and I’m willing to go in at no risk on your part as long as we’re fair with each other and we’ve already quantified what they’ve been worth to you—if I can double or triple their worth to you, would you give me half of the increase?” Wouldn’t you say yes? Andrew: Sure. Jay: O.K., let’s move on. How many other lines do you think you can pick up and handle? Do you have any idea? Andrew: I think I can handle at least another half a dozen lines. Andrew: Well, in what areas would you want to have lines? Would you want kindred lines or what? Andrew: I think it’s important to have kindred lines so that once you’ve sold a customer there is an opportunity to sell them two or three other things. Jay: The question is—and this is not meant to make fun—but since we don’t really know who the prospects we are addressing are, how can we find the most kindred lines? Andrew: I think the question really is, in what way can I hope to promote my services, so that a manufacturer would look at me and say, yes I would like to have you be my rep. Jay: Simple, it’s simple. First of all, what we have to do is find prospective companies for you to solicit. There are many ways to do it. One is by a personalized letter, looking them up by SIC code and ... Andrew: Oh I can find them. Jay: Good. You find all the prospects, and let’s say there are 100 or 1,000 prospects. What you want to do is send a number of letters off identifying yourself, and saying the following: “I have a proposition that I think you’ll find unbeatable. I would like to grow your business in my territory by educating your prospects and helping them to see the unique advantages that most certainly you have, that perhaps aren’t being understood or embraced by the marketplace. I would like to put on—at my own effort and risk—informative seminars. I would like to become the repository of profitable educational information to your prospect market, teach them better ways they can profit by using your product.”

Then you go into a little bit of an explanation similar to what I just said to you. A company’s price and quality may be comparable to anyone else’s, but the company that extends themselves the most above and beyond a mere sales presentation—by helping their prospects use their products to make more money, or save more money, or extend markets—the company that gives them that kind of information usually gets favored. What you also want to do as long as they are cooperative is you want to pick their minds. You want them to let you interface with all their former reps, you want to talk to the factories, you want to talk to the manufacturers, find all the product knowledge, ways you can help a new customer, or an existing customer, with beneficial uses of their product or service—or ways of running their production processes more efficiently, or different outlets for their products. You’re set up to help grow companies. In the process they are going to favor you. Does that make sense? Andrew: Sure does. Jay: And you send letters out, personalized, not printed letters—computer typed, or personally typed letters. And say, “Anybody can say to you, Mr. Manufacturer, that they want to represent you, that they want you to give them the business you are currently giving to rep ‘A’. I’ll make you a proposition that’s irresistible. I can grow your business above and beyond the business you are giving to rep ‘A’. The way I’ll prove it is give me that business for a finite period of time. If I don’t double it, I’ll get nothing.” You see what I’m saying? You give them a proposition. Andrew: Yes, I do see what you mean. Jay: Be willing to do what no one else does. Everyone else says, “Give me the business you give to other reps, and then maybe I’ll grow it for you.” I think that you should do the opposite: “I’ll grow it or I’ll make nothing.” And that’s a very powerful approach don’t you think? Andrew: It’s starting to sound like a great idea. Jay: By the way, be willing to lose on some. You are going to lose on some, but you could win on so many that it won’t matter. Andrew: Yes, I understand. Jay: I’m making the assumption that you can afford, without a lot of pressure, to finance yourself for a few months in the field? Andrew: Yes, I can. Jay: Good. Now the thing is, don’t be promiscuous. Make the offer the way I’m suggesting, and I think what will happen is if you send that offer to a thousand manufacturers, you may get a hundred who will want to take you up on the deal. Andrew: Could be, yes. Jay: So what you’ve got to do is not be promiscuous. You’ve got to be very discerning and only make deals that look solid. You want deals where there are enough unexploited opportunities in a territory to make it really worth your while. You don’t want to basically be their salesman for nothing for six months just to be exasperated in the end. So what you want to do is you want to

try and tie up as many deals as you can before you start really working them. You want to basically take a position of strength and competence. In talking with a manufacturer who responds favorably to that kind of a letter, you want to say, “There are a few ethical catches to my proposition. First, you’ve got to have a good product, not one that has so many flaws that I’m going to be embarrassed.” You’ve got to be discerning as can be, only take deals where they meet certain criteria, where they fall in certain categories. They have to have enough potential repeat business, enough untapped prospects. They have to have some existing business with a good performance track record with their customers. The quality has to be good. You don’t want to be promiscuous. But the first thing you want to do is get a hundred manufacturers to want to take the deal, which is: “If I don’t grow your business, I don’t make anything.” And that means if they give you ten customers that are already buying from them in the market, you don’t make a dime off them unless you grow them. And you and they agree on a specific minimum growth that is reasonable. When you hit that, you get paid. I’ve done something like that about ten times, and it’s paid off about eight. Does that make sense to you? Andrew: Yes. Jay: That’s a very powerful one, because all of a sudden the risk is transferred from them to you. You say, “You’ve got $30,000 worth of yearly commission in the territory right now. I’m not saying give me that and I’ll maybe grow it, I’m saying that I only want you to give it to me after I’ve grown it. So in other words, I’ll work the clients and all the commission will be held by you until I get the market up to X. If I don’t get the market up to X in a certain period of time, I’ll either relinquish the territory and give it back, or I’ll keep working it but I’ll relinquish the commission that you are holding for me.” That has to be a very powerful appeal to them. Andrew: Sure seems like it. Jay: I think that appeal alone could advance you, but what we have to do is get you to really determine what skills you have that you can mass exploit the most. I think this idea about giving your customer (not the manufacturer you are representing but the customer that you are soliciting) information that would make them money or save money irrespective of whether they bought the product from you is the most powerful suggestion for you in the beginning. Andrew: I think you hit on something there, because their business could benefit from an ability to make presentations, technical presentations to customers. Jay: That’s it. And when it happens, when you start helping your buyer in other areas than just the purchasing of your product—when you help them because you have product knowledge they don’t have—then all of a sudden the relationship is not antagonistic. You are on the same side of the desk. They let you in to gain all sorts of knowledge and you get orders, just almost as a thank you for the other help you are giving them. All you need to figure out is what it is that you can give better than anybody else. If you are a mediocre or an average salesman, but you are a superlative technical person, and you’ve got knowledge that so transcends the limitations of the mere products you are selling, and that knowledge can be utilized by your customers or your prospective customers to make more money in the business they are engaged in—my feeling is that if you give that knowledge free, you are going to get all the business you can handle, don’t you think?

Andrew: Excellent point. I would also like to know about advertising. Is there a possible strategy for advertising? Jay: Yes. There are a number of strategies. First of all, you’ve got to figure out who your clients are, who your prospects are. And as I said, rather than it being incumbent on you to cold call, I think you should work people who know more than you and who have more to gain. I think you should have the manufacturers you’re repping show you all the ads and promotions they’ve ever done, all the mailings they’ve ever done, who they sent them to, where they got the lists, what publications they run the ads in, who—by particular designation and generic distinction—their customers are, what businesses they are engaged in, what publications they read, and get all that together. Then, I think you should read those publications and get a feel for them. I think that if you have product knowledge that is unique you can put on seminars. You can send out information. You can write or produce information, a report or a technique based on your past skill that you can send off in the form of an introduction to the people you are soliciting. Direct mail is the easiest way for you to operate, because I don’t think you are going to find any publications you can run ads in that are regional or localized enough to be cost-effective. Andrew: That’s right. Jay: And I think the other thing is you would have to pay a fortune for the whole country, and unless you’ve got all the additional manufacturer’s reps to pop for the money, you are going to lose your derriere. What you want to do is a lot of neat direct mail, and I don’t think it should be mass printed, I think it should be personalized. Andrew: Personalized—I don’t know the difference. Jay: Well, basically most people just have a letter or a flyer they want to send, they’ll rent a list of names, they’ll stick labels on the envelopes, use a mass-produced sales letter, they’ll send them off to a thousand or a hundred people, and hope somebody will call them. That isn’t what I would do if I were you. I’d have a very strategic program where you’d find out who your prospects are not just by category, but by name. Andrew: Yes. Jay: If you don’t want to do it yourself, I’d hire charming men or women to get on the phone and call all the companies you think are prospects and identify all the people by title and by name who would be your primary prospects. Then I would start sending a series of ongoing educational letters to those people, and I would send a different letter every couple of weeks. It would be for educational purposes. For example: “Mr. Adams, you don’t know me, my name is Andrew Carlton. I am the new representative in the market and I know you are probably very satisfied with the people you are buying your products from. I’d like to introduce to you to a basic philosophy that I don’t know if you’ve thought about. The company I represent, while being price competitive, has a couple of advantages you may not be aware of, but what I mainly want to tell you about is my background in research and development. Quite frankly, I spent a lot of time in your industry before I took on the line and I happen to know that most people don’t understand this production technique that we’ve experimented with that has saved manufacturers an average of 20% of the production time and $4.00 per unit making. I don’t know if it is applicable to you, or whether you are

already doing it, but I plan on being in your area on or around the third week of the month. I’m going to have my secretary call and try and set up an appointment with you. “Maybe we can talk about my product of course, but I’m also very willing to give you the benefit of all the years of research and development we did for manufacturers like you, and can tell you some of the breakthroughs we created for our manufacturers. There’s no charge, there’s no obligation to purchase. I think I can make enough of a case for my company that you’ll decide to give us a portion, perhaps just a small one, of your business, but that remains to be seen. For now I want to introduce myself, and I’d like if nothing else to talk to your production manager, your researcher, or your engineering staff to see if this technique might have applicability in your business. By the way, here’s our catalog sheet or technical data.” I would follow it up with a very conscientiously maintained file on each client. And I’d do a sequence of call-letter-call-letter and a week later I would call them and I would say, “Mr. Adams, this is Andrew Carlton. Probably by now you’ve received my letter. Did you get a chance to think about my offer?” Talk to them about it, and clearly articulate your USP, which is, “Almost every manufacturer’s rep that calls on you, Mr. Adams, has the same pitch—give me the business you give to somebody else—and when I decided to become a manufacturer’s rep I asked myself, ‘What could I do to earn the business that they are giving to somebody else?’ My answer was I either had to make you more profit or save you more money. Most reps try to figure a way to do that with the products they offer, but that’s very difficult because you have to buy 10,000 feet of tubing or 25 million pounds, and we both know, Mr. Adams, that that would be like buying a two years’ supply to save 4 cents a unit. That’s not the way I decided to build my manufacturer’s representative business. “I decided I would find other ways to save you quite substantial amounts of money or make you money by helping you identify opportunities within your own manufacturing or development business that you and your staff didn’t see—ones that may or may not have any direct impact on the product I’m selling. But if I made you a lot of money, or saved you a lot of money, and it cost you nothing, all things being equal, I’m hoping you’ll reward me with a portion (if not all) the business you currently give to somebody else. So my goal now is to let you tap into the product knowledge and the technical experience that I spent twenty-five years of my life perfecting in all these industries at no charge, with the understanding that it’s incumbent on me to make you so much money in these other areas that you’ll be willing to favor me.” Makes sense? Andrew: Yes. Jay: That’s a very powerful one and I can’t believe anyone else adopts that approach. Andrew: Probably very few. Jay: And what it does, is immediately it negates the antagonism that normally prevails between a buyer and a rep. It makes them see that you’re not in any big hurry to sell them something. You’re more interested in learning more about their manufacturing, learning about their technical side, learning about their research and development. And by the way, Andrew, when you do that, all of the sudden other opportunities will be revealed to you that could be more lucrative than the products you are currently handling. You’ll probably start seeing connecting dots that will make what you’re doing seem inconsequential. Once you make somebody a lot of money, once you save somebody a lot of money, once you solve a major problem, then your posture is much different. You should go to

them with the proposition that you’ll look at their business in confidence. You’ll address any problem they have, you’ll just look at all the things they’re doing with an eye towards ways you can make or save them more money. And you only want to get paid if and when you produce. Andrew: Yes that’s more like consulting. Jay: It’s a derivative of consulting, but it is performance-based, which is very unusual. Most people want to be paid lavish hourly wages for the privilege of being affirmative. Andrew: Yes. Jay: What is your singularly best skill? I mean what do you do best? What does Andrew Carlton do that’s great? Not necessarily applicable to what you are trying to do, but what do you do that’s great? Andrew: I think that I have the skill of being able to communicate technical concepts and ideas to technical and non-technical people very, very well. Jay: Well, there’s another possibility. You might be able to train manufacturer’s reps. You may find that you can charge fees or percentages for training manufacturer’s reps all over the country. You can basically teach them how to talk. You’d be like a U.N. translator. Andrew: (Laughs) Jay: There are few people if any transcending that communications void, which is a big impediment to manufacturers getting their products sold, and reps getting customers to purchase from them, and customers getting vendors to understand their problems. Somewhere in these lines may be a bigger opportunity for you. Andrew: Than being a rep myself? Jay: Yes. Keep in mind you can’t charge much of anything until you establish your track record, but if you went to a thousand people and said, “Look, I believe I can teach you ways to improve your communications skills, and what that means if that’s too abstract is I can show you ways to double the sales you consummate or the business you get, because you’ll be able to understand your customers’ problems and solve them better with your product. And I’m willing to train your people for five days in my offices and if it’s successful and increases productivity at least 10%, I want $3,000 per person. If it doesn’t, I want nothing.” Does that help? Andrew: A little bit longer range, but sure. Jay: What I’ve found is the best way to get rich is focusing on what you do the best, and enjoy doing, and then not being afraid to do it strictly on a performance basis. Because if you can focus, if you can perform like mad, and if you do it right, if you charge enough based upon the performance, even if you only hit half the time, you’ll make three times more money than anybody else. Andrew: Well, we are pretty much out of time right now. Jay: Here’s one more idea: I’d find out who the most successful rep was outside of my market area, and I’d call that rep and I’d say, “My name is Andrew Carlton. I’m starting from scratch. I’ll make you the deal of a lifetime. You give me training...” (make it specific): “you give me a

month’s worth of one-on-one training and I’ll give you for a year 10% of my business or 15% of my business,” and that way you make it an incentive to other people to help you really grow. Andrew: That’s a good idea. Jay: And I think you ought to pick a lot of people’s minds, and what I would do, with their permission, is record the conversations, have them transcribed, and study them. Ask the manufacturers and reps to send you photocopies of every letter they ever sent in solicitation, and also their follow-up letters, so you can get an idea. And you should ask them to send you stuff marked, according to the ones that worked and the ones that didn’t work, so you can get focused. Why should you recreate the wheel? Andrew: Right. Jay: If you’ve got enough money that you are not going to go broke, I’d spend the next 30 days collecting material, reading, focusing, and studying your manufacturers individually, their reps, what they’ve done, what they haven’t done. Find out why the last one didn’t succeed, call him or her up, ask them candidly, ask them what they would do today. One of the greatest ways to get people to open up is to offer to share your success with them. Instead of taking years to succeed, if someone can reduce that to six months, what’s wrong with sharing a portion of the first six months’ revenue with them? I mean, I’d gladly give people a share of something I would not normally already have, wouldn’t you? Andrew: Yes, exactly. Jay: And when you do that in the right way, you get all these people to educate you, you get all these people to collaborate, you get all these people to think for you, you get people to do things you cannot imagine possible, by leveraging all the assets at your disposal—your manufacturers, their representatives, the former representatives. What I would do if I were you is every day for two or three hours, I’d be on the phone, talking to people, interviewing people. That’s what I would do. Let other people lay the foundation. Why re-create the wheel, why should you be Lewis and Clark, when you can find people and say, “Look, help me and you’ll make an extra $50,000 a year.” They’ll love it. And no matter how much you make, don’t get greedy. Be generous. Give them a good percentage. Or say, “The first 3 sales I make, you get the commission.” Make it so enticingly lucrative that no one in their right mind would say no to you. Andrew: I understand it now, and I think it’s a great idea. Jay: The stuff that I do is so simple it’s disarming. Don’t pooh-pooh the stuff I’ve been talking about because it seems too obvious to be possible. The very fact that it is so obvious is why it works.

People value knowledge. Think about all the things you know about your product or your service or your industry, all your areas of expertise. Do you know how to save your customers money, or how they can make more money using techniques or processes you’ve developed? If so, why not offer to help them irrespective of whether they buy from you? You can either do it as a free service or, if it’s more involved, offer to do it in return for a percentage of the amount you save them or the added profit you make them. Either way, you can benefit. Even if you help them for free, they’ll

remember it and appreciate it, and chances are they’ll be so grateful they’ll favor you with more of their business later on. Also try turning it around. Find some experts—for example, people doing what you’re doing but in non-competing territories—and ask them to teach you their methods, techniques, and procedures in return for a percentage of the added profit their knowledge brings you. A simple win-win arrangement like that can save you years of learning by costly trial-and-error.

Employment Service for the Hotel Industry Paul’s USP (Unique Selling Proposition) was that his employment agency was the only one in his geographic area that specialized in the hotel industry. But having a USP, while essential, is not enough. Paul only had a few clients and he was very short of capital. In this consultation, I gave Paul a number of quick-fix strategies for turning around a weak financial situation. At the same time, I showed him how to get other people to help build his business for no up-front cost. You don’t have to be in financial trouble to benefit from these strategies. See which ones will work best in your business. * * * * Jay: One of the ways we’ve always, always, always made money for people who were in financial impairment is we do early renewals. What you do is you give them the rationale. You tell them you are getting ready to have a rate increase or something, and that because these people started out with you, you are going to give them the chance to sustain, and you will allow them to renew right now and prepay for up to three years right now for a lesser amount and they can always have a prorata refund, a guarantee. So they are locking in the deal for up to three years but at any time that their circumstances change and they don’t want the service anymore, they can get the money back on whatever unearned service they have paid for . That might be a very good way for you to bring $30,000 or $40,000 or $50,000 in real quick. So, there’s an approach just to get you some capital and play off people you already have. Keep in mind you can do it early without calling it advance renewal with some rationale where they can go for up to three years, and if they want to go for three years, you can even give them installments. In other words, you can say, if you want to lock it in for three years and you don’t have the $10,000, we’ll give you up to 90 or 120 or 180 days to pay it in installments. You don’t care as long as you get the cash flow. So, just give a rationale that’s believable and doesn’t make you look like you are impaired financially That’s a very powerful offer. It almost always works and you figure you’ll at least get 10 to 25% of your subscriber base to respond if the offer is good. You might throw in a bonus. What’s the bonus you can give them? Free seminars once every quarter or something. I don’t know. Give them a free diagnostic evaluation for all their team management people. Give them something worth another three or four thousand dollars and just keeping in mind, you have to have a steadfast adherence to the reason you’re doing it and make it an embraceable, rational, believable reason that’s anything other than the fact that you need money. That’s the first thing.

Second, who’s your singularly biggest competitor? Is there one other agency that is big in placing hotel personnel? Paul: There are two or three big agencies in my area that serve the hotel industry among other kinds of clients, but none of them specializes in hotel personnel. Jay: What if you went to one of them and said, “Look, I have a concept that is so hot, but marketing isn’t my forte. I specialize in the hotel industry. I’ll make you a partner and give you 50% of the profit of all the business you bring in for the next two years and you’ll be vicepresident of our local facility. You have to fund yourself, but here’s the deal: all you do is go to all your contacts and sell my concept.” How about that? Paul: Oh, the negative is that I already know who most of their clients are, and I wouldn’t want most of them. Jay: Why? Paul: Pretty shaky companies. Jay: If they prepay you, why do you care? I’m not trying to argue, I’m just trying to make a point. Paul: It’s a valid point. Jay: It’s found money, well funded, if you can put them on a non-compete, if you can show them where instead of making themselves 50 grand, they can make themselves not only maybe 100 grand, but they would have it locked in forever as an annuity. You approach them on the auspices of wanting to expand, not that you’re impaired, but you want to expand. You’ll give them the chance to have 50% ownership of this or that region for doing all the work. Give them a proforma, whereby you think it will probably only take them 60 days to be not only cash positive, but to bring in huge chunks of money, and maybe they can even do it faster if they have good contacts. Shaky as their clients can be, if they take care of collecting the money, why do you care? They get 50 cents on every dollar coming in, but for that, they take all the risk and do all the effort, pay all the phone bills, you have a stringent control over what they do and say, and they’re strictly, contractually committed to you and can’t compete for two years, if it doesn’t work out. I would think it would be wonderful if you have four companies like that. I would think one here, one in New York, I think that would be real, real neat. So think about that. A lot of things might sound crazy, but as long as you don’t compromise your posture when you make the overture, the downside is just that it’s an awkward thing to do. I do a lot of things like that and one out of every four comes to fruition, but the upside is what if it did, what if you found a guy there who’s dissatisfied and maybe working his butt off to make 40 grand and you could show him that the very same level of production would make him 80 - and not only 80 this year, but if those people renewed forever, he’d have 80 thousand dollars locked up forever like an insurance agency. He’d have an equity in the business forever that he could sell back; you would have the right to buy him out. You’re giving dimension instead of just a job. The guy’s a vice-president and a partner in your firm and he’ll make three times as much money as he does now, but not just on a one-shot deal. He locks in this business forever as long as he works for the company. That has a lot of bearing.

What if you find some retired hotel executive or executives. Somebody who is really known. You make that man your titular head. It must be somebody who is retired and would love to do something really fun who’s been forgotten, but is highly regarded in the whole industry. Find that man or woman, make him or her your public relations officer. What he does for that is, you furnish him with the printouts, and he could work out of his home. You pay his telephone expenses only, but he gets 10 or 15 or 20% of the profit from every qualified lead you close. All he does all day long is call all the hotels and talk about it. All you need is one of these ideas to work and you’re home free. Do you understand that? I am going to give you logical, illogical, credulity straining ideas, but all it takes to find out is you run a little ad or you do a couple of calls, you call and make an overture to one of your competitors. If you revere something, if you imbue it with value and make it sound exciting, you can make other people get excited about it too. Do you understand that? If you don’t, they won’t. This guy I am talking about—if you can find someone who could call 30 people a day, he is probably going to find one prospect for you. That means if he finds one 4 days a week, you’d find 4 prospects a week. If he worked 3 weeks a month, he is going to find 12 good prospects, and if you close a third of them, he is going to bring you 3 more people, 3 clients a month. Three clients a month at 2 to 3 grand per client. That’s $10,000, right? Paul: Yes. Jay: If you had four of these guys and you split the prospect list and gave each one of them titles of vice-president of marketing or something for the West Coast Region, the East Coast Region, and just let them work out of their houses, and they have no salary but have 10% or 20% of the profit, and you had them working all day long. All you do is pay their phone bill and you give them a limit, like a $500 per month phone bill. I think you’d be very surprised at the result? So there’s another concept. Just write your little ad so it says, “We’re looking for 4 regional vice-presidents who do nothing but liaison with the hotel trade. Preferably you are retired from a substantial position with a big hotel chain, you’re known in the industry, no travel necessary, joint venture proposition, all expenses borne by the headquarters company, and you’ll attend all the trade shows at our expense.” And you only send them to the trade shows if they are good. If they don’t work out, they never go. You can easily afford to spend a grand to send them and take a booth or something, couldn’t you? Now here’s another idea: Who else markets to that industry that has contacts that you can parasitically but ethically joint venture with? Can you find vendors who could represent your service for you? Paul: I think there are some people who could do that, Jay, but I don’t know right now that I have the time with getting this thing off the ground to try and cultivate those and get those tied in. Jay: Let me tell you how to do it. Now, I’m not trying to drive you crazy. You came to me wanting to exploit your hotel employment service idea. I’m just telling you how to do it. None of the things I have told you are theoretical. I have done them myself. One year, many years ago, I was running this guy’s mail order operation and he wanted to exploit it to the nth degree and had very little money and no personnel, and I had to find ways to do it. What you do is this, you run another ad and you find somebody who wants to be Head of Affiliate Services or some title like that. You bring in this person, all you do is pay the phone and the postage and the printing, and what he or she does is sit down with all of the trade publications of the hotel industry and

they find all sorts of businesses who’d be calling or have dealings with a hotel to whom your service would be an adjunct. And their job is to solicit them and try to make joint deals where they will represent your service too and get you leads or close it for you. They handle everything, they get an override only on performance. They can get vice-president titleship, they can have an office or a desk in your place. They get nothing but a variable and you give them that whole project. I think that you would be wisely advised to see if you can get someone to do this. There must be a lot of businesses catering to the hotel industry to whom your product line would be a natural adjunct. Paul: One of the key things I would like to do, Jay, is not get too wrapped up with a bunch more employees right now. Jay: None of them have to be. They could all be independent contractors. Paul: Yes, that aspect of it I like. Jay: Just make a lot of independent contractors. The whole trick is, the only thing you have to do is take the time to theatrically convey to them an incredible reverence for the concept and make them believe it. Make it real, make them feel like you are entrusting them with a business opportunity that will be theirs forever. They’re not just an employee. You give them a contract. As long as they work it and they do a minimum amount of volume, they’ve got the rights to that forever. It’s an annuity, they lock it in. Tell them that it is not a one-shot deal, you’re not like most people. “You’re building an annuity. You sell a client once, you renew them over and over and over again.” Do a little proforma where you can show them. You get 100 people paying $3,000 a year. That’s not untenable, is it? 100 people paying $300,000 a year. Let’s say they have 35% to deal with. Your recommendation is they give away 25% to the vendors and they get a 10% override. But what it is, basically, is that they have a 30 or 40 thousand dollar income this year, but next year if they keep adding clients, show them that its like an insurance agent. They’re building a lifetime income. I think that could be very exciting. I think you also might write a little report on the subject of using cost-effective, goalachieving alternatives to using an employment agency. Run little ads in the hotel trade publications offering that report for $29 or $19, enough that it will self-liquidate (pay for itself, break even). If you ran a little quarter page or eighth page ad in the publications, every time you spend $500 you not only get back that $500, but you also have 30 prospects because the report was informative and it also came with a brochure about your company. You probably would get 1 or 2 clients from it every month, wouldn’t you think? Paul: Should, yes. You could get by with a little one inch ad is what you are saying. Jay: That’s what I am saying, yes. Just have it a modest, money back guarantee and call it Hotel Employ Publishing Corporation or Publishing Company or Research Division. Whatever you charge them, just get enough back to cover the ad. You cover the ad, you bring in the leads for nothing, right? Paul: Yes. Jay: You could run it in 3 different trade magazines and if you get 30 to 60 prospects a month, and you close a lot, what you do is, you probably automatically close 5% or 10% of them which is 3 or 4. The rest of them you give to one of these affiliates and they work them. You’d probably get another 2 or 3, wouldn’t you think? They’re interested in the subject. That means by sending for the report: a) they identify themselves as companies using conventional employment

agencies and don’t like it; b) the idea of saving money appeals to them. They’re qualifying themselves by the mere fact that they send for it. So that’s another possibility. And you could knock that out real quick. Another idea: Do a 30-minute videocassette and send out 50 of them. Or do a 60-minute cassette tape and send off 100 of them with a cover letter to people. Just tell them to listen to it in their car. Conservatively try 2 or 3 different approaches that don’t cost you a lot of money. I’ll give you some other possibilities. One, you do a mailing where you offer the same booklet I’m talking about that you’d sell via ads; you offer the booklet free in exchange for them agreeing after they’ve read the booklet to talk to you for 15 minutes on the phone about your concept and its applicability. You tell them you will guarantee the booklet, that you will give them at least 25 sound ideas or 15 sound ideas that will help them even if they never deal with you. It will help them slash or dramatically reduce their cost of hiring and attrition by x% or so many thousands of dollars—and the reason you are sending it to them before you talk to them is you know if you can save them money up front, they’ll be very receptively inclined to talk to you because even if they engage your service, they will be paying for it with a mere fraction of the money you saved them. That’s a good approach. Another approach is offer to buy them a thousand dollar survey, or a thousand dollar evaluation or whatever, if they agree to try your service out for 30 days at your risk, with the understanding that at the end of 30 days, they have to make a decision to go for it or not. During the period they have to call upon you, you’ll end up working for them for nothing. Take some risks, try 100 people, even if you do it for nothing up front. Sometimes you just have to take a shot on the numbers and let numbers work to your advantage. If you bought 100 hotels your service for 30 days with the understanding that at the end of 30 days, they have to decide whether or not to go forward, and it’s just like buying them fire insurance for 30 days. If they need your services during that 30 day period, you’ll do it for them but there has to be a stipulation. The stipulation is: “You’ve got to have enough employees,” or “To qualify, in the course of a year you typically have at least 5 people turnover”—you know, whatever your stipulation is and just take the shot. Right now you can probably handle 100 more people without any real increase of your efforts. If you bought 100 more, you would find that you probably would keep 10% of them, do you understand that? And that could be very exciting. The out-of-pocket cost to you would be very little to fulfill it, even they avail themselves of your service during that free period. Doesn’t that make sense? And if they like it, you can tell them that besides continuing on, you’ll give them monthly or quarterly payment mode to boot. So it’s almost a painless way to operate. That to me is a very powerful approach. At the end of 30 days, you send them a neat letter saying, “Now you have been covered for 30 days. You may or may not have had a call. In the meantime...” (and here you’ll also have some performance achievements to tout in the letter) “In the meantime, we found a chef, we found a banquet man, we found a general manager, etc., for another hotel. You may have had no need for our services this first 30 days, but who’s to say you won’t 30 days from now, or 15 or 45?” And the deal you make is half. What’s the regular price right now? Paul: It’s been $2,000, but I think we need to kick it to $3,000. Jay: I would raise it to $6,000, but offer it at half price for the first year. Give them a rationale. “We know if we get you into it, we’ll have you forever, so we are going to give it to you for half price and buy you the first 30 days free. Thereafter you can pay for it by the month or by the

quarter, so if you’re still a little insecure, you can cancel any time you want.” Make it irresistible, why do you care? Paul: It’s an excellent approach. Jay: Because once you give them the full treatment and they see it works, they will be there forever until someone knocks you out. How much more time do we have? Paul: I think about another five minutes. Jay: Okay, what do you want to talk about? Have I given you some ideas? Paul: Yes, you have. One more issue though: I’ve done a pretty decent direct mail piece, or at least we’ll find out if it is decent. Jay: Don’t put all your fate into one piece. Try 2 or 3, particularly when so much is at stake. Try 2 or 3. Paul: My question is, when you are doing a direct mail piece, is there a kind of rule of thumb that you should not make it over two pages front and back or something like that? Jay: It depends on two things. It depends on how busy the person is who is reading it and how interesting and informative your material is. If it takes a long letter to tell your story, you could tell them, “I’m going to ask you to read a relatively long letter. I’m going to make it informative, but to make it really worth your while, you’ll find in this envelope a four-page report that if you read it after the letter, I will guarantee it will save you at least $2,000 in hiring in the next year, and it will probably get your attrition down 25% even if we never talk to you again.” Give them some reward for reading some really valuable information, and then don’t give them just B.S.; give them some very readable, meaty things. If you want to write your own letters, I would suggest you go to the bookstore or library. There are about 5 books by Dr. Rudolph Flesh called “How to Read, Write, and Think More Effectively,” “How to Write More Effective Business Letters,” and various similar types of subject matter. You have very little to lose, and not all these ideas are going to work, but probably the downside is almost nothing, and the upside is if you can find a joint venture, if you can find 5 people who will do it strictly on a percentage and as independent contractors, think what could happen. If you find a company working in the hotel field that will represent your services, if you can get someone to contact vendors for you. . . do you see the possibilities? Paul: Yes. Jay: Just try them and the very best of luck to you, Paul.

If you need cash fast, one way is to contact your existing customers and offer them a sale—e.g., early renewal at a reduced price, a two-for-one offer, etc. Be sure to give a rationale for the offer so people won’t see you as distressed. If your product or service is specialized, you might also try contacting vendors of a more generalized product line. Let them represent you to their customers for a healthy share of the revenue.

Or find a retired and respected person from your industry and offer him or her a percentage of whatever sales they generate for you. Or combine the above two ideas: Hire someone to call all the vendors who might be able to represent your product line to your customers, and give that person an override on any sales those vendors generate. And don’t forget the more basic approaches. You can offer a free 30-day trial, or a free sample of your product, etc. This approach may cost you a bit up front, but it can build a high volume of back-end business in a surprisingly short time.

Towing Service Seymour had made his towing business the biggest in his area. But it still had plenty of possibilities for growth. I gave him five powerful marketing strategies, any one of which could double his income. These strategies can be appied to almost any business, and they don’t require risking large amounts of cash up front. * * * * Jay: Tell me, do the police give the towing business exclusively to you, or do they rotate it? Give me an overview of how you get a client. Seymour: Okay. In the police business, no matter which town I’m operating in, all of it is shared, whether it’s state patrol, county, or cities. Jay: On what basis? Seymour: On the basis of which towing companies are responsible, have the right equipment, the right drivers, and the storage yards in those communities. Jay: Let’s take a hypothetical situation to help clarify it for me. A car breaks down, or gets in an accident, or is parked illegally. Give me those three scenarios. Why would they call you instead of somebody else, and why wouldn’t they? Seymour: Okay. If a car breaks down, that owner is going to go to a phone. He’s either going to call a garage and say, “Hey! I’m in trouble!” and they’ll recommend a towing company, or he’s going to look right in the Yellow Pages and decide which towing company to use. Jay: And it may or may not be you? Seymour: It may or may not be us. If he calls a towing company, he’s going to do it based on how he feels after looking through the Yellow Pages. So the Yellow Pages are an important aspect of our advertising. Jay: Parenthetically, when do you come due for your next Yellow Pages ad? Are the Yellow Pages pretty well locked up for awhile? Seymour: No, it comes due in February. Jay: So it’s relatively soon?

Seymour: Yes. Jay: Okay. What about a situation where the police get involved? Seymour: If a car breaks down and is blocking a roadway in a city and the police come along, they’re going to call for an immediate tow. They’ll call whoever’s on the rotation list at that given time in that city. Jay: Okay. It presumably is just random - every third or fourth time the call goes to the next person, right? Seymour: Correct. Jay: That applies whether it’s a breakdown, a blocking, an accident, an arrest for driving while intoxicated, or whatever? Seymour: Yes. Now, the police business represents a pretty good portion of our business probably twenty-five per cent of our income. Jay: Okay. That would mean it’s shared. . . Seymour: I divide that with other people. Jay: Is there any factor that would let you get more of the jobs from the police? Seymour: No, other than if we service them really well and really quickly, we’ll tend to get more officers making private requests for us because the officer knows we’ll be there ahead of the other companies, and he doesn’t want to fool around waiting. He’ll just say to his dispatcher, “It’s a private request for. . .” and they’ll call us. Jay: Do you have any equipment that your competitors do not, or vice-versa? Seymour: No, we’re all pretty much competitive, with late-model equipment. I’m usually leading the industry in the style and type, but they’re pretty well caught up with me now. Jay: Are your trucks actually Mack trucks? Seymour: No, they’re Isuzus, Fords, and Chevies primarily. Jay: Okay. That’s one segment. That is twenty-five per cent of your business. All you can do to enhance the city police-engendered business is service them to the highest degree possible. Seymour: Absolutely. Jay: Which you very proudly do right now. So it’s not an area that needs a lot of concentration, or is it? Seymour: Quite frankly, my men, because they own their own trucks the way we run it, are usually much sharper than the average. We tend to get more private requests from the different police agencies because of the way we operate.

Jay: One of the nice things you could do, however, if it’s acceptable, is to prepare kits that the police could have on them and disseminate to motorists who are choosing. The kit would tell what happens when the car is towed away, where it’ll usually go, how to handle it, the time wait, and so forth. Seymour: That’s not a bad idea! We don’t do that. Jay: All things being equal, if you could prepare a really neat, informative kit, that could tip them towards you. I know from the few things I’ve had to have towed that it’s dehumanizing. You’re scared to death, you don’t know what the procedure is, you’re left on your own, you don’t know what’s going to happen, you don’t know who to call. I had a breakdown on the way to Palm Springs and a very nice highway patrolman stopped. He took our information and called it in, but the people he called didn’t show. So we called them ourselves, and when they came, they didn’t know what to do. If you can give the policemen something really informative that overcomes all that fear and confusion and trepidation and is clarifying - and no one else does that - it may only have little effect, or it may have a lot to do with them calling you, but it’s probably a wise investment. It would just be a nice, courteous touch. It would basically be a little, sealed kit they could give people. Also, if the people need a ride somewhere, work out a special deal with a cab company or make a deal with your men. Maybe you’ll have a courtesy service. That may be the deal. Maybe you can give free courtesy transportation to the motorists within twenty miles of where you tow the car to? Seymour: We do that within the radius of where it’s at, usually within a three-mile radius. Jay: Do the police know that? Seymour: No. Only superficially. Jay: I think that’s a very important point. Whether you do it or not is not as relevant as whether it’s known that you do it. Seymour: Right. Jay: Start talking to the police and let them know that you don’t really care about promoting yourself - you’d like it to help your business, but you think this is so good they should give it to everybody, even if it’s somebody not serviced by you. Anytime there is a problem, people should have this. They should know that as a service, you have courtesy transportation that’ll do one of two things. It’ll dispatch a courtesy vehicle, or will see that the person is put up overnight. I think that’s fabulous, don’t you? Seymour: I do, as a matter of fact! I follow you. Jay: Little things make all the difference. I’ve done so many consultations on how to better educate contractors who did only sealed bid work. By using a similar technique, one of my clients got offered so many more bids that his business doubled - even though it was a sealed bid type of business. I’m being very abstract, but just because he extended himself more in educating them, they gave him more business. If you extend yourself more than anybody else in the eyes of the police - first to help allay the fears of the person who’s immobilized in the middle of nowhere,

and second to see that that person gets shuttled somewhere, either a relative’s home, a restaurant or whatever, at no cost - the police will tend to favor you. That to me is demonstrably superior in their eyes. I tend to believe, even though they have a callous public image, that policemen still care about other people. Seymour: Oh, yes! Jay: I just imagine that if you would show you’re going to extend yourself, all things being equal, even though legally they’re not supposed to, you’ll get more of the calls than other people. Seymour: I think you’re right there, because we already feel that just in the way we’re approaching people, we get more private requests from the police than most. Jay: You should have a wonderful little kit. I don’t know what it would entail. Where you are, it’s cold on the side of the road. I don’t know what you could put in the kit for that, but probably there’s something. I wouldn’t spend a lot of money. Something for them to read, instructions. Big reflectors? Flares? I don’t know what it could be. Seymour: I could think of something and so could my wife. She’s very good that way. Jay: Did you read the Marketing Genius material I sent you? Don’t do anything without pretesting. Try a couple of hundred. Go to the police and tell them you’re trying an experiment. Tell them that you think this is a noble service, that it’s very costly to you, but you think it’ll manifest itself in better service to the end-user from everybody. You think it will also help your business. You’d like their cooperation. The next 500 tows or 200 tows (or whatever you can afford) that they encounter, whether the jobs accrue to you or not, you’d like them to disseminate these kits and help you in a little research project. Tell them that you can’t speak for other people but for every job that they give you, you’ll see to it that within a twenty-mile radius, the stranded motorist and his or her family will get shuttled back to their home, a relative, or another a safe place. Seymour: A place where they’re safe. Jay: And comfortable. Seymour: Yes. Jay: There’s no charge. You don’t know if you can keep doing it but you think that there’s value to this. Maybe you can espouse it genuinely under the auspices of trying to extend a service to the end user. My gut feeling is that it will do a profound job of increasing your chances of getting more calls than just one out of four. Seymour: I think you’re right, because just the little additional service we have, the little edge we have, has already had some impact. We feel that and know that. This would certainly be just that much more positive. Jay: You could take it to even loftier levels. I don’t know the level of cooperation you could get from the police, but see if they’d let you put hot urns of coffee in the back of their trunks to give to these people on the road. You’ll furnish them and you’ll pay for it. I don’t know. Seymour: That one I doubt, but it’s certainly something that we’ll follow up on.

Jay: Understand that with what I’ll teach you in this consultation, the specifics aren’t as important as the general concepts. I don’t know the rigors with which you have to contend, but to the maximum level possible, if you extend yourself in the eyes of the police to try to serve the stranded motorist better, I think that will accrue great benefits for you. Seymour: You bet. Jay: Let’s move on. Seymour: The next seventy-five per cent of my business comes from commercial accounts and the Yellow Pages . Jay: Let’s take commercial first. Yellow Pages we’ll cover later. Seymour: Let’s say the next forty per cent of the business comes from commercial accounts. Jay: Which would be. . .? Seymour: Garages, service stations, body shops, dealerships. Jay: Okay. Let’s take every scenario. What do you charge? What are the criteria that get them to favor you over somebody else? Seymour: Price is rarely a factor. I can name the shops that are concerned about price. But the real factor to most of them is service. Jay: Can you be more specific? Seymour: Okay. What they want when they call a towing company is to be well represented out there in the field, because they don’t at that point have the real control of that customer. They want to know that that towing company’s going to get there soon, that they’re going to be dressed nicely, that their trucks are going to be good, that they’re going to do a top-notch job, and that they’re going to do a real personal job with the customer. Jay: What do you charge for the tow? Seymour: My basic tow is $32, plus $2 a mile from wherever we pick the car up to wherever we deliver it. We are about the middle of the road in price. Jay: Give me an average price total. Seymour: It generally runs about $45. Jay: On $45, you pay on a variable rate to the driver. What’s he going to get? Seymour: 50% of whatever they do. Jay: Of the remaining $22.50, you give nothing back to the garage? Seymour: I give some. Some garages I give a 10% discount to and that’s not on the remaining $22.50 - that’s on the whole bill.

Jay: So it costs you more? Seymour: Right. Jay: Is that taken off the top prior to remitting to the operator, or do you just eat it? Seymour: I eat it. That’s my cost. Jay: So on the $22.50 that you get, you take right off the top $4.50. Seymour: Or $9, because to some of the bigger shops I give 20%. Jay: How do you pay them? Who pays whom? Seymour: The shops pay us directly, or if they pay the driver or if the customer pays the driver, he turns in all of his receipts and sales. Jay: Then you’ll remit to the garage or whatever. Seymour: Then we bill the garage. We handle all the billing, all the receivables, all of the bad debts. Jay: Are receivables a problem in your business? Seymour: Not too bad. I have a pretty high volume of receivables but I don’t have much in the way of bad debts. Jay: So you may have a lot of money outstanding but it’s paid in a relatively timely manner? Seymour: Correct. Jay: So you have big-volume people who would get between10% and 20% and that’s for generating how many. . . is there a dollar amount? Seymour: Yes. If there’s $500 or more per month, that customer is given a 20% discount. Jay: Okay. Seymour: They must pay it by the tenth of the following month. Jay: Okay. Interesting. Seymour: The smaller ones get a 10% discount. Jay: When you tow for repair shops, do they pass the towing fee on to the customers, or do they cover it themselves? Seymour: They all pass it on. Jay: So if I go to a General Motors dealer when my GM car doesn’t work, they make me, the owner, pay the $45 towing fee. They don’t cover that if my repair bill’s $500 or something like that.

Seymour: That’s correct. That’s an add-on. That’s an outside service added to their repair bill. Jay: Those two commercial categories require you to remit back a percentage of the gross depending on volume. Seymour: Right. Jay: Okay. What other commercial categories are there? Seymour: Well, you’ve got dealerships and plain repair garages. Jay: Let’s talk about dealerships. Of a hundred per cent of the dealerships in your marketing area, how many do you have contracts with? And are your contracts exclusive or are they shared? Seymour: Okay. First of all, I don’t have contracts with any of them as such. Jay: Because? Seymour: Because it’s always been done on a handshake and, “Here’s what we offer,” and we tend to hold each account because we give them such good service. We’ll do a lot of internal personal favors too. If they need a car moved, or a car goes out of their shop and breaks down right away, we’ll go pick it up and bring it back to the shop for nothing. Lots of private favors done. Jay: And they all know that? Seymour: Yes. Most of the dealers in our area do. We probably tow exclusively for 60% of them. Jay: And the other 40%? Seymour: We’re either in the door sporadically or they’re exclusively with somebody else. Jay: Okay. And you got those 60% because you did what? Seymour: Because I went out and sold initially, and then just plain serviced them - kept giving them good service. Jay: Do you, in fact, still go out frequently, or do you stay back in the office? Seymour: Almost every day, I’m out at least two or three hours, or I take one of my driverowners and we make calls. Jay: And when you make calls, are they to existing clients, new clients, or both? Seymour: I usually make calls to the new accounts. I go with the drivers to get them into the habit of doing it. Jay: What’s your approach to the existing accounts?

Seymour: I’m on the phone a couple of hours in the morning and several hours at night, so I usually have a lot of phone contact with the existing ones. Also, I personally drop in on them and talk just to see what’s happening. But the driver-owners do a lot of that, too, because each one has his own little given area, and they’re pretty jealous about them, they guard them well. In fact, one of the reasons I went to driver-owners is because they take a strong vested interest in keeping business good. Jay: So they’re very covetous about it, and they take it very possessively. Seymour: You bet! We have a very, very good rapport with all of our exclusive customers almost a friendship basis. If something goes wrong they tend to call us up and say, ‘Hey, I don’t like this,” or “This happened,” or “What can you do?” or “I need a favor.” Jay: And the driver-owners have a high degree of stability with you? They don’t say they’re going to take that client themselves and make twice the money? Seymour: No. Because of their contracts with us. It’s a very open, up-front, and solid contract. Jay: So they can’t take your clients. Seymour: That’s correct. Jay: Let me ask another question. Right now, what is your utilization rate relative to the operators you have? Seymour: Almost100%. In other words, if I add more business, I’m going to have to add another truck. Jay: Let me ask you another question. There are several competitors. How are they doing? Seymour: There are four others that I consider solid competitors. Jay: Do you think they’re making money? Seymour: Yes, they are. Jay: Are they making good money? Seymour: I honestly couldn’t answer that. Jay: One of the things I suggest to a lot of people, and it may seem funny, is that they go to their competitors and offer to buy their business and integrate it in and pay them forever a variable rate, whereby they can do nothing and still get paid. You can add 40% more business and get both the clients and the operators. Seymour: I follow what you’re saying. As a matter of fact, that’s essentially what I’ve done over the years. Jay: But a lot of people, even though it works, they stop doing it. People don’t understand. In a competitive environment, most people like yourself are working hard to make $70,000 or $80,000 or whatever you’re making. Let’s say your competitor down the way is not quite as adroit an operator and is working equally hard but only making $50,000. You could take over his business,

integrate it in, bring it up to $75,000, and pay him forever variably $55,000 for doing nothing because you’re still adding incrementally twenty grand more to your bottom line. Seymour: A very good thought. Jay: Sometimes I’ve told people this, and they’re shocked when it works. Draft an overture letter to somebody - don’t even call them. Just say, “I know this is going to shock you, but I have an idea. This is a tough, competitive business. I’ve decided I’m entrenched for the long haul. Instead of fighting each other, I’ve got an idea how I can make you more money for doing nothing and also reward you for the past effort you’ve made. My deal is that I’ll take over your clients. As long as they stay active with me, I’ll pay you 15% of the gross forever. I’ll pay you every month, or I’ll pay you every week. I’ll take all your good operators and give them jobs.” In another letter, you state it differently, “How’d you like to make more money than you’re making now for doing nothing?” It’s just a very powerful approach. Seymour: It’s certainly something I’ll go after right away. I like that idea. Jay: It’s worth it, every time you bring a smaller business in. Look at it. You need the right attitude. If you could buy business you didn’t have and after all’s said and done, you make a profit even if it’s only half the profit you would normally make, and it isn’t grief-ridden. . . Seymour: Then it’s more profit! Jay: Right. You can buy $300,000 of gross profit and you have to pay out $280,000, but you end up with twenty grand you didn’t have. Again, you have to factor in overhead and management time, but don’t be shortsighted. What I advocate is that you pay people on a variable basis for a longer period than most people would imagine. Pay them forever. Who cares, if that’s what it takes? Give them a most binding agreement, as long as it’s fulfillable and it’s fair on both sides. If you made that offer to the four biggies and to the three or four little guys and then start some acquisition. . . what if you double your business for no capital expense, no sales expense, and pay only after you bank the profits? Seymour: Sounds great. Jay: There are probably a lot of tired competitors out there who aren’t as formidable as you are, and aren’t as well-capitalized, and passionate, and poised - who are basically just breaking even, or maybe are debt-ridden. You can show them how they can get out of their lease. Do it strictly on contingency so you don’t have to take on any long-term debt except for the variable compensation to that person. It’s wonderful, isn’t it? Seymour: You bet! Jay: By the way, don’t just send one letter and then stop. What I recommend is that you send a succession of them forever, because people’s attitudes change constantly. Make it always gentle and very up-front and explain your position and why it makes sense to you - but even more, why it makes infinitely better sense to that person, because it’s quite possible that he, the recipient of your letter, will make more money on variable from you for doing nothing than he’s making now for working hard eighteen hours a day. In fact, they’ll get a check from you and they can go take another job. They can be your salesmen if you want and go out in the field and do what they do well, and you’ll pay them a variable on that to boot. It’s a very powerful offer. Seymour: Yes!

Jay: It’s so overlooked that few people do it. So there you have two useful approaches - the police kit and competitor buyout. Let me ask you a question before we go on. Right now, are you making money? Seymour: Just started to again. Jay: On the $50,000 you indicated you’re spending on marketing, where is that being spent? Seymour: Let’s see. In my Yellow Pages , I’m probably spending about $15,000 or $18,000. Jay: Of the $600,000 you do a year, how much comes from that $18,000? Seymour: About 10%. Jay: So $18,000 generates $60,000? Seymour: Yes. Jay: And from that $60,000 you give up 50%, right? Seymour: Right. Jay: So $18,000 makes you at best $30,000, probably $25,000 marginally. You make seven grand on it, maybe, before expenses. Is that what you’re saying to me? Seymour: On the service, yes. I am constantly asking people why they called me. If I didn’t have that Yellow Pages, I’m wondering how many of the people that know us and look us up might call somebody else if they didn’t see our ad. In other words, even though they know us, they have to look up that number. Jay: So you feel that it has a lot of intangible worth. It’s just augmenting your persona in the whole marketplace. Seymour: Right. But I may be wrong in that. Jay: I don’t draw conclusions. I try to reconstruct the analytical data you have available and just tell you what it means to me. Seymour: I understand. Jay: My recommendation would be that you try different approaches. If you could afford it, try going a year with trying multiple ads hitting different headline-type hot-buttons with scenarios that might cause people to call. See what happens if you ran more, if it would justify itself. But it’s a function of going backwards and finding what your marketing allocations are. You read my instructions and commentary in that prefacing letter about headlines and the like, didn’t you? Seymour: Yes. Jay: About telling stories. It would be very interesting if you could run more ads in every publication but each one had a different thematic approach. For example: 90% of your

catastrophic non-commercial business must probably be attributable to five or six basic scenarios, would that not be true? Seymour: Yes, it would be. Jay: So take those six scenarios. Instead of clustering them all together, take each one as a headline and make small ads. Or take the three or four biggest. I don’t know what they would be. “If your car is broken down on the highway and you need to be somewhere, call us. Call this number. Not only will we pick you up but we’ll be there within 30 minutes, 24 hours a day, in most scenarios. We also provide a free courtesy shuttle back to your home, to your office, to the airport, wherever you’re going.” That’s a powerful statement, don’t you think? Seymour: Yes, it is. Jay: Don’t just run one ad, if you can afford it. If you can’t afford it across the board in all the four or five Yellow Pages, try one or two, and try it in three or four other scenarios. I don’t know what they would be. What are the other scenarios? Seymour: You’ve got a car breakdown, you’ve got an accident, you’ve got a car that won’t start at a person’s home. . . Jay: When there’s an accident, do they not normally get the wrecker called by the police? Seymour: Yes, normally. Jay: Okay. So that’s not really as big for advertising as some others. What are the other scenarios? At home? Seymour: At home. Jay: Okay, really a big one. “If your car won’t start and you’re late for work, call this number 24 hours a day, seven days a week. We guarantee to be there within 30 minutes or we’ll give you a discount on the tow. Plus we provide free shuttle service for you to or from wherever you’re going.” That’s a powerful approach, I think. Don’t you? Seymour: Yes, I do. Jay: It may not be, but test it. Seymour: All right. Jay: So that’s a third approach. Let’s talk about getting the dealers. 40% of the dealers you don’t have. Do you want them and, if so, what does it take to get them? Do you have a full-time salesman working for you? Seymour: No. Jay: Can you justify one? Seymour: Not quite yet. That was hopefully my next step - adding personnel. Jay: What does it take to do that?

Seymour: It takes probably $20,000 a year and a car. I’ve got the right man lined up. Jay: What’s he do right now? Seymour: He’s actually working for himself towing, but his whole background has been in selling for years. Jay: Let me suggest an interim step. One of the things that’s very useful - most people don’t think about it - is to identify sales people or businesses that are calling constantly on markets you can’t justify. For example: if you find a company that distributes parts or products to body shops all over the area, and you find either the drivers, the owner of that company, or the sales people, and you contact them and can give them a commission for every client they open up for you- forever, as long as they work the client - you have all the body shops covered. And it costs you only after they perform. Seymour: I see what you mean. As for the service stations, it would be the guy that sells the tires, batteries, and accessories to the service station. Jay: I’ve done a lot of this and it’s very successful. You structure extremely generous programs in the beginning based on the fact that the person has to stay and work it. Basically, if the person leaves, they lose their participation, right? Seymour: Right. Jay: My feeling is that if somebody brings you $1,000,000 worth of good business in year one that you never would have had, and you need to give back $900,000, you still make $100,000 . If that person falls by the wayside after year two or three and you don’t have to pay that $900,000 anymore, it’s very lucrative. See what I’m saying? Seymour: You bet. Jay: A lot of people can’t reconcile themselves to that. My feeling is that I’d even be delighted just to break even on the front end if I’m accruing business that I’ll have forever. Seymour: Yep, makes sense! Jay: But I structure it so the person I approach to commandeer or access that marketplace is supremely motivated. In other words, giving them 5% is nothing. If you’re going to make 50 cents, I’d give them 25 cents or whatever you can afford, to make it so inordinately lucrative that just by commandeering 100 body shops, they can make themselves $3,000 a month. But I’d make that deal either for the first year or the first two years, or whatever, with some compensating stipulation where there’s a high probability that their participation will diminish. Even though you may pay through the nose short-term. . . and I’m giving you a very general philosophy; you have to factor in your own sense of that reality. If you get everybody who’s calling on body shops and you make it so overwhelming - not just marginally, but overwhelmingly worth their while to pitch your stuff in concert with theirs - you could get that locked up. Get everybody calling on service stations. Or go to every service station that doesn’t have towing and make a deal with them. Again, I don’t know all the scenarios. But imagine if you got everybody who’s calling on the people who would be positioned to use a towing service, and they were motivated as can be and they had the ear of the person who made the decisions, and you had a hundred variably

compensated people in your four-city area doing that all day long - what do you think the cumulative effect would be? Seymour: I’m sure it would be positive, but I’m not really sure how. . . Jay: I don’t know either but. . . Seymour: But it would be positive. Jay: But you test it. It’s self-regulating. If you go to a salesman for a body shop supply company, or to the owner of a body shop supply company, and say, “Look. We have a way where, just by your contacts, with no additional effort for your salesmen or service people, we can probably make you an extra $10,000 a month. And that’s without taking a dime away from the business you’ll normally get. It’s going to augment, not supplant, your normal business. All you need to do is present our towing service as your recommended one. Or we’ll work in concert with you in some package that we put together.” Try it. Do a test. If it doesn’t work, you stop promoting it. If it does. . . I think a lot of people have found it does, it’s like reclaiming relationships. There’s got to be - and I don’t know the business - but you identify for me backwards who the biggest possible commercial sources of towing business are. Then take those sources and ask yourself what products or services they buy. Who do they buy from? Then go to the people they buy from and approach the owners of those businesses first, so they’ll take the thing on company-wide. If they won’t do it, go individually to the salesmen. You test it. You test an industry. You test a distributor. Make that distributor your representative. Make him an exclusive rep to all the body shops you don’t yet have as customers. They’ll get, for every customer they bring you, 20% of the gross, or 10% of the gross or whatever. 25% of the profits for the next two years. Show them what that means: just by one quick blitz and doing nothing else, they could accrue $100,000 in their pocket. Try it. Seymour: That I will try. That I think will have a very strong impact on our business. Jay: Spend a lot of time, Seymour. It’s very important for you to sit down with a pencil and pad and think through backwards who, leveragability-wise, controls or has the ear or the favorable disposition of the people who could generate business for you. Seymour: I pretty well know in all cases, too, because I’ve been in this industry long enough that I just know who to go to. Jay: Let’s go to another scenario - impounding . Tell me about that. Seymour: Okay. That’s a smaller segment of our business, but it’s a growing segment, because parking space is becoming more and more at a premium in our area. But it represents only 10% of my business now. Jay: So it’s $60,000. Is it a very lucrative $60,000? Seymour: Yes, it is. Jay: Let me ask you a question. Let’s take the parking lot of John Doe discount store, okay?

Seymour: Yes. Jay: How many towing jobs will be generated in his location? Seymour: Very few. One maybe from each location. It’s the big apartment and condominium complexes that will generate probably three to four a week. Jay: Would they call for you? Seymour: Yes. Jay: Let me give you a scenario, okay? Simple scenario. You go to places that have the problem. You offer the following only when you create tasteful signs for them. You’ll also, if they sign up with you, engage a car that will come at regular intervals around their area and will actually patrol and do the service for them. It will do the policing service but also have an implication of security for the area as well. Seymour: I would have to think that through in terms of what the law does, because by law, we can’t police-impound on our own policing. We have to have the . . . Jay: But if you drive by, if your compensated security personnel drove around. . . Let’s say John Doe discount store is worth one impound a month? Seymour: Yes. Jay: How many of these do you have right now? Seymour: Three stores. Jay: First of all, you have to go backwards. Let’s say you had a hundred of them, okay? Seymour: Okay. Jay: That would be a hundred impounds. A hundred impounds times what? $45? Seymour: No. In this case, times $70. Jay: So you make a lot more. So that would be a hundred impounds times $70. Seymour: $7,000. Jay: And you make $3,500. What would it cost to have a person make rounds? He wouldn’t do it all day long. Seymour: In the evening, and it would be . . . Jay: So it would probably be $500-$600 a month? Seymour: Well, with the car and everything, it would probably be . . . Jay: Say $1,000. Can you get your operators to eat a portion of that in exchange for the business that would be generated?

Seymour: I doubt it, the reason being that they do the releases of the impounded cars too, so they’re actually making two calls for every one call. Jay: Does a release mean that they bring the cars back? Seymour: No, it means they go to the yard. In some cases, yes, they’ll pick up the customer and take them to the yard. Jay: It doesn’t matter. Think of this scenario. I’m trying to give you a way of thinking, by the way - whether it’s right or wrong, whether what I’m talking about right now specifically is embraceable. I’m trying to expand the elasticity of your mind and open your perspective. What if you picked up a hundred retailers, a hundred apartments, whatever, in that area so you could justify a part-time operative who would make the rounds. Whenever he saw a scenario where it was obvious that the person was abusing the parking restrictions, he would call whoever the designate was at the respective place. He calls John Doe, he calls the ABC Apartment manager and says, “Do you want me to let it go or do you want me to call it in?” You do a test and the test goes for a month. For a month you’re at risk. You’re only at risk after you set up enough people. Seymour: Yes. Jay: But what if it worked? Again, this is sad, but if the abuses go on anyhow, it’s almost like when you double the amount of parking meter maids, you probably triple or quadruple the number of tickets that are written. If people are abusing it anyhow - and there may be a moral implication - but what about patrolling and having the patrolmen contact the owners of the restricted parking areas? Having the owners call the towers, that’s a little like an eight-ball in the side pocket the hard way. What if you generated $12,000 worth of towing? Seymour: And I can see where it would, very rapidly. Jay: And you’re doing a service for the owner. You have a procedure so that the security guard isn’t jealous. The point is if it says “John Doe Discount Customers only” - and you’ve got to be careful that it’s not someone who just bought $5,000 worth of products and is next door shopping, you have to work that out - my feeling is that what you’re offering is free security patrol. That’s pretty exciting. Just having a security guard driving around for no cost whatsoever to the operator, having you put the signs up. Maybe even do specialized signs, maybe some line-painting or something. The deal is that they’ve got to give you the contract for a reasonable period of time if the thing tests out. I have a funny feeling, and again, it may be too aggressive or too contrived for you . . . Seymour: I don’t think so. As a matter fact, I think that in condominiums and apartments that would work extremely well. Jay: I would think that they would love having free patrols. Seymour: Here we’re actually ending up giving them more security, which they all want. Jay: Same thing with shopping centers. If every time you invested $500 in a security guard per month, and accrue - net - $2000 worth of heretofore unfound or unavailable profit for yourself, that’s not so terrible!

Seymour: That’s very good, as a matter of fact! I like the idea. Jay: Well, it seems logical to me. In other words, people want service. Tell them, you know you can’t stop the abuses. You’re not trying to. You’re just saying, if people abuse, the premise is that they deserve to be reprimanded. You agree with the owners what it should be. Maybe they’re going to be tolerant and there will be some grace period. In other words, if the car is there for ten minutes, obviously you’re not going to tow, but if you guys make the rounds and over an hour goes by and the car’s still there and it’s in a restricted area and it doesn’t have the right markings, you walk in the store and ask who owns the ’87 Chevrolet and nobody says yea or nay, I just have a funny feeling you might find. . . Some locations will probably be much more profitable than others, but you won’t know that until you experiment. I think that might be very powerful. You go into it very openly with the people. You don’t know that you can justify it, but you think there will be enough business to justify it. You’ll be willing to do a one month trial, and if it pays out, you’ll keep doing it forever, to furnish between the hours of blank and blank, hourly patrol or fifteen-minute patrol or twohour patrol. I just think that’s a really interesting concept. You might only break even. If that’s the case, you stop doing it. However, when you stop doing it, you’ll probably still keep a lot of the clients, right? Seymour: Right. Jay: And it may make ten times as much as you imagine because again, my concept is that if you double the number of meter maids, you’ll probably triple or quadruple the number of tickets issued. Interesting approach? Seymour: Yes. Jay: Okay. So now we have five good ideas for you. You spend $50,000 on marketing. $18,000 is Yellow Pages. Where is the other $30,000 spent? Seymour: Much of it is on one girl’s salary, because she’s dealing with all these customers all the time that have problems, and I consider that part of the marketing. . . Jay: That’s customer service, okay. What kind of problems would they have? Seymour: A lot of it is private impound. She spends a great deal of time on private impound, assuaging customers, explaining what happened and why it happened, keeping us out of court and making the customer feel that they haven’t just been stabbed. Jay: Is she very good? Seymour: Very good, extremely so. A lot of customers who have had a private impound, even after that, they become our customer just because they felt they were treated right. Jay: You know what you might do? Every time you do a private impound, why don’t you issue a credit slip for like $10 with a letter saying, “I feel terrible. We are an extension of the owner of the property but because we feel terrible and we’re here to serve, and we think we give good service, even though the context of our dealing and introduction to you may not have been the most positive, we’d like to make it up to you. If you ever have the occasion, not only will we give

you this discount but we’ll warrant you that we’ll make every effort to get to you if you’re stranded or your car won’t start.” Do one of two things: Give them a discount or give them something you do anyway. “We’ll be glad to pick you up and furnish you with a shuttle.” That’s a great way to turn around a negative. Do you have a computer? Seymour: No, but that’s the next thing we’re adding. Jay: Get a computer. I don’t care if you rent it, lease it, or buy it. Get a computer with a letterquality laser-printer or the equivalent. Not something disgusting. Every time you have an interaction with a customer, irrespective of the scenario, send a letter to them at home or wherever, acknowledging, empathizing, because most of it is problem oriented. It’s negative impact. Talk about the fact that the context of the meeting was not a positive one. Their car broke down, or they were involved in an accident, or they got towed away. You just want to tell them that you feel bad, that you have empathy. Then you tell them you’ll try to make it up to them in one of two ways. The next time - and you hope there is no next time, but the grim reality of the prospects of the car breaking down or whatever is almost certain over the next couple of years - the next time that occurs, if they will call you, you will either give them a reduction, or besides picking them up, see that they’re shuttled, within a twenty-mile limit, at your expense to work, home, wherever. Seymour: “Save this letter in your glove box.” Jay: Exactly. You can’t tell me that won’t have an incredible effect! Seymour: I think it will have an extremely powerful, positive effect. Jay: It will have a positive effect for you. You tell them that if they prefer, they can transfer this to any family member. That’ll be very powerful, and every time you send it out, if you do 3,000 people a month, you’re doing 3,000 letters, it will cost you $500 to send them out. It could be a simple letter with a little logo. It’ll be very powerful. Seymour: You’re right! The rest of the marketing budget is pretty well spent on hats and like, Christmas liquor and Christmas gifts, and that sort of miscellaneous advertising that I sent down to you. Jay: It’s fine. You want to ask me anything else? Seymour: No. Jay: Have I helped you? Seymour: Yes, you have. You have given me some very key points that I think will immediately generate more business. Jay: The stuff I’m all about - the philosophies and the concepts that I teach, advise, and recommend - are disarmingly simple and logical, but they are used by almost nobody. Seymour: Yes.

Jay: Implement them, and sustain them when they work. Don’t just jump from one to another. Make them an ongoing integrated part of what you do. For example: Soliciting people to take over their business. Don’t just do one letter. Keep sending. Have a master file. Every time a new person comes into business, you should immediately send a letter to him, thirty days after you hear about him, saying, “If you find the towing business is a lot harder than you thought and you’re questioning staying in it, why go out of business with nothing when we’ll buy your business and give you a check forever?” Think about that. Keep doing it over and over again. Seymour: I like that! Jay: I hope I’ve helped you. I wish you great success. Please keep me apprised of how you do, and the very best of luck. Seymour: Okay. Thank you Jay. * * * * Don’t rest on your laurels. Even if you’re doing better than your competitors, you can still increase your business by applying principles such as the five I gave to Seymour: 1. In the long run, profits come from repeat business. The best way to get repeat business is by offering the best service. But don’t just apply that to the basic product you offer. Think of ways to offer something extra to your clients - even if it’s just a courtesy, a convenience, or something that makes them feel better. Never stop being alert to new ways of helping your customers. 2. Consider buying out your competitors. If you offer a deal that lets your competitor continue to make money while doing nothing, it’s true that you’ll be paying him for the life of the business, but so what? You’ll still be making more profit than you would otherwise. 3. Whenever you do an ad or mailing, test several different headlines and layouts to see which gets the best response. Each headline should hit a different “hot button” - some benefit that hits home with your prospective customer. 4. If you don’t want to expand your own sales force, sometimes you can reach new customers through existing businesses (or their sales reps) in related fields. Offer those businesses a commission that’s so high they wouldn’t think of passing up your offer. The high commission doesn’t really cost you anything - it comes out of money you wouldn’t otherwise have. 5. Don’t try things just once. Make your offer on a regular basis. This pays off, because people’s situations constantly change.

Industrial Water Cleaning Service Owen is from Australia. His industrial cleaning service uses state-of-the-art equipment, and produces results far superior to the competition. But Owen’s marketing had not been bringing in the sales he had hoped for. Owen came to me with 3 major needs: (1) to market his cleaning service more effectively in Australia, (2) to license his equipment and technology in the U.S., and (3) to sell part of his business (a “graffiti eater” service) in Australia.

In this consultation, I explained to Owen that he has to do more than just sell service and equipment. He has to paint a vivid picture of what the service and equipment can do for people so they’ll revere its value and importance. And he has to offer his service in a way that’s irresistible. If you have a good product or service but not enough people are buying, it may be that your advertising or your offer lacks dimension. This consultation shows what you can do about it. * * * * Jay: What caused you to start this? Owen: I was in an apprenticeship, then I became a tradesman. I started with a small company working in a man’s backyard. He had an agency for high-pressure water jet equipment. Then I became a salesman for that company selling the equipment and chemicals. I also repaired the equipment. Now I have my own company. Jay: How do you promote it? Owen: This has been a major problem for me - I don’t have an existing marketing campaign. Jay: I want to try to help you build one, but I need to learn a little bit about how you’ve gotten to where you are. Owen: Until now, I’ve relied on free editorials in Australian magazines. Jay: In industry-type magazines? Owen: Yes. They’re national magazines but I’m only based in this area. Jay: So you operate in just one area? Owen: That’s right. I will travel all around but basically I only operate here. Jay: Do you have PR releases or editorials in national magazines? Owen: Yes. Those produce the majority of inquiries. We’ve also tried direct mail. Jay: What kind of industries tend to be the most receptive to your kind of service? Owen: First of all - any industry with a forklift. Any place where the forklift carries parts in and out of the factory or does a lot of work. And companies manufacturing steel - stamping out parts or anything to do with manufacturing steel nuts and bolts. Oil is used in the process of manufacturing steel components, and that oil gets on the floor. And the forklifts really make a mess. Jay: Are there companies that you have ongoing contracts with? Owen: No. What’s been stopping me is that the equipment is needing constant modification to bring it up to a certain standard. We’ve only just reached that standard virtually last week. It has to do with recycling.

Jay: After reading your letter, it sounds like recycling is the critical element that makes it really great. Owen: Yes, it is. Except for oil refineries. We’ve done three oil refineries here in Australia who have their own recycling, so we let the water down the drains and they did their own filtration and reclamation. Jay: In the oil refineries you don’t need the recycling, but everywhere else you need the recycling element? Owen: This is true. Jay: Is your water self-contained or do you have to hook up to water when you bring the equipment in? Owen: With the recycling, we’re self-contained. Jay: But before, you had to have long hoses and hook up? Owen: Yes. Jay: How did you drain it? Owen: We had long hoses draining it off. Jay: Must have been a real cumbersome mess. Owen: It’s just as cumbersome now, but we don’t need to hook up to water. Jay: You push the equipment in? Is it really large? Owen: The equipment shown in my brochure is lawn mower size, but . . . Jay: Where’s it connected to? Owen: It’s connected to a very large truck and trailer outside. Jay: With enormously long tubing and hosing? Owen: Yes and it’s very heavy. Jay: Is your truck a tanker truck? Owen: No, we don’t need a tanker. We use a small tank to supply the water. The water gets drawn out through a high-pressure pump into a machine. Jay: And it keeps being recycled back through a filter into the tank? Owen: That’s right. Jay: The recycling capability - is it your own invention?

Owen: Yes. Now that I have that capability, I can market my business and know that I can perform. Jay: On a consistent, reliable, and predictable basis? Owen: Yes. Jay: What problems do most of your customers have that you address, resolve, and correct? Is it dirt that bothers them? Is it the slipperiness of it? At what point does that problem become so profound that they perceive that they need it resolved? Owen: I’ll give you an example. I have one regular contract - it’s a poultry feedmill. They premix certain ingredients to make feed. These ingredients absorb moisture from the atmosphere, and when this powder gets on the floor, it becomes all sticky and tacky. We clean there once a month. Their need is quite great because they don’t have proper drainage. Jay: Do you have a long-term contract? Owen: No, one cleaning at a time. Jay: Is a cleaning one day or is it over multiple days? Owen: One day a month. Jay: How many years have you been in business? Owen: Ten, but in the fork cleaning, really only three. It’s been sporadic. I want you to advise me on how to sell the rights to this equipment in the U.S., and advise me on the marketing of my service. Also, to get some cash fast, I’m trying to sell the “graffiti eater” portion of the business in Australia, and I need your help with that too. Presently, I’m advertising to try to sell the “graffiti eater” business. My accountant is running the ads. We’re not getting the results I expected. Jay: How is he advertising? Owen: I believe he’s advertising in local newspapers and in some ethnic-type magazines. Jay: Do you want to sell the whole business? Do you want to sell franchises? What are you trying to sell? Owen: I’m just trying to sell the industiral cleaning service as a lump business in the U. S., and same for the “graffiti eater” in Australia. Jay: And the “graffiti eater” - basically it does what? Owen: We remove graffiti from buildings. We do specialist sign damage - smoke-stain cleaning from brick buildings. We do a little bit of building cleaning generally, water-blasting and painting. Jay: Does it show good earnings? Owen: Very good earnings.

Jay: And it’s reasonably priced? Owen: Yes, it is. Jay: Is there a logical industry that should be the buyer for that besides the ethnics? Owen: No. Jay: It’s a low-tech-type of business - labor-intensive? Owen: Yes. Jay: He just runs ads in the business opportunities section of the local paper? Owen: I believe so. I haven’t had a lot to do with it yet. I’ve been so busy with other things, but it’s concerning me now and I’ve got to get in there and find out what’s going on. Jay: Okay. You want to know how to market the rights you have developed and bought. What is your U.S. patent for? Owen: For the machine itself, and for the application of the high-pressure water and vacuum together with the fork cleaning. Jay: The recirculation part? Owen: No, that is just an add-on. Jay: Is that patent unique? Is it profoundly and demonstrably superior or perceivably unique from anything else on the market? Owen: Yes. Jay: Why? Owen: Because of the coupling of a vacuum to a speed jet. Nobody else has been able to perfect this, and my machine specifically describes a 360 degree vacuum pickup on a spinning water-jet fork cleaner. So it specifically describes the two things coupled together. The patent has been in operation for a number of years. Jay: What industries would that patent and your system be the most applicable to? Owen: Any manufacturing facility with a forklift. Jay: Is the system plausible enough that a manufacturer would want to own it themselves or would they always want to avail themselves of your service? Owen: It’s too expensive to own for just cleaning the floors once a month or once a year. Jay: So it’s got to be a service organization that would want it. Owen: It would have to be.

Jay: Let me tell you who and how would probably be the best prospects for this. First of all, you’d want to get yourself a copy of the magazine that’s read by people who perform industrial cleaning services. Run a very provocative ad. The ad should fully describe the system and tell what you’re looking for. Do you want to sell the rights totally or do you just want licensees? Owen: Because I’m such a small company, I can’t control things that are more complicated. I’d prefer to lump-sum sell it. Jay: Contact all the companies who have cleaning services. There are a lot of companies who do franchised industrial and commercial on-site, high-pressure and related cleaning services on a franchised basis. Contact them and offer them the product. Stick to the very big industries, and not the commercial office cleaning people. Do you know what Entrepreneur Magazine is? Owen: No, I haven’t seen that. Jay: Entrepreneur is a U.S. publication that focuses on franchises and business opportunities. They’re relatively full with advertisements and listings of all the big companies that franchise in various specializations. The problem a lot of people have is they’ll spend a lot of promiscuous time or money advertising to markets that are low prospects for the product. If we can find twenty prospective companies, that are already in your related business, not doing what your system can do, it would be logical to sell them the equipment. You can get whatever price you want. But give them very liberal terms so they don’t have to lay out seven million dollars at one time. Perhaps it could be conditional. They put x down and x after they get so much profit. That way, it’s affordable. There are probably 20 companies that represent 90% of the prospects. They’ve already got either company-owned or franchised representation all over the United States. If they already have 500 operatives, then it makes good sense for them because your system could be disseminated right through theirs. Owen: Yes. That’s true. Jay: But you’ve got a lot more to sell than just the equipment. Owen: What do you mean? Jay: Instead of just saying, “I have this great equipment; it does such and such,” you can say, “Here’s what we did. We started off on July lst with this marketing program. By September 15th, we already had 46 contract customers that extrapolated out at a million dollars turnover and the technology should be applicable in every city or state or industry in the state.” Put it that way and it sounds exciting. Owen: Of course it would be worth more at that point because it would be legally proved. Jay: Depending on your need for cash flow and the instant perception, if a prospective licensee or purchaser of the patent here could instantly see the viability and the application and the benefit, then I wouldn’t wait. I’d try to sell it then and there. But if it’s going to be hard for them to see how exciting it is until you prove it, I would suggest we focus on trying to get you marketing it in Australia first so the value of it is so evident that they can instantly see the excitement and translatability to them here in the U.S.. I’ll do whichever one you want. Owen: I need to do a bit of everything.

Jay: Okay, then. I’ll help you put it in a proper time sequence and help you get your imperatives in an orderly structure. Owen: I already have had a major company look at it. They’re one of the biggest in the world for scrubbers and floor cleaners. Floor cleaning is their business. They also have a contract business. Part of their organization, only in America, is where they will clean the floor and put a coating down on the floor for the customer. When the chaps saw my machine working here a couple of weeks ago, they were ecstatic. Jay: Is the machine that unique? Owen: Yes, it is. Whoever sees the machine says, “That is amazing!” They’re all really turned on when they see it. The results are just spectacular. Jay: When they saw it, what happened? Was there a dialogue between you and them about some ongoing affiliation? Owen: They have to make out a report and send it back to the parent company. It was instigated by the global marketing manager. Jay: So he’s a highly positioned person? Well-placed? Owen: He told them to look at it. They saw the editorial in a local magazine from Australia. Jay: And they contacted you? Owen: Yes. Jay: Good. Owen: So after a couple of contacts, they sent the people out to look at it. They were highly impressed. I sent a Fax off to the global marketing manager the following day just to thank him for sending the chaps out to have a look. I’m just sort of sitting around waiting at the moment. Jay: When you do a factory, what is your hard cost? I’m sure each one is unique but give me an idea of the fees you would charge and what your cost of sales is on that. Owen: With the recession, the price has gone up a little bit and if we charge something like $7 a square meter, if we do 500 square meters in a day . . . Jay: You’re doing $35,000. Owen: Yes, we make around about $15,000 gross profit after all costs. Jay: Is that a typical job? Owen: Yes it is. We have to make the $15,000 regardless of the job. Jay: So that’s what you need to cover your overhead? Owen: Oh, no. I probably need $400.

Jay: That’s great then. Do these companies pay their bills very well? Do you invoice them or do they pay on the spot? Owen: I invoice them and there’s no problem with payment. Jay: Once you’ve performed your job, how long until that floor needs to be redone? Owen: Six or twelve months. Jay: How many companies have you done this kind of work for over the last year or two? Owen: I’ll bet 40 or 50. Jay: Of those 40 or 50, how many have called you back to to redo it? Owen: We have one on a regular contract. Jay: That’s the one you told me about, the chicken feed. Are you the salesmen? Do you go onsite and sell? Owen: Yes I do. Jay: Let me tell you a very simple suggestion. You should spend a concerted week contacting all the old companies that you have dealt with and propose to them a more price-advantageous maintenance program where you just come in on a scheduled basis either on a weekend, afterhours, or whenever they want to do it. It’s just automatic; every six months or every three months you come in and you treat it, until they say stop. You can give them a much more competitive rate. Owen: The prices are going up all the time. Jay: On what? Owen: When I worked for another company, I did cleaning for $1.45 a square meter. This was two years ago. Today that company would have to pay me around $5 or $6 a square meter because of the further development we’ve done with the equipment. Jay: Are you still price-competitive or are you out of the market as far as competition? Owen: There is no real completition. Other methods use hand-held vacuum wands, and when they’re done, the water seeps out from under their equipment and looks pretty awful. Jay: How long does yours take? Owen: What we could clean in one day would take three days for other companies to do. We’re not making any mess as we go. Jay: Do you usually work during the week, or evenings - or when do they normally clean? Owen: A lot of companies have us in during the week. They might shut down one line. We’ll work that line. Then they’ll shut down another line besides that one and we’ll work that one.

Then they’ll open up the third one and they’ll just move things around for us. It costs them a fortune to shut down their plant. Jay: So if they have to shut it down for three days, the cost is exorbitant relative to what your fee is? Owen: My fee is nothing compared to that. Jay: Do you make them understand that when you’re selling your service? Owen: I haven’t been promoting it on that basis. I’ve only been answering inquiries; I’ve not been actively directly selling. Jay: Isn’t it wonderful that you could build a business just on inquiries? Owen: Yes. Jay: It’s good and bad. It’s bad that you have no marketing. It’s pretty remarkable because your cost of sales has been almost nothing. Can you lock in at that $5 or $6 or $7 rate? Is that a manageable fee or is it still going to keep escalating? Owen: It’s just about leveled out now. I think that with further development of the equipment, that price can start to come down a little. Jay: I asked you about going back to the 40 companies you’ve previously done and your response was that you had the problem of the higher price. Owen: My excuse for the higher price is recycling. We’re recycling so we don’t have any of the risk of putting material down the drain. The clients wouldn’t want that risk either. Jay: Say you go back to somebody who paid you $2 two years ago and you say now it’s $5 or $7, what are the advantages? How do you justify that appreciation in price? Owen: It only just happened so I haven’t had experience in that. Jay: Are you a good salesman? Owen: No. Jay: Let’s talk about salesmanship for a minute. My recommendation is that you’ve got to focus on what you’re really selling. What you’re selling isn’t your cleaning service. You’re selling reducing the down-time on the line by 2/3. You’re selling reducing the problem and the cleanup residue almost by 100%. You’re selling a more effective and more comprehensive cleaning, right? You’re selling the state-of-the-art and you’re selling a safer system. In other words, you get all the gunk off. It’s not going to come back and haunt; somebody’s not going to slip on it. There’s not going to be water lingering that somebody’s going to slip on or get in the machinery. Owen: In three large companies that have asked me to clean, they’ve asked me to do so because I’ve had inspections by head company personnel. They’ve been absolutely ecstatic about the results!

Jay: Comparatively speaking, if you took a picture before and after of your work and you compared it to the after of the other alternatives, is it visually evident that yours is superior? Owen: Well, not quite. What we’re dealing with here is not somebody comparing me to other methods. The other methods are so horrific that nobody uses them. Jay: If they don’t use you, what do they do instead? Owen: They have these dirty, filthy, terrible floors with the forklifts skidding around in circles when it rains outside and they come in with people nearly slipping when they walk from one piece of machinery to another. Those terrible, rotten, awful floors are there permanently because they don’t have a method of cleaning them up at all. Jay: When you use your system, is there any dangerous residual? Owen: No, it’s all picked up. Jay: Can you warrant that? Owen: Yes. I can guarantee that I can clean it. Jay: Can you guarantee it will be clean for a certain period of time? Can you do that in writing? Owen: No because that depends on them and the way they operate - whether they scrub it frequently or whether they continue to drip oil and pull in dirt. Jay: Are most of the floors you would treat sealed? Owen: Most of them had been sealed at one time. That doesn’t work because of the extremely heavy traffic of the forklifts. The seals just get overloaded with dirt and they can’t be cleaned or they break away entirely. Also, they often rot underneath the dirt that’s packed on. Jay: So when you clean down to the base level, are there strips of no-seal and seal? Do you see that? Owen: Yes, quite often we do in certain areas - patches, residuals of old sealer. Jay: That’s fascinating. What is the offer you need to make to the industry to get them to be receptive to you? Owen: I know if I do a demonstration on site, I’ve 90% got the job. Jay: Can you do free demonstrations? Owen: Yes, it costs me money but that could certainly be amortized over the job. Jay: If you go to someone and say you’ve got a very simple, visual demonstration that you want them to see. . . “Clock the time so you can see the minimalized down-time it’s going to impose upon your production line. I’m going to come out and I will clean the dirtiest, most difficult, most dangerous ten square meters and I’ll come and do it for nothing. If you want me to come back, I’ll give you a very competitive bid. If you don’t, there’s no hard feelings whatsoever.”

Owen: It might cost me around $3,000. Jay: Just to do that? Owen: Yes. It’s the high cost of setup and pack-up. Jay: What if we created an ad that we ran in a factory magazine? Owen: We have Factory Equipment News, Plant Line, and Manufacturers Monthly. Jay: The last two sound like they would be very good. Is the first one good too? Owen: Yes, it’s very good. Jay: If you ran an ad or a PR release and basically said that your company spec-cleans and that you want to demonstrate the profound cleaning, time-saving, and operational advantages of your service . . . Offer to buy 40 different industrial companies a ten-meter cleaning at no-risk, no-obligation as long as they satisfy a very reasonable series of criteria. The qualifications would be (a) They have to have a minimum of 20,000 or 30,000 or 15,000 square feet that has to be cleanable. (b) Wretched condition. (c) Serious problems that have evidenced themselves in the last year because of that. (d) They’ve got to be open-minded. If you listed those criteria in an ad or a press release and said, “We’re going to do it for fifty big companies. You just have to be a substantial company with these problems. If you are, we’re so convinced that our floor-cleaning system is incomparable - but you can’t appreciate the effectiveness, efficiency, expediency, and production savings it will produce unless you see it demonstrated first-hand - that we will come in at our risk. We will set up at our risk. We will dispatch our heavy-duty industrial equipment at our risk. We will dispatch two skilled technicians at our risk. We will set up for you and spend whatever amount of time you’re talking about - 60 minutes, 1/2 hour, 3 hours. All we ask is that you take your filthiest, most problemprone job and we will clean 10 square meters of it on the spot. No charge at all. You can determine after you observe and inspect our job whether you want to go forward and have us do the whole factory, part of the factory, or none of the factory. Either way, there’s no obligation, no hard feelings.” That’s pretty powerful, don’t you think? Owen: Very powerful and would cut out running around to factories at random doing timeconsuming free demonstrations. Jay: It would be self-qualifying. You set the criteria right there in the ad or in the press release. You say, “We’ll gladly do it at our risk. All we ask is that you qualify, and qualification means you’ve got to have a really serious accumulation problem that has caused danger, slippage, breakage, and inefficiency of equipment operation.” Talk specific. “Do you have people falling? When it rains, does the equipment slip? Workers trip or slip and it’s really a problem?” How do the magazines run their ads? Owen: Usually the page on the left would be half full of ads. The page on the right would be one-third full of ads. Jay: What does an ad cost in those magazines? Owen: Around $500 for a quarter page.

Jay: You could do a lot with a quarter page. So if we tried to write 2 or 3 different versions and test one against another and we made that very basic offer, “If you have industrial floor cleaning problems or if you have dangerous grease, grime buildup on your factory production and warehouse floors causing you operational difficulties or down-times or inefficiencies or danger to your equipment, your machinery, your workers, or your storehouses or materials - then this offer may be very appealing. We’ve got the state-of-the-art system. It gets right to the core. There’s nothing comparable in time and efficiency. It’s very price-effective.” Owen: We may have one problem. We can’t do within four inches of the edges of machinery, the equipment, and the walls. Jay: Why can’t you do that? Owen: Because we have wheels on the outside of the machine and the water jets are on the inside of the machine. Jay: You can’t turn it a different direction and do it? Owen: No, because even if you get right up against the body of the machine, the jets are still a couple of inches in from the outside body. Jay: But is your job still superlative and preferable to anybody else? Owen: Oh yes because nobody else can get up against the edge either. Jay: I think we should create for you a series of ads. We need to go into advice on selling the “graffiti eaters.” I think what you really need is a nifty ad that offers a free demonstration of your company. If 10,000 manufacturing, warehousing, and machine-type companies read these magazines every month, all you need is probably 10 or 15 jobs a month to be very lucrative. Is a typical job 5,000 or 10,000 square meters? Owen: A typical job is 1,000 square meters. That would just be walkways. Jay: That’s basically what they want you to do? Owen: Yes. Jay: Or the driveways or the aisles? Owen: Yes, we call them aisles. That’s a typical job and a typical job is probably two days. Jay: Let’s talk about the graffiti eaters. Owen: I need advice on selling the graffiti eaters because I need that cash flow straight away. It’s important that I get it off my hands, because quoting and doing all the work for the graffiti eater has been stopping me from doing the important work on the forklifts. Jay: What’s involved in running a graffiti eater business? Owen: This is a business anybody can start. They can run it from their own home or garage. All they need is a utility truck. We can sell them a manual on how to remove graffiti. That’s knowledge that only we have.

Jay: Have you documented that yet? Owen: Yes I have. It’s all down in a manual with all the supplies that we have and the discount rights that we have for the chemicals; they’re very substantial. We would sell them our industrial equipment that we had especially made so that it’s long-lasting and they’re able to perform better services with that equipment. We even have a truck all set up if they want to take the truck out as well. They can park it in their garage. They’re off on a business that’s better than $200,000 a year. Jay: What do you make on that? Owen: About sixty per cent gross profit. Jay: If they did it themselves? Owen: Yes. Jay: Could one person do it? Owen: Yes. I don’t have any advertising and the business still continues, which proves the fact that I have steady customers. If they want to build it up to a two-man operation, it’s very easily done. Jay: What do you want to sell it for? Owen: I want to sell it for $150,000. Jay: You want all cash? Do you want to give them terms? Owen: No, I would prefer all cash. Jay: You have a couple of years operating experience so you’ve got all the financials? Owen: Ten years operating experience, proper financials, and computerized accounting. Jay: You’re only operating it in one area and they could take it all over if they wanted to? Owen: We operate it in our area and that would be the way that somebody else would operate. Jay: Are there a lot of competitors? Owen: Yes there are quite a number of competitors. But we have the name and the reputation. We also have the ability for them to expand very quickly and easily. With all the work I’ve been doing on the floor cleaning, I haven’t been working on expanding the graffiti eaters. Jay: On the 40% cost, where does that cost basically go? Owen: Chemicals mainly. Jay: Who provides the chemicals usually? Owen: We buy in bulk supplies and use those chemicals on every job.

Jay: You would just turn your sources over to them. Owen: Yes. We have 100% markup on chemicals and yes, I would turn over the suppliers. Of course, they would keep it going at the existing discount price. Jay: Are any of the suppliers logical people to buy it? Owen: No. They’re not interested in that sort of business because it’s a service industry and they’re a manufacturing supply house. Jay: Have you considered talking to the suppliers about any of their other customers that might be prime prospects? They may have a lot of people they’re supplying to. When you talk to their sales reps say, “How’d you like to make $5,000 or $10,000 just for helping one of your customers buy themselves a $300,000 potential income? I’ve got this business that I haven’t promoted for 3 years and it’s still making $120,000 a year in profit. I want to concentrate on a bigger ticket, so I want to sell it. You supply to everybody. You must have a janitorial company, or some other service clients who have growth aspirations, who like low-tech-type businesses, who have financial capability to easily handle the minimal financing necessary to buy the thing. Rather than me spend a year running ads promiscuously in the Sunday paper looking for a buyer, why don’t you talk to the 100 people in the service businesses you know?” Cull them out to the top 10 supply companies and one phone call to their representative or general manager telling him you either want him to do it as a service or you’ll give him $5,000 or $3,000 or $10,000 for making that call and getting you a buyer. He can probably, before the end of the week, put you in touch with 10 people who are good prospects. Owen: That’s excellent! Jay: If it’s not appropriate for you, have your sales people call your competitors. Your competitors would probably love to own your business. For you to call them would show weakness. For some third party to call them - a representative of some other supplier who would ostensibly be in a position to know that you’re looking to concentrate more on industrial cleaning - and tell them you’re contemplating selling and you would probably entertain an offer from one of your competitors. Somebody who’s marginally successful and would like to double their size overnight. Someone who’s already committed to being in that business. I have a client who just sold a company to his competitor and it was a perfect match. The competitor wanted it and wrote him a check for $250,000. They figured it would cost them $400,000 to grow that large over the next two years. It was a discounted acquisition of sale. It’s not appropriate for you to call your competitors because if they don’t want to buy it, they’ll go to your customers and say, “He wants out.” Owen: That’s exactly right. Jay: It’s appropriate for a third party to contact them saying, “Look, he doesn’t even know I’m calling you but I know that he’s contemplating selling and he might be persuaded. He’s very excited about this and he might be very persuaded to sell it. He wouldn’t even think of calling but I just think it’s a perfect match for you.” Having set a competitor up by saying, “For you to grow a $200,000 annual turnover would take you 3 years and you’d have to probably put 4 salesmen on it and you’d have to invest this and that. The interest on the bank loan would only be $10,000 or $15,000 a year. For less than the cost of one salesman a year, you could triple the

size of your business and because you already have your fixed overhead, your office and everything, it’s going to cost you very, very little to integrate it in.” You need a person whose posture is right; who can let a competitor in on it almost as a friendly gesture saying, “You probably don’t see this - he doesn’t see it either but his businesss is a perfect match for you and he could save you 3 years’ time and make you the biggest in the industry. All it’s really going to cost you is the interest on the loan. You can make more than the interest by adding his business to yours. You’re going to add an instant $120,000. The interest on the loan will be $12,000 a year, so you’re going to make 100% on your money instantly.” Owen: Would my accountant be appropriate? Jay: Is he a dynamic man? Owen: No. Jay: What you want is somebody who can introduce you properly. You want somebody who’s got that kind of a persona or posture or presence. The head or general manager of your distributing company that provides chemicals to you might be the right person. He might say, “I was talking to Owen the other day and he’s growing in the other direction. Even though this is a very lucrative business, I think he’s ripe to sell it. He said he probably would, but he’s looking for the right person.” You need someone who can point those things out. A person like your accountant may be suspect. * * * * What you’re really selling usually isn’t your product or service. You’re selling time efficiency. Or cost savings. Or a solution to some particular problem. Find out what you’re really selling, and focus on that in your ads and mailers. When you’re selling a service, be willing to give free demonstrations - but be sure you qualify the prospect first. At the same time, predispose him to repeat purchases if he’s satisfied If you want to sell your business - or part of it - paint a clear picture, in dollars and cents, of the profit potential and the ease with which the business can be run. And don’t be afraid to sell your business to a competitor - competitors may be in the best position to integrate your business into their own. But do it via a third party, so you can negotiate from a position of strength rather than weakness.

Limousine Service Mario had energy and an idea, but almost no business background. In this consultation, I showed him how to get started, including what to tell potential investors. If you’ve ever felt you were stuck at square one, this is a good transcript to read. * * * *

Mario: Right now I’m working as a sheet metal technician. Prior to that I was a prototype machinist. I’m pretty much part of the working class here. I’d really like to get something going for myself. Jay: That’s great. I’m heartened to hear that. Tell me a little bit in the first few minutes about your background, your abilities, and what made you decide you wanted to go into the limo business. Mario: Well, it was just an idea that came into my head one day. Every now and then these ideas come into my head and this one wouldn’t go away. I worked for an experimental car company at the time. Jay: What did they do? Mario: They built cars for the government, safety cars. Jay: All right. Mario: Also, they built a PTV, a Para Transit Vehicle. Jay: All right. Mario: They tried to compete with the industry leader, but built one which was a total failure. They tried to do that one on their own, whereas the other ones were government contracts. Jay: What became of it? Mario: I think they ended up selling it at a loss. Jay: Did they actually have a prototype? Mario: Yes, they had a prototype. That was their big problem. They made a prototype but didn’t take the bugs out of it. They tried to work the bugs out at the production stage, and it was a total failure. Jay: So you have a familiarity with the car business. What do you know about the limo business? What have you researched about the limo business? Mario: Next to nothing. Jay: So you don’t know the dynamics at all? Mario: No. Jay: Okay. Do you work days or nights? Mario: I work days. Jay: Do you have capital to put into this? Mario: A limited amount. Maybe about $5,000 of my own money.

Jay: So the most you could do, if you were going to start with a brand-new car, is lease one, right? Mario: I would imagine. Do you know what type of limos I’m talking about? Jay: You want to do old-time ones? Does anyone else have a service like that? Mario: No one that I know of, and I’ve talked to a couple of old-car buffs here in town. One of them has been in two clubs for quite awhile. He’s talked to someone who was in the clubs and from what I could get out of that, no one has ever stretched an old car into a limo. Jay: Is it a technical problem? Mario: No. Jay: They are heavier. Do they need to be reinforced more? You probably would need a structural engineer to come in and. . . Mario: It’s going to be much longer, so it’s going to need a little beefing up. Jay: Let me ask you a different question. Would it be easier to find old limos? Mario: Old limos? I’m looking more for the. . . Jay: You want to do something funky almost. Mario: Right. The classic design of the cars out of the fifties and sixties. Jay: For example? Mario: A ’58 Chevy, a ’57 Chevy, a ’58 Cadillac, you know, a big four-door. They didn’t really make limos so to speak at that time. Jay: They didn’t? But they made hearses. Mario: They were not quite the same as what I’m looking to do. Jay: Let’s take a look at if you were to buy a ’58 Chevy or a ’58 Caddy. What would it cost you to put it together, first of all? Mario: Cost? Jay: Have you thought about all this? Mario: Yes, sure. It’s going to be a major expense. I want to make it a nice limousine. I want something that people are going to want to lease. Jay: Have you taken the time to research the market? I know you said there are a lot of limos being rented, but have you done a lot of research to see who’s doing the business - whether there are four services, three services, individual services, big companies, who they’re getting their customers from, whether you can access those customers easily, what the average rate is, things like that?

Mario: No, not at all. Jay: I’m not saying that your idea is good or bad. What I am saying, though, is that the market place should be able to tell you whether it is good or bad before you have to put a lot of money in it. The first thing I would do is to research the market. Call everybody who’s in the business and find out whatever you can. They are not going to voluntarily give you lots of information, but you could tell them you’re interested in driving for them and go and apply for a job. Tell them you’re interested in learning the business and ask them if you could drive for them. Are you married? Mario: No. Jay: How old are you? Mario: Forty-one. Jay: Okay. So money is not as critical. You might even go to work for one to see how they operate. Besides just the construction of the vehicle, you have to learn the dynamics of the business - who they play off of, the price points, how to avoid certain problems. It’s the kind of business you’d probably get stiffed on often, so you have to be worried about that. See whether most of them are set up on charge cards. There’s a whole plethora of activities you have to master before you go into it. Then you have to decide whether you want to. With $5,000, you obviously can’t afford to do a heck of a lot. For five grand, could you make one? Mario: No. Jay: I imagine it would cost maybe as much as ten to fifteen grand to put one together if you do it right. It has to have a good paint job, a good interior with stereo and good video. What you have to do is find a partner of sorts. Mario: Yes. Jay: The best way to do it is to put together what’s called a business plan, which is basically an overview of what you have in mind, why you think it’ll work, what the dynamics of the business are, what the marketing niche it’s going to fill will be, how you’re going to fill it, why you believe this will make money. Then you do what’s called a pro forma, or financial projection, which shows what the costs are going to be and how long it will take for the thing to be profitable. I would like to use the rest of this time to do several things - tell you how to put together your plan, tell you how to try to get other people to go in with you on the project, tell you where your best sources of partners might be, tell you how to advertise, tell you how to make alliances with other companies, and tell you where you might find the best source of investors. Mario: Sounds like thousands of dollars, just researching and putting in the paperwork. So far my biggest problem, of course, is money. What I need most is a source of partners, as you said, a source of investors. Jay: I can probably help you on that. What I think we should do is take the rudimentary thing first, which is the plan, and tell you why you have to finish that. Once I do that with you, I’ll start telling you sources I would go to for venture partners. Mario: Okay.

Jay: To begin with, you have to do the plan for several reasons. If you approach anybody for money, unless it’s just a friend who absolutely believes in you, they’re going to want some proof that there is a chance of (A) making money, (B) making a lot of money, (C) making a reasonable amount of money in a reasonable period of time and getting their investment back with a profit. The only way you can do that is to outline on paper, for yourself and for them, what your business is all about and why it makes sense. Then put together the pro forma, the financial projections, where you show (A) it’s going to take $10,000 to buy and refit the car, (B) it’s going to take three months and maybe two to four thousand dollars worth of advertising in the paper, or sending a salesman out to work all the hotels, or sending people out to hit all the high schools or the colleges or wherever it is you’re going to work, to find sources of business. You show what you expect the limo to generate, and why you think it can generate that. If the market value for a limo right now is $40 an hour - I think it’s $35 to $50 an hour - are you going to be able to get more money than that? Mario: Probably. Jay: If it’s a funky car and it’s got a neat sound to it? Mario: I want it to be funky only in looks. I want it to perform and I want the interior to be firstclass. Jay: Let’s say you can get $50 an hour for it. Mario: It’s probably higher - everything is higher here. Jay: Okay. Say you charge $60 and have a minimum ride of three hours. Let’s project that it’s going to be rented three days a week for an average of four and a half hours apiece. If that were the case, that’s 15 hours, roughly, times $60. $900 times 4.33 weeks is $3900 a month. You have to put your pencil to it, and for illustrated examples, you have to show two, three, four years worth of projections. If it will bring in $3,900 a month after you get the thing started, show how much of that is going to go for overhead, debt service, paying back, etc. If you use their money, you have no debt service. If you have to go to the bank and borrow money, you have to pay $500 to $1,000 a month for the lease or borrowing service. You have to factor in what it’s going to cost every month for insurance, which is very high on a regular limo. It’s probably going to be higher on an old, retro-fitted one because it’s in higher danger. Do you understand that? Mario: Yes. Jay: So you have to put all that in there. Let’s say it shows that within six months you’ll be even. That’s assuming you’re paying yourself to drive the thing - you’ll be the driver for the first six months. What you want to show then is how you’re going to grow the business by adding more cars. Say that every six months, when you get even, you add another car, and after you get five cars in your fleet, you take the concept to Los Angeles. You start with three cars and you show the financing. What you want to do is show how the thing can grow in more than one market. Could it be licensed or franchised or given through distributorships? Mario: That’s what I would ultimately like. Jay: I think you have to show that as your ultimate goal in order to get the money. Mario: That or be just strictly the manufacturer and seller.

Jay: That might be more interesting. But you can’t make overtures until you know what it’s going to cost. The first thing that you have to do, in my opinion, is spend some time. Do you have a lot of time in the afternoons and evenings? Mario: Evenings. Jay: Dedicate the next few weeks or months to collecting data, finding out about the market, finding out who does what, finding out who the big companies are in your region, finding out all the things you can. Then . . . Mario: Okay. If I’m going to research the region, the best source would be a library and phone books? Jay: Yes. Books. You might want to order phone books. . . Mario: The library here in town stocks them. Jay: Yes, get phone books for everything. You want to get the names of all the retail limo companies, not the manufacturers. What you want to do, before you contact them, is research what realistically it’s going to cost you to produce a retrofitted limo that you can guarantee long enough. In other words, you can’t just do a limo down and dirty - you have to be able to charge enough so that you can make a profit while guaranteeing that if anything goes wrong you’ll fix it. If you want to stay in business once you’ve started, which of course you do, you want to be able to charge enough money that you can handle any problem that goes wrong. I looked at buying a limo years ago. The big company then wanted something like $40,000 for the limo, but they guaranteed it for two years and they had operations out here if something went wrong. All the retrofitted parts are different. What happens if somebody buys one and something goes wrong? Mario: Good question. Jay: You need to have enough built into the cost that you’re able to either go out and fix it or remanufacture a part. I have a feeling that parts are going to be hard to get, so you might want to go out and buy seven or eight of what you want to make and put that into your business plan. You’re better off being conservative about the expectation, but putting plenty of buffer in there for problems. Mario: Right. Jay: So you develop a business plan. You can go into manufacturing, and you can be your own customer if you want, but you can also manufacture for others. That would give you a double edge. In other words, the first one you make you might use yourself to prove that it outperforms a regular one. You could use your own locale as a pilot program to prove to other limo companies that by having a classic one, it gets so much more usage that it pays for itself in three months instead of three years. See what I’m saying? Mario: Yes. Jay: So you could be a manufacturer who also has his own retail outlet. That’s one thing. Next, I’ll talk about finding capital. You can raise money a number of different ways. Mario: There’s plenty of money around here.

Jay: There is, and there are a lot of car aficionados. You might go first and foremost to the group of classic car enthusiasts. You might go to them with an offer. What are you willing to give up? Are you willing to put your $5,000 in first of all? Mario: Sure. Jay: That’s all your savings probably? Mario: Yes. Jay: Let’s say you end up needing $30,000 to get started, okay? What are you willing to give up for the other $25,000? Have you thought about it? If you’re going to put your $5,000 and your sweat-equity into it, are you well enough situated that if you went full-time and didn’t draw a paycheck for three months, you could afford that? Or would you go broke? Mario: No, I couldn’t afford to give up a regular job unless I could find someone who would . . . Jay: Pay you a salary. Mario: Someone who is willing to invest a hundred grand in this. Jay: The point I want to make to you, and it’s very important - and I know you’re anxious, I can sense it from the conversation - is that it’s critically important before you go out searching for anything, that you have your thoughts clarified on paper, and outlined so that when you talk to someone, you’ll present it correctly. Mario: Is there a book, a form. . .? Jay: There are several things to do. Go to the library and look up the category “writing a business plan.” Look up the category of “cash flow projection.” Look up. . . There’s a book that’s a complete guide to being a start-up entrepreneur and . . . Mario: There’s a magazine out called Entrepreneur. . . Jay: Entrepreneur Magazine is not bad. In fact, call Entrepreneur. They sell lots of specialized reports. Maybe they have a report on how to write a business plan and maybe they have a report on how to do a cash flow projection. You need both of those. In the event they don’t have that, some of the very large CPA firms publish brochures and material on cash flow analysis for their own clients. If you’re earnest enough, go to one of the big firms like Arthur Anderson or Ernst & Winney and tell them that you seriously need help - do they have any published material that you can borrow, read, or buy from them? They have some really good material. You have to learn how to do a business plan. If you go to a bookstore or library, I’m sure under the business section you can find everything you want. Check out a lot of bookstores. Maybe you can find them in softcover. Learn all about how to write a business plan. Learn all about how to do cash flow projections. When you do your business plan, I think you ought to incorporate into it the double proposal of being a manufacturer and of also having your own retail operation, so you have the best of both worlds. Do you understand? Mario: Yes.

Jay: You can sell to all the other people around the country, but because you’re going to do all your own manufacturing, you’re going to cherry-pick the best locations for yourself. You’ll set yourself up in the good markets when it proves viable, but all the other markets you’ll sell to other limo companies. You’ll be operating a pilot of your own and you’ll have a proven track record that demonstrates that your classic limos out-generate a regular limo service three or four to one. For example, in Los Angeles, we have a company called Budget Auto Rental that has a special facility in Beverly Hills where they rent real exotic cars. Mario: Uh-huh. Jay: They rent Mercedes, Ferarris, Corvette convertibles, exotic Rolls Royces, and they do incredibly well. You just need to prove that it works. You need to prove that that works for you before you can get a lot of interest around the country. The best way to do it is have a manufacturing company and have a retail limo company where you are your own client in the beginning. Do you understand? Mario: Right. Jay: You should indicate in your business plan that you’re going to do both. You’re going to manufacture but you’re going to cherry-pick the good markets once you validate and prove in your home area, through your pilot, that it works. You put together a very conscientious estimate of what all this is going to take - acquiring the car, retrofitting it, promoting, insurance, licenses, setting up the business, advertising, hiring a full-time or part-time person, paying the driver, paying for maintenance expenses, back-up parts and inventory - and you show how long it’s going to take to recoup your investment. Maybe a year, maybe two, maybe three years. Then you show that as you start getting profitable, you’ll be adding one or two more cars at a time until you get maybe three or four or ten cars in your fleet. It could be very lucrative. As that rose, then you show manufacturing and selling to others. You show what that will contribute every month. Maybe you’ll manufacture four cars a month and on each car, you’ll make $5,000. It’s possible, but consider that you have to compare what your cars will sell for against what a conventional stretch Cadillac or stretch Lincoln, a brand-new one, costs - something in the vicinity of $48,000 today. I don’t know if you knew that? Mario: I had a rough idea. We have a thing around here called the Trade Express and it sells used cars. Not long ago, there was a limousine in there, a used limousine, and it was going for about fifty grand. The man had put a lot of extras in it. Jay: It could have been. Some of them are real expensive ones. The ones that are made by the real classy companies go as high as seventy or eighty thousand new. An $80,000 one that’s two years old could go for fifty. The point is, in your business plan, you have to show why. Did you read that material I sent you? Mario: Yes. Jay: What is the Unique Selling Proposition your service holds above, beyond, against your competitors? One of them, I think, may be that you’re going to be able to build one for a lot less. I think you can probably build a limo, if you’re right. Let’s say it costs fifteen grand, okay? Mario: Okay. Jay: If it costs $15,000, and you made a $10,000 profit, you could sell it for $25,000 when a brandnew one is $45,000.

Mario: Right. Jay: You see that? You could offer somebody a stretch limo retrofitted for, let’s say, $20,000 under market. So if it works, the company could buy three of yours for less than the price of two other limos. If you prove, through having your own operation going and renting your first one, that it works - if a regular limo service rents a car out three times a week and yours rents one out six times a week, and the average ride is for three hours and yours is for seven hours - that proves that a little company can make a lot of money with your products. Mario: A variation on this idea I had was also taking station wagons or big Chevy Suburbans, big four-wheel drives, and doing the same thing to them for the people in Texas, the ranchers who go to parties out on ranches and want to impress their friends with something different. Jay: I had a friend who had a similar idea, and he never got around to it. He wanted to get all sorts of funky cars stretched. You could do that too. As part of your plan, you can talk about doing other cars that are non-traditional. I mean, funky not being disrespectful, but things that are not normal so that people would get a kick out of going out in it. Mario: Right. Jay: There was a guy here who rented a tank as a limo one time. He had rubberized plates on it. There are some fun things some people get off on. Mario: One of these car enthusiasts here in town was telling me that someone had stretched a Volkswagon bug. I see that as being pretty senseless. Jay: Yes. Mario: Not like my idea. Jay: Did he say it worked? Did he rent it? Mario: I really don’t know. I didn’t get. . . Jay: You might run ads in some of the classic car magazines, looking for stretched old cars. You might actually find people who have them, who’ll want to sell them cheaply because there’s no market. You may actually find that some exist, that somebody else did it and didn’t figure out what to do with it, so you can buy it for a song and fix it up. Mario: Good idea. Jay: So run a couple of ads for a couple of months in some of the classic car magazines and say, “I’m looking for classic stretch cars from these years. If you have a limo or a customized car that was stretched out and it was done well and it’s structurally sound, isn’t in terrible repair, I’d like to hear from you.” Just have them call you or write you. It would be interesting to do, wouldn’t it? Mario: Except I would not want to buy something that I didn’t know anything about. I’d want to know the vehicle. Somebody may tell me, ‘There’s a nice beam inside this,” but. . . Jay: That’s a good point.

Mario: And it may not be there and I’d be liable. . . . Jay: That’s a very good point. On the other hand, could you inspect it carefully before closing the sale? Mario: Probably. Jay: You might look into it. In any case, I think the first thing you have to do is learn about business plans. The second thing you need to do is learn about cash flow projections. The third thing you need to do is formulate your own business plan. Again, I would have a dual plan having you as a manufacturer and also a retail outlet. Then if it works, you’ll cherry-pick the outlets for yourself. Then you’ll sell cars to the people outside of the areas you want to be in. In other words, you’ll take the good locations, but maybe you don’t want to be in Chicago or Dallas, so you’ll sell cars to limo companies there. But wherever you want to be, you’ll keep your own cars. You’ll sell cars only to yourself in those market you want to be in. Does that make sense? Mario: Yes. Jay: Then I think you need to do projections. You need to find out what it’s really going to cost you so you know what it will cost for the first car you use yourself, and also what will it cost when you sell them to others. What can you sell them for? What will the market pay? How does that compare to what new limos are going for? What do you think it will do for the limo company buying it? What will it have to generate in rentals, and what period of time will they need to make their money back? Will your car give them a return on investment within a year instead of three years like other people? See what I’m saying? You have to put all that in your business plan and projection. When you finish it, then you have to find investors. You can find investors a number of ways. Depending on how exciting it looks and. . . What are you willing to give up? Let’s say you’re willing to put your $5,000 in and you’re willing to put your sweat-equity in. In other words, you’re willing to work nights and weekends, and to drive in the beginning, and work the office for nothing. How much ownership do you want to give up? Somebody’s probably going to have to put in $25,000 or $30,000 dollars. Mario: As little as possible. But I’d be glad to give up 60%, 75% if I knew it was going to work, you know? If I knew I could become independently wealthy so I wouldn’t have to . . . Jay: If somebody knew that would be the case, they’d want 99%. It’s always going to be a speculation, Mario, but you’re going to have to give up at least half and possibly more to get the money you want. Mario: That’s what I’ve been told - that a venture capitalist will want a considerable amount. Jay: They will want at the very least half and possibly much more. Mario: That wouldn’t bother me if I thought and he thought . . . Jay: Here’s what you have to do. You want to prepare your business plan, your cash flow projections and then you need to find a way to solicit prospective people. The best way, I think, is to find people with either a kindred interest or money or both. You won’t know, by the way, what you need until you do your projections. Once you have done your projections, if they show that you need $35,000, it might be easier for you to find ten classic car enthusiasts who will each

put up $3,500 apiece than it will to find one person to write you a check for $35,000. If you have a lot of investors, even though you have more people, it’s a lot easier. You don’t have one person dominating you. People sort of leave you alone when you have a lot of investors. Mario: They sort of leave you alone? Jay: Right. One person putting all their money up is going to be on your case all the time. Mario: I see. He’s the guy who’s going to be down there at the shop looking at things and wanting to know why there hasn’t been more progress made. If you have a lot of people with a small amount of money, they’re willing to wait longer. Jay: That’s right. I like you already, but I suspect your business savvy isn’t developed yet. You have very little experience . . . Mario: I had a small business once but it was more like a tax write-off. I made jewelry. For a while there, I was getting pretty serious about it. I was making jewelry and putting things out on consignment. Jay: What kinds of jewelry? Mario: Gold, silver. Jay: Was it beautiful stuff? Mario: Some of it’s real nice and others, people don’t like. My designs are a little different than most. Jay: Were you a good businessman? Mario: I kept my books and paid my taxes, you know. It was small. Jay: You don’t want to continue in that area? Mario: I’d like it as a hobby but not as a business. Jay: I understand. To get money, whether you’re sophisticated or an unsophisticated investor, you need a plan that people can grasp quickly. It comes alive, and it’s not just you saying, “I think it’s good.” It’s you having done all the work to evaluate and analyze and be able to present and comparatively convince people that your idea has a high probability of working. As far as I’m concerned, you have some really serious things you need to do. First, you have to learn how to present it. Second, you have to find reasons and compelling evidence to show somebody who’s going to speculate on you that your proposition has a high probability of working. And to show them that if it works, he or she has a high possibility of making a very good return, so that it’s worth them giving you $5,000, $10,000, $20,000, $50,000. It’s very important that you get all that together. You have to find out what it’s really going to cost you to manufacture the vehicles, including a fair enough profit that if something goes wrong, you have a buffer that allows you to fix it. Let’s say you manufacture them and all of a sudden when you drive it for awhile, the old-fashioned drive shaft breaks off and you have to remanufacture it and that’s $2,000. You need to have enough buffer in your plan for all those unexpected but possible contingencies. It’s very important.

Mario: Right. Jay: You have to do that. Once you figure it out, you need a conservative pro forma or cash flow projection showing year one and year two and year three, what’s going to happen from the manufacturing side, from the retail limo rental side, and from selling products to other people. And if it works for your first operation, showing you setting up company-owned stores in other areas. You also need to show how you’re going to get the word out. You need to show your advertising approach, the promotion approach. You need to be able to express it in a business plan, in a prospectus, if you will, in such a way that it captivates and excites people. If you can’t do all that, it’s going to be very, very difficult to sell it. If you can do it, then you should get it encapsulated in written form with clear, exciting, simple statements. By the way, I think you should read some other books. You should read a book by Rudolph Flesch, “How to Read, Write, and Speak More Effectively.” It will help you present your ideas verbally and in writing when you have to do so. Mario: I’m not much of an orator. Jay: If you can’t do it, what you might do is run an ad and offer a share of your interest to somebody who does everything I’ve been talking to you about. Say, “If you’ll help me put together my business plan, get all the details, and present our offer to investors, I’ll give you either a share of the business or a share of the money that’s raised.” Get somebody savvy to do it for you, but be careful you don’t find somebody who’s too savvy. Learning experiences are good. Are you in a hurry? What’s your time frame? Mario: Time frame? Jay: How fast do you want to move? Mario: I’d like to move as fast as possible. I’d like to be independent of having to work for someone else, you know. A year, let’s say. Jay: I think what you should do frankly, is a lot of research, a lot of grunt work. I think you need to get details on the industry. You need to get details on what a limo sells for, and on how they are rented, the typical number of times a month. You might go to a limo rental company, if they don’t think you’re trying to go into competition. You might go to a bunch of limo companies and tell them you’re thinking about making these cars, and then ask their opinions and ask them questions. Tell them you’re trying to formulate whether it’s worth raising the money to make them. Ask them to tell you what a typical limo costs, how long it takes to get their investment back, what the insurance costs, how many times a week or month or day they rent one, what’s a typical rental rate, and where they get their business. Ask, “If I came out with a car for $35,000 and it was guaranteed, if it was better than new because it was updated, if it was classic outside, would you be able to write a check, would you go to the bank, would I have to figure out how to finance you?” All those questions are essential before you can really put everything together. Mario: Great. Jay: Here’s your program: Sometime between now and two weeks from today, you’ll go to the library or the bookstore or a big accounting firm and try to get your hands on a book or report or a guide that will teach you how to do a business plan. You will either get a book or get accountants to show you how to do cash flow projections. You will use your spare time, evenings, week-ends, days off to contact limo companies in your locale and tell them you’re contemplating becoming a manufacturer of classic stuff and you need to get their opinion. Ask

them a myriad, a whole ton of questions like the ones I just mentioned to you. All about whether they would be interested, if they were interested, what price point, what new ones cost. All that information you’re going to need to compare in your business plan to show investors what a good deal yours is. You understand? Mario: Right Jay: I’d like for you to have something you can go out and show people. A plan. You may not have a finished product, but at least you’ll have a focused plan. Who knows, the best thing I may do is force you to realize that it’s not viable. It may not be something that you can do. If so, we’d have to figure out some way to get you pointed elsewhere. Now, it’s just conjecture. It’s a wonderful glint in your eye. It’s an excitement in your eye but you’re not certain that you can pull it off. The only way you’ll know that is to do the research on it. Mario: I have a gut feeling I can pull it off. Jay: I know. But what if you find out that to do it right, with insurance and back up, is going to cost $50,000 per unit instead of $20,000? What if you find out that no one you talk to is even interested in renting them? All that impacts. Mario: Okay. Jay: Thank you, good luck, and I hope you got a lot out of it. Mario: Sure did. Thank you. * * * * Before you sink your resources into an idea, carefully research it, to let the market tell you as much as it can. Potential investors have only one real question: Will this project make money for me in a reasonable period of time? To win their support, you have to answer that question in the most concrete, specific, well thought-out terms possible. No matter how good your idea, there’s no substitute for doing your homework. Before you approach investors, anticipate the most probing criticisms you can think of, then come up with answers in the form of solid evidence and hard data. Think of every angle: the costs of manufacturing hidden as well as obvious - the follow-up costs, the market demand, etc. Present your proposal in a clear, easily-grasped format. The idea has to make sense quickly, as well as stand up to rigorous analysis. A large group of investors may be easier to work with than a small group. The more investors you have, the less chance any one of them will try to dominate you. If, in addition to needing capital, you also lack some of the skills needed to make your business succeed, consider bringing in a partner who has those skills. You’ll have to give up some of your profits and/or ownership, but if you can’t succeed otherwise, you’ll come out ahead. Their profit will be contingent on the business succeeding, so they’ll have as much to motivate them as you do.

Carpet Cleaning (Also Accounting)

Mike has two companies. One does carpet cleaning. The other does accounting for small businesses. Mike told me he’s real good at selling one-on-one, but felt his ads (in pennysavers and other freebies) weren’t pulling enough inquiries. Before he called me, Mike’s offer to prospects was, “Try me once. If you don’t like my work, you don’t have to pay.” In this consultation, I showed Mike some ways to make his offer many times more powerful. * Jay:

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What does your organization look like?

Mike: About 8 employees that clean carpets, plus I’ve got independent contractors who can handle overflow. And I have two people doing the selling besides myself. Jay:

How do you pay them?

Mike: Straight commission. 20% off the first job they bring in, and if it’s a commercial account they get 5- of what comes in each month. Jay:

Do you get commercial accounts on-going?

Mike: Yes, I set them up on an annual contract for monthly cleaning. Our prices are good - better than our competitors’ - and everything’s included. Our competitors offer six dollars a room, but then when they come they try to sell all kinds of extras that should have been included in the first place. Jay: Give me an idea of what an office costs to clean. Or a retail store or restaurant. Mike: A fast food place that’s about 1800 square feet would be about 150-200 bucks. Jay: Mike: Jay: Mike:

What do you make on that? Well, my total cost is 46 dollars including labor. So I make about 150, 160 dollars. And what do you spend on advertising? About $4000-6000 a month.

Jay : Okay. How about if you took $2000 of that and get the best of your salespeople to go out and say, “We’ll clean your carpet, we’ll do your first one for nothing provided you agree that if you like it you’ll go on a 12-month contract and we’ll guarantee our work.” And you took $2000 worth of your marketing allocation and converted it to in-person trials - which let’s say cost you $40 or $50 each - and you experiment with that, what do you think will happen? Mike: I think it’d probably be a pretty good sell. Jay: I always try to give somebody free sampling of my wares before I ask them to buy. Remember my newsletter solicitation? Right in the letter, you’ve got 10 or 15 great concepts probably $10,000 worth of free advice - and it’s implicit that someone’s willing to give you that much up front for nothing, he mu t have a hell of a lot to offer subsequently.

Instead of trying to do the typical kind of selling, I always try to do education. I’d give them free a consultation for 10-15 minutes and then at the end I’d sell them. Why compete on the same basis as everyone else when you can be much more sophisticated and give them knowledge and services that none of your competitors are giving them? You could tell them how to cut down on carpet wear, how to make it last 2-3 times longer, or something like that, and you could tell them that as part of the free first cleaning you’ll put on a sealant or something that will mean they’ll only need cleaning once every three weeks instead of every two. Those little things really make a big difference to people. Does that make sense to you? Mike: Sure does. Jay: You can do even better. Most consumers want things to be simple for them. Why not tell them, “Here’s the deal. We’ll set you up for a four times a year carpet cleaning. Four times a year we’ll come in and clean and spot clean and Scotchguard - whatever your carpet needs - we’ll even repair tears and so on. It’s $50 dollars a quarter automatically charged to your charge card, and the first cleaning is free.” Admittedly, you can only do so much because your cash flow is negative on the first one, but from then on it’s TFN - ‘til further notice. You get them to fill out an authorization and every quarter you put it through their charge card. Then you call and you just say, “It’s time for your quarterly cleaning. We can be there either on Wednesday or Friday or next Tuesday.” And you have, say, 100 people paying you $50 that you’re automatically billing unless they tell you to stop. It’d be a powerful business, don’t you think? Mike: Yes. Jay: Now maybe some people would take advantage of you. Maybe you’re going to have to do 50 of them until you find out that you’re going to get screwed out of 25. But once you find out where the risk areas are, you can improve the ratio. Maybe you’ve got to reach into your pocket for 6 grand for the first three months. But then you don’t have to wait until they call you to have their carpets repaired. They’re locked into your service until they cancel. You’re not investing for a 50 dollar cleaning, you’re investing to keep them for 3 years. And if you ever sell out your business, the quarterly authorizations might go with it. And don’t forget word of mouth. Every $50 you spend on a free trial could be worth $250 in referrals. And by the way, I don’t know your business, so when I say 4 times a year maybe it should be only 2 times a year. You have to decide. But do you see the advantage to the customer? It’s a pain having to call the pool company or the air conditioner company when something breaks. Most people would much rather have you come regularly and check things out. If you call them and say, “We’re coming out again to clean your carpets,” they won’t say “why”; they’ll say “okay.” Mike:

What impact would it have if the first service was for 50% off instead of free?

Jay: If I said to you I’d give you a 15-minute consultation free or if I said I’d give you the first consultation for only $1,000 - which one would be more appealing to you? But that doesn’t really answer it, because every situation is different. My answer is not right, your wife’s answer is not right, what you feel in your heart may not even be right. You have to pose it in the market place and do a very controlled analysis of the results.

For example, you could try an ad or you could get on the phone or you could get a welldressed person to go door to door and you try giving away 50 of them. And you see which way brings the most starts and the most repeats. Mike:

How do I motivate my salespeople?

Jay: You tell them they don’t get much on the free cleaning - maybe $5 an hour - but on the repeats they’ll get $7 an hour or $50 a year commission or something. Just for giving away a great service. Let them understand that you can’t pay much on the free one because you’re losing money on it, but if they do a good job ... you know, so they realize there’s a bonus if they perform. Get them all tied in to the program. Does this sound exciting? Don’t you think they’ll get excited about it? Mike:

I think they will.

Jay: You know, you could try half price, but if cash flow is the problem, you might try only giving away 10 at first instead of 50 and letting it build up. As for ads in the paper, if it was my money, I’d rather spend $30 on a transaction or lose $30 on a transaction knowing that every time I spent that much I’d have a chance at a new customer than I would to spend $1,000 on an ad. Because on the $30 investment you have a higher probability of making a profit or breaking even, but if an ad doesn’t work, you’re out 1,000 or 1,500 bucks. If you’re using salespeople, it’s very important that they do it right. If they sell it too promiscuously - you know, cutting corners and not taking the time to present it right because they’re not making enough money on the deal - then you’re the loser because you’ll have too many cancellations. So I’d do it first with in-person salespeople and then I’d use the profits to try other things like the telephone or an ad. I’d try an ad that stated some qualifications they had to meet - something like, “If you own a house and you’ve been living in it for 2 years or more (this is to protect you against transients) and you have at least 1500 square feet of carpeting, we’ll clean your entire house for you free.” And then tell them the story. A lot of people will agree to that, don’t you think? Mike: Absolutely. Jay: You could also make a deal with carpet companies. Get them to let you send a letter to all the people who have bought carpeting a year back or more. It would be a logical thing for them to do to serve their customers better. You could say, “I’ll give you $10 for every customer who takes me up on the free cleaning, and I’ll also pay you to mail the letter. We’ll do the mailing for you if it’s too much work -or if you want to protect your names you do it for yourself.” That could be very powerful too, don’t you think? Mike: I’ve purchased a Homeowners Marketing that has phone numbers and I’m planning to get two people telemarketing for me next week. Jay: I’m not sure those lists are good. Better to go to some of these big carpet places and have them send a mailing for you to people who bought carpets a year ago that say, “Around now, many of our customers ask us to refer them to somebody good because their carpets need to be cleaned. We’ve discovered wonderful service that quite frankly we feel is irresistible. Here’s what they do ...” You can’t tell me if they gave you a list of 1,000 installations.that were between a year ago and three years ago and you sent that kind of letter you wouldn’t get a lot of business.

Mike: I think I would. Jay: The main thing is to try it and see if the concept will validate. If it costs you $50 for each trial, later you can find ways to cut that figure down. If you get 10 people on the program, you want to see what happens 3 months later when it’s the first time to really perform the service and bill them. You do it as a pilot, and you may not make a lot of money for 6 months, but if it works, look what you’ve got. If you know you can do it, you can project your cash flow and everything. Mike: Are there techniques for raising capital for advertising without giving up control of my company? Jay: Just sell percentages based on the concept. Tell them, “Look, here’s the concept and here’s my idea for the ad. The ad will cost $2,000, but even if it doesn’t work, it’s not going to pull zero response; it’ll probably pull $1,000 worth. That means we’d only lose $1,000. On the other hand, if it does work, it can be a business that not only does half a million dollars here, but I can probably license the concept to 12 other carpet cleaning companies and make another half million in income. If you’ll agree to finance the test ad, your downside risk is probably $1,000. If the first one doesn’t work, we’ll stop. If it works, you agree to roll out the next two or three until we get a positive cash flow. In return, I’ll give you 5% of all income for the next two years.” Or you could give them their money back plus 5%. You could do all sorts of fun things, depending on how attractive you want to make the deal. But it’s a pretty irresistible offer, don’t you think? The downside’s a grand, the upside is 50 or 60 thousand dollars for two years plus their capital back. Mike: Beautiful. Now, can I take all these concepts and make them apply to my accounting business? Jay:

What kind of clients ... is your accounting practice commercial?

Mike:

Commercial.

Jay: Same idea: “I’ll do the first month free and if you don’t like the way I do it, it’ll cost you nothing. In addition, you agree to use my service for at least one year provided you like what I do. If you don’t believe me, I’ll give you some ideas you can use.” Isn’t this fun? Mike:

Great, I like it. I like it a lot.

Jay: You tell them, “By the way, everybody who takes me up on it I send them a copy of ‘199 Loopholes That Survived Tax Reform,’” or something like that. “I guarantee it will legally save you $5,000 to $10,000 so if you don’t like what I do for you the first month, the worst thing is that you could come out $5,000 ahead just for letting me risk my own time and expertise on you for 30 days.” But you also give them some stipulations: “You have to be worth $2,000 to me in modestly priced annual fees, you’ve got to have a super ethical business, you’ve got to have been in business at least two years and not a start-up. This way, I’m sure if I invested my time in you, my investment will pay off because you’re not going to go sour on me.” That’s a pretty powerful offer, don’t you think? eke: Yes, I do. Now can we go through and draft a small ad for the carpet business? Jay:

How do you price your services?

Mike:

$89.95 for a house up to a certain size - it comes out to about 14 cents per square foot.

Jay:

How is that compared to somebody else’s prices?

Mike : It’s about 50% cheaper. You see a lot of ads for 10 cents and 12 cents a square foot, but then they add on your traffic lane cleaner or your pre-spotter, your deodorizer and your protectant, and these are from 18 to 22 cents a square foot, so you have to pay 30 to 50 cents a square foot by the time you’re done. Whereas with me you end up paying around 14 cents a square foot total - that’s for everything, the whole Job. Jay: You could do an ad something like “Commercial quality residential carpet cleaning at 1/2 the price other cleaners charge for less service plus - in parentheses - if you let us do your whole house, you get $65 worth of additional services free even if your bill is only $49.” Then you go on to say, “We have to perform under the most grueling conditions. We have to take carpets that 1,000 people a day walk on and trample and stick gum on, and make them look brand new every week.” And then you tell them, “There’s a lot of flim-flam in this business, a lot of tricky advertising. People will try to bait you with a come on and then upsell you and they’ll use a lesser quality product. We’ve checked with all the main carpet cleaning companies. Their average cost is $170 for 5 carpeted rooms. One wants $160. The lowest we could find that does a decent job is $135. We’ll do the same job, but with better ingredients, and we’ll do it for $79 or whatever. Besides, everyone who does at least 5 rooms gets a free $69 worth of extra services. We spot, we repair. “Don’t take our word for it. Call any of our competitors. Have them come out and clean your carpet and then have us come the next time. But very frankly, we think the best thing you can do for more value, from pride of ownership, is to give us a call. If you’re unhappy, it costs you nothing. We can’t possibly be any fairer. The only thing is that when we make this kind of offer, we have so many people taking us up on it that we may have to take 2 or 3 days getting back to you.” Mike: What about the telemarketing approach? Jay: It would be the same thing, the same message. Don’t talk in generalities. Be specific. Just say this: “The carpet cleaning that A-1 charges $189 for we do for $79. Acme charges $75 but they have 4 different products and services they’ll try to sell you when they come into your home. Ours is all complete, including spot cleaning and repair of tears.” Be specific. Tell hem what it’s worth. “The extras we give you are worth a $69 fee but they cost you nothing.” What else do you want to talk about? We can stop now at 45 minutes or keep going. Sometimes I suggest to people that if they’re overwhelmed and I’ve only given them 4 minutes instead of 60 they can have a 15 minute telephone credit. Just call Bonnie in 2-3 weeks if you want to read something to me and have me critique it or whatever. That’s what I suggest you do. Mike: Okay, I’ll do that. Jay: What normally happens is your mind starts going and generating ideas like crazy and that’s good. Everything you try won’t work. It doesn’t have to. Just control your risks and don’t be afraid. Don’t get set back because the first time things are mediocre. Even on the losers, you’re probably not going to lose 100%. And the possibilities for winning are fabulous. It’s important not to go out aggressively with something until you have all the structures together or it will blow up on you. The worst thing you could do is expand before you’ve got the thing under control. Then you could kill the goose and somebody else will take your concept. When you’ve got it together you want to be able to roll out fast and lock customers in and not screw up. Mike:

Thanks, Jay. If you ever need a limousine…

Jay:

You have access to limousines?

Mike: Jay:

It’s one of my customers. I trade him accounting services. Are they nice ones?

Mike:

Yes, they’re real nice.

Jay: Sometimes I like to engage a limo if I don’t feel like driving. I’ll be glad to trade you consulting for a limo some time. *

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In this one interview, in under an hour, I gave Mike no less than 16 marketing concepts he could use to multiply his profits. As you review the list, I urge you to think about them in terms of your own business. Chances are, almost every one of them applies. 1.

Offer your service free the first time, with a proviso that locks the customer in to a repeat sale.

2.

Make the repeat sale automatic by having the customer sign a credit card authorization.

3.

Give prospects a free education.

4. Think of your offer not as a one-shot investment you’re making, but as a long-term investment in gaining on-going customers. 5.

Motivate your staff by offering them performance-based bonuses.

6.

Always tabulate and analyze results.

7.

Try your marketing ideas in a small, low-cost way first, then put more dollars into the ideas that work.

8.

Never compromise on quality.

9.

Get other companies to supply you with leads.

10. Get other companies to do joint ventures in which everyone profits. 11. Attract investors to fund your marketing program by offering them a percentage of profits coupled with minimum downside risk. 12. Apply these same marketing concepts to other businesses you may have. 13. Create a compelling ad using straightforward copy that incorporates specific facts and figures. 14. Use the same approach in creating a telemarketing script. 15. Control your risks. Don’t get aggressive until all aspects of your offer are in place. Don’t expand unless everything is under control. 16. Be alert to opportunities for win-win bartering of your products and services.

Now go back through this list again, and see which of these concepts you can put into action for greater profits starting right now.

Kitchen Cabinet Refacing This consultation was a real challenge for me. Stephen had a great business concept. It was already working, and the potential for expansion was enormous. But his attempts at expanding had so far failed. It didn’t take me long to see why. What did take a long time was getting through to him on the following two points: (1) why his approach was bound to fail, and (2) how he needed to change his thinking to turn the failure into a powerful success. What I told him in this consultation is a fundamental and crucially important lesson for anyone who markets anything. Stephen’s background is industrial engineering. He has applied his expertise to the manufacture of kitchen cabinet doors and drawer fronts - what is called kitchen cabinet refacing. The concept is basically this: Instead of tearing out existing kitchen cabinets and building new ones from scratch (which costs the homeowner $10,000-$15,000 for a typical kitchen) you can remove just the doors and drawer fronts and replace them with new ones (typically for just $2,600-$3,000). In terms of quality and serviceabiiity, the end result is practically the same. Stephen offers many powerful advantages as compared with his competitors, but his ads soliciting new distributors and dealers were bringing in very few responses, and the percentage of the responders who actually became distributors or dealers was disappointingly small. One look at the ads he sent me and I knew why. * * * * Stephen: I think I have a strong product. My advantages are very, very high quality and the best price. My competitors make theirs mostly from Formica, but I use solid wood. Also, they take 68 weeks to deliver, where I deliver in 24 hours. Jay: I see here some of the ads you’ve been using. Tell me how they’ve done. Stephen: They’ve not done too well. Mostly just curiosity seekers. I think the problem is my disadvantages. Jay: Which are? Stephen: I don’t have any European style cabinet fronts for one thing. The other is that I’ve only been in business for 2 years or so, and many dealers have been working with the same suppliers for long periods of time and it’s difficult getting them to switch. Jay: What’s the up-front investment in becoming a dealer? Stephen: About $50,000. Actually, it’s only about $16,000 in cash that they pay us, plus the ability to finance themselves for 3 or 4 months. Jay: What kind of support do you give them? Stephen: We train them and we supply them with ads they can use to get customers.

Jay: And who have you been approaching? Existing cabinet companies? Stephen: Yes. Existing cabinet companies, including those already doing refacing. And also individuals - entrepreneurs - to try to sell them on the good business opportunity this represents. Jay: And what is the essence of your proposition? In a sentence or a paragraph, what do you say to them? Stephen: I think that information packet I sent you explains very concisely and clearly what we offer in the way of potential for their business. Jay: Okay, here’s what I think. I think your materials are very nicely produced, but I think the way you’re articulating it is not as crisp, not as powerful and compelling as it could be. What you’re really saying is for an investment of $15,000 cash and the ability to finance yourself for 3-4 months, you can create an income of $100,000 or $200,000 a year. That’s really what you’re offering, isn’t it? Stephen: What I’m telling them is that if they buy a greeting card store or almost any kind of store, they usually pay $50,000 or more just to get started, whereas with us it’s just $15,000. I tell them they don’t have to wait 6 to 8 weeks for delivery. I tell them about our computerized ordering system that does away with having to send orders through the mail, and how this lets them schedule the work sooner so their cash flow is practically from the time of the order. And I tell them a lot about the quality of our products. Jay: I’ve got gestating in my mind some really charmingly crisp ideas for you. Have you ever heard of Knute Rockne, the coach of the Notre Dame football team back in the ’30s? He was a real gung-ho, ra-ra, emotional, firm, and angelic coach who got people all excited and really made them perform even beyond their capabilities. I’ve got a Knute Rockne speech to give you about not just what you should do but how you should do it. I’ve been consulting with a lot of people recently, and often when I make suggestions they become, if not defiant, then a little defensive, and they’ll say, “We already did that,” when in fact either they didn’t do it or they did it but in the wrong way. Or they did it but didn’t express it or articulate it properly. Now, you’ve done some really logical things, but I don’t think you’ve articulated the essence of what you’re offering. I don’t think you’ve focused on the appeal that makes your offer electric and irresistable to the reader, to the prospect. I’ve got to focus you. I’ve got to mentally browbeat you into submission and in the process show you how to make your marketing dollars really pay off. If you give a man a fish, you feed him for a day. Teach him to fish and you’ve fed him for life. I want to give you a strategy you can understand and perpetuate. Looking through your materials, I can see that from a technical standpoint, you’re invincible. You’ve got your competitors beat 18 ways til Sunday. You’ve got them on quality, you’ve got them on price, and you’ve got them on all the technical facts. What you don’t have is a crisp, clear, graphic articulation of the financial aspect. Did you ever study salesmanship? Stephen:

No.

Jay: There’s a famous old salesam named Elmer Wheeler. He was a fabulously successful salesman in his own right, and he was a fabulously successful sales trainer. What he advocated was the simple philosophy that you sell the sizzle, not the steak. If you can understand that and apply it to your situation, what you’re really selling is not all the technical stuff in my opinion, but a way somebody can invest $15,000 and have very high probability of making $100,000 a year

income - or a way to make the efforts of their laborers who are currently bringing them $10 hour and instead make $35 an hour per laborer. Do you see what I’m saying? Stephen: Yes. Jay: Are you sure? Stephen: Well, I think so. Jay: I’m not trying to treat you in a condescending way, but I think the essence is so important that I’m going to say it again. I think most of your focus and all the things you’ve written are very understated and more weighted towards the technical as opposed to focusing on the benefit. I don’t think you’re selling kitchen cabinet refacing. What you’re selling is a means by which an operator can dramatically increase his earnings per hour, his earnings per man, his profit per year from a modest investment. Isn’t that what you’re really selling? Stephen: I tried to express that in the information packet I send them. Jay: But what comes across is not what you would say if your were enthusiastically talking with someone over a cup of coffee. You’re making it hard for them. You’re expecting them to work hard to conclude what you already know. I think you should rework all your materials - your ads, your follow-up letters, everything. I think you should run an ad that says something like this: “If you have $15,000 cash to invest, we’ve got a business concept that has the real promise of becoming a 50 or 60 or 80 thousand dollar a year business within 6 months. We have all the guidelines set out. We have case studies you can look at. We have a pilot operation you can visit. We’ll work with you and train you.” And you can even make it more irresistable if you tell them, “You can go into it for a 6-month trial, and if it doesn’t work, we’ll buy back all your unsold stock. For complete details, if you are financially qualified, write to us or call this number, etc., etc.” That’s a pretty powerful offer, don’t you think? Stephen: I’m not sure what you mean about buying back their stock. Jay: That’s not necessary right now. The main thing is the underlying concept: Don’t impose on the reader the responsibility of comprehending the possibilities. Let’s say you’re trying to reach people who are already in the cabinet business. You run an ad in the trade magazine that says something like this: “If you sell kitchen cabinets right now, we’ve got a profit center you could add to your business today and within 3 weeks be making $1,000 on every cabinet job you used to get turned down on” or something like that. The offer isn’t the fact that you’ve got great cabinet refacing, even though I’m sure you do. The offer is, “If you’re a kitchen cabinet company and you go out on 20 interviews and you only sell 2 out of 20 because the rest of the people can’t afford the $20,000 ... we have a way that let’s you salvage 50% of the people who turn you down, and make $2,000 apiece on them on the average.” Do you understand what I’m trying to get you to focus on? Stephen: Yes. Jay: Does it make sense to you? Stephen: I understand that you’re telling me I haven’t been advertising loudly enough the profitibility of these cabinet pieces.

Jay: Here’s an example. I sell a lot of informational type products - courses, reports, etc. Somebody came to me recently with a course to sell. It was fat. The guy had spent about 5 years researching it. It had about 700 pages with 4 sections, a dozen audio tapes. It was very modestly priced. From the quality standpoint, the guy was an acknowledged expert in the field. He spent all his time talking about all the technical stuff and it was so yawnable I wasn’t motivated. This is a true story. Another guy came to me with a product that actually was inferior. But he didn’t tell me about all the time that went into it. He told me about the money that this course could make somebody, how they could put it to a test without any risks. He gave me 4 different ways people could use it - ways I never dreamed of - and it got me excited enough to do a promotion for it and sell a lot of them. Do you see the difference? Stephen: I think I do. Jay: I’m not trying to step on you. I’m trying to help you. The problem I have with your material is that even though you think it conveys what you’re offering, it does not. It’s immersed, it’s engulfed in a quagmire of technicality and abstraction, and it’s not prioritized. Stephen: Tell me, how would I reach the entrepreneur who has had nothing to do with the cabinet business up until now? Jay: You should run an ad in Entrepreneur Magazine that says: “8 out of 10 people who have lived in their home for more than 2 years want to change over their kitchens, but they can’t afford it. We’ve got an affordable way to change their cabinets for 1/10 the cost of new ones, and the homeowner, their friends and their relatives can’t tell the difference. However, the difference to you is that, unlike a lot of other business opportunities, you can make $2,000 on a $4,000 sale and have your customers love you to death. Moreover, for just a $15,000 initial investment, we give you not just the product, but also the plan, the proven technique, the ads, etc. We can put you in touch with the people who are doing it, whereby in the average scenario at the end of your first 6 months you should be on track making $50,000 a year with just one salesperson.” And that’s what you’re pitching. You’re pitching the opportunity. Tell them you’ve looked at 100 different franchise opportunities being offered in Entrepreneur, and your accountant evaluated the investment you offer, and you don’t know of a better way that has a higher probability of making you $50,000 or $100,000 a year starting in 6 months, and you don’t know anyone else who is willing to buy back all your inventory if it doesn’t work. You need to redo your ads using this concept, and also all your follow-up communication, the letters, the packet you send out. And you should give your salespeople a revised telephone script. You’re not selling the quality of your product, even though it’s of significant importance. You’re selling a way to make a sizable profit from a modest investment. You’re selling an opportunity to make more money than perhaps from any other business opportunity around. I’m going fast, but does that make sense to you? Stephen: I understand what you’re saying. I’ve got to pitch the results as opposed to the process. Jay: Exactly. Exactly. Stephen: May I ask: You recommend I advertise in Entrepreneur Magazine. Anywhere else? Jay: For reaching that audience, think you’re going to get better yield for your money in Entrepreneur and/or The Wall Street Journal, but try Entrepreneur first. I’ve talked lots of

people who have advertised in Entrepreneur, and they usually get good results. I talked to one man who has sold 85 distributorships through Entrepreneur in the last year and a half at $22,000 apiece which is pretty respectable. Stephen: It sure is. Now how about that ad I sent you - the one I give to my dealers to use in advertisements to housewives. Can you comment on it? Jay: Again, be prepared for a tactful, hopefully constructive critique, okay? It’s the same thing. You’re missing the essence. Your ad says, “If you want your kitchen cabinets redone...” That’s not the essence. That’s competing on the same basis as a regular cabinet company, whereas you’ve got so much more to offer. What you should be saying to them is, “Call 10 cabinet companies, get their best price, and then call us. We’ll do it for approximately 1/10th as much and you won’t be able to tell the difference. With a regular kitchen job, you have to go to the bank and get financing. With us, you can do it on your charge card.” That’s pretty compelling, isn’t it? You shouldn’t make it incumbent on me, the prospective buyer, to comprehend the appeal and all the benefits. You should make it immediately and clearly apparent in the first piece of material I ever see, which is usually the ad or the salesletter. You have a $20,000 set of kitchen cabinets for $2,000 installed in two days, on an unconditional money-back basis. That’s what you’re offering, isn’t it? The result, the result, the result. You’ve got to sell the benefit, the reason why. Do you understand the principle? Do you understand the things I’ve been saying? Stephen: Yes, that what I should focus on is the results. That in my advertising, I have to be more to the point in order to reach the people I want. That I should be over-pitched rather than under-pitched. Jay: That’s it - only I’m going to step on you again, but this time just for clarification. About being overpitched: If you give them 7 examples, and in every example the person made $50,000, that might seem like overstatement. Talk about making $40,000 in a year, or whatever amount will sound believable. Sell the sizzle, not the steak. And if you haven’t already done so, read and re-read Scientific Advertising by Claude Hopkins. It will give you some very good ideas. Think about them. I hope I have helped you. Stephen: You definitely have. Thank you. Thank you very much. * * * * The principle of selling benefits - the sizzle instead of the steak - may seem easy to grasp. But be careful - it can be deceptive. Although most people say they understand the concept almost immediately, all too many are lax about carrying it out. Why? Because it’s the easiest thing in the world to see things from your own perspective and assume that your audience sees things the same way. Never forget that they don’t know what you know. Chances are they will not see the possibilities for their own gain unless you tell them. What they need to hear - all they really want to hear - is what you can do for them. Tell them. Spell it out in clear, compelling terms. Do this, and - assuming you have something truly

unique, useful, helpful, and of high quality to offer - you’ll multiply your profits beyond your fondest dreams.

Modular Closets Salvator’s business was already successful when he called me for a consultation. The modular closets that he sells hang on a track that attaches to the wall. If you install a closet and later move, you can take the closet with you. In addition, the modular design lets you modify the structure of the closet even after you’ve installed it - converting suit space to drawer space, for example, or vice-versa. The main alternative, having closets custom made, does not offer any of these benefits. And, of course, it’s more expensive. Moreover, someone selling custom closets can’t quote a price in advance; they have to go see the house first. But because Salvator’s closets are modular, he already has everything costed out and can quote a price right on the spot. Unfortunately, none of this was apparent from the ads and brochure Salvator had sent me. Salvator already had the elements of a powerful unique selling proposition, only he wasn’t articulating it. After getting him to see what it is he really is offering, I went on to turn his one-dimensional approach (ad plus brochure) into a multi-dimensional approach encompassing TV, radio, educational booklets, direct mail, joint ventures with retailers and the media, and more. * * * * Jay: How is your advertising doing? Salvator: Very well, but we’d like to do even better. Since we started running that ad, sales have been 3 to 3 1/2 times what they were before. Jay: And have the profits kept up accordingly? Salvator: Well, it was break-even for a while, and now the profits are beginning to show. We’ve just been in the business for 18 months. Jay: What got you into this business? Salvator: My wife wanted her closets redone. She’s a lady who likes to move things, so I came up with concept where everything is movable, removable, all interchangeable. Jay: Is this unique? Salvator: Yes. Other kinds on the market are fixed to the wall. You can’t move them. Ours hang on a track. It’s in the brochure. Jay: That has not been clearly evident to me from any of the ads. Salvator: No, not in the ads. Bu it is in the brochure. Jay: So what you’re saying is that if all of a sudden I want to get rid of my suit space and I want more space for sweaters, I can adjust it accordingly, and in one little maneuver I can do this? That’s very exciting.

Salvator: It has a patent pending. Jay: And truthfully, there is no one else in the country with a product that has this flexibility? Salvator: Not to my knowledge. Jay: That’s exciting. Salvator: We have another advantage in that we offer a 30-day exchange privilege. Jay: How does that work? Salvator: Let’s say you buy an 8 foot closet that takes 4 modulars and you get home and you find that it doesn’t suit your needs. Maybe there’s too much space for suits and dresses and not enough drawer space. Just take it off the wall and bring it back and exchange it for a different module. Any time in the first 30 days. Jay: I understand. Will the closet save me on storage? In other words, could I get 3 times as much into my closet if I installed one of your systems? Salvator: Yes, in some instances, you could. Jay: Let me ask about the demographics. Do you find a certain kind of people, area, age, some kind of identifiable tendency to your customers? Salvator: Homeowners age 35 to 50 with a combined income of $35,000 or more. That’s as close as I can refine it for you. Jay: Do you run in anything besides this one newspaper? Salvator: We’ve tried everything, and that’s the one we have found to be best. Jay: You’ve tried TV Guide also? Salvator: Not the TV Guide. On reason we’ve stayed away from it is we had a competitor who advertised in TV Guide. He’s dropped out of it now. I think his business has fallen off. Our major competitor advertises mainly in newspapers and magazines. Jay: Do you have copies of their ads? Salvator: I have one copy. Jay: What does their typical closet go for? Salvator: For the 8-foot closet that we put in for $247, they put one in for $395. Jay: So your pricing is another advantage. Salvator: Yes, but their pricing is coming down and it’s because of us.

Jay: But still, the first person who publishes or informs or educates the public gets distinction. It doesn’t really matter if your competitor is also a cost-effective alternative to custom closets. If you can be the first to explain to people that everyone charges so much for closets because they have to customize, but you have a system where it doesn’t matter what your space needs are - for the same price, you can have any system you want, and it can be modified and you get 30 days to figure out what arrangement is best for you. Are you interested in maximizing just in your area, or do you want to expand? Salvator: We want to go national. One of the things I wanted to talk about was whether we should franchise or use distributors. Jay: The answer to that depends on how much time and money you want to spend on it. Salvator: Minimal on both. Minimal money and minimal time. Jay: Then a distributorship is better. Salvator: It would have less problems. Jay: A lot less, but you also have less control. I’ve looked into franchises, and with the cost and the regulations, it’s usually better just to do distributorships. It’s a lot cleaner and there’s a lot less you have to do. Now, how are you promoting besides the ads? Is this it? Salvator: When we first started, we did some television. Jay: Successfully? Salvator: Well, to a point. It go us off the ground. Jay: Are you objecting to TV now, and if so, why? Salvator: The cost got prohibitive. Jay: I think your concept is one that’s very demonstrative and it probably would lend itself to a 20 second spot aired at night. You could show a regular closet and you could show your closet. Yours has all the flexibility. You can say, “Our system lets you get 3 times as much wardrobe in the same space and any time your needs change, gives you the flexibility to change the closet around in 3 minutes or less, as many times as you want. Why don’t you let us set it up, and try it at our risk for 30 days or 45 days, and if it’s not more convenient, if it doesn’t give you 3 times the storage, bring it back for a refund.” I think it’s a much more powerful approach than what you’ve been offering. Salvator: That guarantee you just said - would I be exposing myself to too much risk that way? Jay: The idea of taking all he risk and being exposed may seem daring. What happens is that you do have a higher incidence of people who will take you up on it and bring things back. But if the concept is right, it will work. I believe the concept is 90 percent of the battle. A great concept will transcend almost any kind of copy, but if the concept is wrong, the greatest copy in the world won’t make you any profit. So you tell them they can return it in 45 days, and if you are used to giving 3 percent of them refunds, now maybe you’ll have to give 6 percent - but who cares if you get 300% more orders?

You don’t have to commit to it as an on-going program. Do it as a test. Try it - and again, I think TV is the place to do it. Try it on TV for a month. Bite your nails and tell yourself you’ll do it for 100 or 200 installations. After 45 or 60 days, you will know exactly what it costs you. You can do it on late night TV, I think, with a 2-minute commercial. Salvator: We tried night television. We used a 30-second spot. It produced nothing. Jay: Did you demonstrate the product? Salvator: No. Jay: I think your product is so demonstrable that you need to show it. You can try 60 second spots, but I would try 120s if you can run them as tags or trailers on, say, the Tonight Show, Joan Rivers, the movies, David Letterman. Hit the people who watch all the upbeat shows. Show them your closets. Talk about the prices, explain that most people can get what they need for $300 or less, and you can do it yourself and save a little money or we can do it for a modest installation charge, but either way our offer is “Try out our closet in your home for 45 days totally at our risk.” I think that is a very powerful offer. Salvator: It is a hell of an offer. Jay: I think TV is a very good idea for you. But don’t be like some people who look for one fantasy solution to their business problems, because even if it works, as soon as a competitor gets into it, it becomes diluted and fails. I believe in a broad-tiered approach. TV is great. Concurrently, you could take the same concept and reduce it to space ads, where you give them the same 46-day offer. At the same time, I would do it on radio. salvator: I have tried radio already. Jay: Yes, you sent me the script you used. And look at what you were saying. You tried it as a different proposition. My goal is to unshackle the governors on your thinking, to tell you kindly, I hope - that you may be myopic. It wasn’t radio that didn’t work. It was that the offer was wrong, the proposition was wrong. Same for your print ads. I read four of them and it wasn’t clear. Salvator: What was it in the ads that you didn’t understand? Jay: I didn’t understand the flexibility of the product. I didn’t realize the modules were interchangeable. The 30-day exchange policy wasn’t clear. I think you have a unique selling proposition and I have given you that and I will give it to you again: Try our closet in your bedroom for 45 days at our risk, and if it doesn’t increase your storage ability by whatever amount, and if it doesn’t reduce your grief factor, if it doesn’t give you more ease and comfort, then we’ll give you a full refund. Salvator: What we’re really selling is organization. Jay: But you have to relate it to more emotional factors. You are too close to it. You understand the cerebral aspect, but you have to bring it down to their emotional understanding. Do you see what I’m saying? Salvator: I think so.

Jay: In addition to TV and radio, I would have you write an article for one of the throwaway newspapers - an article that tells your story. Chronicle some actual examples, introduce some people, show some pictures of before and after. Maybe a 2-page article. Once it’s published, have it reprinted and send it to lists of the more affluent households, and enclose an offer that says, “If interested, either come in or call for telephone advice, or we would be glad to send designers out just to show you the possibilities.” Publish an article and then reprint it, because in an article you’re not so restricted by space. You can tell he whole story. A guy I know named John Cosley has a funny story to tell. He started off being an insurance salesman, and he used to run ads for seminars. They bombed, because he didn’t write good copy. In desperation, he started sending to lists of doctors, dentists, lawyers, and he would hire people to type the recipients’ names on white envelopes with no return address, and he’d take a newpspaper page with the ad on it that didn’t work and he would put that in the envelope, only he’d have the typist write on the ad, “Murray, worth attending!” and he would have the typist sign it “R.” or “J.” He would send them blindly to these people at home or to their offices, and he got 10 or 16 percent of them coming to his seminars because they thought that some friend had torn it out and sent it to them. I would suggest you do the same thing. Reprint this article that tells the whole story, that really gives them an education. Fold it up, have a bunch of housewives or college students type people’s names on plain white envelopes - no return address - and have them hand print “Worth trying out,” or “Worth taking them up on it,” and sign “R “ or “J.” and send out 5,000 of them. I think you would be very surprised with the results. Salvator: That’s a new angle. Jay: Very powerful. I would suggest another possibility. Create an educational little report which is the same thing as a brochure, only formatted a little differently, on a little nicer stock on how to redesign your closet or how to solve your closet problems. Make it 3/4 educational. Tell them how to prioritize, how to organize a closet. Basically tell them the whole essence of your system, but don’t tie it in with your system til the end, when you talk about alternatives. By then you have told them why it is smart to do one thing over another and the of logic being organized. So then in the last 1/4 of the report, you talk about the options. The options could be: (1) you build your own closet, which would cost you $1,000; (2) go to some of the custom people, who will say they can do it cheaper than you can, but the closet they’d build for you is fixed; if your needs change, you have no possibility for changing the closet; (3) try us. We have a system that costs hundreds of dollars less, installs in an hour or less, can be changed around instantly, and you can try it out at no risk for 45 days. I think that would be very powerful, and you could make a little ad: “How to organize your closet, free report, phone in.” There’s another possibility. I am just trying to bombard you with possibilities. Most people look for one successful angle to build on. That’s good, but it’s dangerous. I like to build a base on as many legs as possible, for two reasons. First, you can grow and expand more easily - more like concentric circles than a straight line. And second, if one area fizzles or starts to get competition, it doesn’t kill you. In other words, if somebody starts doing a knockoff at $150 and TV was your only angle, you would get killed. What I’m going to suggest, then, as another possibility is you come up with something called a multiple crash impression answering machine. It’s like what the movies use when they want to give you the schedule and they have 6 or 7 theatres. you have 6 or 7 lines going in, and you promote a hotline where people can call in with their closet problems. You could advertise the hotline all over - in TV Guide, in newspapers, on the radio, magazines, etc. What the hotline would be is a recorded version of the report giving them all the possibilities, and in the last

minute would be the pitch for you and your offer. Am I giving you the kinds of things you are interested in? Salvator: Yes, but let me ask you one thing. The amount of money we have to spend on advertising is around $3,000 to $3,500 per month, so we would have to do different things at different times to stay within this budget. Jay: But you might be able to do some joint ventures. It’s not as clean, but you can go to somebody who is good on TV, or somebody with money or with TV time available, or an independent TV station, and offer them 40% of all the sales. Or to the Pennysaver and offer them 40% of all the sales. They either trust you for the amount or you can tell people to call in on their number so they can monitor things. You can do a lot of contingency deals like that. Don’t let your budget stop you from trying things. You could go to a radio station that is not the number one, and tell them your concept. Give them exclusive as far as radio is concerned. Install a closet for every one of their disc jockeys so they will know about it. Give them a rough outline of a 60-second commercial, and have a number that people call in on so you’ll know that everyone who calls that number came from that radio spot. Tell the station manager, “We’ll give you a percentage of all the business that comes from that ad every month.” You can do things like that all day long. Look at it as a laboratory. You can get people to give you all kinds of experimental advertising time or print media space, and you are going to gain insight that you can pass along and replicate with your distributors. Salvator:

That makes sense to me.

Jay: When you propose these kinds of deals, you have to revere your concept, and you have to believe the potential. When you are presenting the idea, the person you’re presenting it to can’t feel that you’re down and out and groveling for some free ad space. They have to feel that they have a chance to really lock into a goldmine. You tell them, “Every time we do an installation and the person spends $200, you make $60 and it’s risk free. You have nothing to lose.” You have to sell the person you are pitching. You could offer to install one of your products in their home so they can check it out themselves. I’m getting excited because I have done things like this. You have to believe that the possibilities are limitless. What makes a concept work is passion. You might also want to make yourself available to be interviewed on radio talk shows - sort of as, not an eccentric, but as a champion against the insanities of a fixed closet and why a fixed closet is dumb. Take the position that the whole concept of a fixed closet is archaic, and talk about it not as a salesman, but as an educator. You make it out that everyone is stupid using conventional closets, and you have this wonderful, much better idea. Doing this as a radio personality would add dimension, writing about it this way in an article would be fun, if you talked about it on TV it could be powerful. You ought to do audio/visual interviews of all sorts of people who use your closets. Take what customers say in the interviews and use it in your brochures, on radio, on TV. On TV, always show befores and afters. You could even display actual befores and afters - using real closets - in people’s stores, where they could generate leads for you. You could create a miniversion where you show half a regular closet and half your closet side-by-side, and have it installed somewhere with cards people could use to write in for more information. And in

return, the people letting you use their store space could get a commission. You could do endorsed mailings. You could go to anybody in the fashion business - clothing stores, shoe stores, maybe furriers, women’s clothiers. Get them agree to let you furnish them with a letter that would go out over their signature - a letter of endorsement and recommendation to their customers on their letterhead. You would finance it all, you would mail it, and they would get a share of the profit. You could put installations in their homes as part of the deal. If you could get quite a few businesses to mail this kind of letter out, I bet you would get incredible response. Salvator: I’m sure we would. Jay: Do you understand building a foundation on lots and lots of legs, not just on stilts that can break on you? You have TV ads and appearances, radio ads and appearances, newspapers, a couple of contingency deals with Pennysaver or a local magazine. You have a hot line that people call in on all the time. You’ve got 3 or 4 installations in dry cleaning stores or other stores that have a lot of traffic and can handle your display. See what I mean? Salvator: I do. One last question. What is the best way to get leads for distributors or franchisees in the cities where we want to be? Jay: Use Entrepreneur Magazine, but do it differently from everyone else. Instead of just trying to hustle them, you distinguish yourself by offering them a report. Offer them a 2-part report package. One part is all about your company and the opportunity and your case studies. The other is on the question of whether to be an entrepreneur. It includes 26 short tips to success in your own business, things that will help them understand the advantages and disadvantages of running their own company. Use something like this along with your offer and you wil get 1,000 times more respondents - of whom maybe 10% will be goof-offs whom you will not want, but you’ll have so many more prospects that it won’t matter. Then have a whole follow-up ready to send them. Salvator: Do you think a 30-second or a 60-second commercial running for a 30-day period is sufficient time to get a feel for what it’s going to generate? Jay: If you do it right and present it in the right context and you tell them what to do. If you run it in enough different time periods. Some time periods may not work as well as others. And a 60-second spot may not work as well as a 120, or a 120 may not be twice as profitable as a 60. But if it is going to work, you’ll know instantly. If it isn’t, you’ll know in a week or two. * * * * Make sure your unique selling proposition is just that - a proposition that’s unique and that sells. What you’re really offering - what will make people really respond - may not be what you think it is. Get to the very bottom of it, then articulate it as clearly and concisely as you can, so someone who doesn’t know what you know can grasp it in a moment. Then find as many different avenues for promulgating your USP as possible. Don’t build your foundation on just one leg, but many. See how many different approaches you can experiment with on your existing budget, and see how many people you can interest in joint venturing into areas you can’t currently afford. Don’t think of limitations, think of possibilities. And if you want your concepts to work, execute them with passion.

Credit Improvement Service Bill is an expert in helping people improve their credit ratings. Since a significant percentage of the population has some kind of credit problem, Bill’s business has the potential to go very big. Unfortunately, at the time of his consultation, Bill didn’t have much capital himself. In fact, all he had available for marketing was around $2,000. If you’ve ever wished you could spend more on marketing, read this transcript. You’ll be amazed at how much can be accomplished on a shoestring. * * * * Bill: We have what we call a credit improvement service. However, it hasn’t really been going full-time because we haven’t been able to generate enough leads. And, ideally, I don’t think I would want to operate it on a full-time basis. Jay: But the subject fascinates you. Tell me what you do for people. Bill: We improve their credit. Jay: I read your letter twice to try and comprehend what you were saying and I never got the gist of it. So give me the essence of what you do for people. Bill: The essence is improving the credit profile. In other words, the history that appears on the credit reports. Jay: How do you mean? Bill: Negative items can be removed in a number of ways. They can be removed primarily by disputing information. The Fair Credit Reporting Act, which is both state and federal legislation, gives the consumer the right to dispute certain information. There is no guarantee that negative items can always be removed, but very often they can be removed simply by disputing them. Jay: What kind of success rate do you have? Bill: The success rate varies, depending on the kinds of items that you are talking about. Overall, including everything from bankruptcies to late payments, it is about 50%. That’s actually very good. Jay: That’s wonderful. Where do you have the most trouble? Bill: The problem occurs if the creditor and the credit reporting agency all perform within the period of time prescribed by law. If they verify information legally within the time prescribed for that particular item, at that particular time, it has to remain on their record. Jay: But you say, 50% of them are sloppy, noncompliant, or whatever? Bill: Right, they just don’t have the time to check everything. The main rationale for my seminar is that even if there are negative items that can’t come off immediately, there are many strategies that can be used to get around them. For example, one of the favorite strategies is based on the fact that a person may be listed with several credit reporting agencies. The profiles the consumer receives from those three agencies are usually quite different. Recently, we had a gentleman who had declared bankruptcy. However, we discovered after retrieving his reports that the bankruptcy only appeared on the records of one of the creditreporting agencies. It hadn’t been picked up by the other two. He didn’t know that. The strategy we gave

him is actually quite simple—namely, that a consumer has the right to ask in advance which credit reporting agency an institution uses. Jay: Very interesting. Bill: The road I wanted to take was real estate investment. I found the bottom line was that without good credit, there is not a lot you can do. I looked around for someone to do for me what I am doing for people now. I found that there are a lot of people who are just playing at it. They are just fooling around. They don’t really know how to do it. They are not operating very honestly or ethically. Basically, the only people who are doing this kind of thing are fly-by-night operators who buy a manual by mail that says “Make Money as a Credit Repair Clinic.” They operate for a few months, take people’s money, and then they disappear. Jay: They really don’t do what you are doing? Bill: No, they don’t. So I just thought that I have got to do it myself. I started learning it and as I was doing it, I became more involved and fascinated with the subject. It became sort of a hobby, a game, that developed into something more than that. Jay: Are you very good at it? Bill: Yes. Jay: So 50% of the people you help are happy with the credit they get after using your services? Bill: Actually, we help more than 50%. We help 100%. Jay: How? Bill: Because their credit improves significantly, and they gain information that is worth a lot more than the fee they pay. When I say “we help 100% of the people,” I mean all the negative items will disappear. Now, if we cannot get all items cleaned up right away, a person’s credit situation still improves substantially because of the items we are able to remove. Jay: The seminar you are contemplating would tell what? Give me the format. Bill: O.K. The seminar would give various strategies for improving credit with a view towards making and saving money. With good credit, one gets better interest rates, financing terms, and the use of leverage for investment. The seminar could be an overview, but at the same time, be quite comprehensive. Jay: And specific strategies—letters to use, people to contact, questions to ask, etc.? Bill: Right. The first thing that would be done would be to teach the person the basics. Most people really don’t know the whole system. Jay: I agree. Bill: You’ve got to know the system. And what I like about the field is that it’s really fascinating, yet it is not that complicated. So there is an awful lot you can impart to someone in the course of a 2-1/2 hour seminar. The first part would tell people how the credit system in this country works. The second part would be various strategies to improve credit. It would include credit cards, because a lot of people are very interested in credit cards. Jay: Do you have a proven way that people can get credit cards? Is there a little technique you can give someone ahead of time as far as validating your ability, something that they could actually try out themselves that would show the value of what you could offer them? Because I believe in giving free

samples in advance. When you subscribe to my newsletter, I give 10 or 15 examples right in the promotional mailer. For one product, I did a promotion called “How to promote a professional practice.” In there, I gave about 25 concepts you could use even if you never bought the product. Are there little techniques that you could tell somebody that would clearly demonstrate your ability? Bill: The only trouble is that with any technique for credit, it takes a little time to deal with. Applying for a secured credit card is a good example. As long as people would follow through with the procedures, they would see it. The thing about most people is that they are basically lazy. That’s a fact of life. Jay: I think your seminar idea is great. Bill: No one is doing that now. People have done them, but they have billed them as “get rich quick” schemes. Jay: I know the seminar business; I’m talking about focusing on this specific generic thing. Bill: There have been two people who have given credit seminars in this area. Jay: Do they still do it? Bill: No. One was taken to court because he was a rip-off artist. Jay: How so? Bill: Well, he abused the law in a number of ways. Number one, he misused the trademarks. He made his literature appear as if he was a branch of a major credit card company. Number two, he actually advised people to lie and cheat on their credit applications. Number three, he used his title as an attorney to make it appear as if the illegalities he was condoning were legal. He was taken to court last year and forced to throw all his stuff in a garbage truck and cease and desist. Jay: How hard do you really want to work on this? It seems you indicated that you don’t want to work real hard on it because you want to pursue your doctorate. But it also sounds like you’ve made a big concerted effort. Bill: I do want to write my dissertation this term. Otherwise, we are working very hard. We have a lot of energy and gusto. Jay: If you weren’t sitting here today, what would you be doing? Bill: Well, what we have been doing is laying the groundwork for this whole business. For example, yesterday we arranged to get an American Express Merchant Credit Card. Jay: That’s great. Dan: We’re working to join the local Better Business Bureaus. We’re finding out about advertising. Jay: I need to understand how are you financing yourself. Bill: Well, the last year I was a teaching assistant at the university. Jay: So, really and truly your capital is minimal for this? Bill: Right. Jay: Do you operate out of your house? You said you have an office that you have access to, but you didn’t clarify that.

Bill: It’s like a secretarial service set-up. They call it a Business Identity Program. We’ve got the name of our company on a first floor marquee with a prestigious address. We can use the conference room and set it up to look like it’s part of our office. Jay: But you have to do it in advance? Every time you are there you pay a fee? Bill: Well, we’re entitled to a couple of hours a month. Jay: And if you want to use it more than that, is it so much per usage? Bill: Correct. Jay: Is it nice? Bill: Yes, it’s very nice. Now actually we have set up two different companies in two different locations. One is handling the credit improvement thing, and the other would be geared towards the seminars. Jay: Which one do you think realistically is the most lucrative, and which one do you think would give you the most from a marketing standpoint? By the way, you have subscribed to my newsletter for how long? Bill: Probably six or seven months. Jay: Have you gotten a lot out of it? Have you been able to apply anything? Bill: Well, not so far. Maybe only because I haven’t reached the stage where I’ve sent an ad to press. Jay: How long would it take you to put together both a home-study version of the course and the seminar? Bill: Conservatively speaking, I would say another 2 months. Jay: How many people have you actually done the seminar for? Bill: Well, we’ve had about 100 people. Jay: And they have paid you $300? Bill: In the beginning I charged less. Jay: O.K. So you have had 100 people who paid you. Out of that 100 people, how many have used your credit improvement services? How many would give you a rousing testimonial, and how many would give you that testimonial on camera for a TV spot or a seminar show? Bill: Probably about 10 or a dozen were really enthusiastic. But one aspect of this credit improvement process should be mentioned here. Jay: What’s that? Bill: Like having negative items removed, specifically getting them off using loopholes in the Fair Credit Reporting area—if one attracts too much attention from the credit-reporting agencies and the major credit card companies, they can make trouble for you. After all, even though you are operating legally, you are rocking the boat. These companies have so many resources that they can just put you away. Jay: But it would take them a long time to do that, wouldn’t it? Bill: They can put a person out of business pretty quickly.

Jay: Of the people you have helped so far, can you broadly categorize the gains that you provided them and also give me some specific examples of how you did it? Bill: For example, one fellow who had just declared bankruptcy thought he was tied up for ten years because bankruptcies stay on your credit report for 10 years. He assumed that because he had found a couple of places that had just retrieved data from the agency where his bankruptcy was on record. Jay: I don’t think most people know it is ten years, do they? Bill: Most of them know it. Once they get through it, the bank officer will tell them. Now, we discovered that he had the bankruptcy on record at only one place and gave him the strategy I just described to you. We told him that he was free to get credit at any place that retrieves data from a reporting agency that hasn’t recorded his bankruptcy. Now, unfortunately a fellow like that wouldn’t go on camera. Jay: Give me an example of someone who would be eager to talk about how their credit went bad. Perhaps someone who thought the whole system was against them, someone who came to you for help. Do they sign a power of attorney? Bill: No. Jay: Do you do it for them, or do they do it themselves? Bill: We do it for them, but we pass everything through them for their signature. That way they know exactly what we are doing. Jay: Give me some examples of what happened. Bill: I can point it out to you on these reports. It is sort of a dramatic illustration. They show how claims drop off almost overnight. Jay: Do you have clear copies that can be used on TV? Bill: I think we have the originals on these cases. For example, here is a credit report as it appeared in September 1985. This guy has 6 “negatives” including a charge-out, which is considered one of the most serious offenses. Then in early December, we see most of the “negatives” have already dropped off. By the the end of December the only things left are 2 in the neutral column. All the “negatives” have dropped off. So this fellow was free to refinance at the super interest rates now available, to get credit cards, to do whatever he wants. There was no way that he could have done this before with the kind of credit he had. Jay: After your client was free to do that, did he go out and get credit cards or open accounts? Do you have empirical case studies like that? Bill: The ones I know about are the people we helped get secured credit cards. In many cases they had jobs that involved travel, and they couldn’t get a credit card to rent a car or get a hotel. The only ones we really know about are these secured cardholders. Once we clear up people’s credit, they go off and they do their thing. We have no way to keep track of them. Jay: What exactly is a secured card? Does that mean that it has cash collateral? Bill: Right. The secured card people are those who are still working with us. So we know about them. When they send us their updates, we’ll see inquiries from whatever company. Or they will write a note saying they got their credit card. Jay: Can you point out across the country who offers what services?

Bill: That would be really hard. Jay: But it can be done, can’t it? Bill: I don’t know how it could be done other than by obtaining some promotional materials from the credit reporting agencies where they brag about their services. Jay: O.K., you have given me a focus. How much money can you comfortably afford to seed your enterprise with—and if it doesn’t work, are you going to be devastated? Bill: You mean if it comes to naught? Jay: Possibly. Bill: Well, if we lost $2,000, it would be painful but we’d recover. At $3,000 it would probably be even more painful. Anything over that it would seriously be hurting us. Jay: Here’s what I think you should do. I think you should put your money into creating your course, first of all. Not produce it, but get it all ready to be either a $39, $69, $95 or $195 format. I think you should seek out ways to get other people to promote you, to bear all the risks and you get a contingent guaranteed share. I think you should have a mailing piece that you could mail out to people and test mailing lists. I think you should have a wonderful display ad. You ought to sit down and write. You have just written yourself the beginning while we were talking. You’ll get a copy of this tape and you should get it transcribed. I’d write a credible 10 or 12 or 20-page letter telling about all the possibilities in the credit area. “We give you forms. We give you case histories. We tell you what to say on the phone. We tell you how to conduct yourself in person. We tell what your rights are. We tell you how to respond to turndowns. We tell you how to respond to new actions. We talk about case histories. We show all the examples and then we interpret,” because most people don’t know what the reports mean. Most people don’t know what a TRW is, or a AA1, 3 or 4. Get ready to do a mailing piece. Then you would run ads. The course would probably be a few sequential tapes and/or an accompanying manual or reference guide with tear-out forms. You would tell them that is what they would get. You would offer scripts for every situation, scripts to• use on the phone, retorts, probably rejections, the whole thing. Include addresses of people to write to all over the country. Maybe you will have to do a little legwork. That’s very valuable, because you want to attract people in different parts of the country. There are a lot of mailing lists that you can rent that would tend to contain low credit profiles. Most people want customers with high credit profiles. You probably want the opposite. Bill: Actually, just one point to mention. One thing that has surprised me is that even wealthy people, who you’d think of as having high credit profiles, often have problems. Jay: That’s a neat sales point, even wealthy people have credit problems. Include it in your letter: “If you are a wealthy person, you want to live in comfort and ease, etc.” You could make a great letter that would probably appeal to a whole mass of people, say 5000-person segments of about 4 or 5 lists. The SRDS List Directory, do you know what that is? It’s a mailing list directory for mail order sales. You may make a list of people who would most likely be noncredit worthy but who have proven themselves to be mail-order responsive. There are lists and lists that organizations have. You want to call a good mail list broker and get him to tell you about people who have master lists of millions of names of mail-order responders who are not credit worthy. Those are probably great prospects for you. There are all sorts of possibilities like that. Get your mailing piece done. Make it all encompassing. Offer a proposition: “We can help 90% of the people. We will make a guarantee which is irresistible. Our book comes with 6 copies of every form,

etc. Take the problem of your choice, tear out the form from the workbook, fill it out and use it. Take one script, tear it out and use it or reuse it. You have 45 days (or whatever is reasonable) to test one application. If it doesn’t markedly improve your situation to your satisfaction, you get a full refund. For example, if it doesn’t help you to get your charge cards back, or borrow at prime +2, or if you can’t get an unsecured loan at almost any bank or financial institution you want, send the book back with the rest of the forms and you get a refund.” Be very specific. “Here are 2 credit forms, before and after. You will notice this and this.” And tell them what they are looking at because they won’t know. “Here are some case studies of people we helped in our seminar. For example, we showed Mr. K. this loophole and wrote some letters for him. He did the rest himself with our guidance and he paid us $400. You can pay us $400 also if you want us to do it for you. But we’ll give you the same basic information and let you do it yourself at a fraction of that with a guarantee that if it doesn’t help you, you get all your money back.” Get it all together and make the offer. (I would let them buy it with credit cards too. If they have credit problems, they may or may not have charge cards, but that is their problem.) You get the mailing pieces ready. You get really provocative ads: “How to improve your credit in 90 days guaranteed. Complete details sent to you confidentially, no obligation, •no salesman will call.” You have ads like that in 3 or 4 or 5 publications like The National Enquirer. You could try a bunch of small display ads in different publications. “Our complete report tells you all this.” And maybe list some of the things they will get in the report. “We’re not a credit clinic. We’re a publishing company that publishes unique reports and a course on how to do it yourself.” You come up with a bunch of test ads, little ones, and you try them in different places. They’re very inexpensive. If they work right. Bill: We have done some testing in that regard. Jay: And what happened and where did you run the ad? Bill: In the two daily papers here in town. Jay: I’m talking about mail-order. You want to choose vehicles that tend to produce entirely mail order responses. Before you spend your money, spend time looking for national publications. Bill: Money’sworth? Jay: Money’sworth would be the right kind of publication. Also The National Enquirer, National Star, Cosmopolitan. You probably want the lower end instead of the upper. But you could try it across the board. Try 3 or 4 or 5 different ads in 3 or 4 or 5 inexpensive publications and and run the smallest ad you can get all your copy into cleanly. Tell people to send their name, address, but no phone number to an address with one of your company names that sounds impressive. If the ad costs $100 and it produces 100 inquiries, then your leads cost you $1 apiece. You send those 100 people your letter, which will cost you 50 cents. That’s another $50. Now you have $150 invested. If you got 5 people who bought your course, you would have 5 orders at $40, or $200. With fulfillment you’d be about even. If 10% of the inquiries bought, you would make a nice profit. It’s very rare that you get more than 20%. If it is not a good offer, you could get less than 5. The point is to experiment. And you could experiment on pricing too. I don’t think you should go real expensive for that market. $39 to $69 is probably a good range. $39 seems like a great price. $39 + $8 postage and handling, which will bump it to $47. Bill: For a price like that, I couldn’t make the book an extremely extensive volume because it would cost too much. Jay: In quantity, it wouldn’t. You want to find out if it works first. You’ll lose $500 on the first transaction because in small quantities it will cost you $10 apiece instead of a dollar or two in quantity. I am just giving you examples, but it doesn’t have to be this price. You could try different versions. You could try a $95 version. You have to do some experimenting because every offer, every concept is unique, Bill. We’ve sold many thousands of $150 courses to sophisticated investors. I’ve sold one-hour

consultations to hundreds of people for $2000. If I offer a $2000 session to someone who subscribes to National Enquirer they would probably be appalled, laugh, and send me back some nasty statement. Everything is relative. So it may be that $95 works. My gut feeling is $39. If you gave 2 tapes and the book of tear-outs, the tapes would cost you a couple dollars apiece and the book would probably cost you $3. You would probably have less than $10 in it. $69 is• not a bad price but it sounds like a lot. $39 does not sound like a lot of money. You could add on $8 postage and handling which brings it to $47 but it doesn’t sound like $47. The point is I think you would have a nice little product there. Now there is more to it than that. Your money should turn into leads. Do a lot of little ads. Make the follow-up letter very expansive. If it works well in 2 steps, it will tempt you to do it• in just 1 step. But I think that would dissipate all of your budget. I think you are better off “poorboying” it with leads first and then back-end by using your money to make your follow-up piece, which you would mail out direct. At the same time, explore ways you can make contingent affiliations with people where they will take all the risks. I’m avoiding direct live seminars for a reason, O.K? I will tell you what it is later. I have an idea. There’s this TV show where this guy puts up the money to do the show and every time there is a sale, they will give you 40%. You don’t make a killing but they will sell thousands of them a week and you end up making $10 apiece or $5 apiece. I think you ought to price low for the same reason as the mail piece. There are also radio interview shows that call you and talk with you for 10 minutes to an hour. You pitch your product and they give listeners a telephone number. You could buy 10 shows for around $1,000. You record it and you have them give you a recording of your interview. People call an 800 number to buy your course. Also, I’d read through all the ads in the lower quality mail-order publications—any of them that would be similar to what your course would be. Learn from what others are doing. Bill: I can’t think of any examples. Jay: There are all sorts of magazines. You are better off to get publications to bring in leads for you and you give them a percentage. When you only have $2,000 to spend, I have to give you a lot of “poorboy” bootstraps. Why not send out 500 letters that show companies how they can make money on people they haven’t been able to sell. Show the company you are soliciting that they may not have thought about it, but if they spend $200, they will get back all that and even make a profit. I think that is a good proposition for them, isn’t it? Point out to them that you sell your product in the same two-step process that they do and that they have inquiries from people who would probably be interested in your product. You’ve got a product and a mailing piece all put together. They mail your offer to the people who did not respond to their offer. Orders for your product come directly to them. They keep 50% and give you 50%. Point out that this would dramatically reduce the cost of their advertising, give them more money to advertise, and make every customer lead worth more. It depends on how you craft your letter to them, they may or may not respond. If you only send out 500 letters and it costs you $500, you still have $1500 in your savings, right? Say it pulls 5% response, which it probably would if it was a good letter. That is, 25 people try your concept. Of 25 of these, say 3 of them sell 200 courses apiece. That’s 600 courses at $25, or $15,000 in marketing money. For a $500 investment, that is a nice return on a “poorboy” strategy. There are a lot of easier ways to do it if you can take $100,000 and do it the right way. But if you spend your $2,000 on the mailing and the mailing doesn’t work, you’re dead. I’m just trying to help you. Another thing you can do is craft display ads and 60 or 120 second radio ads. Then write to magazines and radio stations and make a joint-venture proposal: “I have a credit improvement clinic and I get $300 doing this. Most people cannot afford this. So I created a home-study course. I can change their lives with this course for only $39. There’s nothing else like it. Here’s an ad we would like you to run and it is leadgenerating. Here’s my proposal: All the leads come to your station and I’ll give you so much a lead. Or the order forms came back to you and you keep half of the money on every sale.” Or offer them $1.00 for each lead they get. It is a little sluggish, but this way you won’t dissipate all your money.

You might also think in terms of spending $1000 to have someone get you on the talk shows. The subject has to be eminently discussable. If you get on 10 major national radio interviews and you have your offer down pat, you are going to get hundreds of calls. If you sell 20 or 30 of them at $40 or $50 apiece, a $100 investment is going to bring back $500 or more. None of these ideas are as powerful as running a full page ad for $25,000 or mailing 50,000 test pieces. But if you don’t have much money, I am just trying to show you how to build your capital up first. Have you read Joe Karbo’s book, The Lazy Man’s Way to Riches? Bill: I’ve read it. Jay: Read it again. It tells you how to do “per-inquiry” advertising. He tells you how to write little ads, how to do joint ventures. It is good. You want contingent deals with people who have something you can play off of. You could ask all the car dealers for all the people they rejected for bad credit. Bill: All the car dealers? I didn’t catch that. Jay: You could call on all the car dealers where people were turned down for credit. Why don’t you go to all the dealers and try to set them up as profit centers? Bill: Automobile dealerships? Jay: Didn’t you say in your letter that you tried something like that? Bill: Yes, I tried something like that. I tried a number of things. First, we sent out a couple of very large mailings to various groups—automobile dealerships, attorneys dealing in bankruptcies. Jay: You should go to all the attorneys who handle bankruptcies and ask them to sell your package. Say, “I have a special package we’ll custom make for you.” The guys who run the bankruptcy ads, they will get 100 calls and probably 20 of the people they will sell. They are spending part of their money to identify the 80 people who don’t buy. You can go to them and say that you will pay them for the names of the people they don’t sell. Or you will give them your product to sell so they can recoup their investment and run more ads. Do you follow what I am saying? Bill: Wouldn’t that have to be for just some particular kinds of businesses, because most of the leads that people get wouldn’t really be interested in my product? Jay: Of course, it is incumbent on you to find those businesses. What I am saying is that there are lots of businesses and lots of people advertising. I’ll tell you something else you might try that would generate mail order responses. You might have an ad where people would call and get a recorded message. The print ad would say something like “Complete course on how to do it yourself...complete details on recorded message, no salesman.” You rent a set up where you have 3 or 4 answering machines on 3 or 4 lines. The tape basically tells a 5-minute story. There are a lot of techniques. Bill: I did testing on that for about a year. People who respond to ads in papers like that are really flaky, very poor quality. Jay: I understand. You are making a presumption. They probably are. But the people who run ads in there must make money, so it must work. If that is the case, you could write an ad that was very forward. Say, “Our credit clinic has a success rate of 80%. We’re very expensive, too expensive for most people. But we have put together a do-it-yourself course that will give you all the answers for a one-time charge of $39. Before you send any money, call this recorded message and we will tell you all about it in 5 minutes.” You might get 100 calls out of which 20 people send you $40. So you get $800 a week from an ad that costs you $100. That isn’t so bad. If it works you can try it in larger markets. I am just trying to give you little ways to make $200 a week at a shot here and $200 at a shot there. Did I give you some ideas?

Bill: I have some ideas and I understand the concepts. But I am frustrated because I have problems with those sorts of things. First, the ads in the newspapers are really expensive. Just the little classified ads are really expensive. Using a telephone service or things like that, those charges really add up. If we get a few people coming through, we just barely break even. And it does not compensate for the tremendous amount of time invested. Jay: I know. It’s a little scary when you’re operating that close to the edge. It takes courage. The last thing I wanted to say to you is the reason I think a $39 product for you would be good—it’s because you could go back after you send out the product and re-solicit them for more expensive services. You can send a letter with the course or 10 days later saying, “Many of our course buyers write and ask us if we’ll help them individually. They have read our book but don’t know exactly how to go forward on a specific problem. They know that our prices are $395. I just want to tell you that the service is available and, because you have bought the course already, we’ll give you full credit towards your purchase price.” If you sell 1000 courses a week at $39 you can probably end up with 50 a people week taking that credit and sending you $350 for you to help them more specifically. That’s the glory of the back-end. * * * * The whole key to low-budget marketing is to get other people to defray your costs in return for a percentage of sales or profits. Per-inquiry advertising, using other companies’ mailing lists and putting sales people on commission are but a few of the ways to do it. And don’t forget the simple fact that you get more leverage when you spend your dollars on the prospects who are most likely to buy. In most cases, they’re your already existing customers.

Hairpieces Dan sells the best hairpieces in his area, pieces made by a national franchise. But because the market he’s trying to reach—balding men—is so small, he needs a good deal of marketing savvy to increase his profits. The advice I gave him should allow him to triple the return on his advertising investment. I also explained how “host” relationships with other merchants—even with hairpiece dealers who sell to lower-price brackets than he does—could bring large profits to all the parties involved. * * * * Jay: Please give me a quick overview of where you are right now: where your ads run, how much you spend on them per period, and your experience with analyzing their results. Dan: Okay. I’ve been doing some newspaper ads. I’ve got it down to where it seems to work best for me in the TV Guide section and in a 1/2-page ad in the newspaper. Jay: The real TV Guide or the TV magazine in the newspaper? Dan: The TV magazine in the newspaper. Jay: Have you tried the real TV Guide? Dan: Yes. The problem with that is that it covers a much larger area than our city. Jay: So, you have to share it with some other city? Dan: Most of the people who responded were too far away for me, really. So, I’m running in the TV sections probably twice a month, about 1/3 of a page.

Jay: How much of your business comes from that TV section ad? Dan: A small percentage. But I find it so hard to tell whether they’re coming from the newspaper, the television, or whatever. Jay: Do you make specific offers? Have you tried specific prices? Do you ever run special sales? Dan: No, not really. Jay: What does a typical hairpiece cost, $600? Dan: Probably in that neighborhood. Average price probably $800 or $900. We run from a bottom of about $600 through $1,100. Jay: What do you make on a $900 hairpiece? Dan: Net profit?. Let’s see. Figure $200-$300 for advertising. Jay: So you figure a customer costs you $200-$300 to bring in? Dan: Yes, that’s what the national company I’m franchising is saying,and that’s kind of what we’re really finding out. Jay: They’re great hairpieces, right? Dan: They’re all great. Jay: What I gathered from reading your material is that yours are superior to everybody else’s. You’re somewhat superior to one competitor and much better than the second. A third sounds like he’s really the cheapie. But does he do well? Dan: No, I don’t think so. The guy who originated it died a couple of years ago and his son has taken over. I saw some of his work the other day and it was not very good at all. But a lot of times people want a $300 hairpiece. I thought, after reading some of your material, of calling him about sending him those $300 people. Jay: I was just going to say that. What you ought to do is make a deal with him where you get half the profit. You’re laughing, but it really works. Vice versa, do you think you could make a deal with him for you to mail to his customers if he got a share of it? What if you went to him and said, “Bill, you got 500 people or 5,000 people you sold a $300 hairpiece to, but there must be at least 50 who want a $1,000 hairpiece. I’ll give you $300 a sale for everyone you send me.” All you do is write a letter, and he mails it to his people. Dan: I really think that I want to give it a shot. Jay: The worst thing that could happen is that the guy would be shocked and insulted. But if you approach him right, he won’t be. Tell him, “Bill, I think I can put $10,000 in your pocket before December 30 for no risk on your part. I’ll do all the work and won’t take a dime away from you.” This ad that you ran—how did that do? Dan: That was the TV Guide and Cable TV Guide. They tell me they send out 50,000 of them a month. I had a couple of calls and one guy came in for service. That’s all. Jay: Just one?

Dan: Just one. I don’t know whether to run it again. Jay: How many people in your city would you say have hairpieces? Dan: That’s a good question. Maybe 1,000—3,000 at the maximum. Jay: Well, let me ask you a question. Do barber shops or salons refer? Do you ever work on referrals? Dan: Yes, somewhat, but more when I was new, 15 years ago. Jay: Did it work? Dan: Yes and no. Sometimes, a couple of years ago, I had quite a few referrals from salons, but sometimes it’s up and sometimes it’s down. Jay: What if you brought in, strictly on a variable basis, a retired man or woman whose job it was to set up an organization of referring salons in the greater metropolitan area? They would get $250 to $300 for every sale they generate. They would just work 500 salons or 300 salons. If they get one or two referrals a week, it would probably be worth it for them. If you get somebody who’s motivated enough that all he or she does is work the salons, you should give them a title, to give them some sense of importance. And make them believe it’s do-able. All they do is call on salon owners and operators and tell them about what you do, offering free evaluations or some other risk-free proposition. Give them materials or offer materials and tell them very simply what the deal is. They can set up the appointment for the client. The appointment can be a free evaluation. Give them a pitch that’s real easy for a stylist to use, something to the effect of: “It may be right for you, it may not, but the people at Dan’s are superbly professional. They won’t even try to sell you a hairpiece until they’re sure they can help you, until they’re sure you can benefit from what they’ve got. What I’ve arranged with them, because they’re friends of mine, is that they’ll give you a $50 dollar consultation for nothing. Sure, they’re going to try to see if there’s a way you two are compatible, but they’ll tell you the good and bad points about hairpieces, and they’ll tell you about quality and about how to get one that makes you look natural. They’ll tell you things to avoid, and if you’re interested, they’ll make recommendations. I think you have nothing to lose by talking to them. As a service to me, they’ll even see you after hours or on Saturday. Let me make you an appointment and then you decide.” If you knew with certainty that every time you spent a dollar on this, you made nine, it would be pretty nice, wouldn’t it? But what you do is you hire a man or a woman and ask them, “How would you like to make $2,000 or $3,000 a month just for calling calmly on stylists and getting referrals?” I think it would be great. I am a great exponent of host/parasite relationships. A lot of people don’t play the numbers as they should. What other people are in a position to refer to you that maybe most competitors would avoid? Dan: I think that’s one of the things that my top competition has always been very good at. He has somehow given his clients paybacks and referrals. I have too, but for some reason, he has been able to make it work. Jay: You’ve got to get someone who’s as personable as can be, who’s gregarious. You’ve got to tell them what to do. You can’t just say “Refer.” You have to give them plans, you have to give them pitches, you have to turn-key for the stylist. If there are 200 stylists in town and you’ve got 100 of them working for you, you can’t tell me you won’t generate $50,000 or $60,000 worth of sales for them. But that’s just one approach. Who else can refer to you? Who else has a customer base or deals with the kind of person you want as a customer, besides the logical ones? Who else? Dan: I suppose the clothing stores, but we’re not really strong in decent clothing stores in this city, so that doesn’t really help.

Jay: What if you went to some plastic surgeons? Dan: I tried to deal with one of them, and he was interested in my information, but it just didn’t really work out. One of his clients referred him to me. Jay: Let the odds work on your behalf, Dan. There are probably 50 other plastic surgeons in town, or at least 30 of them. Write them all and say, “If you deal in cosmetic surgery and have former patients with male pattern baldness, or women too, we have a service and we would be glad, if it’s ethically acceptable, to share with you some kind of incentive for the sales. If that is not the case, we can pay you a mailing fee for letting us do a letter that you either endorse or let us mail to your people, one way or the other.” In Los Angeles, there’s something called Los Angeles Magazine. Is there a city magazine there that people read? Dan: No, not really. Jay: What do the more elite of your clients tend to fall into as far as profession, age, income bracket, things like that? What do you know about them? Dan: The average age is continuing to drop. They’re getting younger today. I just talked to a gentleman who’s 27. That’s probably about the medium age. We deal with probably not the high income. We have a tendency to deal below that. Jay: What if you did a deal with health clubs, where you got them to let you mail to their mailing list? They’re vanity oriented. You go to the health club and say, “Look, give me a list of all the men who are members.” It would even be better if they gave you a list of all the people who are bald. They would know. What if you paid them $10 a name? It would be worth that to you, wouldn’t it? If you had a salesman say, “We’ll buy the names discreetly and the customers will never know they came from you. We’ll send a personalized letter to them, and you can go over it first.” You could have a name buyer. His goal is to go out and buy the names of bald-headed men; you pay $5 or $10 a name, and he goes to people who would know who those men are. If there are 3,000 people among 300,000 who need hairpieces, your choice is either to run it in the TV Guide so often that they’ll all see it—and pay for reaching a lot of people with full heads of hair—or mail just to the balding ones, which is much more efficient. There are a couple of different people who sell hair vitamins and things like that. If you could get hold of them and get the names of everybody who bought their vitamins or their material or their components in your area, you should be willing pay good money for those names too. Consider Playboy and all the men’s magazines, and Esquire magazine and Gentlemen’s Quarterly, and get a list of every subscriber who lives in a 100 mile radius of your store. They do have lists like that. The problem is you may have to pay for a minimum of 5,000 names, but who cares? Do you know all the other hairpiece dealers? You may even pitch in with them and have them share the cost. If you get a retired man to work for you and it works, though, I wouldn’t just give that idea to other dealers, I would sell it to them and you get a user’s fee. You paid a grand to talk to me, the least you can do is get your investment back. You could offer to all of them that you’ll show them how to add $50,000 a year to their business, but you want 10%. Teach them, and let them use your materials, and let them have a syndicated franchise on your techniques if they work. I’d put $1000 in a slush fund and bring in someone who figures some ways to buy names and addresses of bald-headed people. The easiest way to do it is to go to salons, to health clubs, too. Dan: I wonder if I could get the names from a golf pro?

Jay: Any kind of an organization like that. If it’s an interesting service, could you give speeches on the subject or lectures for luncheon groups? Or is it a really delicate subject? Dan: It really is. It’s awfully tough. 15 years ago we tried doing fairs, but you can’t really get the people to talk to you. It’s a very embarrassing thing; most people just don’t want to talk about it. I just spent half an hour on the phone calling people who had written for information to try to get them in. Jay: How many people have written, called in, or walked in for information due to having seen your ad? Dan: I think last month, I think I was right at about 30 leads. Jay: Thirty leads broken down how? Dan: What do you mean broken down how? Jay: Thirty leads—are they phone-ins, call-ins, walk-ins, or what? Dan: Most of them were phone calls. Jay: Of the phone calls, you always kept their phone numbers? Dan: Yes. Jay: Addresses? Dan: Yes. Jay: Sent the information out? Dan: Yes. Jay: What is the information you send out? The brochure, and what goes with it? Dan: Just the brochure. Jay: Do you want me to make you a lot of money? Then also put in a letter, which should be personal from you. It would say something like this: “Mr. Smith, 123 Clinton Street. Here’s the booklet I promised. Take a look in particular at the example on page four and five. What the booklet doesn’t tell, in my opinion, after doing this for 15 years, is the enormous sense of improved confidence and contentment that seems to evolve with somebody after they’ve had our hair replacement service. I’ve done, so far, 1,000 people in the last 15 years. As you probably know, we’re considered the highest quality of all the hair replacements, so we tend to deal with the people who perhaps are the most discerning. The ones who insist on having their hair look natural, who are very socially involved, to whom appearance is very important. I don’t know your need, whether it’s cosmetic, or whether you want to look younger, or whether you want to have more self-confidence. I can tell you this, though: we probably are better qualified to help you effect the desired physical appearance result you want than anybody else is. “More importantly, you can call me privately or you can come in. We can do it very discreetly, and can do it after hours and on weekends—whenever your schedule allows. I’m willing to really be flexible for you. You can ask me the most probing and intimate questions. You can ask me about our competitors, you can ask me about all the other alternatives, you can ask me what I think of it.” Do you wear one? Dan: Yes. Jay: “I’m wearing one as I write this. I will show you actual pictures. Fortunately, we have such customer satisfaction, that I’ll let you talk on the phone to three or four or five or 25 or 26 of our past satisfied

customers. You’ll meet them in the salon, you can ask them the most probing questions. Then and only then, once you’ve satisfied yourself that it’s the right decision, would we want you to consider favoring us. “But the one thing is, by the mere fact that you’re calling, you’re concerned. You’re interested in finding an alternative to male pattern baldness. Sadly, as we talk right now, there’s no medical alternative, although I wish and hope and pray that they don’t put me out of business while they develop one. In the meantime, if you want to look your best, if you want to feel your best, if you’d like to gain confidence and cosmetic enhancement, you really owe it to yourself to check this out. Again, my number is this and my normal hours are such and such, but because we’re committed to doing this, not just to make the money but to help people enhance the quality of their life, I’ll make myself available whenever its convenient for you. And there’s no obligation. Please give me a call if you think we can help you. If you’re not sure, it’s all the more reason to call.” Do you think that would help? Dan: Definitely. Jay: I may have made you a lot of money just by telling you that. It’s a shame: a lot of times the people who sell franchises and distributorships, they don’t understand how to get the word out. By the way, after you send the brochures out, what do you do, anything? Dan: Try to call in 2-3 days. Jay: If that doesn’t work, what happens? Dan: Try to send them another piece of mailing. Jay: What does it normally say? Dan: “We sent you a piece of information, and we would like to send you another piece of information.” Jay: The next letter goes out. A week or two goes by. He doesn’t come in and he doesn’t call. A letter comes to him from you. “Dear Mr. Smith: I’d like you to meet a friend of mine. His name is Bob Schmidlapper. He’s a very prominent man in this town. He’s a friend of mine. He’s also a very, very satisfied customer. When he came to us three years ago, he was perplexed, because he had a particularly acute case of male pattern baldness—an erratic pattern, not just the typical symmetrical recession. There were globs in the front and back, and he has a particularly pronounced cranium. He knows I’m writing this letter, and he will be the first to tell you how happy he is with the cosmetic and visual changes that came to him thanks to the work we do. He says we’re artists. I just think we’re doing for him what we do for everybody. “I wanted to tell you a little about his story because it’s so indicative of what happens to people after they experience our hair replacement. Bob Schmidlapper, for example, has married, and his social life has improved. He has received two raises, and they’re attributable to the hair replacement. He’s been promoted now, he’s assistant vice president, and his married life has improved, his wife finds him more attractive. I can’t promise all that for you. You may not even be married. I can tell you this, though: you’re really making a sad mistake if you don’t at least explore it more, which is why I wanted to introduce you to my friend Bob Schmidlapper. “You’ll find, in the lower right-hand corner of this envelope a picture of Bob. Take it out. Handsome devil, isn’t he? He’ll be the first to tell you that he was very self-conscious before he came to our studios. If you have any questions, Bob has said that you may feel free to call him at any Saturday you want. He’s usually home between 10—5; here’s his number. Ask him any questions you want, then I seriously encourage you, if at all possible, to come in to the salon. Let me show you pictures of 100 other Dan Schmidlappers whose lives have changed, who are much more fulfilled, who have infinitely more selfconfidence, whose social, personal, and romantic lives have been enhanced.

“Can we help you? Maybe, maybe not. I think you owe it to yourself to at least talk. We may be able to do wonders for you, but find out at least. There’s no obligation.” You can’t tell me, Dan, that that kind of letter won’t work wonders. Dan: It sounds good. It’s so tough to push them over the hill sometimes. Jay: That’s why you have got to play the numbers. The first thing I would do is assemble all the names of all the people who came in but never bought, I’d send them a letter, in a style not unlike the one I just indicated. Say, “I’m writing because I’m worried. A long time has transpired since you and I last talked. Back then you’d seen one of the ads we had in the various publications for our hair replacement, and you asked a few questions and asked me to send you a brochure, which, of course, I did. What I didn’t do is tell you a lot of things I think are really important, and I feel bad about that. I didn’t tell you, for example, that of the people that we’ve done hair replacement for—and by the way we’ve done it for over 1400 people in the last 5 years alone—90% report dramatically improved self-confidence, 50% tell us that they perform better on the job, 80% tell us their romantic life improves, 95%, for some inexplicable reason, lose weight, and get firmer—I don’t know why, but their whole body takes on a different glow and a different posture. They seem to be visibly, measurably, demonstrably happier and more fulfilled, and their quality of life seems to take off. “Will that happen for you? I don’t know, but I think it’s tragic if you don’t have the chance to find out more, which is why I’m writing. I am hoping that the reason I haven’t heard from you is that you went to somebody else and got one—not that you just deferred and put it off this long. Because if you have put it off, you may have sentenced yourself to 6 or 8 or 9 or 15 months of unnecessary whatever that we could have resolved.” You might send a letter to everybody right now and say, “I’m writing this letter to you, Mr. Smith, because I wanted to make you an offer which I thought you might want to take me up on. If you call me in the next three days and my schedule allows it, I can have your new hairpiece ready, cut, and styled, and have you sporting the fullest natural head of hair you could imagine in time for Christmas. I thought you might want to give yourself the best Christmas gift of all. I can have your new hair ready and styled, and you can have the fullest, most natural, most wavy, fully styled head of beautiful hair. Not only can you go into the new year with great confidence and pride, but you can be assured that Christmas will be a wonderful time for you. I’ve got to hear from you within the next 5 days if you want to take me up on this offer, because it’s going to really be pushing it. But I promise you, if you call me before such and such date, I will have your hair for you before Christmas.” Dan: Do you think I should send that to the customers I have? Jay: Absolutely. That was my next question. Send a letter. How many do you have? Dan: About 300 on file. Right now, we have 150 in service. Jay: I would write all 300 of them a personal letter. You might have it sent by something that looks very special. It might cost 50 cents or so. “I want to give you the best Christmas gift possible. I want to give it to you 2 different ways, Mr. Smith. First, I want to give you, because you’re a valued past customer, a $100 discount (or some kind of inducement), and second, I’m going to promise you that I’ll have your new head of hair ready for you to wear in plenty of time for Christmas. The reason I’m writing you is that I know we’re going to be besieged, so I’m giving first rights for the next six weeks to our valued customers, amongst whom you are. But you have to respond to me to set up your styling on or before such and such a date, because if you don’t I can’t promise you I’ll finish. If you do, I’ll promise you two things: (1) you’ll have it by Christmas, and (2) you’ll get $100 off. In case you’re wondering why I’m writing to you: you may not even realize that a good job lasts three years, and it’s been five. (By the way, our newest versions are designed to last seven years.) As great as your piece is, frankly, wait till you see the new ones we’ve got, the hair is even more natural, and is easier to work. At the very least, you probably owe it to yourself to come in and see for yourself. I’ve got pictures, I’ve got actual models, I’ve got all the details, and you can

ask any question you want. But it’s important that I hear from you either by phone or by person on or before November 21, in order to be able to fulfill my promises.” I think if you do that you’ll be besieged. Dan: I think I could probably pick up ten or twenty sales out of that group, which is a good amount. Jay: Yes, it’s ten or twenty thousand dollars—not bad. Dan: They’re probably going to buy eventually anyway, but it might motivate them to do it now. Jay: For the ones that come in for regular services, what do you charge them and how do you do it? Dan: From $15 to $45. Jay: And at what frequency do they come in? Dan: Generally three weeks to six or seven weeks. Jay: What do they have done? Dan: We clean the unit, shampoo and style it and whatever else is necessary, put their hair back on, and make sure they have adequate products for the next month. Jay: How many people have you done since you set them up, hundreds? Dan: About 1,500. Jay: Of the 1,500, how many do you think are still in your area? Dan: That’s the part of the problem. It ends up being a high rate of attrition. They move out of town because they’re motivated people. Probably 1/3 are still in town. Jay: So, that would probably be around 500. How many do you have coming in regularly? Dan: I would say 150. Jay: And that’s because of what? Where do the rest of them go? Dan: Again, our attrition is awfully high. 35 to 40% of the people that buy here quit wearing hairpieces in six months or a year. Jay: Because they don’t like it? Dan: Right. If we sell to five or six new people, four will be wearing their hairpiece in six months. Jay: The ones that give it up, do they ever bring it back or do they just abandon it? Dan: They hardly ever return it. It’s almost an impossibility. Jay: Because they feel too awkward with it? Dan: Yes. It just wasn’t right for them. Jay: Is your piece done with a net, and do they wear it all the time? Dan: We have some where you put it on and take it off, but 60% are permanent. Put it on and attach it.

Jay: So, every few months it gets loose. Dan: That’s right. Jay: So, the ones that still have it but don’t come to you, where do they go to? Dan: Well, the only other thing they can do is to not have it permanent, so they can take it off. Jay: And that’s not the good kind is it? Dan: Well there’s no difference in the structure. It’s just that people have a tendency not to want something that you can put on and take off. Jay: The one that’s more permanent, can you swim in it and shower in it? Dan: You can with the other one, too, if you want to. Jay: Are they fixed that strong? Dan: Sure. Jay: What do they use? Dan: Well, we use a clip arrangement, where we clip it into their growing hair. It’s clipped until you unclip it. Jay: So, it’s relatively permanent, but as the hair grows out it gets loose. It would be worth trying the following. This isn’t for the 150 that come back regularly. Take the 300 people that don’t, and send them a letter offering a wonderful inducement to come back to you. What’s a wonderful inducement? How about the first three months at half price? And you tell them why. You tell them that quite frankly, you want them back as a regular maintenance service customer. If they’re not going to you, they’re going to somebody who isn’t properly skilled, and their appearance is suffering, because the maximum impact and effect of the hairpiece is not being realized. It’s shameful if they spent all that money on that when, in many cases, for less than they’re paying right now for an unskilled and potentially dangerous but wellintentioned stylist to work on them, your technicians, who have been expertly trained, can style their real growth and make it meld and blend perfectly to their hairpiece. The only way they’re going to realize the difference is to try it out for a while, and the only way you’re going to induce them to do that it is to tell them “O.K., we’ll do it the only way possible. We’ll shamelessly bribe you. For the next 3 months, we’d like to style your hair once every 4 weeks for half the normal price. Or if that’s not sporting enough, you can have the first style on us. You can take your choice.” Dan: That’s why I put that ad in the Cable Guide. Jay: That’s all right, though maybe it’s not read enough. Besides, in that ad you’re asking the wrong question. Try it again and ask a different question. Don’t say, “You had your hair replaced”—tell them what the offer is. “If you bought your hairpiece from any of these people, we’ll service your hairpiece for the next 45 days for four visits absolutely free, no strings attached. Quite frankly, we believe when you see the quality of styling, cosmetics, fitting, and conscientious attention that our personal touch affords, you’ll never again go back to your other supplier. We can make the claim and ask you to risk your money on us, but we decided the most compelling way is for us to risk our money on you, with the knowledge that the only way we’ll be able to get our money back is if you keep coming. “You’re not going to keep coming unless we can perform demonstrably superior cosmetic styling and service for your hair. Here’s the offer: come in and set it up. You cannot be a regular customer and take

advantage of this. Preferably you would have had it done by this person or this person or this person. But there is a catch. You must be able to come in three times over the next 45 days, or you won’t appreciate it. You have to come enough times so you see it. When people start saying to you, ‘Gosh, Joe, what did you start doing different with your hair?’ or “Boy,did you lose weight, Joe?’ or ‘Boy, you look younger today Joe,’ you’ll start seeing the visual evidence by the favorable comments you get from your friends. Then we’re relatively confident that we’ll start getting your business from then on.” That’s a little more comfortable, don’t you think? The problem you face, though, is that you need to reach the needle in the haystack. Dan: That’s really what it is. That’s the sad part about it. It’s such a small market that 98% of the advertising dollars we spend we’re blowing away. Jay: Try this: Get a list of all the subscribers to Gentlemen’s Quarterly, Esquire, maybe Playboy or Penthouse. Read the back pages of those magazines, and contact everyone who sells books on the subject, or vitamins on the subject, or whatever’s related, and ask them if they would sell or rent you the list of names of those people they’ve sold to within your area. Suppose you went to all the mail order wig and hairpiece people and said, “Look, you already sold to them. Can I buy the list of names from you?” Do the other guys sell over and over again? Dan: Yes. Jay: Well, you might try some other daring things. You might even try a hot line with a recorded message. Run a little ad in the various locations, saying, “If you have had hair replacement done by Joe, call this number for a free message, If you have had hair replacement done by Kerry, call this number for a free message. If you have had hair replacement by Michael, call this number for a confidential and free message.” In that message talk about the different techniques. You don’t knock them, but you talk about your technique and offer them a proposition. You tell them (because they may not know) that people typically buy a new hairpiece every three years. If it’s been three years, you can offer a trade-in allowance. It might be fun to try. You may have hair replacement wars. Dan: That bothers me, stirring it up like that. Jay: If you guys were the victors, imagine how interesting it could be. You have to make sure to have your attorneys look at it, but if you want PR, the best thing in the world would be to get an article in the paper, an article so daring that it would be noticeable. Or, if you could do an ad that was so provocative that you got somebody at the paper or on the radio to talk about it, wouldn’t that be great? Now, something else. Let me tell you another way to find these people. You might quasi-author a book or a report on, “Is there a cure or alternative to male pattern baldness?—Special report, $3.00.” Run that in a little ad every Sunday in all the papers, and see if you can sell enough of them to cover your costs. Dan: Sounds good. Jay: If you do cover your costs, you’re getting all these people for prospects and it’s costing you nothing. Right now it’s costing you $300 a sale, but if you ran those ads, it could be free. You could try the same thing on the radio—a 30 or 60 second commercial. Go to a radio station and say, “I’ll give you a commercial and a book to sell.” What if you wrote a really good book whose conclusion was that there is no alternative, the best thing is a wonderful hairpiece, and you went to the radio station, and to magazines, and to people like the Cable Guide, and said, “Run this ad any time you want. Have all the orders come to you, and you keep 100% of the money. Give me the names and I’ll send the book out at my expense. We’ll offer a money-back guarantee, and anybody who wants a refund, I’ll pay them out of my pocket and you keep all the money.” Those would be the best leads on the world, wouldn’t they?

Dan: I imagine they would. Jay: And if that works, you take the same concept and sell it to all the other franchised people. Make them each pay you so much royalty or so much a month or so much a quarter to use the concept. Are you getting some good ideas? I’m interested in marketing logic, and some people want it to be more high tech. It doesn’t have to be high tech. If you’re going to run ads, experiment. Sometimes larger ads don’t produce their necessary cost. Sometimes, if you take a 1/6 of a page of ad, add content, and run it in the 1/4 of a page size, all you’ve done is increase the cost of your leads by 20% or 40% or 60%. You should experiment. Your existing ads don’t really have a lot to say. I would take 1/2 of the space and try a lot of different headlines. The next time that national franchised ad you mentioned is on, record it on cassette. Take the cassette to a transcription service and have the transcription service type it out double and triple spaced. Double space between sentences and triple space between paragraphs. Read it over thoroughly. That’s generated $40,000,000 dollars, so look at the copy. There’ll be phrases you can turn into headlines, there’ll be approaches and phraseology you may want to incorporate, you’ll probably have 10 different experimental ads right there. Makes sense, doesn’t it? Dan: I know that they’re getting a lot of response from that. Jay: Look at the people who are selling things by mail. Cut out every ad that you see. I’d buy every male magazine. I’d send away and read all the literature of all the people who are not selling by retail, but are selling by mail. The people who are selling vitamins. Look at their headlines. Appropriate their headlines or derivatives of them. Dan: I know that there is some doubt about that advertising. I think our TV commercials are very good, and they get a very good response, but we also get lost and I think that somehow... Jay: Do the commercials run nationally? Dan: They’re nationally-produced commercials. Jay: What do they cost you to run them? Dan: It depends. I sometimes will run a blitz. We have an independent station that runs a lot of movies, and I run some Sunday shots where I can get a package for $270 for a whole day. Jay: What does a lead cost you? Dan: It’s getting more expensive all the time. It’s probably $20. Jay: Go to every TV station and radio station and tell them, “Here’s my commercial. It offers a booklet and information. Whenever you have unsold time at the last moment, here’s a letter of authorization from me for you to run this commercial with this designated phone number, or a service which I’ll set up and pay the cost of for you. Every time you generate a prospect, you’ll get a $10 bill from me. I won’t buy advertising, but I’ll spend $10 for every prospect you get for me.” Dan: Will they go for that? Jay: I don’t know. You have to try it. Say, “Here’s the commercial, here’s an agreement that tells you what I will do. I’ll pay you every Friday, or I’ll pay you every day. You may designate the answering service of your choice as long as they’re competent and the leads are given to me promptly, because the leads need to be worked fast or they’re of no viability to me. You can run them as often as you want or as infrequently as you want. Every time you have unsold time, run this commercial and have the inquiries come to you, and I’ll be glad to give you $10 every time you generate a bona fide lead.”

Dan: I might give that a shot. I have everything to gain and not too much to lose. Jay: You can apply the same thing to anybody. Give them your commercial, or give them your ad and say, “Look, any time you want to run this, have the requests come to you, and we’ll give you $10 for every brochure request you generate.” Think about offering a free discreet brochure. What if you go to every organization and offer them, to put in their next membership mailing, an ad for a free booklet. That booklet I told you to write. What if you offer them a $10 book free, as a service from Dan’s. It’s a $10 or $20 book. Dan: O.K., what do you feel about advertising in the Yellow Pages? Jay: I would imagine that for you it’s probably better than it is for most people. But I would imagine that an inconsequential part of your business would come from there. Are there a lot of people competing for the hair replacement market in the Yellow Pages? Dan: No, there’s just one. Jay: Is he big? Dan: No, not really. Jay: Who is he? Dan: He’s someone that’s been in the hair business for many years, but not doing hair replacements really. Jay: What does he do? Dan: Just a hair stylist. Jay: I think if you have a guy going out working stylists that would be very good. You’re selling a result. Is this the Yellow Page ad they gave you? Dan: No, an artist did that. That ad is bigger than I had before, and it’s done pretty well for me. Jay: Well, it’s good positioning. If you could do this inexpensively, it could pay for itself. Do you want to make yourself a celebrity in your own time? Dan: Sure. Jay: For a few thousand dollars, produce a half-hour informational commercial which is similar to the stuff Young Generation is doing. It’s a simple interview where you bring in 12 or 15 people who aren’t afraid to be seen and to talk about the before and after. If all your customers are afraid to be seen, get people from outside the market who you could pay $100 to come in and do it. Dan: The national franchise is supposedly going to do that. Jay: I’m talking about a special with you being the star. The satisfied customers talk about it and ask you questions, and you talk and you’re informative. You’re the personality. In between segments, there’s the commercial. The commercial is for you, and it may cost you $2,000 or $3,000 to do it, but if every Sunday you buy 1/2 hour on the independent, and you run it for a couple of weeks, it could be incredible. Dan: It’s possible. Young Generation and the other places must be making it pay.

Jay: They don’t keep re-running that stuff if it doesn’t work. It’s clearly paying all the production costs, and paying for the exorbitant costs of all the cable time. It’s making a profit. What if you had a half-hour show and entitled it... What is Young Generation calling it? Dan: I don’t know. I’ve seen the one from Young Generation, and I’ve also seen the one for the Stockholm formula. Jay: What you ought to do is record all that on your VCR and transcribe it and read slowly what they’re saying, because that stuff works. Look at every ad. Because that’s carefully and ruthlessly edited stuff, and that’s what you need. Want to ask one more question? Dan: What is my Unique Selling Proposition? Jay: How’s this? “A full rich head of beautifully styled hair, natural looking hair,” something like that. You’re selling realism, aren’t you, at a price that anyone could afford. A full, rich head of natural looking hair. When people come to you after they’ve talked to your competitors, what phrase, what analogy, what approach do you employ to get their business? Say it in a paragraph or less. Dan: I try to tell them that hair replacement is only as good as the people that stand behind it and care about it to make sure it really looks good and to teach them how to take care of it. That’s what we’re interested in doing here. I’m trying to stand behind it and help them as much as possible. Jay: How’s this: “You can have a full, rich head of natural looking hair in a matter of weeks at a price that will surprise you,” or something like that. Maybe the price isn’t even important. Isn’t that what you’re really selling? Dan: We’re basically selling an image, and we’re trying to change their image of themselves. Jay: Somebody ran an ad one time that made a lot of money. “Have your stomach be rock hard and lean in a matter of weeks,” and that’s all they said. It was so powerful for somebody who had a gut on them—all of a sudden they saw their gut pairing away and a rippling of muscles. It was 4 or 5 visually graphic words. In the same way, try “You can have a full, rich head of natural looking thick hair in a matter of weeks at a great price.” I think that may be it. * * * * Are you wasting advertising dollars by paying to get your message to a large number of people who aren’t potential customers? If your product has an audience that’s in any way specialized, see if you can find ways of getting your advertising to that audience alone. The best way may be to get mailing lists that are likely to reach those people, and send letters to them directly. Offering incentives for referrals is one way of doing joint ventures. Inspire people to enter into host relationships by arranging it so that they’ll benefit from your success, and then pointing out, in concrete terms, how much they stand to gain.

Fine Soaps The knowledge that came out in this consultation is so powerful and so universally applicable that I could call this transcript, “A Short Course to Entrepreneurial Success.”

Dale, a computer expert, wanted to make extra money by selling fine soaps through department stores. But he was about to make a mistake that has wrecked many an entreprenuer: entering into a joint venture that would have left him practically enslaved if he succeeded and bankrupt if he failed. In this consultation, I suggested a better way, including how to get other people—mail order companies, retail stores, sales reps—even more motivated to sell your product than you are. Whether you’re looking for market penetration for your product or for good products to bring to market, if you’re an entrepreneur, you should read this transcript. * * * * Jay: How much capital do you have to deploy, and how much time will you spend? Can you give me an overview of that? Dale: I think I can do it part time, at least in the first phase. I have about $10,000, which should get me enough soap to do some testing. Jay: Your soap smells very nice and is packaged nicely. Is there much more of it in inventory? Dale: No, we don’t have much inventory, but we do have enough to show at any kind of trade show. Jay: You told me about the three people that are your competitors. Does your soap look as nice as theirs? Dale: It’s pretty close. It’s pretty good. Jay: If $6.00 or less is what it would retail for, what would your cost be on it? Dale: About $1.25. Jay: So you would sell it to the retailer for what? Dale: $2.50. Jay: That, it would seem, is one of the points I have to get straight. There are many different ways to do it. It sounds as if they’re planning to keep the price high, but to give a lot of it back in the form of discounts or promotional allocations. Dale: The question in my mind is, who am I selling it to? I have to sell it to the retailers. Jay: Go over for me a little more of what you’ve learned about them. You said that one department chain does a great job, which no one else does, with display units, but that two or three people have their own retail stores and do very well. In normal retail distribution, if I go to my premium department stores in the area and go to the soap department, they would have displays of the two or three competitors there. Dale: They won’t have number two. They might have number one. Number one has its own stores in all the major malls in my town. It’s a little shop, and they sell their soap for $8.25 for three bars. Jay: And would you be selling this six-pack for $6.00, or would it be three bars for $6.00? Dale: The latter. The six bars would be quite a bit more. The 3-pack would be the biggest seller. The other items are supporting items, but they would sell for about 1/3 as much retail. That’s the experience these other people have had. By the way, none of these companies advertise.

Jay: I noticed that and that’s interesting. So they have no real expenditures? Dale: No, they just do it by shelf space. Jay: You said that somebody was hoping to get a lot of displays in the catalogs. Dale: They indicated that. Jay: Have you thought about that? Do you have any marketing acuity yourself? I noticed that your background didn’t lend itself to that. You said you were interviewing a lot of sales and marketing people. How has that been going? Dale: Well, one guy sounds kind of interesting. I’ve eliminated several people. There is one guy up in New York who has some experience, and used to work for one of the major soap makers, and has contacts in some of these stores. He is interested. Jay: What did he say when you interviewed him? Did he give you a lot of insight into the market? Dale: Yes, he did. He said that one of the problems was that stores who have to train their customers to pay $8.50 for three bars of soap won’t be really interested in training them to spend $6 for three bars of soap. Jay: How have you found the people you have interviewed so far? Dale: I have looked around in my immediate environment and I have this one guy who sounds interesting. He was recommended by the designer of the soap. He wants 5 to 7%. Jay: Of your wholesale sale. Dale: Of retail. Jay: Of retail. That seems very high. I don’t know the industry very well. Is that industry-wide? Dale: I think it is. Jay: Before that, what do you get from him? You get the formulation. Dale: I get the entire North American market. Jay: But what you’re buying is the right to something that isn’t really successful yet, right? Dale: Correct. Jay: And for that, if it sells for $6.00 and you give him 7%, you have to give him almost 50 cents, which is approximately 20% of your wholesale sales, isn’t it? Dale: Well, that’s true. I know he would be very flexible along those lines. In the early stages he would be willing to defer it. Jay: That’s admirable, but by deferring something, you could end up owing him a cumulative $500,000, so you’ll have made nothing. I’m not impugning his motives or integrity, but I want to give you great counseling. Dale: I see what you’re getting at, and that thought has crossed my mind. Jay: He could win irrespective of what you do.

Dale: So what you’re saying is that somehow he has to be rewarded for his efforts, too. Jay: What I need to explore with you in this consultation is the intellectual value of the property you’re buying—how valuable this design and this product is. If you went out and had it formulated as a new product, and had a soap miller mill it for you, and had a designer design a new product, what would that cost as a one-time investment? Compare that to what you have to pay this designer if you make his soap successful. It’s one thing if you’re buying a million dollars of inventory for $100,000 on a deferred basis, or if you’re buying a business whose product is well ensconced and gives you its good will and customers—but this is something else. What you’re buying, it sounds like, is the privilege of being indentured to somebody forever, in exchange for you making it successful at your risk. But maybe I’m wrong. Dale: I see what you’re saying. Jay: I think what’s worth pursuing is my giving you instructions on how to be sure that on this or any venture you go into, you’ll be well ahead. I think that information could prove invaluable. By fine-tuning your perspective on relative contributions to the success quotient, I may give you a perspective that will serve you very well forever. That’s probably invaluable to you. We may or may not determine to go ahead with the soap, but I want you to understand, my goal is to give you great advice, so I’m going to give you a way of thinking that should endure and sustain you forever, irrespective of whether the soap is your winner or you walk away from it. Dale: All right, fine. Let’s continue. I just wonder whether this couldn’t be handled simply by making his cut a part of net profit. Jay: Absolutely. Or gross profit—but on a basis where you can’t play any funny games and neither can he. What are you really buying? You’re buying the right to the product formulation, and the packaging. Does the packaging already exist somewhere? Dale: Yes. I guess the attractive thing about it is that it only takes a phone call to Japan to order it. Jay: Packaged? Dale: Right. Jay: And the packages costs how much again? Dale: $1.25. Jay: And in what minimum quantity do you have to buy? Dale: Well, right now because of the dollar/yen ratio, the manufacturer is also acting a lot more flexible, so they have offered to do a small run for us. Jay: Is it a large company? Dale: Yes. Jay: Is it a large enough company that you can go to them and ask them to partner with you and put up front money, capital, so that they will have as much to gain as you will? Dale: They have not been willing to do that. Jay: You’ve asked them?

Dale: The designer has, yes. Jay: Is he a good businessman? Dale: I don’t think he is, no. Jay: What you ask isn’t as important, frankly, as how you ask it, you know. A lot of times people blow this. The question to ask the company is, “What would it be worth to you to have 100% of the wholesale sales on a $13,000,000 business that would endure forever? Is that worth your putting up $50,000 right now, on the condition that if we make it successful I’ll pay you back, and if we don’t we’ll relinquish the rights to you?” That’s a very interesting proposition isn’t it? Now, who has the rights? Dale: The designer, Jim. Jay: Tell Jim that his deal is no longer 20% of your gross, it’s 25% of your profit. And state clearly how profit can be defined. “Profit very simply, Jim, is revenue minus the hard cost of the product, the hard cost of warehousing, real sales cost, and real promotional expenses. If we’re making gross profits of $100,000 a month, you’ll get $25,000 a month, Jim.” What you always want, in my opinion, is for anyone you deal with to have more to gain by you becoming successful than you do. It would seem like this company in Japan would have a lot more to gain by you being successful than even you. Does that make sense? Dale: Yes, and I will continue to... Jay: You can’t just do it capriciously. You have to put it together strategically and pragmatically. You want to be, I presume, an entrepreneur. For the next few minutes I’m going to give you an idea of what you really have to do to succeed as an entrepreneur. You will find that deals like this are probably a dime a dozen. You’re going to find, all over the country, viable-sounding products and concepts that are already done and that you can take over for a penny on the dollar. The crux of what you offer and what you will contribute is the ability to bring it to fruition and perpetuate it and imbue it with life. That’s the hardest part. Do you understand that? Dale: That’s the part I’m interested in. Jay: The point that I want to make to you is that that ability is applicable to anything, not just soap. You’re better off going to somebody else and having them risk the money on you so you don’t spend your $10,000 and have nothing left. If you can’t find anyone, don’t beat your head against the wall. Instead, I’ll show you how to look at 500 deals a month, how to get people to write you, and how to use your $10,000 to find more deals than you can imagine, and by putting no cash in but using intellectual capital. To make yourself wealthy without much risk is really what you want. Soap happens to be the vehicle you’re looking at, but maybe it will work and maybe it won’t. How old are you? Dale: 36. Jay: Married? Dale: Not married. Jay: Okay, no obligations. So you can really dedicate time without messing up the destiny and fate of some loved one. You’re uniquely endowed with the time you need to really do a lot of things. How much time do you have?

Dale: I just work a regular week. Jay: So you have evenings and weekends available without any sweat, and you have $10,000 in capital. Well let’s talk about you and Jim one more time, and then let me give you some thoughts. First of all, the most intelligent thing you can do is to leverage everybody else while you just be the catalyst. If you could take, out of your $10,000, $1,000 to form a corporation where you had 75% and Jim had 25%, everybody would have more to gain. You have to see to it that everybody playing will gain by your being successful. Then you’ve got leverage. Everybody is going to work like mad to help you, instead of you working like mad to their advantage. Does that make sense? Dale: Yes. Jay: So first thing, tell Jim that by putting his rights to the packaging into the corporation, he gets 25% of the net profit. Write a formula as an article of incorporation or as an addendum. Talk to your attorney (and get a competent attorney who’s going to look out for your best interests). Instead of giving Jim a royalty from the retail sales—because again, deferring payment of it sounds benevolent, but he can always throw you into Chapter 11 and take over when you don’t pay your bills—you want to have him tied to your net results, and you want him to be motivated to help you do very well. If he assigns his copyrights or his royalties or rights to the corporation, then you could go to the Japanese company. Or maybe some other company; maybe the advantage the Japanese company has isn’t that significant, and some local milling company would be better. You approach whoever is approachable and tell them that you have a product which you think can compete head on against these other ones. It’s a $13,000,000 or $9,000,000 or whatever kind of business. If it just did that much, it would make X amount of money. Offer them the chance to be your sole supplier, in exchange for advancing you enough money to do the job right. Tell them you would like them to advance you money, and to let you produce the first orders on a deferred payment basis. Tell them that you’ll pledge to them the first profits to pay their money back. If you don’t do a minimum volume over a finite period of time—maybe 12 months or 18 months— they get the rights to the product and the packaging. All of a sudden, Jim has more to lose by your not succeeding than even you do. Right now, you’d lose $10,000 and Jim might not lose anything. The other way around, he’d have his percentage on the line, so he’d be motivated to help. Dale: So basically, clean up the relationship with Jim. Jay: Yes, so that he’s not going to gain when you lose. In fact, if he puts his royalties into the corporation, then if you mess up, he messes up more, so he’s more invested than you are. Dale: Aside from fronting us the product, we also are going to ask for some money from the manufacturers. Jay: You’re going to say. “Look, I’m willing to put in the following.” Tell them what’s unique about this product. Is it really well formulated? Is there something about this product that’s worth a lot? In other words, what would it cost me to replicate this product from scratch? Dale: I don’t know. $60,000 maybe. Jay: So what Jim is putting into the pie is $60,000 worth of dyes, packaging, and formulation, right? So if you go to a soap company, you could tell them that’s what you have right now. Is it quality stuff? Dale: In my opinion it is. Jay: Are you knowledgeable enough that your opinion is meaningful? Dale: No, but I do have access to people who are. Let me just ask you something real quick. This question about whether it really is better than anything else bothers me a little bit. Soap is just soap.

Jay: I understand that. You have to decide for yourself. Even so, you’re better off if you can be in the soap business tomorrow and not have to pay a dime to Jim or have him with a great advantage over you except that he’s already wasted his money. If what you’ve got here is infinitely valuable, that’s something else. Try to discern what you really have here. You have $15,000 worth of packaging spent, you’ve got some formulations which may or may not be that valuable. The packages are charming. The carrier pack isn’t that impressive to me; the logo and everything look like they could be vastly improved. I like the floral and the English looking packaging on the boxes, but the carrier box doesn’t look that impressive. Dale: The 3-bar box looks a little better. Jay: I’m not trying to devastate you. I’m trying to help you see what you’re giving up if you make the deal. If you make the deal, I will also try to ask you, “What are you getting? Are you getting a wonderful product, are you getting a wonderful design?” Dale: I think it’s good. I’ve given it to women friends of mine and they seem to like it. I’ve gone into the stores and looked at the competition and ours seemed pretty good by comparison. Jay: Let’s talk about the competition. How, again, are all the other products marketed? One, we know, is done through their own stores. Do those stores sell a whole lot of other products, or do they just sell soap? Dale: They sell other products. I should probably point out that one of them got started in mail order. They started with a store front but they turned it into a mail order catalog. Jay: You talked about that in your letter. I was going to suggest that you might try a mail order approach. You talked about a line of products. My recollection is 15. Do they exist or is it just the soap right now? Dale: When I said 15, I meant 6 fragrances of soap, 6 fragrances of gel, that makes 12, plus the gift pack, that’s 13, plus another kind of gift pack in a basket, that would be 14 and then a potpourri, that would be 15. Jay: But do they exist? Dale: No, but they could exist pretty easily. Jay: Does he already have the designs and formulations?. Dale: Yes. Jay: It’s possible that you could go to mail order companies, and with or without the financial assistance of a supplier, offer them the product at a certain price percentage. Let’s say you offer it at half. You offer it to be retailed at $9.95, and perhaps you offer the 6-pack to be offered at $15.95, but you give them a marketing allocation allowance. This is not just giving them a 15% reduction. I would do the opposite. I would mark it up based on the price the market will bear, not less, but I would give $2 or $3 a package back to them in advertising allowance. Am I confusing you? Dale: No, basically you’re talking about how to approach a mail order pitch? Jay: Yes. You go to them and say, “We have a product we think is unique.” Dale: Are they going to offer it at those high prices? Jay: You sell it to them at a certain wholesale price that you know they’re going to double. It’s based on whatever the retail market is, not on what your cost is. Maybe you’re price positioned to be less, but

they’re just going to mark it up. In other words, let’s say a 6-pack of the competition would be $15 in retail, hypothetically, and let’s say the cost for a six-pack would be $3, and let’s say you could mark it where they could sell it for $10 and still make a profit. Instead, I’m suggesting you could keep it high, but you use a generous portion of your gross profits to add an allowance for them if they promote it aggressively in their catalog. For example, if they’ll agree to put a 1/8th of a page ad or 1/6th of a page ad or whatever size ad in the catalog, you’ll give them an ad allowance of $2 a set that they can take right off the top. This forces them to advertise your product. You’re better off forcing them to advertise to get the money back than you are just giving them a price reduction. I would go to mail order companies and offer that. I would also go to retailers and say, “Look, if you’ll take this product on, which retails for $15, our wholesale to you is $7.50. However, for the first six months, to help you establish the product for us because we want to do ongoing business, we will give you a $2 or $3 per piece marketing allowance as long as you advertise it, as long as you put demonstrators in the stores, etc.” Use some way where you can force them. Instead of giving them a reduced price and having it sit there and die, you take the price reduction and give it back to them in the form of ad allowance that will sell the product for them. Does that make sense? Dale: It’s a great idea. Jay: It’s so much smarter. Because you need advertising right now, give them an incredible ad allowance, but only give it to them after they promote. Go to stores that are logical adjuncts. For example, if one of the competitors has their own stores and they sell their own potpourri, go to potpourri stores and offer them the sets for $7.00, and tell them that if they’ll run an ad or do a special promotion—or some way that you can assure that it gets promoted, so there’s a high propensity that they will sell through and not just store in—that if they order from you, you’ll give them an allocation. As long as the ad is promoting your product, and you have pre-approval of it, you’ll give them $3 or $2 or whatever you allocate per set, per carton, or whatever kind of correlation you come up with. That way, they only get the money after they promote in a way that will induce the marketplace to come and buy. They’ll have to reorder, and that achieves your objective. There are also other possibilities. If the industry standard is 10%, if you were to get a rep to represent you, the angle might be to give the rep triple the industry standard. Dale: By the way, the deal you were talking about with Jim—could I include some type of a representative in a deal like that? Jay: As long as what you do is ethical, as long as it’s legal, as long as it’s trackable—so that everyone who’s involved can easily, without any argument or dispute, know who owes what to whom—you can do whatever you like. There are no rules. What you have to do, seeing as you are short on capital, is be long on incentive to others. Something else: Were I you, I would run ads in trade publications read by people who call on retail stores that sell your kind of products. The ads should say, “Manufacturer of decorative bath soap looking for representative for unique representation. Will give not only lavish commission, but actual equity in the company if you hit minimum attainments.” Start interviewing people, and don’t just go with the first person. Run provocative ads that are small. Use that $10,000 to run maybe $500 worth of ads in a couple of trade magazines looking for people. Say, “Manufacturer offers triple the standard industry commission, coupled with substantial equity option, based solely on performance. No capital investment ever required,” and then talk to a lot of people. Let people educate you. Talk to 100 people who are interested in the deal, tell them what you have in mind, ask them their opinion, ask them how they would do it, interview them rigorously.

By the way, success is nothing more than a state of mind. Do you know that? It’s an attitude that your product is incredible— you believe that the product you’re offering someone else is an incredible deal for them, and you convey it with an integrity of belief. Dale: I believe that, but it goes along with what you said earlier about strategy. You’ve got to have all your ducks in a row. Jay: But you’re not in any hurry. You’re better off tying up with Jim first. Once you’ve got that tied off, if the product is good, then approach a bunch of manufacturers on the contingent deal I told you about. Approach a bunch of representatives, and look for somebody who (a) already has a market, (b) has the ear of the market, (c) has ambition and is tired of making 5%. Salesmen love to get 30% of sales, and if a salesman does $1,000,000 or $10,000,000 the first year, and can get 5% of the company, why do you care? If you can leverage nothing into a lot, doesn’t it make sense to do so? Think in terms of what it suggests to you: You can apply it to any commodity you might want to get your hands on. You can run ads all day long and say, “Investor looking for viable products that didn’t make it in original effort in retail. Will consider taking product over, paying you generous commission and royalty, or giving you equity in the company.” If you ran those kinds of ads in the trade publications and in business sections of the newspapers—it would cost a couple hundred dollars a month—you would probably get solicited by hundreds of people who had products that for whatever reason didn’t make it. They’ve imprudently invested their $100,000, and now they have a garage full of dusty packages. You can take over the rights and give them interest in the business, or give them a royalty, or do the same thing you’re doing with Jim. If you look every year at 500 products that have already had the money spent but bombed at the marketplace, they may have bombed because they didn’t package it right. You find a way to make it exciting by giving more consideration to retailers than they normally make or giving double the commission to the reps. Do you see what I’m saying? Dale: Oh, absolutely. In fact, I would rather not be one of those people. Jay: Which people? Dale: The one that has the garage full of soap. Jay: The point is if you could look every year at 500 of those peoples’ products, you could pick and choose. If you found one that was promising, you could go to a manufacturer and made him a deal like the one I suggested to you for the soap manufacturer, and you could go to the reps and the retailers and tie up the rights to things. It’s a way of operating where you can leverage your knowledge. You interview the heck out of everybody. Instead of just looking for another rep, begging them to take your line, you took a whole different market, you take someone who could convince you that they’re going to be the chosen person who can triple market for your product, and give them the option of going high or low. Let me give you an example. I get $2,000 to consult, and I’ve had people pay it readily when they know me. For people who don’t know me, though, that amount seems high. In this offer you’re responding to, of the $1,000 you’re investing in me, probably 80% went to promotion and to what I had to give to Howard Ruff. I’ll make $200 if I’m lucky. However, I look on it as an investment. If I do 100 people like you, maybe out of every 10 people I talk to, I’ll find one that’s worth $25,000-$50,000 in ongoing consulting. Do you see what I’m saying? Dale: Well, right, I could conceive that in another year I’d call you back. Jay: Yes, but more importantly, if one way you can’t make it work at all and the other way you have to give up half your profit, remember that giving up half your profit brings you market penetration you wouldn’t otherwise have. You get retailers selling it, and you can put other products on the line for which you don’t have to give up half of your profits, because you’ve got the market penetration. Isn’t that worth a lot?

Dale: What I would really like to do is establish some credibility. Jay: Well, the best thing to do is to have enough money to do it. If you don’t have money, you create it out of sales. In other words, instead of selling it cheap when people want margin anyhow, you’re better off to go to people and say, “Look, this product sells for $15.00 retail. I wholesale it for $7.50 because I want to make it successful. I want the resales, I want to become a perennial and a mainstay supplier to your mail order catalog or your retail store or whatever. I’ll invest, for the first 6 months, $3.00 a set in advertising as long as the ads are approved by me and you run them. Admittedly, I’m not going to make much profit in the beginning, but it’s worth it to me to help you establish my product as a success and get a repeat customer base.” That sounds impressive, doesn’t it? Dale: I agree with that. I’m trying to think along those lines. Jay: O.K., but you need the margins to be able to do that. If you’re going to reinvest in them, you don’t just go cheap. If $8.00 is the wholesale price, use $8.00. If they’re spending nothing on advertising, you take the $3.00 a set you’d allocated, and go to an advertising agency and say, “Look, how would you like to have 50 cents for every dollar we ever sell forever? If you come up with great ads—you spec them, I don’t pay a dime for them, and I get the retailers to run them and pay it out of the sales—I’ll give you 50 cents for every dollar that comes from using your ad if it can sell.” Do you see what I’m saying? Get everybody motivated on a variable basis so you are the impresario of all these incentive-based people. That’s the incentive posture to take, don’t you think? Dale: That’s what I’m trying to do. I just haven’t quite done it. Jay: O.K., you’re 36. How many businesses have you looked at? I’m not trying to knock your enthusiasm off on this, but this may not be your only deal. You can impose this basic general philosophical approach on all sorts of different products. You can acquire the rights, and if you play the numbers right and you have virtually nothing invested but some ads, all of a sudden your company is nothing but a garage in back of your house or a rented space in a warehouse. Every time you find somebody who’s sitting with a million dollars of inventory that they can’t sell, you take it over and re-package the deal. You find a rep to whom you pay a lot of money, and also offer him a share in that particular business if he makes it successful. You sell it to the retailers. You find businesses where no one advertises and put up $3.00 a year (which you build into the thing anyway), to advertise it, and you find somebody who will create the advertising on a variable. Once you learn how to sell potential, it’s pretty exciting, really. Don’t think in terms of being rich or famous tomorrow. Think in terms of wanting to preserve your $10,000 and use it as judiciously as you can. To do that, look at as many deals as you can get your hands on, and arrange it so that the vendors and suppliers have more to gain by your being successful with the product than even you do. Don’t deviate from that until it becomes a really fun game you play. Play the numbers and don’t get emotionally frustrated if something doesn’t work. Just keep trying, but look for situations where you can take over, wonderful deals where somebody’s actually spent a fortune and then just hit it wrong or didn’t execute it properly. Keep in mind that there are so many opportunities. Federal Express, about one year ago, sold their Zap Mail business, a form of Federal Express which is like fax machines. They built it to $26,000,000 dollars, but they spent $100,000,000 doing it, and they were losing $20,000,000 a year, so they got out of it. But they gave the names, for free, of the 3,000 Zap Mail customers to someone I know, who set up an organization and is now doing about $8,000,000 a year, and making $1,000,000 whereas Federal Express was losing. It’s a state of mind, looking for the right reformable combinations, and it’s very exciting. Have I given you a more focusable strategy? Dale: I think so. You’ve generalized the problem. The strategy of exactly what to do with the soap is more focusable. At the same time, I have to question some of the assumptions behind my soap deal.

Jay: All I want to say to you is that while it smells very delightful and may be a wonderful product, don’t delude yourself into thinking that your friend Jim is the only opportunity you’ll meet. If you start looking for them, if you spend time and effort and capital in reselling a product that didn’t sell, you could probably every day buy good products that hadn’t sold from even big companies. You can find all sorts of people, you can find ads, you can write suppliers, you can get directories of people who are manufacturers and ask them who they’ve done work for, and you can go to lists of package designers and ask them if they know people who have done this kind of work, and if so, to refer them to you for a finder’s fee. Again, I’m not trying to talk you out of Jim, but you have to decide whether you want to be a soap entrepreneur or an entrepreneur. If you want to be an entrepreneur first and soap is only an opportunity to exploit, I think you should sit down and enumerate what criteria you need before you go forward with your precious energy and your limited capital. If soap is the thing, then I think you should use the rest of your time with me to focus on it. I’m just making sure soap is what you want to sell. Dale: Well, I want to be an entrepreneur and I don’t really care about soap that much. But basically, soap is the bicycle I’m training on and learning how to ride. Jay: Okay, there’s nothing wrong with that as long as the deal is structured properly. But with the deal you have—20% of your wholesale sales going to royalty, and no leeway for marketing, no leeway for mistakes—$10,000 will last you a very short time unless you’re very judicious. I think you’ve got to restructure your relationship first, don’t you? Dale: I do. That will be my first priority. Jay: I hope I have helped you philosophically. Dale: You have helped a lot. Jay: If you get control of the situation, there are so many products and commodities out there that I think it will boggle your mind. You can make your $10,000 go a long way if you start thinking of people who could throw products to you. Dale: It’s been a pleasure, Jay. * * * * If you want market penetration, or if you want to find good products you can market, put other people’s creativity to work for you. Remember, no matter how generous the advertising allowance you offer retailers for marketing your goods, or the share of net profit you offer inventors for letting you market their products, you’re not giving up a dime of your own. Instead, you’re making money for both parties. The way to ensure that other people are as enthusiastic as you are in moving your product is to structure the relationship so that they have at least as much of a stake in your success as you do. If you win, so do they. And if you lose, they lose, too. Retailers, catalogs, business partners, employees, sales representatives—they’ll all perform at their best when their returns depend directly on their success.

Stop-Smoking Program Calvin is a research scientist who has spent years studying the smoking habit. He has developed a stop-smoking program that helps people quit in just ten hours over ten days—with no willpower or withdrawal symptoms.

When he met with me, Calvin had not yet begun to actively market his program. He was looking for ideas on where to begin, what to do, and what to look out for. I gave Calvin a whole bunch of dramatic offers and guarantees he can use to test-market his product. I also identified different markets, including various affinity groups, that could have an interest in his program. If you’re bringing a new product or service to the market—or if you’re on the lookout for new ways to increase your sales potential—then you’ll find the low-risk approaches in this session of particular value. * * * * Jay: Tell me what you’re doing with your marketing efforts. Calvin: I haven’t marketed yet. I have a brochure, and I thought I would advertise in local papers. Jay: I’ll try to give you the best advice on how to optimize your asset—your intellectual property. Basically, if I understand correctly, your program requires five two-hour sessions over a two-week period. Calvin: Ten hours altogether; five two-hour sessions. Jay: What does it require on the part of the participant, the person with the bad habit to break? Calvin: All it requires are certain exercises, experiments, and self-monitoring. Most people find they stop wanting to smoke rather than having to force themselves. Jay: How many people have you actually helped? Calvin: Well, I’ve worked with a lot of people overseas, but I’ve never used it here. My success rate is much higher than hypnosis—better by about 35% after six months. Some people gave up smoking just by reading my notes, basically. I would say there’s probably a 75 or 85% success rate. Jay: As long as a service or product actually performs, you’re always better off offering the most dramatic of guarantees. That will only encourage more people to try your service. Calvin: My worry is that people would give up smoking and then smoke a cigarette in front of me on the last day just to prove that they haven’t given it up. Jay: Human nature, unfortunately, is tattered with a lot of questionable morality; however, by and large, most people will not avail themselves of a money-back guarantee. I’ve made some outrageous guarantees. I’ve given people a full year to make money on various courses. A higher percentage than normal will want their money back, but this is inconsequential to the 300% or 400% increase it effects on the front end of the gross. Calvin: Let me ask you something about the guarantee. Do you think it would be better if it were, “If you’re smoking again in six months, come back.” Or, “If you’re smoking on the very last day, I’ll give you your money back.” Jay: What I think is better is giving them a longer term. We feel confident it will work immediately, but the question is whether it will endure. “Come back at the end of six months or 12 months or two years if you’re still smoking.” The longer out, the least likely someone will avail themselves to your guarantee. Calvin: What do I do, offer them their money back or another course? Jay: It should be clear to you that you should test everything. What will frustrate you in the context of this conversation is that I will give you suppositions, but I will not give you anything that’s absolutely definitive. Every scenario is kaleidoscopically unique.

Sometimes you’ll find different ways of articulating a guarantee. For example, one guarantee could be if at the end of one session, you’re still smoking, you can have your money back. If it normally takes 30 days for the program to work, you can give a six-month guarantee. That might produce a much different front end or response level. You want to experiment and comparatively evaluate to see which guarantee or guarantees effect the highest front end with the most tenable back end. You may find that it’s better to give three times the refund if you get four times the response. There is no right or wrong. We’re mentally experimenting and twisting the cone on the kaleidoscope until you get the pictures or the factors that are right for your situation. Let’s talk about your private practice. How active are you? Calvin: I work four or five hours a week. Basically I am connected with an employer-assisted program that refers people to me. Jay: It sounds like you want to expand in this area as well. Perhaps before this hour is concluded we can at least give you enough primary tutelage that you can adequately fend for yourself. Do you have capital to invest in your project? Calvin: I have some capital, yes. I can’t tell you how much I’m willing to invest, but I would be able to work out the risk ratio. I could probably put in several thousand. Jay: The first thing you have to decide is whether you want to market your program directly, sell it off to a third party, convert it into a vicarious instructive program such as a taped course, or all of the above. What I try to do is counsel my clients to do the most hedging and the lowest-risk programs first, particularly if it isn’t critical that something be done tomorrow morning. This generates capital while preserving their existing capital. If they have the rest of their lives to build it, they should do so in a very pragmatic matter. That’s what I would suggest you do, so you husband whatever capital you have. Let’s take sequentially what I would do if I were in your shoes. First thing I would do would be to see how many employers you could approach who could offer your program to their employees. This could be on a price-preferential basis with either the employer picking up part of the cost or as an affinity type of a deal. Does the program have to be done singularly? Calvin: It could be done in a group. I just thought of doing it singularly in my house. Jay: How much would you charge for it in your house? Calvin: That’s something I haven’t decided. Jay: What does Smoke Enders charge? Calvin: Well I’m not sure, but there’s another program that charges about $600 with a money-back guarantee at the end. I was thinking of charging the same amount. Jay: That would be good; however, there might be an easier way. The problem you have in charging $600 is that you might have to spend $200 or $300 of the $600 in advertising just to get a customer. You might be better off in the embryonic stages to get more exposure or to document case-study successes. Then you go to businesses, affinity groups, or organizations with a very simple proposition. You say, “I’ve got a success rate which is unbelievable, the program’s worth $600, and I’m prepared to take it nationally. I need more research and testimonial case studies. Consequently, I’m willing to pay through the nose for the privilege.” If they participate and bring in at least 10 people at a time, or 5 or whatever you want, you will give them a $300 discount—or even more if you so desire—and an unequivocal six-month, money-back

guarantee. The only concession you ask is that they agree to be available for testimonials. Since you have the right rationale, instead of psychologically begging them, it’s to their advantage to listen. Tell them you’ll address their group at lunch hour, after hours, or before hours. You might want to experiment with different prices to see which one works best. The employers may or may not want to buy down, subsidize, or contribute towards reimbursement. That’s their prerogative. Every day you could approach three employers. If you pick up one a day, you’re accruing a couple thousand dollars a day in business, not counting the success generated by the testimonials you’re accruing. That’s the easiest way to go. The next easiest is to bring on an associate who would do the same thing either on commission or on minimum salary and commission. Calvin: I think I’ll need to do it on my own. Jay: Just make sure you track and keep detailed, copious notes of your presentations. Keenly focus on the questions you capably answered and the questions you didn’t. Spend enough time analyzing and experimenting with different presentations. Test a lot of variables. Certain ones are going to work and certain ones are not. Find a hybrid of successful variables. If you can record the presentation, all the better. Everything you do has an infinite amount of applicability. It can be turned into something you can license, distribute, or franchise. For example, with the right presentation you could produce a fee income of $50,000. You can sell the transcripts. You could take the documentation and turn it into a tutorial. Then teach people all over the country who want to buy a distributorship for your program and sell 1,000 people a distributorship for $5,000 each. Make different trial offers. For instance, you go to somebody and say, “Look, as long as you sign up, I won’t bill you until the last day—and only if on the last day you’re not smoking.” Try it. Maybe you’ll lose your derriere. But maybe it will work. You could also say, “Pay by charge card and I won’t even put it through until the 45th day.” You want to experiment to see which approaches still the fears adequately enough to get the maximum amount of people attending. Am I giving you some ideas? Calvin: Yes, you are. You’re giving me a lot of options which never occurred to me. Jay: What I think you should do is take a week and try concept A. Maybe that is $300 and a six-month guarantee. Then take a week and try concept B. Maybe a lesser and longer guarantee and you won’t cash the checks until the end. Concept C is don’t even pay me. Sign an affidavit that if you stop smoking, you’ll pay me. If you get 10 times the people attending and only half of them pay off, you don’t care. You’re probably going to lose on three out of four of the concepts, but the fourth is the one that will pay off. Do that over and over again and it will make you rich. It doesn’t matter if you lose the three if you quadruple your money every fourth week. Do you see what I’m saying? Don’t be chintzy on yourself. You have enough cash flow where you’re not going to go broke. In the next couple of months use a laboratory of experiments to find the right concepts. It’s wonderfully exhilarating. Calvin: Who in the firm do I approach? Jay: It depends. If it is large, it would either be the Personnel or the Human Resources Director. The more you have a conceptualized, presentable program, the better chance you have of succeeding. Plant the seeds of tangible ideas for them. Show them they’ve got something to gain. If you’re too abstract, it won’t fly.

Calvin: Now, I don’t know a lot about these businesses. Do they generally like a half-hour visit with questions and answers. Jay: There’s no right or wrong. I think you should be able to tell what works. Everyone is looking to be led. Tell them you’ll give a short introduction or mini-seminar at whatever time is convenient. This will have a positive effect on people who aren’t interested initially. If I were sitting there with a workable concept, a modicum of capital, and wanted to see how the market embraced it, I would think this would be a low-risk, high-success way to leverage yourself. It may not work, but if it does, then you can go into any geographical market you want. As you know, human nature is about as predictable on the East Coast as it is on the West Coast. Calvin: Do you think it would be a good idea to try to get individuals? Jay: Let me ask you a question. What is the promise you can make? Calvin: I can make three promises. You can quit smoking in ten hours over ten days. No willpower involved. None of the usual misery of withdrawal symptoms. And if it’s a business, I’m willing to come to you. Jay: You’ll do it in anybody’s place if they pay enough? Calvin: Yes. Jay: I think that might be really fascinating. You might try little display ads in the Sunday paper. You might say, “I can get you to stop smoking in ten days spending no more than ten hours. Doesn’t require willpower. I’m available to do it in my office or in your home.” Every week try a different little ad. Calvin: Once a week you change it? Jay: Sure. An ad may make you a lot of money, but you still want to experiment to see if another ad works better. What you could do is get a really neat recorded message. You could get a special multiline answering machine that will accommodate a long outgoing message. Experiment with a five-minute, ten-minute message: “My name is Calvin. I am a scientist who’s spent years in studying the smoking habit. My specialty is getting people to stop smoking almost instantly. In fact, I’ve perfected a technique that many people say is remarkable. Not just because it works, but because it requires such minimal effort. To be more specific, it takes approximately two weeks total. You have to invest a whopping hour a day for approximately three days a week to do it—in my offices or in yours. For one person, it’s very reasonably priced. Special rates for groups of three or four are available. I guarantee it unequivocally.” Try different messages. You might say, “I guarantee that six months after the course, you will not be smoking or you get your money back.” It’s that simple. Take charge cards. Try a number of deferred payment plans. Remind them that with the money they save when they stop smoking, they’ll easily be able to pay for it in a year. If they want to know more, give them a phone number to call. Keep in mind, you can do all these things anywhere in the country. You could also do something else. If you wanted to, you could try doing 90-minute seminars. Calvin: Would this 90-minute seminar actually teach them the method or just talk about it? Jay: Just talk about it. I would put it on a Saturday afternoon or Sunday or Monday. I would experiment with ads or headlines in little ads. Keep in mind, all you’re trying to do in the beginning is find out how the market responds. Be inordinately conservative with the size of your ads. You’re better off trying 100 things small than trying something large, because at first you’re going to be more off the market than on.

Calvin: I was thinking of a free tour once a month. Jay: You should. What if you got women’s groups to sponsor lunches? If every day at lunch time you were addressing a different business, social, charitable, religious, or affinity group? Or at their breakfasts or evening meetings? What if you talked for a half hour on the psychology of habit breaking and you gave everybody a little technique, like a little free sample, that they could apply to some other bad habit? This is empirical evidence enough of your ability. If everyday you invested one hour calling churches, hospital auxiliaries, Elks Clubs, Jaycees, Rotary Clubs, and all the affinity organizations—imagine if you spoke every morning and lunch, and if every Saturday you did a seminar. That’s how I would start. The next step I would take would be to identify people with customers, prospects, or affiliates who would be highly probable candidates for your services. You could do a special promotion for them. For example, what if you went to every health store in a city and wrote a letter over their signature. They approve it and send it off to all their customers. This letter offers a special arrangement they have ostensibly made with you for group stop-smoking training at half the normal price. Or maybe it’s payable one-third when you start, one-third on the last day and one-third 45 days later. You don’t really care in the experimental stage, and you give the health store 25% of the profit. If that works, you can go to all sorts of health clubs and stores. The trick is to find somebody who’s got a customer, prospect, or roster of people who would be highly disposed toward what you offer, who would highly respect an offer from their club, and who would believe the price reduction was genuine. The club or organization would be excited about making $1,000 or $2,000 just for mailing out your letter. Calvin: You were going to talk about contacting the local doctors. Jay: What’s your experience with them? Calvin: I haven’t had any. Jay: You could go to doctors and offer to set up special profit centers for them. You sell them your services for X dollars; they send you their customers. It’s not profit sharing, it’s just that your services are available to them for so much per course or procedure. If you sent every doctor, dentist, and health professional in a city a properly crafted letter, the odds are that some would avail themselves. You’re like a subcontractor. They go to a laboratory for blood work or specimen analysis; you wholesale to them smoke-ending programs they can do in a group. You can then put together special packages that they can offer to their patients. You’ll prepare letters they can send to all their patients inviting them to come on a Saturday for a free seminar. You guarantee results so the doctors can guarantee it to their patients. Depending on what they charged, doctors could easily add $5,000 or $10,000 a year to their practices. Is this helping you? Calvin: Yes, I am delighted with the amount of different approaches. Jay: Is your technique profoundly superior to the kinds of techniques other people are using? Calvin: I think so. One technique uses an adversion, a mild electric shock. Hypnosis is just hypnosis and wears off very quickly. I think what’s really interesting about this is that the more you’ve failed and the more you’ve used will power, the more likely my program is to succeed.

Jay: If I had such a procedure, I would solicit a pilot hospital. Go to a hospital and say, “I have a concept that will be a perfect mesh for you. It will allow you to draw people and augment your unfilled beds. It’s a natural profit center.” If you approach 100 hospitals every week, you’ll probably find five or ten that will be receptive. It’s the antithesis to what all other people offer. It can be a profit center, it can be vended as an introduction to the hospital, it can be vended any way you want. “I will sell you a license on my concept. I will initially do all the instruction. I will teach designates from your staff how to conduct subsequent programming. I will work on the advertising, positioning, and instruction of the material, and create a special course study. I will do it all for you. “Not only that, I want nothing until the concept has proven itself. You set up the most stringent criteria. I will do all the work and not get a dime until I meet the criteria. After it is validated, I want a royalty of X dollars for every person that you bring through. I want to use you as my test example so I can sell licenses to other hospitals outside of your marketing area.” You’ve got to experiment. Maybe hospitals are not the answer. Maybe approach different kinds of organizations, chiropractors, universities. Maybe you could go to an insurance company and say, “I have a way you could get great PR and make a profit at the same time. What I suggest is that you underwrite my experiments to develop a profitable stop-smoking program under your auspices. Once I get it perfected here, I will give you a license throughout the U.S. It could be named the Prudential Stop Smoking.” People not only improve their health, you’ll give them a reduction on their policy for the first year. Whatever you have to offer is usually worth more to somebody else than it is to you. The premise I would go on is this: since your product or service performs superlatively, do not be at all reticent as to getting paid after it performs. Calvin: It’s just a question of finding those people. Jay: Once you get some experience and understand the phrases, the motivations, the right guarantees, etc., you take what you have done one-on-one and in groups and elevate it to a package course. The smartest thing to do is hedge your bet by taking the course to other people who have customers. Offering it to them on the basis that you make less than they do but they have all the tonnage. For example, if you go to companies that sell to 10,000 or 15,000 or 25,000 people, offer it to them to sell by mail, catalogs, or brochures. Say the thing sells for $95 or $65. Rather than going 50/50, give them 60% or 65%. Even though you don’t make as much, it’s such an inordinately appealing offer to people who normally wouldn’t be motivated or excited. Even though you’ll make less per transaction, you’ll make so much on tonnage that it won’t matter. Once you get it perfected, you could make a special arrangement with charge card companies or insurance companies and offer it when they send out premiums. What if you could make a mailing with people who are members of A.A.? Is this getting your mind really clicking? Calvin: Yes. What do you think of my idea of working with individuals at the top of big companies? Jay: I think every idea you have is promising, but you will find, to your humble chagrin, that a lot of your better ideas, the ones that seem the most fulfilling, will be rejected by the market. Some of the ones you think are sort of hokey will be embraced. Calvin: I just want to make as much money as quickly as I can. Jay: The most enjoyable thing I’ve ever counseled people to do is to get a typewriter or word processor, work on the ideas, and get all sorts of assimilated lists of prospects for all sorts of applications for their products and services—and then let the numbers work.

For example, if every week you sent a personalized form letter to 100 doctors; if every week you ran an ad for investors to buy the licensing rights; if every week you made a mailing to 100 hospitals, to every major hospital holding company, to every insurance company. Let the odds start working. The $5,000 or $10,000 that you would normally spend for a few ads is being leveraged to reach the entire prospective marketplace in America. Let’s say you mail out 30,000 letters in 6 months. When all the dust settles, you have 100 or 200 really good prospects you can work on. Do you see that? Calvin: All you need is one really good one. Jay: All you need is validation and replication. If you can validate something that can be like a cookiecutter, replicated over and over again, you are home free. Play off the biggest overlooked way, play off of other people’s customers. Every time you see an ad in a magazine or newspaper for products that are compatible, cut it out and send a personalized form letter to the company’s owner. In the letter, you say they can use your product to get an extra 1,000 customers, or make an extra $1,000, $5,000 per quarter, or $25,000 per month. That’s a nice income. Rather than trying to recreate the wheel, rather than going to the market and trying to make it on your own, rather than running great big ads and sending out mailing pieces, it’s much easier to work on a joint venture with somebody who can endorse you through a mailing or insert your promotion in with their promotions or packages. You’ll have a much higher probability of succeeding. Until you have much more experience in experimentation, I strongly encourage you not to take unnecessary and dangerously expensive risks. Calvin: Let me ask your opinion about something else. I have this question about a particular savings and loan. If it works, it’s worth it. Jay: Sure, but it’s probably marginal. Find out who their ad agency is, the head of the ad agency, the head of marketing for the savings and loan itself. Then send a letter along with a videotape of yourself. Allow them to test it at your expense, to try the first 13 weeks without paying you a dime. You’re better off getting nothing to get somebody to start it, because performance is the validation. You’ll allow them to do whatever they want at your risk for 13 weeks. If it works, you want fair payment to continue. If it doesn’t, it costs them no more than a regular commercial. That’s the way I would do it. Calvin: How about any general ideas about my practice? Jay: The bulk of your practice is family counseling? Calvin: I wish it were. It’s individual stress. Jay: What if every day you spoke to businesses or companies about stress aversion, stress control, and stress management. What people want is results. You talk about quality of living, more efficiency, sleeping all night, better family relationships, greater romance, enhanced concentration. Talk about the fact that if you’re stressed out, you can’t lose weight, gain weight, stop drinking, or stop smoking. Tell them you have a very special proposition. Unlike most professionals who get paid whether it works or not, you’re very willing to get paid only if it works. After the session, if it hasn’t helped them, then tell them they don’t have to pay for it. No one does that. Tell them your name is blasphemy in your profession because you have no aversion to giving money back. That might be so provocative that the press might do an article on you.

Go to a PR agent and offer a little trade. “If you’ll write an article about my program and money-back guarantee, I’ll give you 10% of all the business that comes from that article for the next year. And, if you’re fee is normally $1,000 or $2,000, I’ll give you that amount in stress counseling, either for yourself or for one of your clients.” Calvin: Well, you’ve certainly helped me. Jay: The very best of luck to you. * * * * As long as a service or product actually performs, you’re always better off offering the most dramatic kind of guarantee. More people may ask for their money back, but the increased response you will generate will more than make up for it The best way to find which guarantee works best is to test, test, test. As in Calvin’s case, you want to first establish a track record, to document the successes of your service or product. Then, armed with that documentation, you can more easily convince the marketplace. Offer your product—or give a seminar or lecture—to established groups that might have an interest in it. That’s one easy way to generate new leads. The wisest thing to do in the beginning is hedge your bets. Use low-risk approaches. Then once you validate your program, roll it out big. (A.7)

Temporary Restaurant Help Art’s business is an innovative one: providing temporary help to restaurants, hotels, and catering services. Just as an office temporary service provides secretaries and receptionists, Art’s service provides chefs, waiters, managers, and so forth. When he called me, Art had had some success in soliciting new business, but nowhere near enough. What I suggested to him was to stop trying to call on restaurants etc. on his own, and instead enlist the help of vendors who already call on these establishments. The vendors would receive a percentage of the business they generated for him. It’s a very efficient form of marketing leverage, and it might very well apply to your business as well. * * * * Jay: I read your material last night and it’s an intriguing concept. Can I ask you a few questions? First of all, you have mailed out a couple hundred of them so far, correct? Art: Not quite. I think probably about 150. Jay: Go through them again even though I’ve read the material. Tell me how many responded, and then trace for me the metamorphosis of those respondents.

Art: Actually we didn’t get any spontaneous responses from them. What I have done is follow-up with a phone call (I haven’t been able to follow-up on all of them). The ones I was able to contact (approximately 30%) have said, “Yes, we are very much interested. It’s a good idea. We will call you as needed.” Jay: So tell me, the 100 and some people you mailed to, what kind of a cross section were they? Were they large restaurants? Art: No, they were private clubs. Some large restaurants, some small restaurants. I would say 30 of them were cocktails, and about 30 of them were places I had previously called on in a marketing survey that had already responded favorably at that time. Some were institutions like hospitals or banks, for instance, that have their own dining rooms and cafeterias. So, it’s a large cross section. Jay: There must be thousands of prospects in your city. Art: Yes, there are approximately a little over 3,000 according to the influential contacts. Jay: But anybody could be a good prospect, right? Art: Anybody could be a good prospect. Their credit is something we might need to check into a little bit. Jay: I think with larger companies you’ll be all right, but the ones that are not credit worthy, as long as they pay in advance, you could probably find profit across the board. Help me understand the dynamics or the impediments you and your wife are pitted against. For example, are you committed full time to it? Tell me the capital and the marketing monies. Give me an idea of what the dynamics might be so I can give you the most accurate and useful assistance. Art: I have committed full time to this. My wife, at the present time, is pretty much out doing other things. But I have on my staff a fellow chef who is taking management classes and has some time available to help me with the follow-up calls and personal visits. I find that it’s difficult (if not impossible) for me to do personal visits because that takes me away from the office and the telephone when inquiries and requests for service come in. Jay: On a typical placement, you roughly make double? Art: I add 75% to whatever the worker gets (and that is variable depending on the skill level required). Jay: You mentioned that one of your purveyors had offered to promote you through their people. What was the exact offer that they made? Art: He felt if he could get his sales staff to promote my services, he would look at it as an enhancement of his service to his clients. Jay: But he would want to do it for profit participation? Art: No, I asked him, “If those salespeople do produce for me, how do I compensate them? And he said, “Don’t worry about it, we’ll talk about that later.” Jay: I’m of the opinion that if you don’t have somebody financially invested, they’re not going to super perform. If you’re limited in your manpower and your resources, the best thing you can do is leverage your time, leverage your confidence, and leverage your capital. But I think doing it on a noble, or altruistic or non-profit based arrangement with somebody is really a bad decision because there’s no great inducement to the salesperson in the field. Art: That was my feeling. That’s why I brought that up.

Jay: I think it would be better to go to him and say, “Look, I will let you take on all my services in a limited area and you can delineate the customers you call on and for a certain period of time (say, 90 days) I will give your company exclusive representation to those customers, provided you warrant to me that each one of your salespeople will credibly and extensively promote the services at least from 3 different occasions in that field and make a presentation and invite all your customers to a luncheon sponsored by the two of us where we’ll explain the concept more expansively. What you get is the following: for the first ‘x’ months, you get such and such a percentage of placements to be divided as the company and the salesperson deem fit. We’ll give you 30% off the top for the first 3 months and it will graduate down to 20% or 15% thereafter.” My experience has always been in the beginning of a business you have to almost shamelessly bribe other people into making it happen for you. Give them the lion’s share or all of the front-end profit, knowing that you’re going to work for nothing. If there’s 75% profit in there, give 50% or 60% or all 75% to them for the first 3 months. Because when they have a chance to make an inordinately large amount of money to get it started, they’ll bust their tails and get 100 restaurants or 100 clubs or 100 businesses to use your service instantly. On your own, you wouldn’t have got that for 3 years. What you’ve given up is the profit for 3 months and you graduate to a more tenable arrangement thereafter. Does that make sense? Art: Yes, that does make sense. However, the 75% I’m putting on there is not all profit. Jay: It’s got to cover your overhead, but there’s a marginal or incremental profit. What I’m suggesting is right now accept all that you have to reach in your pocket for. What I would do in the beginning is get anybody you can to help you and give them incredible inducements. In other words, for the first 3 months of their relationship, they can have what would amount to the lion’s share. For example, on a $21.00/hour, you have built in (after expenses) $5.00 or $6.00 or $10.00. I would almost offer the whole thing to the organization for the first 3 months. For example, for the first 3 months of business, you’re giving them all the profit as an inducement and you’re taking a calculated risk that they’ll get people so smitten with the service that their variable fees will ultimately pay handsome residuals to you and you’ll make up for it over time. Art: How do I determine which part of my business results from those people’s efforts, as opposed from my own marketing efforts? Jay: Simply by delineating exclusivities. How much marketing monies are you prepared to spend over the next year? Do you have that already established or is it proforma based on your hope for sales? How much do you have sitting in the bank or in your pocket in the company’s checking account right now? Art: I have allocated a maximum of $30,000 for getting it going. Jay: Is that marketing or is that everything? Art: No, that’s everything. I don’t have a specific amount on marketing. So far, I have spent pretty close to $10,000. Jay: How many clients do you have right now? Art: Right now, I have only 4 active clients. Jay: How often do they generate business for you? Art: Three of them have used the service only once and one of them has repeated twice. Jay: The one that had the 2 repeats, what kind of a client was it? Art; That was a restaurant and catering company. He used the services when one of his chefs was sick.

Jay: All you can do on your own is call on 5 or 10 people at most. But by making associations with even 5 or 6 specialized different groups of people, you can effectively present your concept to 3,000 restaurants and commercial installations and hotels and corporations. To answer your question, how can you delineate, it’s very simple. Let’s take the purveyor first. I’ll give you other suggestions, but that’s the fastest, quickest easiest way to grow that business. Your $30,000 is not a lot of money. Art: I know that. Jay: You can dissipate it so fast, your head will spin. Art: I will have to start drawing some money so I can support myself. Jay: You’re not drawing a salary right now? Art: No, not at this point. Jay: First thing you do is sit down with the sales manager and you change the whole posture. You explain to him that you’ve decided, after serious contemplation and consideration, that you do in fact want to effect a relationship with them but it’s got to be profit-based or it won’t work for either side. You want to enter into an experimental probationary exclusive arrangement with them for a finite period of time on those clients or those companies that they currently cater to. So the first thing that they’ve got to do is furnish you with a list of people that they cater to and you’ll maintain that list in absolute confidence and they will call that list and present your services in your behalf. They will have to agree that in the course of a certain period of time (let’s say 90 days), their sales force will at minimum make at least 3 separate and complete presentations for your services in the context of selling fresh vegetables or whatever it is they’re selling. Secondly, they have to agree to invite their clients to a breakfast, luncheon, or a dinner (that will be collaboratively financed by you) where they present your services so you’ve got your prospects’ attention in an environment that’s very positive. Thirdly, you mutually agree that if a minimum amount of business is engendered from their efforts in a certain time frame (120 days), they will continue and automatically get their “exclusive” extended for another few months. You will pay them a certain amount after you’ve figured in your fees. Maybe you should split it with them 50-50 in the beginning, but you tell them that it will drop down to 1/3 after you get established. Use it as an inducement, a figure that’s really easy for them to understand and embrace—and you’ve got to explain to them what they’re vying for. Most people cannot comprehend in abstraction what it’s worth to them. You’ve got to explain to them what they stand to gain if you’re moderately successful. What’s the name of their company? Art: Acme Catering. Jay: You just say, “Acme Catering, if you’re moderately successful in your introduction and successful advocacy of my service and your broker or representative generates for me a minimum of 100 placements a month, that will earn you ‘X’.” (And you want to work it backwards so they can see that they can get a check for $5,000 or $10,000 or $15,000 a month for a modest amount of work). Then you have to point out that this is not a one-shot deal. Tell them, “You might poo-poo it and say, ‘Well, $15,000 is nothing.’ But you’ve got to see that if you keep at it with a modest amount of reorienting your customers and reselling them occasionally, that $15,000 should keep growing.” You’ve got to show these people that, not unlike an insurance salesperson, there are renewals. Basically what you’re offering them is that you’ll work with them almost forever as long as they warrant that they will continuously promote you and that they will affirm that their salesperson will make a minimum number of calls and they will do a minimum number of orchestrated events where you can get all the managers together in a concerted effort where you can make your presentation occasionally and introduce yourself where you can always make a tether on the clients through them.

Art: The only thing that comes to mind is I will have to orient that sales force in a sales meeting. Jay: Exactly. You’ll do the same thing. You’ll win them over by being a charming man. We’re going to judiciously use your monies to win over people through your charisma and through your sincerity. It’s much better if you have them over for a luncheon where you have their undivided attention than if you sort of haphazardly do it. The same thing applies to the salespeople as to their customers. You have their 5 or 10 salespeople and you buy them the most incredible dinner of their life and then you sit and explain the concept to them. You have to educate them. They don’t know the fine points or the benefits of what you’re doing. You’ve got to give them a turnkey presentation that can be reduced to 5 minutes when they’re calling on a customer. Before you give them that, you’ve got to give them all the impacting factors (which is a little education as to how a banquet operation works, how a hotel works, and the various kinds of employees and the shifts and where problems arise and how you can fill it for them and some background). Art: I think I will use that brochure as a sales tool for those people. Jay: I think it’s very good. The best thing is to pre-sign people so that by signing up they’re already registered. It’s almost like a personnel insurance. They’re signed up and then if they ever have an emergency, it’s just a matter of calling and there’s no set-up cost. That’s something you might have them do. You just get them to sign up and there’s no threat to the program so that they’re all set up and ready if and when an emergency arrives. That’s the first thing. Art: That’s one of the problems that I have. There’s not an immediate need for the service, but there’s a perceived need down the road. Jay: By setting them up in advance it gives you a reason to start sending communications to them, something they can stick on their phone, something to post on their bulletin board, a file that they can keep, a continuous monthly communication, a hotline recording they can call anytime they need to and get them acclimated. If you’re working them, you can’t tell me that you aren’t going to start generating 300 or 400 hours worth of placement real quickly. Art: How do I sign them up? Jay: What you do is the following: You get them to agree to bring their salesperson to a meeting which is like a luncheon, and then you give them the pitch. The pitch is basically the service, but it’s like signing up now and becoming a member. Everybody signs up, but it’s a risk-free sign-up. Art: That would entail some sort of a form or maybe a packet. Jay: It would be a packet and the packet would entail the following: (a) They would give you details on their business so you know the scope and so you can prepare the right kind of personnel profiles. (b) They would fill out a credit application and would sign an affirmation presuming their credit passed that, if they use the service, they agree to pay in 7 days. So it’s like a soft commitment already signed and executed. The packet would include a mini-file of information they could put in their drawer so they would already have filled out anything you would need in the way of information for a specific job description or job request. It would also include something they would display that they could stick on their phone: When you need a restaurant chef in an emergency, call this number. Art: I was thinking of that paper clip dispenser. Jay: It’s not bad. I think a stick-em on their phone would be better. Also you need somebody to die-cut a card that they would put on their Rolodex—one that’s got a tab that sticks out so it will be easily

noticeable. Give them some benefit package that they get and some kind of freebie that has high perceived value so it’s exciting to them. They get something of a high benefit just by becoming an affiliate or signing up. Maybe they get a free 2 hours of consultation with you, or a free valuable personnel analysis or something that of it’s own volition is worth $200 or $300 , and they get that free and it’s got genuine value of its own accord whether or not they avail themselves of it. But the first things you do are (a) you’ve got to make the deal with the purveyor, (b) you’ve got to get the salesperson excited and you’ve got to give them an education, and, c) you might even (on special calls) make yourself available to go out on calls with them. Are you very good in person? Art: I think I would be, yes. It’s not something I’ve done, but I have appeared in public. Jay: The thing with the purveyors is that you want to get them really behind it. You don’t want them to do you a service, you want them to make a lot of money. It’s much more profit-motivated and the affiliations are 10 times more successful than noble-based ones. But be careful not to grow with too much rapidity. You want to be able to handle it easily. Can you find plenty of people? Art: Oh, yes. Jay: I think if one purveyor represents you to one segment of a market, then you find other segments of the market that they perhaps don’t cover and you can find somebody else to represent you there and leverage you again (maybe to a lower segment). Maybe they don’t call on restaurants. Art: Anybody that serves food. It could be a little bar—they would call on them and they would also have the large multi-unit accounts such as Marriott Hotels. Some they have agreements with to supply all of their needs. Jay: But the truth of the matter is that your concept, if it was nurtured properly, could easily generate $100,000 or $200,000 a month, couldn’t it? Art: I really don’t know. Jay: At any given point, how many people are sick, are going on vacation, or are burnt-out? Have you ever tried to estimate that? Art: No, I haven’t. One of the problems is the resistance from the operators to pay a fee for the service. In the restaurant industry, they’re not used to that like people are in offices and so forth. In the office world, they have pretty much accepted the idea of using temporaries and paying a fee. But these people are not used to paying a fee, and we’ll have to find a way to educate them to show them that it’s to their advantage, saving time and saving money. Jay: When you’re pitted with that negative, how do you overcome it? Art: That’s my question. Jay: Let me ask you a question. If you’re a little restaurant and you get a call and your chef either quits at the last minute, or he’s sick or you know he’s coming up for vacation...what would your option be? Art: My option would be to ask somebody to work the extra time and pay them time-and-a-half overtime, or do it myself and then fall behind in my administrative tasks, or call somebody in who has a day off. I used to have people that I could call on for extra work. Jay: Were they pretty dependable?

Art: Not always. Availability depended on whether they were off from their other jobs or not. Jay: With your service, can you guarantee that you can have somebody within 2 or 3 hours? Art: Yes, I can do that. Jay: I think you’ve got to list all the negatives and you’ve got to educate them. You need to understand in the beginning that everybody is different. The mentality of a restaurateur is different. Only the people who understand business, the most logical ones, will understand you immediately. Other ones will have to see it’s demonstratable—but that’s all the more reason why if you’re using your purveyor to call on 5,000 restaurants a month, the odds of finding 50 or 100 who will comprehend and embrace and accept the efficiencies and the advantages of your service is highly likely. If you’re doing it yourself, you may struggle and stumble through 500 people one-by-one before you find them. That’s why it’s wonderful efficiency for you. Art: I explained to you that about 30% that we have contacted have said, “Yes, we’re very interested and we would like to use the service,” but only a few out of those have used the service. Jay: It’s always going to be incumbent on you. Let’s say they sign up 1,000 people. The first thing we would do is bring on somebody, perhaps a gentlemen who is going to school or a pleasant woman who would start a series of regular telephone contacts to introduce you and plant the seed of your service. This person could learn the possibilities of their situation, asking if they wanted to schedule out people for their vacation so you could start planning for them, and telling them about special options. If they get a special banquet at the last minute and they don’t have the people, how they can call you and not lose the business. Plant seeds of examples of utilization in their minds and it’s up to you to keep doing that. Art: How frequently, once a week? Jay: In the beginning, you want to do it as frequently as necessary (or until you become guilty of overkill). As long as you can call with information which is useful and helps expand your prospect’s ability to understand and exploit your services more efficiently, it’s defensible. When you start becoming a nuisance, that’s too much. If you got 1,000 people and you’ve got 2 people on the phone, it’s highly improbable you can call them once a month. If you got 50 people, you’ll probably work them to death so you’ve got to be very careful. If you get the purveyor to provide you with 1,000 or 2,000 or 500 companies who say, “Yes, I am interested” or “Yes, I want to be set up and when I have one of these problems I will avail myself of your services,” you get no assurance that they will do it. It’s up to you to make it be real exciting and appealing and all the benefits fully acceptable to them. The way to do it is by calling them on the phone. Another thing you can do is send a vacation schedule to them that they can send back to you so you know in advance they need a main chef, or they need a cook for two weeks in June. You can have it set up for them now so it’s already covered. You pride yourself in warranting to them that you can handle any emergency in 2 or 3 hours. Of course, you can find the most skilled person if you have the most lead time, so you would like them to fill it out way in advance. Art: That presumes that I would give to those salespeople some form that they could leave there for the people to fill out and return to me. Jay: It would be very good to do that, but it’s also very wise to follow up. Art: Those letters that I have sent out and made follow-up calls on, a lot of them told me “Yes, I remember getting that but it got lost in the shuffle.” Jay: Success (you’ll find in selling an intangible) is normally the result of a series of letters, calls, letters, calls. There’s a series of transactions that have to come together before it becomes real, viable, and acceptable to a prospect. Just because the purveyor sells them and you get people who say, “Yes, I want to

avail myself of it,” in an emergency, they don’t necessarily think of you. Don’t overlook the fact that it takes a series of calls, letters, and communications. If you have 35% being given to you and you give 1/2 or 1/3 to the purveyor, you might then want to give 5% or 6% to salespeople to bring it all home. You have to have everybody working together. You’ve got to make it work, because you’re going to probably need 1 or 2 or 3 in-house liaisons who are nothing more than glorified, non-threatening, nurturous, nudging “P.R.-ish” type people who just keep advancing your services and pushing people into using them. But you’ve got to find a way to pay them, and it might be that the deal you make is that you give a lesser percentage to the purveyor but you explain to them that the only reason you’re reducing it is that 100% of no sales is meaningless, 15% of something generating $1,000 or $2,000 is very meaningful. The only way you’re going to bring your customers to fruition is by being able to afford to nurturously keep working them after the purveyor gets them to agree that they’re interested. The way to do that is by you being able to justify the expense of having a man or woman on the phone nurturously advancing the relationships. The best way to do is to give the man or woman a variable. You could say, “Look, I’ll pay minimum wage against 5% of the business you book.” You have them work the same customers that were set up by the purveyor. Art: If it’s a delayed sale—you know, they sign up somebody but the initial sale doesn’t come until later on down the line...? Jay: It’s who deserves what commission. It’s very simple. You take an assumption. Maybe the way to do it (if it is too much trouble long-term) is to get them to introduce it and give them almost 100% of the sales for the first 3 months for introducing it and nothing thereafter—or a little bit—so you could justify paying the bulk of their commission to your house people thereafter. But probably you’ll have to say, “Ok, you give me the list of who your prospects are and you’ll have exclusive protection on those. You generate signed agreements from 1,000 people and those are your customers. You get commissions on them irrespective of whether their business comes from their salesperson or my people following up.” You just have to bite the bullet. Art: I was intrigued by a concept you mentioned on your hotline last week—an endorsement from a noncompeting business. I thought I would try that approach with Acme Caterers. Jay: You can try it with a lot of people. Art: You can make a preferential offer to their preferred customers like 5% discount on their first order, can’t you? Jay: That will be very good but it’s not going to necessarily mean an immediate sale. Another suggestion (if they don’t object) is you could pay fees to 5 or 6 other non-competitive people to write letters on their letterhead to their people. You would write the letters or at least collaborate on them. The restaurant or hotel is getting hit by the purveyor or somebody who sells ovens—or maybe one of the magazines would do a letter for you. If you’ve got 5 or 6 letters going out to these same people, the cumulative effect would be very powerful. Do you think again that the purveyor will cover enough of the prospects that they alone can supply you with prospects? Art: I think so. They’re pretty much all-inclusive. There are very few establishments that don’t buy from them. If I were to go to one of their competitors, I would probably just duplicate the same thing. Jay: That’s wonderful, and do you have great relations with them? Art: He approached me. Jay: The first thing I would suggest is that you sit down with a pencil and you do some extrapolation where you start really identifying what it could be worth to them, not just in a month but forever. What you’re

saying is, “I would like to make you a million dollars, not just in a month, but payable in the next 10 years. I’d like to pay for you guys to buy a whole fleet of trucks.” You’ve got to show them in concrete terms how one really concerted effort can show dividends to them forever. You’ve got to be willing to pay off and not think it’s unfair later on, and you stay with it as long as volume emanates from them. Pitch the thing. A little effort on their part could make them a million dollars over the next 10 years, and show them how. Show them that you fully expect there to be $2,000 or $3,000 a month in temp work and placements in the restaurant field just in your city in a year. All that emanates from them, they’re getting 10% off the top forever. They’re going to make $20,000 a month and that will pay for a bunch of trucks, the rent on the building, and pay for training programs for them to hire new salespeople. It’s very important, Art, to use the benefits you’re going to be able to give them. You have to present the concept to the purveyor in a tangible way where they can see what it can do for them. Art: Well, I don’t need to convince them to do it—they’re willing to do it for me already. Jay: You want to get them excited about doing it for a profit so they’ll really get the effort and the sustaining commitment behind it. You want them to stick to it until it comes to fruition. You want dinners with everybody so you can introduce chefs and give examples and show them the kind of people that they can get. “Here’s John Schmidlapper. He was the head chef of this and this, now he prefers working just a few days a week. If you need a chef in an emergency, we can bring him in.” Also, after somebody uses the service, you have to have a system of following up. You not only call them but a letter goes out to them that each time they need a chef, you’re available. Concurrently, go to all the temp places and see if they want to take on a deal with you and split a profit. It’s not big enough for them to want to develop a restaurant division, but they’re already in the field. If their salespeople want to represent you or you want to represent yourself, give them calls or referrals or profit splits to make it worth their while. Art: There is one company I mentioned to you that has a hospitality division. What they mostly do is provide waiters, bartenders, managers, and that sort of thing. They don’t have somebody in-house that can interview chefs and cooks. Jay: Go to them with a proposition and say, “Look guys, you basically don’t handle this segment of the business. I do. Why don’t you add a division where you promote this and we’ll split the profits 50/50.” Art: O.K. Jay: And play off the fact that they already have the presence there. You go to everybody who’s got temporaries and show them, “If you get the opportunity, you can represent us. We’ll take all the risk and we’ll be responsible for results. You can have half of the profits or one/fourth of the profits,” whatever you have to give them. Who else could help you? That purveyor alone sounds like it’s a wonderful opportunity if you execute it properly. Art: Do I continue my current marketing plan? Jay: If they will really commit fervently to do the job for you, and you know with certainty that they’ll do it in a timely manner, I would think that your own one-on-one efforts will be redundant and all you’ll be doing is dissipating capital. They’ll do more good for you while stocking every restaurant in town in 6 months than you could do spending your $30,000 in 6 months, don’t you think? It would be better for you if you knew with certainty, if you got warrants from them that starting on such and such a date, their salespeople will make pitches, they’ll agree in advance to have a meeting with their salespeople and you, and 30 days after they announce it, they’ll have a dinner meeting where they’ll invite all their customers to meet with you for dinner and learn about all those things that you offer. Art: I think that would cost too much to invite 1,000 customers and spend $15 for a dinner for them.

Jay: What about a luncheon? Art: That wouldn’t be practical. The sales staff yes, but not the customers. Jay: Have they ever had dinners for their customers? Art: I don’t think so, not that I’m aware of. Jay: You could induce them to have one and maybe pitch one of their suppliers to cooperate and tell them that you’ll pay a fraction of the expense. They pick up a third or fourth and you pick up $3,000 or $4,000 where you have the opportunity to pick up all your prospects in one sitting, that’s pretty powerful. Art: I’ll have to kick that around. Jay: Sometimes you never know until you try it. Work on setting up affiliations with other organizations who can promote your services through their facilities. If restaurants, delis, gourmet food shops, or any kind of facility that would tend to have customers that were prospects for you would agree to represent you to their customers and you provide them with mailings to do so, promotions to put up in their retail establishments, and/or inserts to put in with their packages that say, “Call our store to arrange for chefs,” you can play off the same thing. You could play off all sorts of people. The way to do it is bring on an associate and make that associate “commission only” and give them 1/4 of the profit. Tell them to go out and set up deals with 100 retail establishments and you would furnish them with promotional materials. You have it custom-printed for their store and you would basically give them 25% of the profit. Art: What about that ad in the restaurant news? Jay: When you ran the ad, what happened? Art: I had exactly 2 calls and I had about 4 more telling me, “Yes, I have seen the ad.” Jay: How much did that ad cost? Art: $70. Jay: The first thing you need is a great powerful headline that has the essence of what you’re all about and the essence is in one sentence. What do think it is? Art: If you’re short-handed, we can help. The temporary employment service solving your kitchen staffing needs. Jay: Your headline should be something like this: “If you’re caught short-handed for kitchen help from the most skilled to the most basic, we can help on short or long term notice, by the day, by the shift, by the week, by the month, or long-term assignments.” If I were skim reading your ad, you want something to tell me the essence of the offer. You want to bring it down right to the purity of the offer. Art: Alright. I’ll do it. Thanks, Jay. * * * * You don’t have to be running a temporary help service to apply the marketing concepts I gave Art in this consultation. Just think of all the vendors who interact with your customers and prospects. Is there a way those vendors could do a sales pitch for you, or introduce you, or at least leave your brochures behind?

If so, then present the idea to those vendors. Make sure they see the potential of it—how much they stand to gain, in dollars and cents, over the long haul simply for taking a few minutes extra time on each visit or sales call to mention or promote your product or service. Another idea I gave Art that you might like to try is to hold a lunch or dinner where you bring your message to a lot of prospects at once. Educate them as to what you do and exactly how you can benefit them, and it could conceivably pay off better than an ad or a direct-mail package. Speaking about ads, note how specific the headline was that I suggested to Art at the end of the consultation. Are your ads and headlines specific and USP-oriented? Are you focusing on the benefits to the user? If not, change the focus and the wording and then see if the number of qualified responses doesn’t increase dramatically.

Winery Charlie owns a small winery that has experienced financial and legal problems. These problems have hurt his company’s reputation and sales have suffered. To make a comeback into the marketplace, Charlie wanted new and effective strategies that would make his product stand out from the competition. His marketing campaign faced an additional obstacle: the numerous legal restrictions imposed on alcohol promotion by government agencies. To get around these problems, I helped Charlie search for the most aggressive promotional options he could legally use. I then outlined step-by-step measures he could utilize to get the most out of these options and gain greater market awareness for his products. Even if you’ve never faced the difficulties Charlie’s faced, this transcript could make a big difference in gaining greater visibility for your products or services. * * * * Jay: You have interest in an entity that is a distributing or marketing representative arm for your winery—a separate corporate entity that is not ensnarled in your problems? Charlie: Yes. Jay: What are they doing right now? Charlie: We have the resources there where we can do what’s necessary, but the head person is basically a liquor man with the old school mentality—kind of an old boy network. When I’ve had these financial problems, I have had one devil of a time getting back into the geographic areas. Jay: Give me a problem area where you initially had good penetration, and now you’ve got bad or no penetration. Charlie: Well, after I had established the market on my own, I turned it over to a marketing company because we determined that we needed more people in the marketplace to keep banging on doors and showing our faces. This company’s approach was rather lackluster. I was with a larger distributor in the area at this time. Our marketing company did not like the distributor but decided to leave me there for the time being. When we got into the financial snarls with the bank, the bank started interfering with the marketing company. Jay: How and why did they do that?

Charlie: By directing that all monies received by the marketing company be sent to them. They had a legal right to do this, and we had agreed to it. Yet, the marketing company on their own decided they’re not going to agree to that. They locked up the receivables and the case goods warehouse. Jay: Did they have the right to do that? Charlie: No, and it’s grounds for action, but I’m very reluctant to file suit against them. Jay: How did it impact your inventory? Charlie: Because my marketing company warehoused my full case goods inventory at their winery, when they made the decision to lock up the cash, they also made the decision to lock up the inventory. Jay: And you couldn’t get your own product back? Charlie: I couldn’t even touch my product. I couldn’t pull one case out of the warehouse. I couldn’t sell eight orders. This happened twice within a six-month period. Jay: And all the time you were held up in legal snafus, salesmen for competitors are telling the retailers that you guys are in terrible trouble. Charlie: Yes. And we have not been able to recover from it. Jay: Have you been out in the field yourself now? Charlie: Just as of about the last month and a half. Harvest came early, and I’ve been tied up here at the winery until just this past week. I did go into the Midwest for a few days and worked with a couple of distributors. We’re basically just starting from scratch with them, riding with the salesmen, meeting the owners of the companies, and things of this nature. Jay: When you do that, what happens? Charlie: Oh, we get very direct response while we’re there. Then it’s the trick of keeping that going after you’re gone. Jay: Is there a lot of inventory sitting somewhere now? Charlie: No. I’ve gotten inventory pretty well under control. It’s all fresh inventory now out under the new label. Jay: What happened to the old stuff? Charlie: I eventually whittled that out little by little through a number of different avenues. Jay: So are you still producing at your old rate? Charlie: We’re producing it at less than half our old rate. Jay: How much of that is currently committed? What are your estimates? How much are you going to sell on your own? Right now, if we don’t talk, if nothing else happens, how much do you think will sell? Charlie: Well, I think we probably will have it all sold by next year at this time. I feel good about the steps that we’re taking, but it is important to me to get these sales rebuilt with quality products as soon as possible.

Jay: Let’s talk about what you can and cannot do relative to the legal constraints imposed upon you. Charlie: Okay. For one thing, it’s against state laws to sell direct. I had contemplated hiring college kids, giving them a car allowance, filling their cars up with wine, and sending them out to sell. Jay: Why can’t you? Charlie: It’s against state laws. Jay: But it’s possible you could sell by mail and develop a mail order business in your home state? Charlie: Yes. There are several states that we can ship into. Technically, though, any wine going into any other state really must go through a distributor so that the state gets their tax revenue. I can hire people to go out and sell floor stacks. I can get them to go in and make the sale by making the presentation, showing what the product looks like, offering them tastes of the product, and then walking out the door and coming back an hour later to deliver their order. Jay: So you can hire young men to sell to retailers, but you can’t sell to individuals. Charlie: I think to move any quantity, I really could only go to retailers. But I could sell to individuals as long as I didn’t make the sale and deliver in the same transaction. Jay: But you could set up wine tasting parties where people savored it and put in orders for next week or tomorrow. Do you know of any outfits that have done this with success? Charlie: Yes. Their sales people claim it’s reasonably successful, but they have never done it for any period of time, which leaves me to believe that it’s probably not all that successful. Jay: Let’s go over to the biggest volume, which is ultimately the retailer. If you go to a retailer or a big chain today and you want them to take your product in again, what advantages will the retailers get for doing this? Is there a price inducement, is there loyalty in the market? Charlie: From everything we’ve been able to learn across the country, our strong supportive consumers say, “We can’t find your product any more.” Also, we are one of only two wineries that produce wine from this area. Jay: Is there a distinct taste from your region? Charlie: Yes. Jay: Is your Cabernet moderately priced? Charlie: Yes. The suggested retail is about $6.99. Jay: So it’s modest on down. You’re competing against the big bulk bottlers. Charlie: We’re just a touch above them, but we’ve constantly wondering if we’re too cheap. Jay: What’s your answer? Charlie: I don’t know. I read your information and you say I ought to test market it. But, honestly, I have not test marketed the product at $14.95 first and then $6 to find out. Jay: Do you think your quality can compare when you go against somebody? Is your wine demonstrably superior, comparable, or inferior?

Charlie: When we do blind tastings against the major award-winning wines in our particular classifications, out of 8 or 9 products, we generally come in among the top three. Prior to our financial problems, we had a very successful list of gold, silver, and bronze awards. We frequently have people in our tasting room who will go through 7 or 8 of the different products and say, “I have never been to a winery where I enjoyed every single wine like I did here.” Jay: That has to be very gratifying. Now, let’s categorize prospects and strategize accordingly. First of all, the big volume users are either the distributors or the retail stores. What action are you currently employing to work those, and what are the results? Charlie: Our marketing set up has about five different people all around the country, in addition to the head man. Jay: And these people are all independent? Charlie: Independents that work on a broker basis. Jay: What can you do in terms of promotion to get the retailers and/or the consumers excited? I’ve never seen coupons for wines. Charlie: Some of the big guys tried it and ran into horrendous objections from the BATF, the ABC, etc. As I understand it, it’s now legal but I know no one in the wine business who is doing it. Jay: Do you think it’s indicative that it didn’t work or it’s too much bureaucracy or too much hype? Charlie: I have a feeling it’s some of both. Jay: Let’s go forward. What’s the most aggressive promotional option available to you within rigid compliance with the ABC and prudence? Charlie: I get the best response from doing charity wine tastings. Jay: I think sampling is wonderful as long as something comes of it. What does a bottle of wine really cost you? Charlie: $1.50 to $2.50. Jay: In wine tasting, how many bottles go for how many people? Charlie: An average tasting ranges anywhere from 20 people to 1500 people and we will pour about seven bottles of wine. Jay: Do you have a full time operative who coordinates that? Charlie: Over the last two years, it’s just my wife and I. Jay: Do you have the time? Charlie: It’s hit and miss. We do three to seven tastings a week ourselves within the local region. Jay: If, all things being equal, you could give 1,000 tastings a week, are you set up so your winery and/or marketing arm can subsidize or absorb it? Charlie: Yes.

Jay: I’ve set up programs for a lot of clients—retailers, restaurants, etc.—who always do charity things. They have full-time operatives to set them up. This gives them such an inroad into the marketplace that it has a very powerful cumulative effect. It might be worth your while to hire purely variable-based operatives to set up tastings in concert with host organizations. For example, you could get grocery stores, charitable, social, or religious groups to host tastings that would be sponsored in part by you and in part by them. The host organization would pay a modest amount of money and keep all the proceeds. You would organize it and have people in the northern and southern part of the state organizing it continuously, both the tasting and the follow-up. Everyone who comes would register, and afterwards would get a letter from you and/or your wife telling them about the history of the wine. Maybe you’d send them a coupon. It has to be done very deftly. The people organizing them receive a small wage but get a very nice incentive on distribution and residual business in the area. What do you think about that? Charlie: It’s possible. Jay: Whatever we come up with, you can easily test so you can find out quickly and without a lot of expense what works. Then you can replicate it fast. If it doesn’t work, your downside is very modest and you can modify. It’s very powerful if you understand that you’re not mandated to do any one thing. You could try 50 tastings or one region and track it for 60 days and determine the front-end costs, the sellthrough costs, the residual effect, etc. There are very powerful things you can do. Let’s talk about free goods besides tastings. What else can you do? Charlie: We’re very limited. Generally you want a charitable function. Jay: Is it blatantly illegal to go to a high volume restaurant or a big liquor store and set up tastings? Charlie: Yes. Jay: Why? Charlie: It’s part of the old prohibition laws that are still on the books. Jay: I had a very expensive restaurant client once who I devised this wonderful personal mailing for. I wrote a personalized letter to 40,000 people within their marketing area. The whole essence was that when you came in, the restaurant would buy you a glass of champagne or vintage wine. Their attorney got shocked, and the ABC wouldn’t allow it. They said the customer had to buy something. So I wrote another one to the effect that if you bought something for a nickel, we’ll give it to you. That also made the attorney tense. The rules you are mandated to operate by are pretty harsh. Charlie: They’re very antiquated laws, but they’re all over the U.S. and they vary from state to state. Jay: Well, for your tastings, we can get a list of every charity group that tends to have high affinity responsiveness. If we mailed 25,000 to charitable heads and got a 3% response, you’d probably be able to book. That’s leverage, don’t you think? Charlie: Sure. Jay: You’d start by mailing 2,000, 3,000 or 5,000. You’d have to find out how to get the list. You could sit down with a pen in hand and think of what kind of groups tend to offer you the most repeat prospects. Charlie: We generally find that it’s doctors, attorneys, and hospital groups. Jay: So, you could write to hospitals, auxiliaries, women’s clubs, fraternal, civic, and charitable affiliates and offer to put on a charity wine tasting. If you did that for a raffle—can’t you give a case of wine to raffle off or anything like that?

Charlie: I would have to check into that. Jay: The point is, you could do some neat things. Your letter could be a stock form letter with a charming story emanating from you and/or your wife telling them your history: how you were a farmer and decided to bring your regional grape to greater distinction; the struggle of your uphill battle but how it was worth it because now lots of people are drinking your wine; how one of the most joyous ways you have found to let people savor the experience is to host wine tastings put on by you, your wife, your winemaster, etc.; and how in the month of November you’ll be in their area putting on charity wine tastings in conjunction with service groups. Tell them that you’ve only got a finite amount of time on your schedule but genuinely would love to put one on for their service group. With a little luck you, your wife, your winemaster, or your junior winemaster could be there. You’ll provide a general education on wines and a sample tasting of at least seven products. You ask that they provide the cheese, the group, and that they endeavor to produce at least 25 serious people who would like to learn more about wine and spend a very enjoyable two or three hours with you. Have interested individuals contact the host organization directly, or the organization can send back the card and you’ll contact them to set up a reservation time. Charlie: How would you get the direct mailing list of who attends the party? Historically, these parties present some exciting possibilities. Jay: I think it’s a function of the way you structure the deal. They call you and say what they want. You tell them you need to know in advance who will be attending. You might even have the names imprinted on cards or have the favored bottles personalized. Charlie: How about having cards that they fill out with their names and addresses and enter in a drawing? Jay: Great. Is there anything at the winery like a bed and breakfast where you can give away a weekend or something like that? Charlie: Technically, the winery cannot give away things like that because that is an inducement to buy. Jay: You could have a guest or tasting book that you pass around for people to sign as part of the tasting procedure. Ask them questions, too. When you’re finished, if you have lots of results, you can get a computer service to send out quasi-personal letters. You can print them in batches of different colors and add a personal note, something to the effect of, “I enjoyed meeting with you. I’m particularly glad you like Cabernet’s and thought I’d tell you a little bit more about the history of ours and about our region.” The point is: the more you can bring color and history and dimension to your products, the more people would relate to it. What do you think about that approach? Charlie: I like it. Jay: Let’s talk about retailing now. What does it take to get your reps to promote your products over the competition’s? What do they make when they buy your wine? Are the margins the same? Charlie: Yes, basically they charge the same markup. Jay: Are you allowed by the ABC to do anything to induce retailers to buy? Charlie: Yes, I can sell directly to the retailers if I want. Jay: But I’m talking about price differences. If your price list says that your wholesale price on a case of state bottled Cabernet is $38.12, what flexibility do you have to charge the retailer that price?

Charlie: We have a listed price and technically all wineries are supposed to stay with their listed FOB price or the distributor price. Jay: What are the legal and the regulatory requirements? Charlie: None. Jay: Can you give the salesmen at the liquor counters so much a bottle or so much a case? Charlie: We cannot get involved in inducements directly to any of the employees. Jay: You cannot, for example, put together an inducement package that the store itself gives, but you just give to the store? Charlie: I know of no one that’s been able to do something like that. Wineries will frequently give inducements such as that to the distributor’s salespeople. We’ve done things like give away a free getaway weekend to top salesmen for our brands. Jay: Is that legal? Charlie: It has to come from the employer. To carry that down to the retail level would be such book work that you won’t get a distributor to do it. Jay: Can you trade goods? Charlie: Technically not. There would have to be money received for them and of course the state and feds all want their revenue from them. Jay: How much tax is involved? Charlie: A penny a gallon for the state and 17 cents for the federal. Jay: But if you trade and pay the thing, is that fair? Charlie: That’s fair technically. The federal government comes in once a year and spot-checks your invoices against your shipments out of inventory. You could get caught on it and get in trouble. Jay: Usually when I’m pitted with helping somebody who’s got a competitive product that has no unique selling advantage, I try to figure out ways you can help the customer. People get too limited sometimes when they’re trying to promote their own product or service to think of what else they can do to induce sales. I try to get you to think beyond these boundaries because the person you’re trying to induce has such a broader range of needs. If you can fill any of needs in other ways, i.e., if you can help them make money, if you can help them save money, the end result will benefit your sales. For example, I’ve had people teach people, buy them tax newsletters, buy them books, send 1,000 copies of best sellers to prospective customers with notes on diet, on money management or investments, etc. These offers had no relevancy whatsoever to the product or service that the business person was selling, but they had immense relevancy to the broader spectrum of the customer’s personal life that the business person was trying to impact. In your case, you can invite all of your prospects to come to a wine tasting. You can put on activities and invite local retailers. You could put on an educational seminar on some subject that may or may not be relevant to yours and have a wine-tasting at the same time for the buyers of retail stores, couldn’t you? Charlie: Yes.

Jay: And be sure to test and measure everything. Testing gives you leverage. I don’t want you to go knocking on doors if you can send 25,000 letters out in the course of a year that would cost $7,000 and produce a 10% response of 2,500 organizations that want you. You can call and do some prescreening to see which ones have the biggest memberships and most potential for you. It makes sense for you to maximize the return on your time and your resources at this point. Charlie: Thank you. * * * * To get powerful leverage, look for the most aggressive promotional option that you have (that stays within compliance of the law, of course). Then, determine what kind of groups give you the highest repeat business and use a very personal letter to present your offer. Keep exploring this strategy—testing every step of the way—and you should find an extremely effective inroad into your marketplace. Use color, history, and dimension in every aspect of your marketing campaign to help people relate to your product. In Charlie’s case, he can write delightful letters to his prospective clients that tell his personal story, describe the history of the winery and region, and give information about his products. Do you feel that your product has no unique selling advantage? Look for other ways you can help your customers fulfill their broader needs, whether it’s through conducting educational seminars or offering books on money management. The end result will be increased product awareness and greater sales.

Artist and Seller of Art Kent is a painter of landscapes who sells originals and prints. When I talked to him, he had a stack of prints he was unable to sell, and only a handful of his previous customers were giving him repeat business. I gave Kent a wide range of ideas he could use to attract qualified leads and produce immediate sales. These included a “Meet the Artist” night, and a series of personalized letters to his prospects. I also told him (and this applies to nearly all businesses) how to redirect his energies to his most valuable, but most overlooked asset: his present customers. Finally, I hit upon one audacious marketing strategy that had the potential to generate thousands of dollars practically overnight. * * * * Jay: First of all, tell me how you got your art practice to where it is, what really works, what you enjoy doing the most, and where most of your business has come from. Give me a quick overview that embellishes what you wrote in your letter. Kent: Well, I have made a name for myself as a painter of landscapes. I know a lot about the history of the regions I paint, and also of their peoples. I remain in touch with my customers with a yearly Christmas card and several pieces of promotional material. You have copies of them. That’s the way I have done it. I have worked very hard. I am a very ordinary sort of fellow and not too difficult to get along with. I think that helps. Jay: How long does it take you to create an original work of art?

Kent: Of course, it depends on the size. My biggest historical pieces run me up to four or five weeks. I am getting faster. I am acquiring a technique that is much faster. Jay: Without compromising the details? Kent: Without losing quality or integrity of the piece. Jay: Where do your customers come from? Kent: Well, they’re scattered all over the United States. A great many live in the East, the Mountain States, and the Southwest. They travel to see national parks. They also see my paintings in magazines, and can reach me using the number in my advertisements. I also have a studio. I see people by appointment only. I’m not interested in having dozens of people come through with ice cream cones, hot dogs, and everything else. Jay: What about the gallery that shows your work? Kent: They no longer represent me. The gallery worked with me for about 8 or 10 years. Jay: Why did they stop? Kent: Well, they sold their business. Jay: You and I have the same ability. We can create value at will. You can do a $20,000 or $30,000 painting in a month. In a month, I can create $20,000 or $30,000 worth of value. It’s a wonderful gift, if the world will embrace it properly. Kent: That’s right. The only problem is, we have to find somebody who wants it. Jay: Somebody who needs it or who can convert it into value for themselves. So right now, you’re not getting enough business. Can’t you find another gallery? Kent: That would be no problem at all. But, if I do that, then I have to give the gallery about 40% of my sale. I really don’t appreciate that, because what happens is that I have to close the sale myself anyway. Jay: In other words, they show your work, then parade the prospective customer to your house. You have to do your dog and pony show before it’s sold anyway. Kent: Most of the time that is what occurs, because the buyer likes to meet the artist. One of the problems we have as artists is obtaining the name and address of the person who buys a painting. See, the gallery likes to hold on to that. They don’t really want the artist to have that information, because they feel you will bypass them and make direct sales. Jay: You look distinguished in an understated way, you are outgoing, and I could tell instantly you were articulate. Do you give seminars or speak to groups, and, if so, has that made money for you on a residual basis? Kent: The answer is yes. I’m always willing to give, for instance, a watercolor demonstration. If this occurs, I can usually pull in, depending on the size of the town or city, as many as 250 people. And these are good contacts. Many of them are artists of course; not too many are buyers. But it gets my name out in the public, and I thoroughly enjoy it. Jay: When you have done that in the past, who has financed the undertaking?

Kent: Well, there really isn’t too much financing. I remember at one time several years ago that an organization—I think it was the Ladies’ Society or something like that—invited me to do a show. They provided the room, I provided the mirrors, the tables, and the finished painting. When it was completed, I had donated to a worthy cause, and, of course, we auctioned the painting. Jay: Well, that might be very interesting. From your letter, it sounds like your wife and daughter are already an integral part of growing your business. Kent: Absolutely. Jay: It’s wonderful when someone’s behind you. Kent: Right. They are very capable and very honest. Jay: It would seem to me, assuming you and your wife enjoy traveling, that you could put together a promotion, to be done by direct mail and/or telephone, directed to large prosperous organizations. You could offer yourself for a “Meet the Artist” evening. You do a piece right there that’s donated and auctioned off. The organization pays only for your real expenses to get there. That could keep you busy one day a week for a month or a year, if you could handle that. It would seem that you would be broadly expanding the number of qualified patrons who could also be good prospects. What do you think about that? Kent: I think you’re right, yes. Jay: What’s a painting worth that you would do for one of those affairs? Kent: About $1,500. That would be a watercolor that I would produce on the spot. Jay: That is not enough to make it work. You would have to organize meetings back to back, because the cost would almost be prohibitive. I think that would be the best thing to do, but the dynamics don’t work well. If it’s going to cost $500 to get you there, and they bring in $1,500, it’s a marginal transaction. When you’ve addressed a group of 200 in the past, and when they auctioned off the watercolor, did you get usually one or two customers out of it? Kent: I would think so, yes. We also gain quite a few names and addresses, of course. Jay: So the back-end may make it worthwhile. Let’s talk about ads for a moment. You probably want to show your work, but you must also find a way to justify every ad you run, so you make some profit. It would be very interesting if you could create an ad that demonstrates your work and has an offer of $5 or $10 per print. Something that would bring a qualified prospect to acknowledge himself or herself. Kent: Yes, this is something that I really wanted to talk to you about. My ads are not working. Jay: I think there might be some easy ways I could help you generate a very substantial amount of money by reclaiming something you already have. In the process, you could generate enough capital so you could comfortably experiment without having to jeopardize your inflow. Does your business do well? Kent: I would say that I make a pretty comfortable living. I have a lot of expenses—photography, travel, paint, canvas, all these things. I don’t believe I can give you the net on it right now. Jay: Do you have the names and addresses of your 1,200 customers on computer? Kent: I do have them on computer now, yes. Jay: Do you have them categorized by what they bought—either by dollar or by category?

Kent: Not in the computer, no. But I do have that information. Jay: How often do those people re-buy from you? Kent: Not as often as I would like them to. Jay: Let me tell you, the marketplace is only begging to be led, to be reaffirmed, to be programmed. What if you sent out letters, personalized on computer, not pre-printed, at some frequency to all your customers, or categorically to segments of your customers, that said something like this: “I am writing you to alert you to an opportunity, Mr. Smith. I know and appreciate the fact that you are one of our better patrons or admirers, and I’m charmed by the thought that you have a painting, line-drawing, charcoal, or whatever it is, hanging in your home or office. “In the past, you indicated you want to continue collecting. I’m equally gratified by that. I’m writing to tell you that my workload is such that I’m only going to be able to produce a limited number of paintings this year. Quite frankly, I imagine I will be able to do a total of 4 oils and 7 watercolors, and, if I’m lucky, 2 or 3 series of 100 each in prints. “I’m writing in advance to tell you that if in fact you are contemplating acquiring more pieces, I would like to give you the first opportunity to purchase some of my work. You can do so before I go on the road, do shows, have the galleries put my work on display, and do all the drudging and time-consuming things my art advisors want me to do to attract patrons. “Frankly, I’m scheduling now for the next six months. I don’t know if you’ve thought about collecting one of my own original inspirations, or something else. But this letter is being written to afford you the opportunity, if you’re ready to add to your collection, and if, in fact, you want to acquire another piece of my work. “I’ve asked my daughter to facilitate any commission or acquisition you are interested in. I told her I was sending you this letter and that you might be calling. I’ve advised her that if you are interested in an original piece of art, or in one of my prints, she should sell it to you, because you are one of my preferred patrons. My past clients get first preference on my time and my product. “I repeat, my time and product are very limited. I give preference to the people who have patronized me in the past for two reasons. First, I appreciate your business. Second, quite frankly, it’s good for both of us, because you can match your collection, and I gain more publicity. Through you and your peers, my work grows in value. The more your investment grows in value, the more we all gain.” I think that’s a neat letter, don’t you? Kent: Yes. It sounds good. Jay: And it’s tasteful. You’re not demeaning yourself and you’re not groveling. It’s basically through the auspice of charming, appreciative service that you’re very nobly and honestly saying, “I can only do a little work. I’m going to sell it to somebody. Yes, I might have to go on the road and do shows, but I’d much rather sell it to you. But, if you want to buy, you’ve got to let me know right away. If you call my wife or daughter, they’ll tell you what my schedule is and what I’ve got in original works.” You could say you’ll send them pictures if they prefer. Tell them about the two limited editions you have planned for next year, and how you’ll assure them a position on your roster of buyers. You have to direct them to action. Say, “The thing to do, whether you have contemp lated, whether you definitely want something, whether you want to see what’s available, or whether you want to get a handle on my new offerings, is call my wife or daughter, Monday through Friday, between such and such time. They will tell you what’s available, schedule a commission, make suggestions, or just discuss my works with you.”

That will produce calls. We’re talking about lead generation. Lead generation is a fascinating phenomena. It’s only good if you can convert leads to sales. So, once you get them to call, you’ve only got half the battle done. Kent: Can I possibly make use of my recent trip to South America and indicate that I am now producing new things? Jay: Absolutely. You should do a mailing to your customers. Let me tell you where you missed the boat—it’s not you specifically, it’s everybody. You expend more effort and capital going outside. You missed the boat by not directing more of your efforts to your existing customer base. Your 1,200 people represent half a million dollars in business. If you could nurture 20% of them a year, you could get $100,000 income for probably $4,000 in expenses. Do you see that? What you should be doing is sending a series of letters to those 1,200 people. Kent: I don’t need to reach all those 1,200 people, because some of them haven’t really bought anything. They may have bought a $30 print. Jay: How do you know they won’t buy anything? You’re making a supposition that may be very costly to you. It’ll cost you just a half dollar to send a charming, computer-generated, seemingly personalized letter. If you just plant the seed... You might have a P.S., or you may have different categories of letters applicable to the right person. “I know you loved my work, and I know you were on a limited budget when you made your first acquisition, a modestly priced print. Irrespective of the size of your purchase, I still regard you as a valuable patron. I am now alerting you to the fact that I have two other prints coming out that are slightly more expensive, but I think they would augment your collection beautifully. “Perhaps your circumstances have now changed, and you would be interested in a larger original oil or watercolor. If so, I’m going give you top consideration. I’m being very frank with you, because I have a limited availability.” I sense that even though you want to live and prosper, you don’t want to just make money, you want to touch humanity. You want to have them be smitten with your vision. You want them to appreciate your perspective. Your artistry is a personification of your perspective, isn’t it? Kent: You’re really right. Jay: I hope I’m helping you. I think the problem is that you’ve got to make people understand, you have to empathize with them, tell them what they don’t realize, tell them what you’re all about, and tell them you want to touch them and help grow their art collection. People who have never been touched before will appreciate why parts of the country are so wonderful, why our heritage is so wonderful. For all these reasons, financial gain being the least, you’re writing to urge them, to tell them you’ll work with them. Tell them you have been known to be liberal on payments, you have been known to extend yourself very beneficially on people’s behalf. You want to grow collectors. If they and their friends appreciate that, you’re doing something much greater than just selling art. Kent: Right. Jay: I think that kind of approach would be embraced. A lot of people would find it exciting, don’t you think? Kent: I think you’re right.

Jay: I think you’ve already got what it takes. I’m just articulating what I think you want to say. It’s got to be done right. It’s got to be done with a lot of short paragraphs. Do you see the way I write my letters to you? They’re very clear and easy to read, aren’t they? They invoke sincerity, don’t they? Like locks in a canal, they float you progressively forward in thinking, don’t they? I’m not asking you these questions to waste your time or patronize my ego. I’m just illustrating how you should maneuver ethically, and advance the thinking and action of the customers you’ve already got. Kent: What about my ads, Jay? Jay: What do you want to know about them? Kent: Well, they aren’t working. I would like to know how to make them work. Jay: First of all, where do you run them right now? Kent: In an art gallery magazine read by art collectors and subscribers. Jay: If people collect other artists, do they seem to be interested in you? Kent: Not necessarily. It depends on the type of art they’re interested in. Certain people like certain things. Jay: Who would you be similar to? I’m trying to give you some innovative ideas to make your ads do really well. Kent: Well, I’m similar to several landscape artists in the country. Jay: Who’s very popular? Kent: Well, Tom Lovell is one. Jay: Is he highly regarded? Kent: Yes, very much so. Jay: Is he highly collected? Kent: I would say yes, very much so, and his prices are very high. Jay: What if you ran an ad ran that said something like this: “If you own a Thomas Lovell, if you have an ‘aesthetic simpatico’ with him, you may have a kindred spirit with me. I would like to talk with you about your collection and about the possibility of owning or gaining a special commission for one of my existing works. I’ll talk to you directly. My time is very limited, but I’m interested in communicating with people who have an acknowledged interest in such and such and such.” That’s a very interesting approach, isn’t it? Kent: Well, yes, except it feels conceited. Jay: Let me tell you the basis of ads. You take a lot of ideas and bring them to the marketplace in the form of a question. You ask people to validate or invalidate these ideas. It’s conceited if it’s written haughtily. I think you’re all about nature, history, and the expression of certain artistic values. If you know that certain collectors are probably highly disposed to favor your philosophical and aesthetic point of view, then speak directly to them. Don’t waste your money on everybody if only one out of a hundred art lovers are interested in you. I’m talking about efficiency. I’m telling you how to be efficient.

What I would do for maximum efficiency is run a series of charming ads—not cocky or haughty—but very straightforward ads from an emotional standpoint. If there are 10 artists that people collect, people that would be interested in seeing your work, I would write a letter and say, “People who collect Tom Lovell—you and I should probably talk. People who own works by Lovell might want to own my work. My work can be seen here and here and here.” Kent: How about if I just say, “If you own a fine piece of art, we should talk?” Jay: No, because you’re not being selective. What if I own Picassos, what if I own Andy Warhols and I think they’re fine? You might think it’s excrement. If you want to make every marketing dollar be as efficient as possible, the first thing I would do is find everybody who already has acknowledged that they are philosophically, aesthetically, and artistically in harmony with what you’re all about. They already have a partial or a nice collection of similar works, but not yours. Kent: I see. Jay: Have them acknowledge themselves. Ask them to write or call you. Tell them you’re looking for 10 or 20 collectors. Tell them—forthrightly and selfishly—why you think it’s good for you and it’s not bad for them. Tell them you think you can augment their collection. Tell them what you’re all about and about the void you can fill. Tell them about validity. Tell them that you’re not trying to sell them necessarily, you’re trying to develop a dialog. If there’s a match, if they call you, you’ll be glad to give 1/2 hour of your notinconsequential time in talking to them. By dealing directly with the artist, two things occur. First, the acquisition cost is as advantageous as possible. Second, they really get to understand all about the artist— before they spend their money. I just think that’s a neat approach. Kent: I like the idea. Jay: Try it. Try using the names of 20 artists who are similar to you. Try 20 little ads. If the collectors want to invest a little effort, if they could be good collectors of your work, then you’re willing to invest some time and effort in them. Be glad to send them an example. I think you should run those kinds of ads. If only 50 people responded, but 100% of those 50 people were super prospects, then that’s better than spending $5,000 for a big ad or another kind of ad. Then you can spend all your money sending the pictorial stuff to people who really are prospects. You can develop a dialog and patrons and get referrals. That’s what I would do. Kent: What about my prints? I’ve got a million dollars worth of prints sitting here. Jay: Retail value? Kent: Yes. Jay: What do they really cost you? Kent: About four dollars each. Jay: Let me give you one suggestion—a suggestion so daring and audacious that I don’t think anyone in their right mind would do it, but I think it would be worth trying. Send to 100 people in your database a matted print with a cover letter saying, “I’ve taken the liberty to do something no other artist has ever done. Since I thought you were going to want one of these prints before they sold out, I’ve sent it to you for 30 days on approval. You didn’t request it, I know, so you’re

under no obligation to pay me for it. You can return it if you want. However, I thought you would probably feel bad when you found out they had sold out. “Don’t worry about paying me right at this moment. What I want you to do is take it, set it up on your desk, look at it for the next 25 or 30 days, and then decide. If you believe, as I do, that it’s a piece you should have adorning your wall or office, or certainly as the next adjunct to your collection, then take the envelope and statement I’ve enclosed and send me the $225. If you don’t want it, send it back to me and I’ll reimburse the shipping charges.” What do you think would happen if you did this? Kent: Well, I feel like I’m sticking them with something. Jay: It’s a test. I’m not saying, go crazy. Take a hundred people, send them this letter. Rather than having them send you money, you felt you would let them view it in their home or office for the next 30 days, and if they didn’t like it, they could send it back. Try it. What’s the worst that can happen? You could lose $400. But what if one-third of them buy? You get back 33 times $225—over $7,000. That wouldn’t be so bad, would it? Kent: I don’t think I have the charm that you have, Jay. Jay: I think you do. I think you don’t know it. Kent: Is there any way you think I can job these prints out? Jay: What do you mean by “job them out?” Kent: Sell them at a jobber price. That’s one-fourth of their retail value. Just get rid of them. There’s one print we’ve had for 7 years. Jay: Here’s a neat thing you could do. Take an ad in one of the magazines that’s read by people who like your kind of art, but create an arm’s-length entity who would act as your marketing agent. I have a great concept that I’ve used in the past. It’s very, very effective. It’s called the marketing test. You have a headline that says something like, “$225 limited edition famous prints—only $39 or $59 as part of a daring test we are doing.” The body copy would say, “We wanted to find out what impact price alone had on compelling the marketplace to collect famous art prints, so we acquired the entire remaining edition from a famous artist. His prints were designed to sell for $225. But we’ve made a special one-time-only arrangement with the artist. We are using his prints in an experiment to try to induce more people to start collecting art. He has allowed us, for one time only, to offer his prints to the marketplace at a large discount. “There are three stipulations you must meet to acquire these prints for this special rate. First, you must never have purchased prints from the artist before. Second, you must promise that you will put your print on prominent display, either in your home or office. Third, you must read the accompanying history of the artist and his views, which he has written to help you to understand what he’s all about. We’ve also enclosed an inventory of all his full-priced works.” That kind of approach could be very interesting, don’t you think? Kent: Yes, it’s very good. I would have to find someone to do this who’s not connected with me. Jay: I agree, or create an entity down the street. You could own it or make a deal with someone who would act as your arms-length conduit, so it wouldn’t breach the integrity of what you are doing. Then, if it works, it would be wonderful. Kent: Right, very good.

Jay: Do you have a lot of original stuff in inventory right now? Kent: No, the originals sell quite well, and I have a tremendous amount of work ahead of me—about six months’ worth. Jay: Well, the first thing you’ve got to remember is to work your customers. Send them different letters, send them a little monarch letter. It’s almost like change-up pitches in baseball. Try a lot of different approaches. If you got a monarch-sized letter that says, “I just got back from South America, and I have the greatest inspiration for three pieces with a Spanish-Western theme. It’s just going to be so interesting, I want to tell you about it. Frankly, I’m sure they’ll sell, but I’m offering first options to my valuable and appreciated patrons.” What do you think will happen? Kent: I think it’s very good. I should get a lot of response. Jay: What I suggest you do first is apply the techniques. I’ve tried to give you a philosophy today. It’s a way of thinking. What I wanted to do today is give you a way of thinking that’s logical. It’s talking from the heart. Are you getting some good ideas from this? Kent: Yes, very much so. Jay: Also, you’ve got to realize, you need to tell your prospects why. To review what I said earlier, tell them what you’re all about, your vision, and why you appreciate them. Tell them that they obviously understand, they obviously are in simpatico with your views of nature or the Indians or the progeny of our country or whatever it is. Weave this web, this romance. Move them to action. Tell him why it’s selfishly to your advantage to get people to increase their art collections, that it not only makes your work more valuable, it makes their collection more valuable as well. Kent: I think we’ve covered a great deal. Jay: For most people, let me tell you what happens. If I do my job correctly, I may overwhelm people. All I’m trying to do is super-germinate a way of thinking in your heart and mind. I hope that you have benefitted. * * * * The advice I gave Kent is based on fundamental marketing principles that cannot only generate leads and increase sales, but also increase the value of his artwork. I suggested: 1. Planning a series of “Meet the Artist nights.” (By meeting your customers in public, you attract qualified leads and also create publicity and awareness of who you are and what you are all about.) 2. Taking out ads offering prints for five or ten dollars. (The right offer in the right magazine or publication can bring qualified prospects to acknowledge themselves. From there, you can do follow-up contacts to create further transactions.) 3. Creating a series of personal letters, offering people first crack at buying new works. (Make sure you have a database with as much information as possible about your clients and prospects. Send them regular communications to create a bond, to create empathy, to create goodwill.) 4. Reselling all previous customers. (Direct your efforts to your existing customer base. It is often an untapped source worth a lot of money. Don’t assume anything. If they haven’t bought a lot in the past, their situation might have changed. A small investment in postage may pay you back manyfold.) 5. Educating prospects. (The more people know about you, the benefits of your product or service, and the way you do business, the fewer obstacles they’ll have, and the more reason they’ll have to do business

with you. When people know more about your product and its uniqueness, the more valuable your product becomes to them.) 6. Taking advantage of similar artists. (Try positioning your product as an add-on or complement to a product the customer already owns.) 7. Using the bold strategy of sending prints in the mail directly to part of the market with the offer, “If you like it, pay me, if not, send it back at my expense.” (If, like Kent, you can do this with little financial risk, it may be worth a try. Start small.) 8. Creating an arms-length entity to market test products. (You can have an outside person test the pricing of your product by offering highly discounted deals via a “one-time special arrangement.”) Try out these strategies whenever and wherever they can be applied to your business. Measure the results, and keep doing the ones that work. Even if four out of five bomb out, the one that works could make you so much profit that the loss you sustained on the others will seem inconsequential.

Motivational Seminars Craig, an investment manager, had also been teaching very successful seminars in personal motivation at a local university campus. He averaged 50 students a month in response to 6000-piece mailings, and had glowing testimonials from the course participants. Now he was planning to turn his seminars into a home study course—a booklet of six lessons, each 1216 pages—and to market it nationally. He was wondering what to name the course, how to price it, and how to advertise it. In this consultation, I emphasized the importance of testing different approaches to see which gives the best results, and gave him details on how to do so. Testing could by itself double or triple the return he gets on his marketing dollar. I also told him how to make maximum use of the “back-end”- following an initial approach with a series of further offers. I showed how for many marketing ventures, the back-end can make the difference between loss and enormous profit. One of the best back-end strategies, the joint venture, is especially underused. Craig’s case may show you how to work with other businesses to greatly i ncrease your bottom line. * * * * Craig: In the letter I wrote you, I talked about the name. I don’t feel good about it. There’s a name I was going to use before, and I still like it. I was going to call it the “Empire Formula” and below that “A System For Attaining Personal Success.” I can talk about the fact that success is not a secret, it’s a system. The company that I’m going to be using is called the Empire Institute. Jay: Why? Is Empire symbolic of anything? Craig: No, I had an old company called Empire Financial company, and Empire stands for power. But there’s no real reason why I called it that. I prefer not to use my name in it. Jay: If you read the Marketing Genius materials, one part had to do with testing. You will find this single concept—testing—will help you enormously in any marketing endeavor you engage in. You can test many suppositions and see which ones influence the outcome, and know exactly how much they influence it.

For example, you test 1,000 people with one approach and 1,000 with the other approach. You give one the Craig Wilson system, one the Empire formula and see which one the marketplace likes. What I’m going to do in this hour is give you expert guidance, but also tell you that I don’t have all the answers and you don’t have all the answers. The marketplace will clearly and definitively answer any question you have ever had if you will ask them in the form of a comparative, very inexpensive test. It may seem scary, but it’s the most powerful single device you have available to you. You can take any question you want to know—whether one price is better than the other, whether to use long or short copy, whether one headline is better than the other, whether one company or plan is better than the other. All you have to do is experiment in a competitive test. On the name, do you have an aversion to using your own name? I like the Wilson System or Wilson Method. You could also tie it into the area in which you perfected it. I had a client who formulated a stress management system when he lived in Santa Fe, New Mexico. He called it the Santa Fe Method. I liked the name, but what I like and what you like is not relevant. It’s whether the market likes it. The point is, you don’t have to choose. You can do experiments where all the variables are the same except for the name. Then you see whether it makes a perceptible difference when you call it the Acme System, the Wilson Method, the Empire. Craig: What I’m thinking right there is that I’ll have to refer to it by name in my lesson material. Jay: You can very easily have a cover letter that says you originally called it the Wilson Method or System and say, “It’s since been renamed.” It may not be perceptible, but if in fact one name enhances the perceived value in the eyes of the prospect and increases yield by 300% (which I don’t think will happen, but it could), it’s worth waiting to know. Craig: I agree. Jay: The best way to find out is to try a little test. You can photocopy a direct mail piece before you even print it up. Print 1,000 pieces one way and 1,000 pieces another way. Send it first class and photocopy it. Have 2 versions on the word processor. If I were gambling (and I don’t want this time together to be predicated on that), I would rather see it be the Wilson Method or Technique than Formula. I also think you would be better off choosing your own name instead of the Empire because I think it’s got more intrigue to have it based on your own name. But, as I said, it would be best to comparatively test and let the marketplace tell you. Craig: I ran a little test with my class the other night and said, “How many prefer formula versus system?” System won. I also asked them how many prefer system vs. process and they preferred process over system. But that was a very small test. I don’t know if it would mean anything or not. Jay: The people who are close to you are not the people to have evaluate it. You typically want somebody who is not close to you. But it would be very interesting to experiment. If you had to choose, I think you’re better off with a “system” or “method” or maybe “process.” Rather than having to choose, do a 3,000 piece mailing. It may not work anywhere, but have 1,000 pieces be the the “method,” 1,000 the same except the name is the “Empire System,” and see which one if any does perceptibly better or worse. Craig: Below the name, I was thinking of calling it “The Process For Attaining Personal Success.” Jay: I like that. Bear in mind, I’m not recommending that you arbitrarily choose. If you had to, though, that would have a good connotation to it.

Craig: I was intrigued with two-step advertising. I recently signed up for the Charles Atlas course to see how he markets it. I sent in under two different names. The first one I bought from him for $35 plus $2 postage. He sends it to me 2 lessons every other week, 6 mailings to me. I didn’t sign up for the other one and 2 or 3 months later, I got a 50% discount offer. Jay: Two-step is a great way to work if you have a great back- end. Let’s discuss it. What do you plan on charging for your course? Craig: Well, I’m thinking somewhere around $35-$45 for it. Jay: That’s very good. You know you can price-test very easily and find out. Craig: Maybe $30. If I go over $45, I would be way out of line because cassette programs are selling for $35. Jay: Okay. In the beginning you can try a lot of various things. What you ought to do first of all (if you haven’t) is monitor everybody who is running two-step ads of an informational basis. I’d get Psychology Today, Mechanics Illustrated, The National Enquirer, Women’s Magazine, and maybe Playboy. I’d look at everything that comes in. I’d look at a couple of different issues of the ads to make sure you were seeing a winning thing. Just because somebody ran an ad one time is not indicative of the package. I’d look for something that had been running for a long time so you have an indication that it really paid off. I’d study all the follow-up pieces, the package and the approaches that they implemented so that you can come close to that. I would never plagiarize, but I would emulate; after all, they’ve probably expended a ton of money to perfect the ad and they have indications that it worked. Keep in mind, though, that your business approach is going to be unique to you. The exact tenets that worked for Charles Atlas or some other kind of a two-step approach are not going to be applicable to you. When you run yours, look for publications that are replete with ads. Don’t try to find one that has no ads, that you just stumbled on accidentally, and think that you’ve got the fountain of wealth. Most people make that mistake in the beginning. They don’t want to be in a publication that’s loaded with all sorts of other ads. That’s an erroneous assumption. The publications that are full of ads are probably the most responsive ones, because advertisers don’t keep running in them unless they work. The best thing about two-step is that it’s a cheap way to get a lot of qualified prospects, and you backend. You can try a lot of different ways. You can try the free information or the free special report offer. You can try $1.00 or $3.00 for the first lesson. You can try a plethora of different approaches to see which one or ones produce the best result. Two-stepping is much easier to succeed with than one-step. A fullpage ad that tells the whole story has to pay its own way as a one-step. It’s very difficult in the competitive environment of a good mail-order publication. You should try a lot of different thrusts, headlines, and premises in your ad approach and in where you run them. For example, it sounds like your process, your system is so utilitarian as to almost be dangerous to you because it may be too abstract for someone to really realize the application. I would strongly advise you to experiment in different ads from the general to the most specific application. For example, you could try one that can say, “How To Be And Get Everything You Want.” You’ve got one letter which is very interesting. You’ve got all the different things you can do with your system in sequential order. I would also try some very specific ads that just address one application. For example, “Lose all the weight you want. Be the person you want to be in the next 90 days. Complete details about the Wilson Method, free” or “Attain the success you want within a reasonable time frame. Complete report illustrates how and why it works, and makes a risk-free proposition.” Craig: “Move into a better home. Be a better speaker. Become a non-smoker.”

Jay: Think of the headline as an ad for the ad. One of the biggest mistakes people make is they’ve got an ad that is so encompassing that they try to be all things to all people. Oftentimes that isn’t as good as selling specific applications. So, I would caution you. I definitely encourage you to try a general ad that says how to be everything you ever wanted, but also get into the sub headlines. Broach on what you just read to me and make a proposition. The way you construct the offer can make a big difference too. It can be a free detail. It can be a free report. It can be the first lesson free. You’ll send them a sample tape. Try all sorts of different things. You can experiment and analyze because you might find that you can run different applications in different publications. Maybe in women’s magazines the application might be beauty, weight, and cigarettes. The men’s might be success, romantic success, or a whole plethora of different vertical applications. You don’t really care if you end up with 12 different ads if each one of them works. Craig: But the course would be the same in all. Jay: The course would always be the same, but the follow-up letter might have a different headline or a different beginning paragraph. Say, “Here’s how to do this, plus how to do all these different things as well. With this one system you are given the power, the knowledge, the ability, and the techniques to be whatever you want and to achieve whatever you want. You want to be thinner, you want to be bigger, you want to be wealthier, you want to be more articulate, you want to be.” I think that could be quite fun, but I think you could induce more people to buy by offering some kind of report or secondary information. Is Charles Atlas offering a free book? Craig: He just says, “Send me your name and address for more information, free.” Jay: I would encourage you to try expressing what you’re going to send them differently in each ad. Offer them a free explanatory report that explains all about the Wilson System, why it works, how it works, and then share actual real-life experiences from 10 people who applied it in their life. Make a “try it out before you decide” offer. When you send your follow-up letter, I would tell them that you’re so convinced that it works, that you’ve got a wonderful, wonderful proposition for them that would be hard for them to pass up. If they’ll send you $39, you’ll send them the complete system to study and apply in their life to their problems or goals—or whatever you want to say—for x number of months. If at the end of that period there’s not visible evidence that they’re profoundly progressing on the road towards the specific goals they were striving to achieve (if they haven’t seen actual accomplishments, whether that means making more money, achieving more of their objectives, shedding weight, firming up, dating more girls, getting a raise), you won’t let them keep it. You want them to send it back to you for full refund. That’s a very strong statement. I would also make it a better-than-risk-free proposition: give them something to keep just for taking the trouble. For example, when you send it, throw in one little perceivable bonus. Do you remember what we did with the offer you responded to? We gave you a subscription to my hotline and that subscription is yours to keep even if you feel you didn’t get your money’s worth on the course and you asked for a refund. That kind of “better-than-risk-free” proposition, where the person can come out $600 ahead just for trying the product, is very, very disarming. For example, offer to send them (in the ad) the free report complete with actual case studies and a proposition that’s better than risk free where at worse they’ll come out $50 ahead. Create another companion product that is not price comparable in the outside markets so you can genuinely make it worth $25.00 or $19.00 or $100.00 or whatever is reasonable relative to the price you are charging. Offer to include that companion product free with the basic course of study. If they find, for any reason, that your course, your process, or your system doesn’t achieve the objective that they’re seeking (provided they reasonably apply it and spend that 14-1/2 minutes a day), you don’t want them to keep the system. They just send it right back to you. On the same day that you receive the request, you will refund the full

amount. No questions asked, no hard feelings either. You want them to keep the bonus as compensation to them for at least having enough faith to give your system a try. It’s the least you can do for them. It’s a very powerful closing technique. Craig: What’s you’re experience in pricing with regards to the handling costs? Do you have a price, plus the handling, plus the sales tax? Jay: Yes. Usually you can charge $39 plus postage, shipping and handling. Assuming you price-tested and that’s your winning price, then I would add $5 on to it for shipping. Why do you want to send it out in a series of 6 mailings? Because it is perceived better? What will happen? Craig: I’ve discovered in teaching at the college that if I teach an all-day class, they don’t get as good a result as when I spread it over 6-8 weeks. The other thing is if they get it all at one time, there’s too much and they’ll “get around to it sometime.” Jay: Make sure that you explain it, then. Sometimes you have to prepare people to embrace and to study the curriculum properly. In your follow-up letter, tell them why you’re not just going to make it one class. Tell them, “I understand that you’re so anxious to learn how to lose weight that you want to hear it all in one sitting, but it doesn’t work that way.” Hold out that candle. Craig: Even to somebody who’s already subscribed? Jay: Well, no. I would make that as part of the allurement, as part of the conversion letter which you would send in response to an inquiry. Give it a unique and alluring persona. Tell them you’ve done thousands of students and you found out that if you cram it all too close together, the effect will be lost; it’s a cumulative effect, a sequential process. Once they get to the last step, it’s a powerful tool and they can achieve anything they want in their life. If they try to cram it too fast, the effect will be lost on them and you can give it sort of an intrigue. I think you can take advantage of people’s desire to want to believe in it. What is your next question? Craig: What about the logo? In my class I draw a figure with 4 different parts: what we want, what we think, what we do, and what we want to be. These four have to be consistent with each other and consistent with an overall purpose. The logo is basically the first lesson. I don’t tell them that at the beginning. Start with the first—what is it you want? We spend two lessons on that, deciding what their personal goals are. Then I go from there to the action steps. Then they decide what they’re going to do to accomplish that. Jay: It’s important that you let people in a little bit on the method to your madness. When you’re sending off your follow-up letter, it’s critically important that you let them in on a little bit of what your system’s about. The logo is probably important if you’re going to do a really neat job of it. Make it look classy— raised letters or foil outlined—and make it really tasteful in the follow-up you send to people. By the way, when you send follow-up letters, a lead costs a certain amount to acquire. An attendee costs you a finite amount to bring to that meeting room. A lead will cost you anywhere from fifty cents to $15.00. Make absolutely certain that you get your follow-up letter out exceedingly fast by first class mail. Don’t try to send it by bulk-rate, because the savings on the postage will be minimized by the lower responsiveness in the people by the time they receive it. Also, make sure you do a sequel letter. If you monitor a hundred different two-step offers in all the magazines, you’ll notice that the sequel doesn’t have to be a related product. Look at anybody doing twosteps just to see the series, the sequence, and the approaches they use to get you. It will help you craft a number of different follow-up letters. For example, after somebody’s had 10 days, if they don’t convert, you send them letter 2, after 10 more days, you send them letter 3, and after that a certain number. You’re probably wise to monitor all sorts of people who may be even more aggressive than Charles Atlas, people who have 3 or 4 or 5 tiers of back-ends. If you’re going to do this as a genuine profit-rendering endeavor,

you want to think in terms also of other tiers of supplemental and more expensive products and services you can render after they take your basic course. Craig: I thought about that. I thought about picking up a newsletter that I could send out monthly to people after they took my class and finished it. Each month, just send it to them. With each one, offer them something. There’s a motivational book I can get through the author’s widow at about $2. I could sell them for about $5 or $6. It’s a nice little follow-up and it’s one of the things I could offer. Jay: The concept to back-ending is usually the opposite. You try to find more expensive follow-ups. For example, you need a more extensive, advanced course on rapid goal achievement perhaps. If you could develop something (and maybe it’s $395) and it’s available on tape with other instructional workbooks, all of a sudden you have enough back-end products. You can go to break-even or lose on the investment in gaining a $39 course customer. But from every 500, if you know you can sell 50 of them a $395 course, that’s very lucrative. It’s not dissimilar to the application of what you probably do in your investment sales activities where you bring somebody in maybe at a profit, maybe break even, or perhaps at a little loss because you know for every 100 people you sit in a room for a seminar, over the next X number of days or weeks or months you can precisely expect 3 or 5 or 7 of them to be customers worth $500 or $700 apiece in commissions in year 1 and so much in year 2, etc. The same dynamics will apply to this endeavor. And that’s what makes it exciting. Is this genuinely an endeavor for love or is this one for profit? What do you really want it to turn into? Craig: I want to do it as a profit item because I want to get out of the investment business. In fact, one of my plans is to be out of the investment business within a year, 2 years at the most. I want this to build into a full-time marketing deal. Jay: If you can make a wonderful profit on your $39 students, that’s exquisite, but don’t be shortsighted. If you could sell 100,000 people a year a course for $39 and didn’t make a dime or didn’t lose a dime, you got 100,000 prospects for a much more expensive continuity product. And among those 100,000 people, there are probably 5,000 or 10,000 serious-minded zealous people. I’m sure there probably are, as you know from your own experience. Those who really want to achieve, who get something out of it, who want to reinvest time, effort, and capital into themselves, and their attainment of their goals will continually grow and prosper and they will set new goals and new aspirations that you can help fulfill either by sending them things or by having them come and attend seminars. When you start getting a lot of people concentrated in geographic areas, then you can do in-person seminars on holidays and weekends. There’s a whole plethora of on-going, expansive, and specialized approaches. You might develop a special course for business achievers, a special course for salesman, a special course for whatever. Then you might bring in operatives on a strict commission and deploy them to certain geographic areas. You might develop an application that can be sold to businesses for all their employees and done on-site. There’s a limitless array, once you get your ground floor set up. I would also counsel you to seriously consider approaching it in different ways besides just direct mail. Craig: I understand that, yes. Would I be making a mistake in representing someone like Nightingale Conant, who’s already producing well-known tapes, as a follow-up too? Jay: Not necessarily. But the problem with Nightingale Conant, et al., is that you’d have to pay the maximum. You’d need big margins to make it work. For example, on your course, if you had more than 1/4 or 1/5 of your retail price in product costs, it would be very difficult to make any money. Your advertising costs could be as much as 50%. If you take on products like Conant’s, although they’re good products, you’re probably going to pay 50 cents for every dollar’s worth of sales just in product costs. It’s going to minimize the worth because you paid so much to identify your customer. You need a larger margin.

You’re better off to do some independent research in finding people who either have products that are very good but have not been marketed successfully, or finding people who have concepts that are very good but have never been put on tape. Find people who put on seminars but don’t record them and get the rights to record them and give them a royalty of 5% or 10% of selling price. Or find other experts who never have really reduced their products into written form. Or find out-of-print books that can be converted into other forms. I used to have a publishing firm that did 7 or 8 million dollars a year. What we did was go to publishers and buy truly wonderful and profound out-of-print books on timeless subjects. The books were great and were well-researched. The authors spent their whole life mastering their topic. We’d get the rights for almost nothing. We would turn a 200 page book into a 100 page report. The book that didn’t sell for $9.95, we’d sell l0,000 of them for $69.95. We didn’t feel bad, because the market didn’t perceive it as a book and we sold everything on a liberal guarantee. But the market needed to see it in a different format to embrace the knowledge. Does that help you a little bit? So when you talk about the deceased man with the $5 book, take that same book and break it into a report for $39 and repackage it. Saddle-stitch it and maybe do a tape that accompanies it. All of a sudden, you’ve got a very interesting product. The widow shouldn’t mind if she gets the same amount of money (or more) for doing nothing. Craig: Actually, he wrote articles and published them. I’ve got 225 of his articles. Jay: You could turn that into a course. Take all the lessons, meld them into something else and you’ve got a $195 advanced course for graduates. Craig: Would you put that in the form of a course, or in the form of a report? Jay: Either or both—it depends. I would experiment and see what works. As you start building customers (by the way, you don’t have to try it just through your customers), don’t lose your prospects. Somebody who didn’t take your $39 course might take your $195 course or report. Craig: Is it a good idea to offer it to them at half price if they don’t buy, like Charles Atlas does? Jay: It isn’t a bad idea as long as there is a rationale for it. What is the rationale that Atlas gave you? Craig: They didn’t give any rationale at all. They just offer it at half price. Jay: I was very successful constructing price-reduced offers, but I found in my experimentation that they worked best when you gave a rationale. For example, let’s say that you get to your last letter and you’re intending or contemplating a price reduction. You give a rationale saying, “I’ve come up with an offer that I think you’ll find irresistible. I’m willing to absorb 50% of the selling price if you in return will agree to one slight imposition on yourself. The imposition is as follows: I want you to agree to act as my research assistant. I’ll absorb the bulk of my profit and make a marginal amount of money on you, if you would be willing to share with me the results you achieved. Let me use you as my testimonial or case study. If you’re responding because you want to lose weight, let me use the weight you lose, and the improvement in your health and appearance, in my own future promotions and marketing endeavors. If a certain business objective is what you’re in pursuit of, and my material has helped you to achieve your own business or a certain amount of wealth or a minimum amount of income or a specific promotion, agree that all the accomplishments that occur I can report, analyze, and share with my customers and prospects in the future.” Give them a marketing reason so they’re not thinking it was only worth $15 or $20 in the first place. Craig: Charles Atlas was $35. Jay: That was the first offer? Craig: Yes, and then he ended up with $17.50.

Jay: What if you did a similar amount? It doesn’t have to be 50%, but you could do a price reduction. Give them an embraceable rationale that doesn’t damage the perception of the product. For example, you can say, “Look, I’m barely going to make any profit by selling it to you at 50% off, but there’s a method to my madness. I feel it’s more important to get you to embrace it and achieve. Because if I do, I believe you’re going to attain such incredible results that you will probably be one of the best possible case studies I could ever want for subsequent promotional efforts I will do. You will be my ‘before and after’ and I’ll be able to tell the story. You didn’t even want to bother, then I had to almost shamelessly bribe you by absorbing all the profit by giving it to you for basically cost under the proviso that you would work the 141/2 minutes every day, you’d report on it and at the end of 6 months, I would be able to call you and you would tell me what you had accomplished.” That makes them feel like there is a better bargain between the two of you. It is certainly a very powerful approach. Craig: If I develop a mailing list, what’s your feeling about renting that mailing list out? Jay: It depends on how proprietary it is. A good many lists can make you as much $2 per name per year. Craig: I heard about $50 to $100. Jay: A good list will run between (depends on the market you’re in) probably $50 or $75 a thousand which is 5 to 7.5 cents a name. A really good list you’ll sometimes mail 20-30 times a month. 20 times 7 cents is $1.40 per month per name. It could be very lucrative. I used to have a company that sold financial newsletters and in one year I made $250,000 just off of 100,000 names. Craig: Is that right? Jay: Yes, frankly, the names made as much as the newsletter itself. But an important point is this: a lot of times you’re better off using mailing lists as a medium of exchange, going to people who have other lists you would like to access because their customers and prospects are synergistic to yours. Offer to trade, name for name, the use of their list which may not be on the market. Another point of critical importance is to go through the Standard Rate and Data Service Directory of every mailing list that’s available for rent, and find out who the list owners are. Not the list managers, because the managers are brokers totally removed from the owners. Find the owners and see if you can induce them to take your product and promote it through their list and give you a share of the profits. Twostepping is much safer than one-stepping, but still not without pitfalls. The best of all worlds is to get companies who have customers they don’t adequately work, or who put out tens of thousands of packages of their product every month, who you could induce to include your promotional materials in with theirs. Say you have a hundred different companies mailing your material every month in their packages, you can also go to everybody who’s selling something almost directly competitive to what yours will be and say, “Look, let me have your names after you’re done working them and I’ll give you half the profit or a quarter of the profits or so much a name.” Use ingenuity because a lot of people don’t think logically when it comes to accessing host relationships like that. It could be very valuable and very useful for you. Craig: How do you feel about the concept that Paul Myers had—”Sell to the masses and meet with the classes?” Should we sell to a large number of people and make a small profit on each? Jay: It depends. I think with your kind of product, it would probably be a good idea. I still have a couple of newsletters that we sold for $500 apiece and another we sold for $895. The most we ever had was 5,000 subscribers, but that was still a $2,500,000 business and I chose that in lieu of trying to purvey it as a $10 or $19 product to the world. I would rather have a handful of people who were dead serious about it. It depends. I think the product you have has such utilitarianism and has so many different applications it’s almost mind-boggling. But let the market tell you. You may find that there’s no difference in the number of people who convert when you’re charging $69 as compared to to when you’re charging $39. I tend to believe that $39 would be a magic price. But wouldn’t it be fascinating if you found out that there’s no (or

such minimal) difference in response that you could easily go to $10 or $15 more? That’s almost all profit. It’s a fascinating field. Craig: How far up would you go in the scale on testing? Jay: I would go no higher than $95 and no lower than $19 or $29. I would try 3 or 4 prices, $39, $69 or $49 and the bump would just be indicated in the coupon so you don’t have to reprint the entire piece. In your sales material, you can also do a double bump where you can offer another device. You can offer, for example, an advanced course too. You can offer 2 for 1. An advanced course could be worth $69 and you can offer the two for maybe $89. That could get your average order up pretty high. There are all sorts of fun experiments you could do in your testing and it could make a big difference in what your results are. You can have fun and it doesn’t cost a lot of money; it just requires a very, very enterprising and open mind. It requires an experimental mind-set and a very keen and close attention to analyzing all the results that come in. Craig: I’m thinking about what kinds of products to market now. I’m thinking about the back-end of the product. Maybe I can go to that author’s widow we were discussing and say, “Can I use this material? Not copy his articles but more or less use it as a...” Jay: Reincorporate it into a different product. Recast it as something different. I would start calling around and looking for people who have courses they can’t sell. Look in the back of Success Magazine. Just because they’re selling it for X, write to them and say, “Look, I’ll be glad to take a non-exclusive or exclusive on your product and sell it to my customers by a standard deal. I’ll give you 20% of the gross or 15% as the case may be.” Your picture looks like you’re a very jovial person. If you articulate well, you might experiment with trying to get somebody to do a 20 or 30 minute infomercial on you that they can run on cable. Do you have cable where you are? Craig: Yes. Jay: Melvin Powers’s course is offered on cable TV. Joe Cossman offers his on TV and he sold 10 million dollars worth of courses in the first year they promoted it. You might start watching the people who do the infomercials on the cable They’re usually on at the crazy hours of 10 or 11 or 1 in the morning. Monitor who is behind them, contact them, and see if they will do a show around you and your product. Craig: This is not a cassette. I know there are a million cassettes out there and I didn’t want to compete with books or cassettes, particularly in this. That’s why I made a home study course. Should I come out with a cassette program on this myself? Jay: Do you mean as an adjunct to it? Craig: No, I mean as a back-end deal. Jay: Sure, of course. As long as it has an augment or it addresses a vertical application of what the general material is. You should use the $39 course as a way to accumulate and generate a ton of qualified people to whom you can resell more specialized and expansive educational material. If you can’t create enough yourself, have people finding it for you: all these people who have wonderful material, old and new, people who do seminars and don’t record anything. Or who record it, and turn the tapes into a written course. Or take a written course and turn it into a tape course. Take a live seminar and turn it into both. Find old books and writings and studies. Do some findings and research, maybe there’s old articles you could assimilate from Psychology Today or Success Magazine, or you can do reprints from everything together. You can assimilate. Just use your mind to create new products.

What you need are more expensive back-end products to resell to the people who buy your courses and also to the people who didn’t but inquired. You need a high enough markup that it makes the front-end worth working because you might find that it costs you 50 or 60% of sales to buy the first customer. Now what about your financial seminars? Craig: I’m trying to get out of that business. Jay: May I make a suggestion? Why don’t you take what you’ve learned in giving them and run an ad in Financial Planner magazine? Offer (for a fee) to teach people in different parts of the country your system. “Every time you spend $2,000 on marketing, you can accrue $14,000—or whatever—in residual sales in the first year. It’s a 700% return investment and that’s just in year one. I’ll teach the whole plan to you for $5,000 and you can pay half now and half after it proves out.” Craig: I might do that. I’ve given 15 speeches on how to do it. Jay: So why don’t you turn that into a course? Why don’t you take the speeches you use and turn the whole thing into a “how to do it?” Most of these people don’t know how to do it. If you taught them how to do it (at $5,000 a whack), and let them pay you $500 a month or $5,000 out of the actual back-end sales, you wouldn’t have to work too hard and you’ve already got your front money out of it. You could make a million dollars with the back-end. I’m diverting your attention a little bit, but if you’re that good at it, you could sell x numbers of those where you teach a course or a package on how to do it. You could sell other residual base products to them for different courses, different mailing pieces, different scripts of things to do, or different mailings to send to their customers. You could have a lot of fun with that. Even though you want to get out of the business, you already know that business. Why abandon the methodology you probably spent $50,000 over the years to perfect? Why just walk away from it if you could residualize or institutionalize it? Craig: Good point. I’ve been kind of giving it away up until this point. I’ve been doing pieces for free at seminars and conventions. Jay: It doesn’t matter. Put it all together and do the same thing I’m suggesting. Craig: I think the main thing I’ve gotten out of this is the back-end deal. Jay: You have to have that. Let me tell you what happened with me. This was the most expensive lead generating you’ve ever seen. Between what I had to pay Howard Ruff on the split and what I had to pay to print 100,000 of those pieces you responded to, it cost me almost $650 or $700 to get you to want to talk to me for an hour . However, if I do my job correctly, I’ll go back to the couple hundred people that I talked to and I’ll solicit them for a more expansive year-long tutorial for $21,000 and I’ll get X number of people that will do that. I’ll find 1 or 2 of them that are large enough and operating enough that they are a good contingent client and I’ll make a half million dollars on that. Do you see what I’m saying? I want the back-end. But if I garner your respect, if I make you money or enable you to achieve at least the preliminary expectations of your goal, you’re predisposed and you’re favorable and receptive to other more expansive services and products I offer. That’s what it’s all about. Even if there are 800 people. Someone may charge $50 or $100 or $1000, but if Jay Abraham has made you money and enabled you to achieve the goal you came to him for, you are philosophically receptive to something else from Jay Abraham. That will work for Craig Wilson too. Make sense? Ask me one more question. Craig: On this back-end, if I send something out to somebody, how do they know it’s me? How do I keep people from mixing it up with all that junk mail they’re getting?

Jay: It’s simple. By the time they’re done with your lessons, there should be affinity for either you by name, the Wilson System, or whatever name you use. The letter will come from Craig Wilson. At the top, “The Wilson System, Institute, Method” (whatever you want to call it) and your prefacing letter will deal with them as an alumnus. You’ll say, “I’m writing to alert you and a few other Wilson System alumni about a new product I just created that I think can only enhance the achievements that you had from the basic system you studied.” There’s a perpetual continuity to it. I hope I have helped you. Craig: You have very much, I appreciate it. I look forward to meeting you one day in person. * * * * The only way to know which product names, prices, and approaches are the ones that the marketplace will best respond to is to ask the marketplace. If you’re spending money on advertising, you might try the testing techniques I shared with Craig Wilson; they can boost your returns enormously. Businesses very different from Craig Wilson’s can profit from the back-end principle. Think about ways your business could increase return from customers, or even from prospects who haven’t responded, by following up with other products or services. Back-ending, done properly, could be worth millions to your business.

Educational Tours Sid already owned a successful siding business, and now he wanted to spend a little time and money making his avocation—a love of Biblical history and archeology—successful as well. He has started a second business of conducting educational tours to the Middle East. Sid knew his subject and was ready to give great offers, including money-back guarantees. What he wanted from me were new and powerful ways to generate leads for his tours. I was excited by Sid’s market niche. During this consultation, I gave him a number of dynamic and effective principles he could use to generate new leads by making his educational tours exciting to a national audience. If you want to generate more leads for your business (and who doesn’t?), read on. * * * * Jay: Why don’t you ask me the most probing and specific questions you would like answered, and we’ll see if we can do something really good. Sid: The first thing I want is some ideas on how I might market these educational trips I’m organizing to the Middle East. As I mentioned before, I have another business that is pretty well under control. These trips, however, are something new and maybe aren’t the kind of thing that can be marketed on a large scale. Jay: It might be. What’s the maximum capacity your contact in the Middle East can handle? Sid: He can handle thousands of people. He has a school there. He also has a staff, and he could put more people on his staff. Jay: There’s no problem accommodating large numbers of people then? Sid: No, because even if the school can’t accommodate them, there are a lot of other lodgings and nice hotels nearby that can. Ideally, we would have groups of no more than 200. It would probably be even better to have a group of 100 people once every week.

Jay: Are you his singular source, or does he have other sources of income, revenue, and students? Sid: Well, I can be the only source. At this point, I am not, but he wants me to be his total representative in this country. In the past, he has mainly worked through colleges and universities. Jay: So this is your first time organizing this kind of trip, and you’re gearing up basically to a more lay audience? Sid: Right, but it’s a little bit above just ordinary lay people. The trip would be more geared toward church leaders—Sunday school teachers, ministers, etc.,—because I’m offering a little more advanced training than the ordinary church school would want to have. Jay: If I remember correctly, you told me that you were actually ready to do something unprecedented— that you’re willing to guarantee the tutorial part on a money-back basis? Sid: Yes. We’ll give them a money-back guarantee if they’re not satisfied with the tutorial—less the airfare, of course. Jay: Does anybody do that? Sid: No. Jay: I think that could be a powerful approach. Sid: So do I. And I don’t think there’s any problem selling what we have to sell. My problem is finding a good way of generating leads that would be profitable to work. Jay: We talked before and you mentioned you charge $1,500 or $2,200. Is that what you were thinking? Sid: Our cost is roughly $1,300, and we could charge as high as $2,200 for the trip, leaving roughly an $800 to $1,000 leeway between our cost and the round trip price. Jay: $1,300 is your cost including the tutorial to the school in the Middle East? Sid: Yes. The total for everything is $1,300. Jay: What’s the airfare? Sid: That’s covered in the $1,300. Jay: If you could go to church groups and get one to bring 5 people, will your contact not charge you for the minister or the head of the group? Sid: Yes. I guess that for every 10 people, one free tutorial is included. I could bring the minister for every 10 of his people that signed up. Jay: Including airfare? Sid: Yes. Jay: That’s pretty powerful. Who else does things like that? Sid: Some of the other groups offer one free trip for 10 people who sign up. Not at our price, of course. Their price is quite a bit higher, but their program stinks.

Jay: I know of a very interesting company doing coin promotions. Their headline and advertising premise is very powerful, and their formula might be usable by you. They say: “We didn’t go into this to make money. We went into it to introduce people to our products. We don’t care if we make a few dollars or lose a few dollars. We just know that if we give you a great value on our products, you’ll probably come back and buy more if you have a chance to make any profit.” You could say the same thing in your materials, because you told me if you didn’t make money, it didn’t matter. You didn’t want to lose money, but if you didn’t make any money, it didn’t matter as long as you achieved your goal. Right? Sid: Yes. Obviously it’s not the kind of thing that’s going to make a million dollars. I make pretty good money in my other business, and I’ve got some good investments that are taking care of me okay. But I’d like to make money with this idea because it’s more fun. Jay: When you teach your archeology class, who do you usually teach it to? Sid: Usually church people who are interested in a deeper understanding of the Bible. Jay: What do they pay you for it? Sid: I’m lucky if I get my expenses. It just depends on the group. Sometimes I get as high as $1,000 for it. Jay: Is it something you could turn into a course and sell? You could tape it, for example. Sid: I could, but I don’t think it has that much appeal or that much demand. It’s not anything you can make money with, build your character with, or anything like that. Jay: Avocations are nothing like that. Think about it. I went and made a presentation to Weyerhauser two weeks ago. They have a $300 million dollar floral products division. In fact, they’re the biggest producer of floral products. Down by you there’s a larger nursery. Have you ever heard of them? Sid: No. Jay: It’s one of the biggest growers in the South, and it’s owned by Weyerhauser. They bought all these entrepreneurial companies. Floral products are one of the fastest growing hobbies. Avocations can become businesses like that, whether it’s something successful that makes a lot of money, or whether it’s operated at a loss or break-even point. For example, your could take your archeology course—your avocation—and convert it into a selfteachable format. You could hire some man or woman as a mass sales manager and give that person the power to work out ventures with churches, religious and non-religious radio and TV stations, and all sorts of other arrangements. Let’s say the tape cost $10 to produce, and you decided to sell it for $59 or $109. You could instruct the sales manager to spend up to $25 of the purchase price to arrange a sale. They could do group plans and fund-raising events. They might make almost nothing, but they could make a lot of money if they sold it. You’d be surprised. I had that proposition given to me back in 1972. I took a product you probably never heard of called ICY HOT, an analgesic balm like Ben-Gay. It’s now very successfully sold in stores. When I got involved in it, it was simply a product developed by a man who didn’t know what to do with it. He knew there were repeat sales, but he didn’t know how to get them. He was ready to spend 100% of the first sale to get repeat sales, but he didn’t want to spend any money on advertising. He would gladly spend $3 for a customer, but he wouldn’t spend $1,000 for an ad. He just gave me a funded amount, and I was able to build it into $13 million.

In your case, if we found you the right kind of sales—not with salaries, but with the right variables—I think you would be very surprised at the profits to be made. Sid: I like what you are saying. Archeology is somewhat boring to most people— a bunch of old pots buried in the ground, that sort of thing. Unless you really understand archeology, it’s not that interesting to you—unless you bring it alive. What you are describing would apply well either to a videotaped or an audio-taped program with pictures of the Holy Land that featured not the archeology but the land itself. People are interested in the Bible and Bible history, but they don’t understand about the land it was written in. There’s almost a nonwritten thing in the Biblical scriptures that presupposes that the reader already knows about the tradition, geography, history, climate, geology, etc. Without that knowledge, people can’t really understand what they are reading. With that knowledge, things just jump out of the pages at you. It’s just really plain, clear, and simple, and it makes sense. A package like that could be put together with a taped program. Jay: Let me give you some suggestions for your trips that might be very interesting. This sort of thing is very popular on cable TV stations. You might consider doing a half-hour cable show. You buy time on Sundays or on Sunday evenings, either on the religious or on the non-religious stations. Make it a fascinating half-hour show where you basically view life and add dimension and excitement to religion in a way. Sid: How could I make any money on this as far as selling anything? Jay: You buy the show, which serves as basically an educational, ethical setup for the commercials. You own all the time and you run 2-, 3-, or 4-minute commercials during the show. The first few minutes, you do a commercial for leads. Then you do another ten minutes and run a commercial for your product. For example, you ask them to send in for inquiries, and you also ask them to send in for a short course. What other products do you have? Are there teaser products? From your Middle Eastern contact’s side, does he have any other products that can be sold cheaply? Has he got a beginning tutorial or a tape course that you could sell at half price or at liquidation price? Sid: He’s got a series of tapes and videotapes, but they’re not put together as a course. Jay: It doesn’t matter. What I’m trying to do now is give you maximum value for your time. Think about what would happen, Sid, if you went to a radio station and said, “Look, I’ll spend $9 out of $10 to get a lead.” If you send 10,000 people the tapes from your Middle Eastern contact, you’re going to find that a thousand of them will be prospects interested in the tutorial. You could buy 10,000 tapes and send them to 10,000 churches as a promotion. You would tell the churches, “The next time you have a congregation meeting, an auxiliary meeting, or a meeting of all your Sunday school teachers, fill out this card and send it back. We would like to send everyone at your meeting a sixty-minute tape by a teacher we know in the Middle East. We think that when you listen to this tape, the Bible will come alive, and you’ll see that the proposition we’re making is irresistible.” Offer them a money-back guarantee—something like, “If it’s not the most electrifying and educational adventure of your life, we’ll refund all your money—less the hard cost of the airfare and the hotel. You won’t have to decide until after the last day of the trip. You go through the whole thing, the whole tutorial, and the whole course before you make a decision.” It could be very powerful. Sid: Could we put together a videotape to talk along the same lines and attract more sales? Jay: It costs about $4 in medium quantity to mass produce videotapes, including dubbing and the tape itself. Do you know Joe Cossman? Do you ever watch his commercials or shows? He is a moneymaking business opportunity fellow. An associate and I just arranged something for him. We’re going to do an experiment in direct mail where we offer a half-hour or an hour-long videotape worth $29 for a modest amount. The premise is not for buying the tape but for placing an earnest deposit. We tell them, “Just give us your charge number and we won’t even put it through until 30 days after you have received the tape.

This way, if you don’t like the tape, you can ask for your money back. What we send you is a wonderful illustrated example that will teach you and be visually entertaining for years to come.” In your case, Sid, you could say, “We’re giving you a wonderful opportunity to learn all about the history of the Bible country, etc. If you’re interested, we’ll give you full credit and place the order on your credit card. If you’re not interested, you can send it back for a full refund, or you can keep it for re-review whenever you want to. All we ask is that you give us an earnest deposit of $10 or $19 on your charge card. We will not even put the order through until thirty days after you have had the tape.” If you could self-liquidate the tape on the leads, then the back-end is all gravy. That’s probably a smarter idea. It would work best if you could sell something or let people sample something for $5, $10, or $29 with a 100% money-back guarantee. That lead used as an entree to the back-end would be very powerful. You can use a number of different approaches. You might have a 3-hour tape, a $19 or $10 videocassette, or a whole course. You might offer to send any of these options, you might get operatives around the country to sell them, or you might do it directly by mail. For any congregation that will have at least 20 of its members attend an evening meeting, you could lend them a $100 set of tapes to view. All they have to do is sign an agreement that they’ll send the tapes back within 30 days. At the same time, you could also make them an offer about a wonderful adventure that they could take. To get the tapes, all they have to do is set up groups of 20 people to attend. You’ll want to try a lot of different experiments in small quantities. Sid: What do you think of giving our videotapes to travel agents with a $200 commission for them? Jay: I have to know other factors. How is $200 relative to what they normally make? On a $1,300 package, what would they normally make? Sid: Normally, they would make something on airfare and maybe a little bit from the hotels. But they wouldn’t sell the trip for $1,300. They would sell it for $1,800, $900 of which would be airfare. So they earn their standard airfare commission, plus a markup between the actual ticket price and what they charge the customer. Jay: This might be interesting. Try a little ad to get affinity. Get all the religious publications that have people selling religious-based products or services to mass audiences. These people should have a solid reputation and a customer list you could access. The best possible advice I could give you is: access people who know your marketplace. In other words, ethically find other businesses who have identified a religious base and tell them, “I want to do a turnkey program under your auspicious name. I’ll pay everything. All I want you to do is sign your name on a letter stating that you approve. “Then, lend me access to your mailing list. I’ll furnish the letter, I’ll pay the postage, and you get $200 for every person who responds. We’ll give a 100% money-back guarantee, and we’ll give a wonderful, wonderful offer for you and for your customer list.” Then, Sid, you play off this promotion. The way to begin is to start compiling a list of anyone who sells anything by mail or anyone who has retail facilities around the country with a big identifiable customer base. In the next five or ten minutes we have left, we’ll talk about this. It would be a powerful tool, as these companies have already spent millions of dollars identifying their customers. Being ethically parasitical might be the easiest, fastest, and most direct way to reach your potential clients. Sid: Is that information covered in that marketing course you advised me to send for? I have sent for the thing, but I haven’t received it yet. Jay: The Marketing Genius Course is very good. I have another, more advanced course called “For Your Marketing Eyes Only.” It takes one case at a time and covers some of this stuff too. Marketing Genius is a wonderful tutorial for the $495 price. It contains 17 specific reports. It will open up your eyes to wonderful ways to expand your business.

Sid: What I’m interested in doing is giving this idea a group shot and trying. If it works, okay. If not, I don’t want to waste any more time. Jay: How much commitment in terms of time and capital have you given to it? Do you have somebody else besides yourself working on it, or are you going to do it all alone? Sid: I do all the controlling of it myself. My Middle Eastern contact will take care of the things over there. I don’t want to put too much effort into it. I thought maybe of putting in $20,000-$25,000 and six months’ worth of my time. Jay: Honestly, the easiest thing to do is what I’ve suggested—find affiliations rather than going from scratch. Identify 25 companies or organizations that have members or customers who are religiousoriented. Get these companies involved and get them to endorse the mailing. If you have 25 mailings to 5,000 names on each of their lists, and the lists cost $1,000 apiece, you can amalgamate the people from each list who respond. In the long run, you’re not going to lose. You could identify sales representatives working for other religious-based products. You could go to parishes, churches, or congregations with a robe salesman, organ salesman, sound-system salesman, or Bible salesman. Someone who already has a wonderful connection with them could take on the line, and you could offer the most generous and open deal in the world. If you have a guaranteed profit, what do you care? One of the things I have been advising people all along is to be very generous in the growing stages of their business. If fair competition costs $100 but you’re going to make $400, give the salesman $300. That’s what it takes to get the customer excited, so why do you care? That’s what I did with the ICY HOT adventure that I engaged in. The way I got people excited was by using 100% of the money the owner gave me to spend. I could have given $1 or $2 commissions and kept the other $1 for myself, but I gave away all but 15%. I kept a lousy 15%, but I was able to sell 5,000 jars a day. If I kept fifty cents or one dollar, the product would have been less attractive to the people who were helping me. And when it all struck, I still was getting my percentage long after the deals wore out. Sid: Yes, money makes people do things. Jay: You should make it overly generous. You can find reps by inquiring and by reading all the old magazines, trade publications, and church publications to find out who advertises in them. Contact these advertisers, ask them to take on your line, and make them a generous offer. There must be somebody with an impaired business but an active sales force who would take on your product line. You guarantee them 90% of the profit. In the beginning, you may only make $50 or $100 a transaction, but if you gain 2,000 names and build up your reputation, it would certainly be worth your time and money. Sid: You bet. Jay: It’s worth it. People just don’t understand that. You’re only going to put $25,000 in it. Granted, it’s not a lot of money, but the smartest thing to do is to leverage every dollar you put in by accessing people who already have a high involvement and high regard in your market and can leverage a high sphere of contact for you. What else do you want to ask? Sid: That’s about all, I guess. This gives me a new way to think about my market and a lot of different things to try. Jay: Good. I love helping people when I can render a noble service. I want to enhance every dollar you’re spending in the marketing arena. If you’re committed to a field, try to circumvent the pitfalls and avoid losing money or avoid making fool-hearted mistakes. Sid: Great.

* * * * The quickest, most powerful way of taking your products to your targeted market is by being “ethically parasitical”—using the companies or people who already have high involvement in the market you want to reach. They have already spent millions of dollars identifying their prospects and winning the trust of their customers. Get their endorsements or backing for the products you offer, and you’ll get a much better response than you would on your own. In the beginning stages, be overly generous with your salespeople. Give them whatever it takes to get them excited about reaching your prospective customers. Give them an offer they can’t refuse, and, in the end, you’ll profit from it.

Recreational Toy Developer Stan’s primary business is scrap metal, but on the side he’s involved with a recreational toy product. When the toy first came out, Stan and his partners promoted it on the street and on TV commercials. Their approach elicited a large response, but few sales. For the last few years, Stan has kept the product dormant. Now, after creating a new and improved design, he wants to bring it back to market and make it “the major fad of the century.” His main question to me was, “How do I do this?” In this consultation, I explain the advantages of mail-order advertising, and give numerous, detailed instructions for using it to full advantage. * * * * Jay: Did you subscribe to my newsletter? Stan: Yes. Jay: That’s great. Have you enjoyed it? Stan: I must say that I have not read everything in it. Jay: I would encourage you to keep reading, rereading, and rereading, particularly some of the bonus material, because it should open up new avenues for you. Let’s talk about what you want to garner out of this conversation. Stan: I have an idea of how we should market and I need your advice. When it comes to promoting something as big as this toy could be, I think we need to hook up with somebody who does this all the time and knows what he’s doing so we don’t have to reinvent the wheel every time. We have made quite a few contacts recently in Canada and abroad, and have found some interest in our product. But I spend my time—which I don’t have a lot of—wondering, “Is this guy the one we want to go with, or is it this one, or this one?” I don’t know. Jay: I’m going to ask you a lot of questions. I’m going to give you a very objective overview of the product and talk not only about the opportunities, but about the areas that are replete with problems.

Besides this product, are you looking basically to divert a portion of your time and capital resources into marketing ventures for profit? Give me a little insight into what you’re trying to do. About half the people who call me thought they wanted to know one thing, but I’ve very tactfully evidenced to them that they really wanted something totally different. We’ve gotten some very interesting conversations out of this. I’m not purporting that will happen on this consultation, but... Stan: Well, I’m willing for this to go any direction whatsoever. Jay: I want to figure out what it is you really want, and whether or not the product you’ve focused on will provide it. Years ago, I used to sell radio advertising. I was so zealous and so talented that I could go out from the radio station and make this incredibly enthusiastic case to almost everyone I encountered. I was very successful at selling, but I failed to realize that often the demographics of my station were not at all compatible with the requirements of the advertiser. I’m telling you this analogy for a reason. At the time, I knew nothing about how to craft commercials. We had a radio station man who claimed that he could write a commercial in 60 seconds. And he could. Yet, he failed to include in them any compelling offers or motivation to buy. What happened was that three-quarters of the clients I brought in had terribly nonproductive experiences with his commercials, and here they’d spent perhaps $2,000 for a flight of advertising—which for them is a lot of money. Anyway, these commercials would produce virtually nothing, and it would ruin my clients for all posterity. They would never try any radio station again because I had basically teased, frustrated, and caused them to totally waste $2,000 or $3,000. I felt very bad in subsequent years that I had ruined them. Another radio station could have reached the right market if a caring, knowledgeable person had crafted the right commercial to make them money. Now, I’m saying that as a preface because perhaps you want to be either psychically or financially fulfilled by engaging in marketing endeavors. If you get into the wrong one, you could put an inordinate amount of your time, emotion, and money into an endeavor that doesn’t work. This failure could turn you off conceptually to all marketing approaches when, in fact, it’s really giving you a good lesson. You understand what I’m saying? I’m bringing that up because I think you have an interesting but difficult product. But I need to find out what you really want—whether you’re really in love with your product, whether you’re anxious to get into a marketing vehicle, or whether you’re just basically like me and do all sorts of things until you get bored out of your gourd and waste thousands of dollars. It’s therapeutic for me, but then again, you’ll find that I’m a very different person from most people. Our conversation is designed to enable me to give you maximum help and answer your real question, which may not be the one you’re verbalizing. Stan: Well, I would like this particular product to work because there’s a certain amount that’s been put into it, but this product isn’t the “end all” of my psyche. Jay: But you’re interested in marketing? Stan: Yes, somehow I seem to be. I don’t know much about it, and I haven’t been involved in it, but I like a lot of things about it. Especially one of the things you’ve pointed out—the highly leveraged way of investing your dollars. Jay: Exactly. And if you can garner, cultivate, and perfect the ability to embrace, address, and revere intangibility, and can see how it can put a little vision in the back of your mind, you can do so much with so little. It really is very exciting, but it’s so all-encompassing and the opportunities are so widespread, that it’s sometimes very hard to focus on. But let’s talk about your products now. Stan: I find this whole process conceptually appealing. You know, turning the intangible into reality. There’s something incredible about all those strange people out there as a mass who are also individuals

responding to this concept. There’s something appealing about making this concept a reality. But unless it becomes a reality, it will just stay a nice product. Jay: I understand. One last parenthetical comment is: I find when I’m on my upscale—focusing on a concept, playing with it, and stalking a marketplace that doesn’t know I exist—I feel a very ethereal joy, a very neat private excitement. If you’ve done your job correctly, you’ve already got the right concept in your back pocket. It’s just a matter of when they pay the bill. I hope that analogy doesn’t sound a little too over-dramatic, but nevertheless it works for me. Now, how much have you spent so far on this promotion or on the product development? I saw the agreement from your advertising firm that said they’ll pick up 25%, but I’m not sure... Stan: O.K. We’ve spent nothing on that firm. They’re a marketing firm—the expert we might deal with. I don’t know how expert they are, but they’re willing to put up some of their own money, which is always encouraging. Many of their projections turn out not even to be that expensive, because at the time we made the agreement with them, we were talking about only re-doing the injection molding. Jay: Let me ask you another question. When the commercial that you sent me originally ran, where did it run, and how badly or well did it do? Stan: It’s very difficult to say how it did, because it ran on a black dance show, which was a very small version of Soul Train. I don’t remember how many people watched it. We got a decent response, but we probably sold hundreds instead of hundreds of thousands of units. Jay: But you see, the way you analyze it is: if the spot cost $200, how many units did it sell? Moreover, what did it gross? And after all expenses, what did you make? That’s all you really look for. Is there any inventory that exists of the product? Stan: Yes, there are about 10,000, and we have several thousand partial units sitting aside as well. Jay: What does it cost—do you need all the tooling to be able to complete them? Stan: The new place that’s going to be doing the end pieces can do that. Jay: They can do it inexpensively? And on an as-needed basis? Stan: Yes. Jay: I’m going to give you a lot of philosophy here. Somebody called me on the phone recently to ask me to take over a very interesting course on how to buy a business with no money down. It’s got a manuscript of 460-470 pages, which would turn out to be four or five different volumes for the course. This guy wanted money to go out and print 5,000 sets. I told him I would rather take the money I’d give for the 5,000 sets and put it into 3 different test ads, mailing pieces, or whatever. If the sets will sell for $100 each, but it costs me $200 each to make up just 20 copies of them, it would be worth it because I could test market it and not be guilty of mail fraud. I’d really have some product to advertise, but I could put most of my money into market validation before I tied up lots of money in the product. Now if you take that analogy and apply it to yourself, it would seem that depending on whose money it is—whether it’s yours, a group of investors, or some other third party—instead of putting $50,000, $60,000 or $70,000 into tooling up, you could put $10,000 or less into producing two or three different versions of an ad that address different issues concerning the product. For example, in one of the versions you could answer questions about danger. If I were a parent, I wouldn’t buy the product simply because it looked like maybe my kid would poke his eye out with it. You could produce not only a 60-second commercial but a 120-second commercial, which is harder to air, but gives you a lot more demonstrable time to show the product in use.

Try two or three different versions premised differently. In the end, maybe you spent $5,000 to produce the commercial and $5,000 to try it on two or three stations that have a history of being mail-order responsive. If the commercials break even or better, it would be very encouraging. If they bomb, that would tell you something—at far less expense than putting $50,000-$70,000 into the business. I would always rather know the answer before I put a lot of money into something. You know that you’re going to live and die by marketing anyhow, so why make marketing the last function you do? Why worry about producing, as long as you’ve got enough product to send out when the first orders start coming in? If response is terrific, you can get into production right away. I would do more than one commercial. Commercials are no different than ads or mailing pieces. One thrust may be a killer, and the other can be an absolute dud. I would try two or three versions if you can get them done inexpensively. Preferably you could use a producer who’s got a good performance record and will do these commercials on a modest bonus or reward basis—depending on the results. Cover the real expenses, but if it works, they get $10,000; if not, they lose with you. But you get three different commercials, and you put most of your money into trying them on two or three different stations in historically proven places where mail order items sell. Stan: Should this be mail order? Jay: Well, I thought in one of those documents you indicated you absolutely wanted to go mail order. Stan: Oh, no. Maybe someone along the way mentioned it. This large agency wants to put the ad on TV and get it into the big stores. Jay: That was going to be my next question. I think you probably could get people to do a consignment deal where they get distribution, you run the commercials for a month or so, and then you go back and take an inventory. At this point, you get paid, and you either take the stuff back, or you replace it and do it again. Stan: I feel we’re limited at great marketing. Even if we’re the greatest experts in the world, we can get beaten by people in the business who have more than one product, a lot more clout, and the ability to wheel and deal more than an individual can. Like the powerful people who buy advertising time on TV. They get it much cheaper than an individual could because they buy blocks of time, and they fill it up with their products. Jay: Are you hell-bent on doing it yourself, or would you rather take the product and lay it off on someone else? Who controls the product now? Is it yours? Stan: Yes. Jay: And how does your salesman and the original inventor fit in? Stan: Well, the three of us work together, but they do whatever I say, so I really have control of it. Jay: It is my opinion, first of all, that the product is only going• to be successful if it is demonstrated, which means you have to use television. Stan: It needs to be demonstrated? Jay: Don’t you think? There are loads of people out there who can help with this. I have a friend who sells licenses for all sorts of different, zany items to people and manufacturers. He’s made millions of dollars and has written a book called “How I Made a Million Dollars Selling Ideas and How You Can Do It.” If I mentioned his name to 95% of the people, they’d have never heard of him, but that doesn’t mean the guy isn’t good.

Stan: Well, we had another marketing guy who made favorable comments about our product. I don’t know if he really liked the product or not, and maybe his comments were self-serving. But, based on his advice, we’re taking our item to a trade fair in the next few weeks. Jay: You’ve got a certain number of units already assembled? Stan: No, we’re not going to try to sell anything. In fact, the only thing we’re showing right now is the old model, not the new one. Jay: Does the new one have flaws that are not evident in looking at it? Stan: No. Jay: So what did your marketing guy say? Stan: He said, “Come to this trade fair, and you’ll meet people. I’ll be out of town so I’m not going myself, but at least ten people out of all the people demonstrating there will be featured on TV, such as Good Morning America.” He said that the publicity will be great. I gathered that he wanted us to come talk to him if we got featured by these TV shows. Jay: Well, I keep getting the feeling, though, that it’s got to be demonstrated. If you just set it up in trade shows... Stan: What he said was, “I don’t even think you need TV. What you need to do is to have this on everyone’s mind as a promotion.” Jay: Have you talked to a good PR agency and asked for a proposal, as well as for the dollar amount they want? Stan: Well, I’m not sure who to go to, and I’m kind of waiting to see what happens as a result of the trade fair. Jay: But I sense that you are deeply enough committed that if I try to talk you out of it, it wouldn’t have a profound impact on you. You’re going to go ahead with it, aren’t you? Stan: I think so. Jay: I’m making that point for a reason. Now let me ask you another question. You’re busily engaged most of the day in your scrap metal business. Can you make available an hour or so a day to do some research and leg work, if you can get people to give you marketing advice and if you don’t have to do a lot of traveling? Is that difficult? How much time, besides effort and money, do you have? Stan: It’s hard to quantify that. Sometimes I have more than an hour a day, and sometimes days go by when I don’t have any time. So there is some time to spend on it. I’m not sure I’m the one to make all these judgments. Jay: O.K., but it’s not a judgment, it’s a research and reconnaissance suggestion. One of my strongest recommendations is for you to solicit as many different people to pitch to you and tell you what they would do if they had the job of promoting your product. This will give you a great education long before you have to commit any money—and you may never have to commit. They’ll give you ideas, and you’ll look at their proposals and twist and manipulate them. Call every PR agency and tell them you want to be solicited. Tell them you’ve got a product that you know has to be demonstrated, and you know that one very expensive way of demonstrating it is to buy TV commercial time. Ask them and talk in abstractions. Instead of allocating $300,000—which may not be very much for commercials— for one-half or one-third of that amount you can make PR do it all.

For example, have them garner news scoops and stories for you. Ask them what they’d do if you gave them a budget of $25,000, $50,000, or $100,000 for local, regional, national, and convention sales. With or without television advertising support, how would they put that product in everybody’s awareness? To me, you sound like you learn very quickly and that you’ve got a focused mind. Use your skills to let them teach you. Listen. Ask a lot of questions. It will do a myriad of benefits. You’ll probably discover the avenues available to you that are more cost-effective for getting your product into the public’s mind. You’ll learn how to get it shown, demonstrated, on the news, and on all the TV shows that appear right before the beginning of prime time where they cover the local news and the fascinating little slices of life. Ask them what it takes to get on all the local programs, and whether they can coordinate that concurrently as you’re getting bombarded with responses. As you begin to understand avenues you’re not familiar with, your marketing talents will be activated. Maybe you’ll see other applications for this product or other areas you’re interested in. The very worst that will happen is you’ll gain a very broad and expansive perspective and have more information to base those little decisions on. Even if it takes three more months to get started because you’re diverting time on factfinding, reconnaissance, and getting educated, it’s time well spent. Stan: The big distribution firm we’re looking at covers major parts of the U.S. They also have people in foreign countries, so they would start distributing and doing their own advertising in foreign countries. Jay: I would say you have nothing to lose in this area, except for the cost of investment, because it’s a separate market, and you’re not going to be taking away from anything. Any cash flow that you get from there would be positive except you may still have to spend that $60,000 to $70,000 to tool up. Stan: Well, the way I’ve redesigned it, the tooling really isn’t that expensive. But it’s still an investment when you have to put the money up for the manufacturer and the toy still needs to be assembled. It’s not a complicated product, but it’s not totally simple either. Jay: Whose money is invested in all that raw material? Yours? Stan: Mine. Jay: O.K., how much do you have invested right now? Stan: About $4,500. Jay: O.K., so you’re not into it in the tens of thousands of dollars. Stan: Not in the inventory. Even with the order to make the mold and so forth, it’s not a major investment. But still, when you’re selling something, it has to be ready. If you think that you’re going to be able to sell 10,000, then you have to have 10,000 ready when the orders start coming in. Jay: Well, let me restate the question. To get to the point where you had 10,000 packaged individual units in some inventoried warehouse, what would that cost you? Stan: Well, there’s a price schedule, but I’m not sure what it would come to. Including the packaging and everything, it becomes a significant cost. Jay: Is it bubble-packed, or what? Stan: No, what we did before, which was probably a real cheap way, was use poly bags. The product probably costs about $1 to make, and then packaging could be another 25 cents to 50 cents or more, depending on how elaborate you get. If you go into department stores or toy stores, they’re into all these fancy boxes that get thrown away. It annoys me.

Jay: Now, are your current distributors ardent enough that they’re willing to give you nice, firm initial orders too, or do they just want to have samples, or what do they really want? Stan: Well, the one person who’s currently interested wants a demonstration tape because he said that our one-minute ads didn’t show him enough. There are lots of things about those ads that I don’t like myself. Jay: From what I’ve seen, they’re cute, but the quality is very bad. It doesn’t really focus and demonstrate the product up close. Stan: There are lots of things that can be done with the product that the ad doesn’t show, and there are things that it does show that are really marginal, so there are lots of things wrong with it. This guy would like to have a 15-minute demonstration tape he could take to stores—to see if they are as interested as he thinks they might be. Many times, though, the stores will say, “Sure, I’m interested, but how much advertising are you going to do?” Then we’re back to this “what comes first?” dilemma. Jay: Here’s a philosophy which you may or may not know: you basically just build into the package an allocation for sales or for marketing. For example, you build into your price structure so much per unit allocation for television. You go in and say, “O.K., you’ve got to give me a firm purchase of 10,000 units or whatever. These 10,000 units at wholesale to you is $40,000.” You build your advertising budget into that price. The more the better, such as between 10% and 25%. Tell your distributors, “You know I need 10,000 units sold in the marketplace, but I’m going to put 2 weeks worth of advertising on TV.” You’ve got to go backwards and correlate. Stan: And then you need to spend money to make the TV ad. Jay: My recommendation is that if you do a TV ad, make it mail order first, and try it out in a couple of markets. It doesn’t even matter if you change it around, because if you’ve ever looked at the difference between an ad directing you to go to the store and one directing you to mail in, it’s just the last 10 or 15 seconds that are different. When you’re watching that ad, you don’t know until the end whether you’re supposed to pick up your pencil and get out your charge card, or if you’re supposed to go to the local drugstore, do you? And if you understand that, in my opinion it would be best if you mocked up a number of units so you’re sure you don’t get charged with false advertising or fraudulent advertising. I would put a little bit of money into trying commercials, and get someone to produce them with the understanding that you’re going to test them on mail order before you have to worry about getting distribution to sell them retail. Stan: One of the problems with mail order is that people don’t really know about the product. Yes, they’ll see an ad and maybe see that the product works, but they won’t have this emotional kind of mentality where everybody knows about it. Also, with mail order, the packaging is different because it has to be shipped in individual boxes. Jay: So my recommendation to you is predicated on the fact that it doesn’t matter if you don’t ship out a unit. If you spend $3,000 advertising on TV, the cost of producing a mail order ad is not going to be a lot different than if you ran an ad for retail distribution. You just want to see if you run the ads, if you spend $3,000, will it bring in $10,000 worth of mail orders? Even if you give all the money back, or you lose it and waste your $3,000, it’s just to see if the commercial will generate enough business to justify going to the trouble of getting retail sales. Stan: Well, it would cost more than $3,000 to do that because you have to make an ad. Jay: What I’m suggesting is the following. It would be very interesting if you go to somebody who’s good and successful at producing TV commercials and say, “Here’s the proposition. I want you to create for me one, two, or three ads, and I’ll test each one.” If you run two or three spots and you get a good response right away, then you can talk to someone more experienced for the next ad, if you want to. At any rate, if you run two or three spots for mail order, you’ll know if it’s going to pull or if it isn’t going to pull. The point is, you get somebody to create the ads at cost. They may want $7,000 to $10,000 to do it, but their

real cost is probably only going to be around $1,000 or $2,000. You just tell them nicely that the deal is as follows: you’ll run the ads for one week. You’ll pay whatever the spots cost as long as you’ve got control over the project and as long as the spots produce a three-time mark-up in response. If the ads hit this markup, you’ll give them a $5,000 or $10,000 bonus. You need to make at least that much more in mail order to justify the ads’ expense. Let’s say you’re going to use a derivative, or the same mail order ad, to support retail sales. If it can’t produce at least three times the cost, you’re not going to make any money off it. If you spend $5,000 in retail advertising support and you can’t do at least $15,000 worth of retail sales, it’s not going to be worth doing to make it profitable to you. Stan: Then the product still has to be made and shipped out. Jay: Only if the ads work. Let’s say the ads don’t work or they just break even. I wouldn’t pay him the bonus for these results, but the break-even response shows you there’s life. Now you can begin focusing on different ways of changing the ad—improving the concept, changing the price, etc. When something shows life, it shows you’ve just aired the concept, the USP, the pricing, and the articulation of your product. But if you spend $3,000 in commercial time, and you generate $700 in orders, that tells you something, don’t you think? If instead of $3,000, you get $9,000 or $10,000, it tells you you’ve got a promising product. If you spend $3,000 and you get $3,000, it tells you there might be hope—you’ve just got to play around with it some more. It’s better to get this information before you have to have the product. Who cares if you send the money back and say, “We ran out of inventory,” or whatever. I’m suggesting it’s going to cost you a few thousand dollars one way or the other. I would rather lose money finding out that the marketing won’t work than end up with $30,000 worth of inventory that I can’t market. Stan: Right, I don’t want the inventory. Jay: Let’s try and focus. Why don’t you play back the questions that I’m not answering. I’ll try to be very crisp and direct in answering them for you, or at least give you some direction. Stan: As I think about what you’ve said, what the history of our product is, and where we are right now, what I think I need is the proper people or organization. I need to have confidence in their experience and I need to feel they know what they’re doing. Hopefully, they’re willing to put up their own money to organize the marketing of it and have the expertise to do the job properly. There’s still some question as to• how we’re going to go about doing it. We have to be able to handle all the day-to-day affairs that come up—the parts that need to be ordered, the units that need to be assembled and put into stores, the mailings that need to be handled, and finding the people who have the proper contacts to get the product to the distributors of the stores. I don’t even know which way to do the promotion yet. And then I think, “We ought to take the product to a big company, and let them do what they know how to do.” Jay: And are you against doing that? Stan: No. At one time I had some reluctance to do it. Someone presented it to a major company. The company came back and said they didn’t want it because they’d already seen it or something like it. But, yes, we could do that. I’m not against anything. Jay: Is your toy patented? Stan: The old product is not patented, but the new product is in the process of getting a patent. Our lawyer thinks it has a very good chance of getting one. Jay: And when would you know that? Stan: In a year or two. So it would be pending anyway. Jay: If you do still in fact have this yearning, burning, or at least glowing interest in marketing, the more education you get now, the more successful you’ll be down the line. Maybe I’m doing you a disservice because I’m getting you so smitten you’ll lose interest in your steel business, which is probably where you

make all your money. Still, I believe you ought to dedicate a certain amount of time every day, evening, afternoon, whenever you can find time, to do this research. Now it would entail a lot of things, not only soliciting the PR people, but looking at other advertising. For example, watch the mail-order commercials on TV late at night. Write to the advertisers and see if they’d be interested in taking your product on, either as a joint venture or by taking all the risk themselves. Just explain that there’s no urgency to make a deal. This reminds me of something. I’m not much into real estate, but I was involved with some real estate promoters, and I used to read all those “nothing down” books. Some of them were pretty hokey, but there’s a consensus/admonishment they all give you when they say, “Look at 100 houses before you make your first offer, because the first house you see you’ll think is the only house for you, and you think you’ll never see a good deal like that come around again.” You know the phenomenon. Stan: Yes, definitely. I’m the one slowing everyone down• right now, so I agree. Jay: Call 100 people, call everyone who does mail advertising, and ask them if they’d be interested in taking your product on 100% joint-venturing with you, buying commercials for you, or making commercials for you. Learn, learn, learn. Read. Write the radio stations, or call up every radio station, and ask them for their list of mail order advertisers. Ask the stations for the context, the names of the people who buy the ads from them, and work backwards. This real estate guy I knew bought every book, then called and wrote to everybody. He ended up doing $13 million just by doing all sorts of leg work. In the process, he got an education and started 5 other businesses, all of which worked. So, even though you don’t know what’s going to happen or how it’s going to end up, you’re just throwing out a lot of interesting possibilities, and you’re learning. Don’t give up if somebody says no. Respond by saying, “You guys know how to buy commercials better than I do. If I produce a commercial, will you buy time for me for a mark-up?” Maybe they’ll say yes. Then say, “Fine. You know how to make commercials better than I do. Will you write the commercial and produce it for a percentage of the profit?” And then, finally, you might at first risk money if they produce the commercial, and you’ll give them the chance to buy half interest after it’s been validated or invalidated. Does that make sense? Stan: Well, that’s one of the strategies we were thinking about doing with this agency. Whether they’re the right guys or not, I don’t know. Jay: But, like I said, maybe it works, maybe it doesn’t. But wouldn’t it be much more enviable, and wouldn’t your leverage point be much more enhanced if you solicited 100 people and had 10 people interested at different levels risking all or some of the money? In the process, you’re getting an incredible education. Stan: Do you happen to know any people who are particularly good at this kind of thing? It’s one thing to solicit 100 people, but it’s nice if somebody knows how to do it. Jay: I might have some names for you, but you can get a quick education by reading the mail-order advertisements, writing people, and watching TV. I’ll be only too happy to try to dredge up names and maybe help you work out some kind of progressive blueprint to start calling. When I started in this business, I was very young—18—and didn’t know anything about it. But if I called someone and they didn’t have the answer, I wouldn’t say, “Thanks, goodbye.” I’d make them put me onto somebody else. It becomes a very fascinating investigative research project, and it just unfolds incredibly. Stan: Are there a certain breed of people who invest in this kind of thing? Jay: Sure. Stan: Where are they? Jay: Some of these people will venture-market for you. I think the proposition is so abstract, it’s going to be a little harder at first to find them. You can always run little ads in the Wall Street Journal and try it.

There are people who can be made to invest just because they have access to inventory that costs them little, or because they have talent that would cost you a lot. Sit down and make a list on paper of the things you would have to pay money for and then segregate these items by vertical category. You’d have to pay money for production of ads, production of materials, production of packaging, production of copy, etc. And then you can go to professionals, the large private entrepreneurially owned companies in those fields, and find someone who’s got plenty of money or excess capacity and who’s only going to make 10% per unit if he sells it for you. Give him also a third interest, plus his 10% if he finances it. Show him that the downside’s only the test, and on the upside, he could make himself a million dollars instead of $10,000 for doing the packaging. Just keep making these kinds of pitches. Do you understand what I’m saying? Stan: I just wonder if there are any particular people? Jay: There are people who finance things. In the Wall Street Journal there are a couple of guys who run ads. They’ll say, “We’ll produce and run your commercial on 9,000 cable networks if you pay for producing the spot.” Most of the cable operators have a couple of public service type shows they’ve got to do certain types of programming on. They sell commercials for almost nothing for these shows because almost no one responds. These people charge you $5,000 for a schlocky commercial that is basically worth maybe $500. They charge you for every dub that you want, and they send it to cable stations that air it in places where no one watches. There are all sorts of scams. You’ve got to be very careful. But the way I’ve made lots of money is by going to people who didn’t see they had more to gain by financing it than they did by selling me the package. If nothing else happens, at least the whole process will be very illuminating, fascinating, and expansive for your psyche. You’ll get an incredibly vast education, and you might do what I’m doing. For instance, from taped conversations like ours, the more you listen to it and jot down your insightful notes from these conversations, the greater the likelihood that you can increase your grasp of marketing dynamics by 10, 20, or 100-fold. If this is nothing more than a vehicular stair step, it will cause you to get an education, and cause you to focus your mind on some totally unrelated product or aspect of marketing. If the marketing is the thing, as Shakespeare sort of said, it shouldn’t matter, and if nothing else, you’re going to do a more noble job for your product. Stan: Thanks a lot. * * * * What’s the right marketing strategy to get your product into the public’s awareness and build sales? It’s the strategy that brings you the most market validation for the least amount of time and money. From my own experience, I’ve found that mail-order is often the best avenue. You can, for example, find TV stations with a proven record of mail-order responsiveness and test two or three different commercials for a lot less money than it would cost to take your product into retail channels. When you find an ad that works, use it everywhere you can. This will give you a firm footing for moving into retail markets (if this is appropriate). Your long-term success will depend on how well you garner a solid marketing education. Set aside time each day to research your market. Listen, read, and ask lots of questions. For example, contact PR firms and ask them: “For my product and my budget, what can you do?” Their recommendations will cost you little and teach you a lot. Watch mail-order TV commercials, read mail-order print ads, and contact the advertisers to find out which ones work best. For almost nothing, you can accumulate a wealth of invaluable knowledge. This is only the beginning. As you learn, new marketing avenues will open up to you, your marketing talents will get activated, and you’ll discover great opportunities for building profits. Just remember always to keep your mind open, and have the courage to keep trying new approaches.

Recreational Vehicle Resort Henry’s mailer had brought reasonable returns during his RV park’s first season. But as with most business owners, Henry was just scratching the surface. In this consultation, I showed him how to write headlines that catch the eye, copy that maximizes a product’s appeal, and graphics that direct the reader’s attention to wherever you want it. I also showed Henry how to keep his mailing list up-to-date for the lowest possible cost. And I gave him several variations on how to increase marketing leverage through the use of host relationships. * * * * Jay: First of all, your primary prospect owns a camper, a travel trailer, or some form of RV, recreational vehicle? Henry: Yes. Jay: Okay, and 99.9% of your people would already have one, correct? Henry: Yes. But that might be a little misleading. Perhaps I should qualify it. Roughly 10% of the population has any type of camping equipment. That leaves 90% of the market out there on tap. Well, there’s a system that Coast to Coast Camping has, called “CCC” - which means Camp Coast to Coast, and “CCR” is Camp Coast to Coast Resorts. To qualify for the resort concept, every park must have at least five cabin or trailer rental units. Jay: And you do? Henry: We’re just in the process of putting them up. Jay: So what you’re saying is a prospect could join the CCR program and not have to have a camper. If I pay your $3700 reservation fee, and you have space available, I could just come and rent a cabin for $30 or $40. Henry: That’s correct. $35 a night to rent a cabin that will sleep six. Jay: And it’s a nice cabin? Henry: Yes. Jay: The next question: Of 100% of the people you sold during your first 100 selling days, how many of them did not actually own an RV or camper? Henry: We were not equipped with cabin rental units then. Jay: So in the first 100-day selling period, 100% of the people owned a travel trailer. Henry: That’s correct. Jay: Right now, for your state, do you have a comprehensive list of everybody who’s got a travel trailer?

Henry: Yes, we bought a list. Jay: When did you buy it? Henry: A year ago this month. Jay: Do they offer a service where you get updates, too? Henry: They don’t, no. Jay: How often can you get updated lists? What does a list cost? Henry: The total cost was $18,000. Jay: Wow! For what? Henry: That’s what they charge. I’m trying to think what the rate was per name. Jay: How many names are on it? Henry: Roughly 225,000. Jay: Okay, and it’s on magnetic tape? Henry: That’s correct. Jay: So if you want the new one you have to buy all 225,000 and pay another $18,000? Henry: No, I can order as many as I want. There was a minimum. I believe it was a $5,000 minimum. Jay: But now that you have last year’s list, if you want this year’s, which might have another 1015,000 campers on it, could you just pay for the extra names? Henry: No, you can’t get it by the year. I think the only way to update it is to get the whole list again. Jay: You can’t say to them, “We’ll take the list we’ve got, run it against the list you’ve got, and pay for the non-duplicated names?” Henry: No, they won’t do that. Jay: It would be good if they would. Henry: There are other sources to acquire that name list from. R.L. Polk, for one, has a motor home list. Jay: Okay, well it might be to your advantage to take your list, go to everybody who has a motor home list, especially the ones who have the most accurate and up-to-date lists. . .

Henry: Well, part of the problem is exposing that list to anybody else in the industry. They’re copied constantly and resold. It’s important that you’re dealing with somebody with integrity to protect the list. Jay: But what I’m suggesting is that if you find somebody who says, “I have a list of the latest, most up-to-date names, and there are 300,000 names on my list,” and you say, “Well, I have a list of 250,000, so you probably have 50,000 names I don’t have. I don’t need the 250,000 names I already have, but I’ll pay a premium if you let me pass my list against your list at a computer house, and for every hit, every unduplicated name that we find, I’ll pay you three times what you normally want per name.” Does that give you an idea? That way, when you don’t want to give them your list, and they don’t want to give theirs to you, you give both to an independent third party computer house who is skilled at what’s called merge-purge tape processing. They’re skilled at passing one list against another and pulling out all the non-duplicated names. Henry: Yes, I’m familiar with that. Jay: That’s the first thing I’d do. Try to find some source where you can get new names without paying $18,000 for them. Typically names are worth, depending on where they come from, about a nickel apiece, no more than a dime, unless it’s an incredibly exclusive list. If you have a quarter million names from the state, and you paid about $20,000, you paid close to 8 cents a name, didn’t you? That’s market value, a nickel to a dime a name. When you do a mailing, because it’s bulk rate, you don’t get it returned to you, probably, do you? Henry: No, we don’t. Jay: You also don’t have a return address on it, so there’s no way to get it back, is there? Henry: There are just driving directions. You’re right. Jay: That’s the first thing. Second, people who own an RV, mobile camper, travel trailer, or motor home, besides being registered, do they also subscribe to certain publications? Henry: Yes, I believe there are some out there. There’s a periodical called Travel Trailer News. Jay: You should contact those periodicals and ask them for lists of their subscribers or members, because those subscribers will be more active ones. You know that they’re more committed by the mere fact that they patronize and subscribe to those kinds of publications. Henry: Okay, you’re saying that those publishing companies have name lists for sale? Jay: Yes. Most of them should be willing, for a price, to rent or sell lists for one or multiple time usages, lists of their subscribers in a specified geographic area. If you call and say, “I want all the subscribers in this state, or within a 100-mile radius of my park,” and they say, “Well, we only rent nationally,” there’s always a way to work it out. Tell them you’ll pay a premium of 2-3 times the normal rental rate, and most of them will easily accept that. And while they may have only 10,000 subscribers in your state or marketing area, those 10,000 are probably supremely good prospects because they’re more committed. They’ve extended themselves by spending $30 a year for a magazine that helps them really focus. Henry: Yes, that’s excellent.

Jay: Also, go through all the magazines and look at all the people who sell mail-order products or services to the people who read the magazines. Contact those companies and ask them if they would be willing to do a joint venture lead-generating program through their list, where they endorse you. Am I confusing you? Henry: No, not at all. Jay: Suppose I sell some kind of apparatus for a mobile home or travel trailer. I sell it by mail. I have 25,000 customers in your state. You offer me a joint venture or a premium rental if I’ll sign a letter you furnish, telling my customers that I’ve bought them a 3-day vacation at your Resort because I think it’s going to be such a wonderful thing for them. All they have to do is send this card in and reserve the exact time. Henry: Yes, I thought about contacting places that sell travel trailers or equipment. Jay: That’s the next thing I was going to say. Call everybody you can who has campers, trailers, or related equipment, and offer them an on-going variable commission. What is the commission you pay your salesmen? Henry: They average 17% provided they sell enough to reach the bonus level. Jay: So on $3700 they make about $650-700? Henry: Yes. But I have another program, a red scratch-out card, like a lottery. Anybody who wants to find out more about my park just presents the card and they can win either a microwave or a black & white TV, or a set of Corningware. Jay: And how does that impact things? Henry: What I would do is approach recreational vehicle sales places and pay them $25 for every lead that sends us one of these red cards. Jay: What would happen if instead you gave them a preferred price and let them package the sale? Is that do-able? Henry: Yes, it is. Jay: Or, what if they financed a stay at your park when someone purchased an RV? That would be very interesting, wouldn’t it? Henry: Yes, it would be. Jay: Again, I’m not promising that it can be done, but I’m saying that you’ll find out by testing a few. The worst you’d do is waste some time. I’m sure that won’t be the first or only waste of time you’ll ever do. But what if you had every travel trailer and mobile home park mailing all their former customers a letter from you inviting their people, or a letter from them telling their people they’d bought them a two-month reservation? It would be powerful if the person who sold me the travel trailer sent me a letter saying, “I didn’t just buy you a week, I bought you a 2-month trial membership. And I bought it because I think that you want to maximize the joy and pleasure of owning your mobile trailer. You have to be a member of an organization like this, not just because it is a wonderful resort, but because it is

tied in with 500 other resorts around the country, so it gives you the chance to really maximize the experience, for a one-time investment. Usually, you have to make a decision without experiencing it. But I think enough of this RV park that I bought you a 2-month membership that lets you experience it yourself and then decide.” That could be really powerful. Try just one facility, and if it works, you expand it. If it doesn’t, you’re out a few people who went for two months on you. But try getting every sales organization that sells and sold RV’s to set up a procedure so that either right after they bought their mobile home, or three months later, or whenever you can get them to do it, a letter you crafted went out to their customers from them, offering to have them come out, or to buy them a weekend, or buy them a month, or buy them something, or get them a discount on it, or something to induce them. If you started experimenting with different propositions and different endorsed approaches, I think you would make a ton of money. I can’t begin to know which approach will work. Every situation is kaleidoscopically unique, and you’ve got to experiment. But try one arrangement where they send an endorsed letter and you’re paying them so much a lead, and another experiment where they offer to buy a reservation for their customers, and you’re paying them so much a sale. Or just pay them a premium for doing the mailing, a one-time fee of $500 or $1000 to let you mail, or sending a letter endorsed by you to their people and they never get paid again. And just experiment to see which, if any, works the best, cost effectively and results-wise. It would be pretty interesting, wouldn’t you think? Is this helping you? Henry: Yes, yes. Jay: Okay, magazines, associations, what kind of other group affiliations would RV people need? Are they members of any other organizations? Henry: Yes, there’s a periodical called The Good Sam Club, a periodical that’s published and geared to people with recreational equipment, reaching various parts across the country... Jay: Okay, so how many people. . . do you rank real high on rating? Henry: We really haven’t been open long enough to even get involved with that. Jay: What if you invited all the members to, what if you reserved. . . how much utilization is the park doing right now? Henry: 100%. Jay: Oh, really? That’s a problem. Is that on the weekends or throughout the year? Henry: That’s throughout the year, of course. We just flat shut down in October because we couldn’t keep up with the pace. We outgrew the existing facility. Jay: How do you compensate for that? Henry: Well, we’re in the process of putting in the swimming pool and administration building and country store and new sales area. And that should be finished here in another three weeks. Jay: I was going to say, it would be interesting if you sponsored group weekends where you invited 100 members or 15 members of a group, to bring their travel trailer down for either a weekend or special mid-week deal. But part of the deal was that it was an absolute turnkey

proposition, and didn’t cost them anything. There was a barbecue every night on you. A really neat deal. The end of the second day they get hit with the pitch. Henry: Yes, we do things like that now. Jay: Typically, what will it be? How will you do it? Henry: Well, when you mentioned barbecue... Jay: You didn’t indicate that in what you sent me. Henry: That’s a good lead source, probably the best one that I know of, to have the members come and bring invited guests. Jay: And they’ll come for what, a weekend? Henry: Yes, for a weekend, 3 days, and we’d roast a pig in the process. Jay: And they know, coming in, that that’s what’s going to happen? Henry: Yes. Jay: Typically, how many people would show up? Henry: We’ve had pretty good turn-outs so far, even the potluck dinners, and card games. I would say an average show would be around 50 people. But we only have 87 places. Jay: Okay. There are also the trailer and travel and camper shows. Do you take a booth at them? Henry: Yes. Jay: And you get all the names? Do you also go to everybody else who shows and ask to do a deal at the end where they give you all their lists and names? Henry: No, I’ve never done that, though we just played a show here two weeks ago. Jay: I think you should go back to everybody else who showed there, and if you think there’s an affinity, not only ask for a deal with the names they have on their list, but also ask them to work in all the names they’ve got from the last year of everyone they’ve ever called on, if in fact there’s a high probability that their customers and prospects are prime prospects for you. Henry: Where is their motivation? Jay: You give them four choices. One: reciprocity if it’s not competitive. In other words, you trade lists. Two: a flat rate for the entire list, as long as they warranted the lead - that the names are good and clean and not wasteful. For the rental, they would get $1,000 or $5,000, depending on the quantity and the quality. Three: so much per lead. Four: a percentage, if you can quantify it. I think there’s a lot of inducement. If I came to you and said, “Give me all the prospects you have that you didn’t convert, and the ones you did convert, because I’m going to promote them, I’m going to send them a promotion for my whatever, which is non-competitive with you, and I’ll give you $5,000,” wouldn’t you be interested?

Henry: Yes. Jay: So will they. Play everybody, and then solicit. If you get too many responders or takers, then you can pick and choose on the criterion of which ones sound the most viable first. The card that you sent I think can be improved in a number of ways. First of all, the reproduction is terrible. I would try a couple of things. How many pieces did you mail out? Henry: 10,000 the first three weeks, and 15,000 every week thereafter. Jay: First of all, if you’re going to mail in that kind of quantity, shame on you for not comparatively testing all sorts of variables. You should start doing it. Test for pictures. I’ll tell you a fascinating story. I had, years and years ago, a company called “Entrepreneur’s Magazine.” I was looking for a breakthrough approach. I came up with a headline called, “Confessions of a Hard-Nosed Millionaire.” Very provocative. It was a self-mailer. I saw a newspaper photo, in the magazine owner’s office, of the owner looking down really disdainfully, intimidatingly, and condescendingly at the photographer. He was standing against his bookshelf, in a 3-piece suit, with all his plaques and books, and he looked really intimidating, really hard, really tough. I used that picture on the front-cover of a self-mailer with that headline, and it did exceptionally well. The owner didn’t like it, and he arbitrarily substituted another picture. He thought his success connoted to people the sense of a wealthy guy getting out of a Lear jet with a big bosomy blonde, going to an exotic car, so he had a picture of himself getting out of a Lear jet with a big bosomy blonde, going to a gaudy limousine, and he used that picture instead of the one I had used. It produced 2/3 less results from the very same copy. So what I’m saying to you is, experiment and find that one best picture. Maybe it’s a different site, different location, maybe there’s another picture that’s got people, kids, facilities, campers, fishermen, with the water in the background. What if that picture pulled two to three times the yield of this one, and the copy was the same? It would be pretty interesting, wouldn’t it? What if a different headline did that? I have terrible trouble focusing on the copy. Henry: That’s why I highlighted it. Jay: It’s difficult to read. Henry: What do you suggest? Jay: First of all, you can open it up more. There are two or three different approaches that you could try also - a tent postcard if you needed more space. Do you know what a tent postcard is? Henry: No I don’t. Jay: Just envision: double the size, fold it over in the middle, it’s like a tent. Henry: Okay. You get into a cost thing there. Jay: It’ll only cost more if it doesn’t work better. Again, I’m suggesting that one of your 15,000 or one of your 10,000 mailings. . . what you want to do is bite the bullet and go through maybe three or six weeks worth of experimental testing where you can compare the results of one approach with another. You can only test one variable at a time for it to be meaningful. And you can’t test picture against copy. You want to test one picture against another, one headline against another, and so forth, keeping everything else constant.

Keep testing, and you may find out that a different picture pulls twice or three times as well. But there are other things to think about. You might, just as an example, find that opening it up and telling a more complete story may not pull as many people but the ones it pulls convert better. There are all sorts of analyses you want to do. I’m troubled because all you do in this postcard is tell me all the eligibility rules. I’d rather know all the advantages. My presumption is if I own a motor home, camper, or trailer, I know there are always stipulations. But the probability is that I’m going to qualify, if I’m looking at the 10 qualifications. If I satisfy number one, there’s probably a 95% chance that I’m going to satisfy the rest, don’t you think? Henry: Are you saying you would omit the others? Jay: Well, not necessarily omit them, but I would want more space. I would tell about the advantages that they’re going to see. To me, you might do better if you wove in more of the allurement. “Come to a place where there are 500 acres of undesecrated, beautiful, lush green land, and where there are twenty flowing miles of crisp blue water and there are bass, and there are walleye, and where you camp in your own space, you’re not next to each other. The average campsite is private, it’s ten feet from the next person, not ten inches, and you can dig a barbecue pit, and there are plenty of clean facilities. It’s well stocked and you wake up and it’s crisp, and you don’t know that there’s anyone around you, and you’ve got all these things you can do, and there’s this activity and that activity. Every Saturday night there’s a free barbecue, etc.” Again, the bonuses and dues are not necessarily bad, but you’re not underpinning it with a lot of benefits that tie in with the real product itself. Henry: My theory was that all human response is based on need or greed. Jay: I don’t dispute that, but what if by underpinning more specifically the benefits you double or triple the response? I’m saying that if you’re going to spend a half-million dollars, which is what I think you’re spending, you owe it to yourself to know that altering one variable could increase by twenty to two-hundred percent either the yield or the conversion. Don’t you want to know that? Of course you do. I would try different headlines. I would try a headline. Your card has no headline! “We’d like to invite you to spend 3 wonderful days, a wonderful 3-day adventure on us. No charge, no obligation.” Henry: You’re saying that you would cut down on the eligibility requirements and not be so concerned..... Jay: Or move them somewhere to the right. Before I’d have eligibility requirements I’d have promise. But keep in mind, you don’t know until you experiment. I’d try 10 listings of bulleted advantages, of benefits you have when you go there. “The only stocked lake that has twelve different kinds of fish, where it’s almost like you throw in your pole and you catch the limit. A place where the wildlife is unbelievable. We’ve got deer, we’ve got. . . a place where you don’t have to see another house or factory. A place where you can hike.” I think that those things are what people look for, aren’t they? Henry: You’re saying that the fish are so good you have to stand behind a tree to bait your hook! Jay: Yes, if it’s true. And I think I’d try experimenting with the picture. Frankly, it may or may not be the right picture. What I’m looking at, it’s hazy, it’s not a crisp beautiful azure sky.

Henry: We had a new one made that is. Jay: It looks like a nice day at the swamp. But if it turns out that it works best, use it. Sometimes you find a wildcard. Maybe beauty doesn’t work as well. What I’m saying is that it’s dumb to take $600,000 and put it on red 22 and spin the roulette wheel, if you can hedge your bet to five other places at the same time. I’m saying you’re not doing that. Did you ever see the stuff that I do for Investment Rarities? We sent off self-mailers for them that are multiple-faceted and embossed. They’re very expensive, but they pull five times what a regular mailer does for only two times the cost. They actually made us a lot more money. So I think you should experiment with letters. If you don’t have enough space to tell what you want to say, try different ways of saying it, try different headlines, try a headline. My feeling, frankly, is that if you’re getting 1%, that’s maybe because you’re getting only 10% of the recipients to read it. If you could get 20% to read it, maybe you could get a 3% response. Even though there’s not much copy, my eyes go to the bulk rate stamp, they go to the map, they don’t really focus in the beginning, they go to the eligibility requirements. All that notwithstanding, it still pulls a good response. I’m just being brutally critical with you. Henry: I appreciate that. That’s what this is all about. Jay: I have what you might call a “greased shoot” philosophy of mailers. You should start progressively from the top and get their eye movement to go where you want it to go. So your name runs in more, take it and put it in the left. I don’t know if you’re mandated to that size of bulk rate stamp, but if you aren’t, I’d bring it down some more, just because it focuses the eyes to the wrong place. I would try different headlines. Here’s one: “We’d like to buy you a $30 weekend or $50 weekend complete with dinner, with a roasted pig barbecue on us, plus free fishing, free tennis, free hiking, movies in the clubhouse on the weekend for the kids, babysitting, whatever.” Try different promises, try different approaches. When you’re selling a $40,000 deal, one offer pulls a certain kind of person, another offer pulls a different kind. I did a consultation, a seminar, one time, to people who wanted to learn about mail order. I was trying to teach the philosophy of subjectivity and objectivity. I said the word “big money” to them, then went around the room, and chronicled what people thought of when I said “big money,” what image, what amount, came to mind. Very interesting. This was 15 years ago, so to somebody making $5 an hour, big money was $20 an hour. To somebody making $2,000 a month, big money was $5,000 or $6,000 or $10,000 a month. To a guy making $100,000 a year, big money was a million dollars, but a million dollars a year, a million dollars at one time. Likewise, I asked people why they were at the seminar. Some of them wanted to learn mail order because they hated their job. Some of them were approaching retirement, some of them wanted to find a way to cultivate their hobby into a profitable major income source. But the point was, if I had thought that big money meant $10, and they’re all there because they were approaching retirement, I would not have appealed to 90% of the interests of the people there. Do you understand the analogy? Experiment with broader appeal. Is this helping you? Henry: Yes, we’re doing well. I’d like to ask you a couple of questions. I have a copy of the mailing piece in front of me. Jay: The self-mailer, this little postcard? Henry: The postcard, and I’m looking at the printing on the back, and my objective was to highlight that in bold print to appeal to a need.

Jay: My feeling is that a lot of people who camp are not necessarily younger; they tend to be older. The type is so very small, it might be hard for them to read. I don’t know typestyles, but this one looks cluttered even though there’s not that much type there. Again, the pink sticker is very interesting, about the gifts. I have the one that talks about the $169.95 TV. Is that on all of them? Henry: Well I can change that gift. That’s why I had that put on there with a sticker. Jay: Have you experimented with changing them? Henry: Yes, if the TV doesn’t pull I’ll go to a 35mm camera - whatever’s pulling. Jay: And have you found that it makes a difference? Henry: Not really, no. It hasn’t made much of a difference at all, and that surprised me. Jay: That surprises me too. Are they all dollar-valued the same? Henry: Yes, right in that same ballpark. Jay: If you could find something at a higher dollar value, I’d be interested in seeing it. To the extent that it doesn’t drive you crazy (financially and otherwise), so that you don’t have to buy and stock inventory, I would be constantly experimenting with different headlines, different bulleted appeal/benefits, and different offers on the pink sticker. Try that, try different formats of delivering your message. Don’t be afraid to try real fancy ones too, and to see what happens when you tell your complete story. Henry: Okay, I tried to order these mail pieces 100,000 at a time because of the price break. But I firmly believe in testing, and my intention was to always to test an absolute minimum of 3,000 pieces a week. Jay: It sounds like you’re not terribly hamstrung for marketing dollars. If that’s the case, my feeling is always that I would pay a horrendous premium in the test stages for the privilege of learning. I would optimize the dollar, the buying efficiencies, because if you look at what you can learn, you pay three times as much for two months, but what you learn can pull five times the people and two times the sales in the ensuing nine months. If you can do that, the cost of printing in lots of 20,000 at first is really miniscule. You might find that certain formats work best, and maybe once you find the color, maybe once you find the right picture, you can print 100,000 of them. Can’t they print the front 100,000 and just do the back part as needed? Henry: Yes, indeed. Jay: Use good judgment, but I’m suggesting that if you’re going to really spend a half million dollars, or three-quarters of a million dollars a year on marketing, you owe it to yourself to first find out the best possible approaches, the ones that pull the largest number of qualified leads, and then mail in large volumes. I’ve had clients do some very zany things. I’ve had clients send one letter and a week later try a little different approach, saying “You probably got our letter. We forgot to tell you this and this and this.” Just pull out the people who committed to the first one, then do the second mailing to the rest. You might get more on the back end, you just never know. When Publishers’ Clearing House sends a postcard as a precursor to their big package, they do it because it works. Also, are there any personalities you could get, who would be useful

in this? Maybe somebody who’s not a personality, but has credibility? What if there’s a prominent outdoorsman in your state? Henry: Well, when they show up on the site they watch a Coast to Coast film. Lorne Green is a spokesman for Camp Coast to Coast. Jay: But of course, he’s dead, so. . . It would be really interesting if your prospects got a letter from somebody else who’s synonymous with “rugged outdoorsman.” Don’t campers think of themselves as rugged outdoorsmen? Henry: Yes, basically. Quite a gregarious group, really. Jay: They fish and hunt and are rugged outdoorsmen. I think you owe it to yourself to try some letters. Henry: What do you think of the concept of a postcard, as opposed to an envelope that has to be opened? Jay: I think there’s no right or wrong. It’s not for me to tell you - that would be grotesque malfeasance. Test everything. It isn’t postcard versus envelope. It’s content, it’s teaser, it’s promise, it’s the way it’s delivered. Try oversize. When everyone’s going bigger and bigger, I have clients who send out charming little monarch size envelopes, because it gets your attention. I’m not saying that it’s right for you. It may be, but wouldn’t you like to know that for sure, even if you spend $20,000 to find out? With most people, even if we’re all talented, and I think I’m talented, the odds are that it takes experimentation and improvement to do the best. I don’t care how proficient we are - usually our first endeavor at anything isn’t the best, don’t you agree? So if that’s the case, you owe it to yourself to see how high is high. How much better is better? To find that out, just experiment. What happens if you change one module of this mailer, if you put in a headline? My eyes jump from the resort name to the map. Set it up where the eye movement is more precisely controlled by you. It’s obvious that if you go from the headline to the first thought, it takes a second to build a case, and it tells me all the benefits. Then in the far right corner you put the eligibility, you carve into a box so it segregates and subordinates it - so it doesn’t divert from selling the person on it. Maybe it won’t make a difference, but wouldn’t you like to know? Henry: Yes, I would. Jay: Also, you have all those names. You know, if you don’t have your list’s phone numbers, there’s a service that lets you pass your whole list against their phone numbers. Any names they have numbers for, they can have their people call them and invite them. Have you tried that? Henry: No. Jay: It may or may not work, but it would be very interesting to call and invite them. The best way to do it is under the auspices of somebody else. Could you tie in some association or organization? Maybe you can get the Good Sam club to allow you to use their name as an invitee. “As a special weekend, get-acquainted event, in an effort to try to get you as a member, Sam is sponsoring a weekend at this Resort, and we know you’re not a member of Sam, but Sam thinks it’s a good way to get you to know us. We’ve organized a wonderful weekend complete with barbecue roast suckling pig dinner free, and if you like you could join.” Use host devices to give a reason that the whole thing is going on. And try that with two or three organizations.

Sometimes it’s easier to use a different host device to get them in the door - a different rationale. All you want to do is get a qualified person sitting on your property for three days to experience it and listen to your pitches, isn’t it? Henry: That’s right. Jay: Let me think in concluding if there’s something else I want to say to you. See if you could organize this: use some of your marketing dollars to pay a full-time man or woman - who’s on commission - to go out and make deals with everybody who could endorse you, who has mailing lists and customer lists. These would not be just one-shot. Every time an RV salesperson sold a mobile home or RV, you would have a deal where they would sell a package to the people right there on-site, with a letter from you. If you had that deal with 100 dealers, wouldn’t that be wonderful? Henry: Sure would. Jay: And that’s what you want - you don’t want one-shot. It’s great what you’re doing, but if you could institute or install or engage on-going commitments from 100 other operatives, associations, and people who would let you put inserts in their newsletters that go to the people of your state, all those people, and you could work joint ventures with all of them, you couldn’t handle all the business. It’s do-able, but just needs to be organized. What else would you like to talk about? Henry: I like the idea of jotting down some additional benefits and laying them out in the form of a mail piece. Jay: Try two or three approaches and think about better headlines, and think about eye movement, because my eye jumps from the bulk rate stamp to the bird on the insignia, to the map, and really has great trouble focusing on the rest of the body copy, and sort of looks at the pink slip. I tend to typify most people. If even with that, you’re still getting 1% response, imagine what you might get. Wouldn’t it be great if you get 3% and the quality was no less? Henry: That’s right. When I look at that eagle, that’s my symbol, but really it has no significance for the mail piece at all. Jay: The point is, a lot of people make a mistake and get enraptured with their logo, but it distracts and diverts the flow and the continuity for the reader. And you don’t really have a starting headline. “Your club in North Country, the last affordable dream...” I guess that’s okay, but it’s not actionable, it isn’t really a promise that gets me to move. You should try headlines that say something to get me to progress to the next sentence. Experiment, okay? Henry: I’ll do that. It sounds like an excellent approach. Thank you. Jay: It’s been my pleasure. * * * * Does your mailing piece grab the reader’s attention? If the headline clearly offers a benefit or result that the reader wants, he or she will continue reading. Design your piece to make the reader’s attention flow where you want it to. Be careful not to misuse logos or other graphic devices. Don’t divert the reader’s eye from the message you want him or her to read.

Use an attractive and readable typeface. Never let your piece look cluttered. And again, what sells your product is its direct benefit to the prospect, a benefit no other product offers - your Unique Selling Proposition. Emphasize that. Remember also to experiment with different copy, headlines, graphics, pictures, and angles. Don’t presume to tell the market what it wants - let it tell you. Systematically vary one element while keeping the others constant, and carefully measure the results - not just in quantity but in quality of leads generated. This may cost more at first, but in the long run it should increase your return many times over.

Sales Representative for Satellite Equipment For 25 years, Edward did high-level marketing for a major electronics corporation. Then he took an early retirement and began representing smaller electronics manufacturers on his own. He had started off well, but soon hit a plateau. I gave him techniques that hardly anyone uses, but that are so simple and logical they’re almost ridiculous - except for the fact that they’ve created millionaires. These techniques include: how to save a fortune in time and money by accessing other people’s knowledge, and how to advance potentially valuable relationships through careful and judicious testing. * * * * Jay: You are a challenge! Edward: Well, it’s a little different than the kind of thing you’re normally doing. Jay: To be honest - and this is going to sound funny - there’s no norm to what I do. Edward: I understand that. Jay: But to be very candid, yours is one of the more interesting challenges that I’ve had. I’m getting your file. Are you glad you left the corporation? Edward: Financially I’ve done significantly better than I would have done with the corporation. I happened to run across a company I thought needed some marketing systems, and they were the first client I acquired. I had them all lined up by the time I left the corporation, so I had a business base to start with. We’ve done fairly well over the years together. Jay: Looks like you have nine firms you represent. Edward: Right. Jay: They’re all interrelated in their product lines. Edward: Right. With two or three of those companies, I do almost nothing other than collect an occasional commission when a sale is made.

Jay: Whether they make it themselves or you make it? Edward: Yes. Jay: Which ones are your active ones? Edward: The active ones are the antenna company and two of its subsidiaries. Then there’s another company, and those form a group that is a specific . . . Jay: Are those two separate companies? Edward: Right. The antenna companies are all one company. The fourth is a separate company. It’s a small company, a struggling company. They may not last more than a year or two. They could probably use your help too! Jay: Do you do a lot of business with them? Edward: Most of the time, I’m responsible for probably 15 to 20% of their backlog. Jay: That’s impressive. Edward: I do sales for them probably somewhere near $700,000 to $1,000,000 a year. Jay: What does a representative make? What are the customary percentages? Edward: With these kinds of companies, it generally starts around 10% and decreases as the size of the individual contract goes up. Some have a cap. Jay: Really? That’s interesting. How do they justify that? Edward: Their justification is that it doesn’t take much more effort to win a $2,000,000 contract than it does a $500,000 contract. In many respects, they’re right. Jay: Interesting. Edward: What the cap usually says is that anything above this amount is negotiable between you and the principal. My best deal is with a company I’ve had for about a year and a half. They don’t have a cap. They go down to 5% and don’t go any lower than that. Jay: Which one is that? Edward: They make a very high frequency microwave device. They’re primarily in the electronic collection and electronic warfare business. Jay: So you settled in and you ended up with whom? Edward: Four companies are in a group that are involved in satellite communications, ground stations. Then the other group of two - who are sister companies owned by the same parent, plus another - are in the electronic warfare intelligence collection business. All the customers for these companies, except for an occasional sale to an Air Force Base or a range instrumentation place, are large government prime contractors.

Jay: What is the total number of prospects you have? Are you just selling one coast? Edward: In fact, primarily my efforts are in the biggest state in my area. Jay: When I say “just,” I acknowledge that it’s a wonderful market, but I just want to know about the geographic limits. Edward: Those are the maximum geographic limits other than a couple of customers elsewhere. Jay: Continue with your background and then we’ll start focusing via some questions I’ll ask. Edward: Okay. Essentially when I came back here, I spent a year or two as a systems engineer. Jay: Is your background engineering? Edward: I have a degree in Electrical Engineering and did my masters degree in Engineering Administration. Jay: Does that make you more negotiable with the buyers you have to deal with? Edward: Most of my sales are with the engineers who are designing and specifying their systems. Jay: The people who are specifying your products - is it like one engineer talking to another? Edward: That’s right. Jay: That’s got to be very valuable. Edward: It’s very valuable. The fact that I grew up in it and that all of my experience is in the areas they’re doing business in is really the one unique thing that I bring to this particular market place. Jay: How did you build your following? The $5,000,000 that you’re doing now breaks up amongst x number of customers. How did you curry their favor? How did you cultivate those relationships? How did you build the entree for yourself and then subsequently the companies you’re representing to the manufacturers? Edward: Initially I built it because I knew them. Jay: Through your corporation background? Edward: Through my corporation background. Jay: So it was a great springboard? Edward: It was. In fact, those corporate contacts still probably account for 40% of my income. Jay: That’s wonderful. Edward: It’s mostly a different set of people now than I knew then, but that got me the entree into the company.

Jay: Isn’t it interesting that as a percentage-based rep, you probably make five or ten times the income you did on salary at a fraction of the time expended? It’s ironic, isn’t it? Edward: It’s probably twice the income now. Jay: But still there’s the irony of the compensation. It’s a shame that big companies don’t have better variable compensation for their people, isn’t it? Edward: No question that the large companies have no concept of how to do that. Jay: It’s amazing that there aren’t better incentives. Anyhow, right now, as we talk, you have strong penetration or rapport with how many companies out of the number of prospects you’d like to have? In other words, if there are a hundred companies you should be selling to, how many are you reaching? Edward: Okay. In both cases, it’s a smaller number, but let’s say there are probably . . . They go in divisions. There are probably only about fifteen companies that could account for 90% of the business in one aspect. I have a good “in” at probably two or three of them. Jay: How did you get the two or five of those companies that you have, and what’s your Unique Selling Proposition? What’s your benefit to them? How do your competitors maintain their hold on the ones you don’t have? Where are they and who are they? Edward: There are a couple of ways my competitors market, and when I say competitors, I have two sets of them. I have the marketing guys or reps, and I have the principals. Most of the principals do not market through reps. They go direct. One does have a rep out here, though. Jay: Okay. But he’ll also go out. . . Edward: He’s not a big competitor of mine. He is a competitor but the only place he wins business from me is one antenna line he has where I don’t have one that’s anywhere near pricecompetitive with it. So he’ll go in there with that one. Jay: You can’t induce your manufacturers to come up with a comparable product? Edward: They have elected not to do that. Jay: There’s just not enough market for it? Edward: Right. Jay: What about another competitor? Edward: This other one to date has not shown up as a big competitor of mine. Eventually he will. Jay: Why? Is he formidable? Edward: He and his engineer are very capable guys. Jay: How about this other competitor I see here?

Edward: They are significantly larger than any of the other companies I represent and that compete with them. They compete with two of mine. They do their own marketing. They have marketing offices all over the country. Their annual sales are probably twenty to thirty times what my guys do. Jay: And how do they do it? Edward: They do it with an aggressive, intensive advertising campaign. Jay: In where? Edward: Basically the trade journals that the customers read. Jay: Which are what? Edward: There’s one called Defense Electronics, one called Electronic Warfare, and several other related magazines. Jay: I’m going to get ahead of myself but we’ll backtrack again to the subject I’m about to introduce. You asked me about how to garner the names of certain people who you said are hard to get: the buyers or specifiers or the engineers of some firms that you don’t sell to. It’s possible and I don’t know enough about the trade publications - but many trade publications will, for a price, make their subscriber lists available. Did you know that? Edward: No, I didn’t. Jay: Well, they will. And I’m going to give you a tip. If you go to the people who publish those magazines and say, “I want everybody who subscribes in x, y, and z states.” If they say, “Well, we will only make it available if you buy the whole list,” don’t be short-sighted. Do it. There can’t be that many subscribers - 10,000 or 20,000 or so? Edward: I don’t really know. Jay: I doubt if it would be that many. So whatever they want within reason, you should be willing to pay to get the use of the mailing list because let’s say you end up with 500 names in your biggest state. Even if only 20% are prospects and you can’t segregate them out, it’s worth sending a quasi-personal letter to all 500, even if it’s embarrassingly inapplicable to 450. Edward: That’s fine, yes. If I pull out 1% of those or half a per cent of them. Jay: But you asked me in one of your questions how to find those. What you do is identify the three or four trade publications or newsletters or subscription-based types of publications or services that they will most probably subscribe to. If they are big ones, call and see if you can pay them aboveboard to rent their list. If they are private ones - for example, if there’s a gentleman who may have a very interesting newsletter to a certain industry - approach that person on one of two things: 1) just renting you his subscriber list in a certain designated geographic area; 2) if he is reluctant, suggest that he allow you, if it’s going to be done aboveboard, to work those names and give him a share of any business that emanates from it. I’m just trying to give you some ways. Edward: As you talk, that gives me an idea because it turns out I know a personal friend of the publisher of one of the main ones.

Jay: Great! Let’s go on. You also asked about the advertising and I want to give you advice on that. So they’re running large full-page ads in the trades, and what do the ads say typically? Edward: Mostly they’re generic ads. Jay: Basically they’re conveying their image? Edward: That’s exactly right. They feature a product and they have a large product list so they can . . . Jay: Do they also ask for inquiries, or would that even be necessary, since they probably know who the customers are? Edward: They list a phone number and a marketing guide, but that’s usually not necessary. Jay: How does this competitor, the scientific one, advertise? Edward: They’re a smaller company and . . . Jay: Smaller than you, larger than you? Edward: They’re probably about the same size as the companies I represent that compete with them. Jay: All right. Edward: They have a local guy here who’s their full-time regional marketing guy. He’s very capable. He came up a little bit through the same route that I did. Jay: And that fellow is doing what you’re doing except he’s getting a salary? Edward: A salary, that’s correct. Jay: Is his motivation as acute as yours? Edward: No. Of course not. I’m not sure whether he’s on any kind of a commission. Jay: Very smart! Edward: At one time he and I talked about going into the repping business together, so I know him quite well. Jay: Parenthetically, you have certain things here you think you want to garner from this conversation. My goal is to try and give you as broad a spectrum of directable insight as I can. I also want to plant some gestating seeds that will carry your thinking long past this hour. One of the things that you might also do - and I’ve recommended this to a lot of clients unlike you, because there is no exact similarity between you and other clients - is to identify all sorts of people who are not directly competitive but who are in kindred types of businesses working for the manufacturers, and solicit them, constantly, to go into partnerships or maybe to affiliate with you. Most of them will never have the guts to do it, but what will end up happening - if you work the relationships and try to curry their favor and induce them to come work with you - is

that a lot of them will try to throw business your way. That will be either for fraternal reasons or for profit, as long as it can be done ethically and aboveboard. I’ve suggested that to three or four different people over the years. I’ve encouraged them to try to curry.favor every time they meet someone who’s calling on a similar kind of a market but for a non-related item, to suggest that perhaps they go into partnerships. Most of the people you approach won’t, because they don’t want to leave the sanctuary and the perceived security they have. But by working ten or fifteen people on this basis, two or three of them, just because they’re flattered and because they also want to keep their options open, throw business your way. Two or three of them end up coming to you with profit-sharing deals, which as long as they’re aboveboard, you have no problem taking. The cumulative effect is very good. Occasionally, one will come over and help expand the business strictly on a performance basis. It’s good to take 5 or 10% of your time and work constantly at soliciting people you hear of who are good. Not necessarily competitors, but people who you know probably have ins in the market you want to reach. Edward: That’s a good idea. Jay: It works. You get their names, keep little files and send them personalized letters which we’ll talk about, invite them to lunch, flatter them if they deserve it. Make overtures to them, and just be constantly nurturing and advancing those relationships with the same kind of a gestational process you would have when you’re working on the major manufacturers. This would require constant advancement, because if you had fifty guys that you’re working on to come into partnership or association, because their contacts or their technical knowledge are related to you, few if any will ever take the shot unless they’re actually forced to. Lots of them will like to straddle the fence and keep options open. They’ll throw you business, they’ll recommend you to people. They’ll do deals where if you can do it again, aboveboard, they’ll throw business to you for a share or whatever. It’s a wonderful device. Just keep advancing them. It’s surprising - the cumulative effect. It’s so logical and obvious, but again, most people don’t think of that. Edward: That’s a good idea. I had thought of some of those people after reading some of your material. Jay: I hope the material that I sent to you was useful. Edward: Very useful. Jay: Good. Let’s continue. So basically it’s three things. Some competitors advertise, some have company people, a finite number also have representation like you. Edward: Right. Jay: How many people like you are there banging against each other’s head in the waiting rooms of top places right now? How many direct competitors do you have for any market? Five? Ten? Edward: Oh, less than that. It’s a very small number. In each area, three or four companies at the most.

Jay: Let me talk about something related. I suggested devices to identify prospects. There are other ways to do it. Here’s one of the things I did earlier in my career - and the devices are not dissimilar, so you can learn from them. I got started in the mail order business originally when I was about 21 years old. I was locked out, and didn’t know the buyers or the contacts. Finally, I started doing a lot of exploring and found that there were certain people calling on radio stations for other things. They were selling jingles, they were selling electronics. I started currying their favor and got them to introduce me, in a predisposed favorable manner, to radio managers who opened up to me. I got them to refer me to the contacts, and save me the sifting and prospecting and get me right to the person. I did it in a number of ways. Usually it was variable profit shares, but I also paid certain people - actually paid them - for a certain number of hours of their time. This is when I had very little money. I paid people $50 an hour when $50 was a lot of money, just to talk to me for a day. I would give someone $300 or $400 just to let me pick their minds, fully acknowledging to them what I was doing. It saved me years. It took me six months of doing this - picking people’s minds, using one person ethically to get to somewhere else, giving him or her a variable on what I produced from it, or paying them outright for the chance to pick their mind. One guy I remember spending literally every weekend for a month with. The guy was a jingle salesman and he sold to every radio station in America. He had contacts with all the managers. I spent every weekend on the phone to him, not only going through his files, but getting little bits of info, making all sorts of extensive notes on what he knew about the person their likes, their dislikes, their hobbies, little ice-breaking things. It sounds silly to you, and I paid the guy like $1000 to go through his whole file with him. He thought I was crazy, but I used that to make my client $18,000,000 gross- and after they grossed $18,000,000, they made about $3,000,000 on it - and it was only because I was able to do all this. It really works! Am I giving you any ideas? Edward: You sure are! Jay: What I’m saying is that I think you should do two things. You know certain people in the market. Don’t be afraid. You make enough money with your thing to put aside $15,000 or $20,000 and use it to pick people’s minds. Use it to make offers to people. When you see ads in the paper for people who you know are not competitive, solicit them - call them - pick their minds. Find their reps, if they’re commission guys. Do whatever you can do, to the extent you don’t compromise. My recommendation is to be pristinely ethical about it because of the volatility of your industry. There are a lot of things you can do, if it isn’t against the procedures. Offer a guy $1,000 to pick his mind for a weekend, go visit him, take him out to lunch. Offer a variable. Just keep picking his mind and keeping all this information. Have systems, ask him to introduce you to people, ask him if you can send letters. Those things will all advance your name. Ask him if he can invite people to have lunch with the two of you or play tennis. Just keep doing that and allocating 10 or 15% of your resources towards that cultivation of data from that non-traditional sort of host relationships. It’s a very powerful device. The cumulative effect is incredible. It’s simple, but it’s so obvious people sometimes don’t see it. Whenever you see ads in the back of a journal, even though you’re a rep, if you see other reps advertising, who’s to say you couldn’t learn from one of them, if he’s a master rep. Just for an introduction, you may want to lay off 20% of your commission to another rep. Edward: Sure, I have no problem with that.

Jay: Think about how can you leverage other people’s inroads, other people’s relationships. What I’ve always done for my clients with this, and it becomes a geometric progression, is incredible. You start working and interacting all these different factors. Instead of doubling, it’s like squaring and cubing and whatever the next progression is. Sounds theatrical, but it really works. It’s a very powerful concept. Edward: It is. I hear what you’re saying. Jay: But it only works if you do it with regularity. You have to know how to ethically manipulate all these resources who don’t even know they’re resources, and you have to know how to curry them. There’s a sequence of events; you can’t do it too fast. You sort of nurturously introduce yourself. You constantly at any given point have maybe 20 or 100 people at various stages of the process. Does that make sense to you? Edward: Yes. Jay: It’s critically important, if you don’t use a computer, to use a very detailed progressive file system so you know what you’re advancing, and so you don’t embarrass yourself. You have all these people you’re advancing. You have to make them all know that they’re equally important. It’s a fun challenge to you, but you have to do it with meticulous concern for how you keep advancing the relationships. Document what you’re doing so you can remember the last thing you said to someone, and what the next thing you have to do is, and the next sequence. You have to keep guiding one relationship towards another or towards an objective. Again, you’re making pitches to a hundred people at a time: some of them ostensibly to come into your employ, knowing that they probably won’t; some of them to introduce you to people; some of them to just sit down and get paid for their time; some of them to get a finder’s fee any time they give you the name of somebody. You have all these different transactions going constantly. You have to keep really diligent records or you’ll really mess up. If you keep records, it’s scary the dynamics you have available to you. It sounds silly, but really it’s very exciting!. I’m fundamentally an acknowledged opportunist. I love to work smart; I hate to work hard. Edward: Right. Jay: So I try to leverage everything and everybody from a fixed point and keep advancing them. Because look at what you’re doing. If you have a hundred people you’re working relationships off of, you have the leverage of their cumulative experience and knowledge. I could go to great efforts to illustrate the millions of dollars worth of human capital involved. Their companies spent fortunes sending them out, getting them to make inroads at places, and the airplane tickets and hospitality suites and all sorts of other things. You’re leveraging off of all that for nothing but a variable, or maybe you have to pay a guy $1,000 a month to pick his mind. You’ve got to look at what you’re leveraging, if that makes sense. Edward: Sure does. Jay: Most people don’t see that. It gets exciting when you realize it. What you want to do is go back through all your old trade publications and make yourself files of your competitors, or of people who have inroads. Look at all the ads in the back for people who started out being manufacturer’s reps. When you hear that someone failed, and maybe went back into somebody else’s association and took a job, call them up and say, “Hey, you spent three years of your time and all your savings and it didn’t work, but you must have made contacts. Let’s share them”. Be

truthful; never exploit anyone. Always pay more instead of less but be variably predicated. Say, “Look, John. You just spent a year working my state. You were selling something unrelated. You may have inroads to engineers who I don’t know. If you’ll share that information with me and I can use it, I’ll pay you a share of what emanates for two years.” What I do is always give someone an incredible variable-based, incentivized inducement to share with me. The point is, you’ve got to take the philosophy of found money. If somebody can help you make an inroad that you wouldn’t have been able to get on your own, and it makes you $100,000 a year for five years, paying them some seemingly large fee actually makes you lots of money. I’ve sometimes been accused of giving too much variable income, but it’s by making such seemingly over-generous offers that I induce people to make things happen for me. Edward: Makes perfect sense to me. Jay: Rather than saying, “I’ll give you 5% of the business for the first year,” I would say, “I’ll give it to you for three years.” Maybe I’d give him 8% or 10%, because I’m getting 90% of business I wouldn’t have had otherwise. What’s that worth? Edward: It’s money you wouldn’t have gotten at all. Jay: Right. Now, what else would you like to ask me specifically? Edward: You’ve read both my letters. You’ve read the thing I sent out, the copy of a letter, and you’ve read my very short description of the kind of companies I represent. How about a couple of suggestions? Jay: The first comment is that I don’t know the market you’re serving. The one thing that I found lacking, even though you have to use succinct letters, is that there’s no Unique Selling Proposition, no USP. Maybe it’s hard to advance that in the context of the kind of letters you have to send to the buyer or the engineers you’re talking to, but there’s no real Unique Selling Proposition. Edward: You’re right! Jay: The USP, whether it be technological expertise, low price, or quick turn-around, delineates your company. I don’t know what yours is, but if you don’t have one, we’d better find you one. I think that the stuff I extolled in that material I sent you is true across the board. You have to focus your letters. Maybe it has to be more sophisticated, vis-a-vis the market you address. But I didn’t see anything there. If I understood that letter, all you are doing is introducing me to another generic competitor who wants my business. In essence, what you’re saying is, “I have another fine firm to introduce you to. Give me the business you’re giving to somebody else but not for any reason that benefits you.” Edward: You’re right. You’re right! Jay: With that as my critique, tell me what unique selling advantage any of the people you rep really offer, if any. If there isn’t one, let’s try to create something. That’s how you really gain market share, by pointing that out. You may have always had them, but if your buyer doesn’t see it, it does you no good. What I try to teach people, all things being equal, is that if we can give you a Unique Selling Proposition that instantly makes your product or services stand out above all the competitors, you have the advantage.

Edward: You’re right. After reviewing your information, I noticed I wasn’t doing that. There’s one thing I see in all of these companies and that’s, except for one, they’ve all been in business for a long time and are good, solid, reputable firms, and their products are quality products. All that is generic and that’s the problem. Jay: Most of the other companies you would be competing against very probably have been in business for a long time or the principals who spun off from other companies have been known for a long time. So keep talking! Edward: Good. It seems to me that there are two parameters. When it gets down to making a purchase with most of these people, the purchase is generally made to the guy who is a) responsive to the specifications, but b) responsive at the lowest price. Jay: How do you become responsive to the specs at the lowest price? Do you feel you’ve done that? Edward: I think that in general, the companies I represent are very price-competitive. Jay: Let me ask you about the selling process. Are you usually creating something for replacement or is it a first-time job? Edward: Generally in most cases it’s a first-time kind of opportunity. Jay: So an engineer has spec’d it. It doesn’t exist. Right or wrong? It’s not a standard item? Edward: What the engineer is doing may not exist. The engineer is spec’ing a system which is a collection of things that I sell and others sell. Jay: Is the product. . . ? Edward: The product that I’m providing, 50% of the time probably exists just exactly like he wants it. An additional 40% exist almost like he wants it, so that we’re going to do things differently for him, and 10% are probably things that don’t exist at all. Jay: In your field, is performance so critical? Are there stats available on the quality of your manufacturers’ product versus your competitors’? What’s the terminology they use? Edward: In the satellite business, they use station and system availability. In other words, the ratio of how much time it’s on the air to how much time it’s off. Jay: Okay. Are there analysis data available to prove definitively that your stuff is so darn dependable that it’s not even a question? In fact, is that relevant when you’re selling, or is everybody’s stuff so reliable and engineered with so much redundancy that it doesn’t matter? Edward: It’s a relevant question in the satellite business, but the answer to your question is probably yes, everybody probably can say, “Mine is as reliable as the other guy’s.” There is no one competitor that is either head and shoulders above everybody or head and shoulders below everybody. Jay: There’s no way that a manufacturer could, for a modest amount extra, engineer something into their system to enhance reliability or something that you could tout for the same money as everybody else that makes it demonstrably superior?

Edward: If they could, they would. They look for those things all the time. Jay: By the way, excuse my naivete. I’m just probing. Edward: Good questions. The other side of the coin - something I’ll throw out - none of the products I sell are things that people punch out on assembly lines. Nothing is sitting on the shelf waiting for somebody to buy. Nearly everything has a ninety-day to one-year delivery time. So it’s made when the customer orders it, except for a few long-lead items that the vendor keeps in stock, or the principal sometimes will build even though the customer buys just one. He might build five just because he knows he’ll sell them in the next year or so. In any case, one of the things customers are concerned about is the ability to deliver a product on time and to have a product work when he gets it. I guess ideally every supplier would like to say they’re better than anybody else. I’m not sure I can fulfill that. Jay: Okay, so the USP isn’t in the product. But here’s an angle: using you as a USP. First of all, once you identify your master mailing list - let’s say there are 250 people on it and you don’t know with certainty how many of them are real buyers , but you’ve identified them from whatever compilation methods - mail a series of regular letters every month to those people who don’t respond. Each letter addresses a different focal theme, because different hot buttons will evoke a response from different people. Edward: Those are some thoughts that have been going through my mind since I’ve been reading your information. Jay: If you have, from your experience, certain techniques that help engineers dispatch their job more effectively, efficiently, and save their firm money, you may be able to incorporate that knowledge into a letter. For example: “Ten Ways Engineers Can Save 60 to 180 Days and up to $500,000 on Radio Telemetry.” That might be a headline in a personal letter. It might say (and allow for the fact that I don’t know the terminology), “After 25 years of being in this field, I’ve culled down ten major mistakes that most specifying engineers are guilty of. If they incorporated this knowledge into their specifying and purchasing procedures, they would probably save their firms as much as 180 days in manufacturing loss and/or tens of thousands of dollars.” There is an insert that we used in selling my newsletter years ago. I think I incorporated some of it in the letter I sent to you.. We gave ten specific examples, and somebody reading could, without ever patronizing me, have about $25,000 worth of real knowledge right there. It’s like when you got the letter from me, you probably received so many ideas that if you never talked to me, you had a direction. It had the effect of predisposing you favorably towards me. Edward: That’s right, it did. Jay: It lofted my expertise another rung above what you may have expected. Having you presume I could help you even before we talked. Now doesn’t that same effect hold true to your market? Edward: Yes. Jay: Everyone else is saying, “Give me the business you give to somebody else.” You, whether they give you the business or not, are giving them a letter telling them, for example, twenty ways they can become a hero. Doesn’t it become implicit that you have a lot more to offer? If it works, then believe it or not, even hard-core, seemingly amoral people have a tendency to be reciprocal,

to give back. If they become a hero, if they save their company $500,000, if they get a $20,000 bonus that is attributable to a letter they got from you, don’t you think they’ll be inclined to see you? Edward: Yes. Jay: Does that help? Edward: Yes, it does. Jay: That’s only one approach. You try a whole plethora. Another one might be just a straightforward offer. “My name is Edward. I own a specialized manufacturing rep organization. Our expertise is in this. Quite frankly, I’ve been doing it for years and years.” Tell them your background. “I started out from x major corporation, worked around the world,” and give them a little synopsis like you gave me. “I’m not promising this - everyone is writing you saying, ‘Give us the business you give to someone else.’ I’m not suggesting you do that but I am suggesting that before you give anybody your business, it might be to your advantage - as well as mine, but certainly yours - to pick my mind because I’ve been doing this for more years than many people have even been in the business. I understand the intricacies, I understand the pitfalls. I’ve probably delivered more systems and helped specify more than almost anybody I know of. Again, maybe you can find someone who’s fast; maybe you can find somebody who’s cheaper, but you may be able to save and become more efficient with whoever you favor by interacting with me first. I’m willing to consult with you on a non-obligational basis. All I’m saying is, if I give you ideas that make sense, and everything else is equal, favor me with the business. If not, don’t. But before you favor anyone, I think it could be very valuable to you to at least pick my mind.” That’s a neat approach, don’t you think? Edward: Great! Jay: You’re lofting yourself on a whole unique basis. All of a sudden you’re a repository of knowledge that’s available to them whether they favor you or not. Planting seeds. Scare them and titillate them. Give them examples of things you’ve done over the years. For example: “‘I saved that company this amount by coming up with a way to cut that.” For example: “We overcame this problem,” and give them the example. That’s an approach. Tell them what to do. Don’t just say, “Thank you.” Say, “What I suggest is that if you have programs on the board right now in contemplation, call me. Confidentiality always prevails. I’m available on the telephone. I can meet you in person. You can come to my offices. Suffice it to say I can tender an overwhelming number of references. I wouldn’t be willing to write a letter like this if I couldn’t deliver. You have more to gain than I.” Edward: I use that verbally when I meet new people. Jay: It works, doesn’t it? Edward: Yes, it does. Jay: That will work very effectively. Edward: You’ve given me some really good suggestions. Jay: The biggest suggestion I can give you is to get a grid. Look through those trade publications. Keep track of every time somebody quits and goes to work somewhere else. If they

leave - say your competitor goes to work for somewhere outside the field - call and ask if you can pick his brain. If somebody goes into business being a manufacturer’s rep in a related field, see if you can make a deal with him, whether he’ll help you either for a fee or for a variable deal, because most of them starting off don’t have a lot of money. You know that. Or if somebody goes out of the manufacturers rep field, contact him and see if you can access his knowledge for a fee or a variable. Keep working all the possibilities and you’ll be very surprised. Lots of people have a publication they sell. If you find some manufacturing company or some publishing company that sells manuals or newsletters or software or updates, call those people and ask if you can access the people who subscribe to them or the names of the buyers who bought them. If they won’t rent them to you, offer them an overgenerous profit-share so they’ll let you do it. See if you can get them to endorse you. Try anything. Be audacious as can be vis-a-vis the limitations of your more structured field. The downside is very little; the upside is incredible. Edward: It’s tremendous! Jay: That’s about the best advice I can give you. Edward: I think it’s good. Jay: I hope I helped you. Edward: You have very much. * * * * To get good lists of prospects, approach all the relevant sources in your field: pre-existing lists, trade journals, magazines, newsletters. These lists are usually available for a reasonable price. Also, look for businesses with related but different products - not direct competitors, but with similar clients - and try to work out a mutually profitable arrangement, where they find you leads or mention you to prospects. You’ll both gain if you pay them an attractive percentage for business they generate for you. Approach such people regularly, and keep careful records of your interactions. Sometimes it’s worth your while - especially when you’re breaking into a new field - to pay experienced people just to pick their brains. Their knowledge of who to approach, how to get in, and what to do once you get in - the prospect’s likes and dislikes and interests - is intellectual capital. It can make you a lot of money.

Looking For a Business to Go Into Carol has been in sales most of her life - in hotels, in car dealerships, a variety of things. When she called for her consultation, she was involved in a silk-screening business with a partner, but it wasn’t going very well. She had subscribed to my series of marketing reports, but for some reason hadn’t read most of them. When she called me for her consultation, it was clear she was basically looking for what to do next.

I never thought of myself as a career consultant, but by giving her a lot of my marketing principles, I provided a framework within which she could make some decisions on her own. As I think you’ll see, you don’t have to be at loose ends to benefit from what I told her. The consultation brought out numerous concepts you can use to increase your own profits starting immediately. (There are a few little bonuses in this transcript, such as how to get past a prospect’s sales resistance so you can make your pitch, and how to write a booklet - at virtually no cost - that gives expert advice in a given field when you have no expertise in the field yourself. You’ll find these beginning about two thirds of the way through.) * * * * Carol: I’m at a point where I really don’t know what I want to do. I have to make a decision. There are people depending on me, and my funds are not going to be there forever. When I got the solicitation letter for your marketing reports, I thought it was sent to me personally. Jay: Well, let’s look into what you enjoy doing the most. You’ve done a lot of sales. Are you good at details? Are you self-motivated? Carol: As far as details, I would rather have someone else do that. One of my greatest strengths is I have always been real good with people. This guy I met who owns a printing shop saw that quality in me and asked if I would like to sell printing for him. But I don’t think I want to do that. I’ve worked for somebody else all my life, and now I want to work for me. I’m willing o work hard, but I also want to do something that is going to give me some gratification. Jay: Let me start not with an advisement but with a sincere request, and that is that you take the time after this consultation to read my materials. Read those marketing reports, or pay someone to read them into a tape recorder and listen to the tapes. It will give you some very important philosophical understandings. One of the most basic of these is the principle of leverage. You only have a finite amount of capital to invest, and you only have a finite amount of time and energy to expend. If you take a job, you can make a certain amount of salary and/or variable compensation, but you are limited to what the person you are working for is willing to pay you. On the other hand, if you’re on your own and you come up with something that’s salable, you can leverage it. One way is by selling the same basic concept to more than one company. For example, in the past I wrote lots of direct mail pieces to sell newsletters. I would write a letter for one newsletter and let them use it, but I would retain the right to sell it to other, noncompeting newsletters, just changing the premiums but keeping the copy basically the same. With some, I’d sell it for a fee, with some for 20%, with some I’d take only 10%, depending on what I could negotiate. By maintaining a similar attitude about leverage, you can take a proprietary interest in something instead of just an employee’s interest or a finder’s fee. And for no more work, and oftentimes less, you can make many times more. If you can avoid it, never be an employee. Also, you should always look for ways to make a deal. Now, some people think that a lot of what I advocate is crazy because the things I come up with don’t follow the usual rules. But as long as you don’t do anything immoral, as long as you don’t encroach upon somebody else’s

rights, you can make your own rules. If you think just because it hasn’t been done that it can’t be done, you may be doing yourself a great disservice. Now let’s say you want to do something with this printer who approached you. I would suggest that you go to him with a proposition. You’ll take him on, you’ll build business for him, but on the following stipulation: Not only are you an independent contractor, but once you bring in a new customer, you are not obligated to keep servicing that customer. You can hire someone to do it for you, or you can even sell your interest to a third party. And your interest is some agreed upon percentage for, say, 4 or 5 years. So instead of being an employee where he can fire you, right at the outset you’ve tied something up long-term. And if you ever have a falling out with the printer, and you’ve brought in a customer that’s worth, say, $2,000 a month to him, and you’ve been making a percentage of that, you can offer to sell your rights back to the printer for $5,000, plus you’ll sign a non-compete agreement on that client. It’s a way of structuring dealings where you can leverage them, not only now but you also get a participation for the future. I’m being a bit abstract, but do you see what I’m trying to say? Carol:

I understand what you’re saying.

Jay: For example, at first I sold things to clients for a fee. Then I started using variable compensation. Some people don’t like variable, so I would say, “Okay, I’ll sell it to you for a fee, but I retain 100% of the property rights - the actual property is mine. You can use it, but you need to pay me for each use.” With one client, when I write something for them, they pay me $50,000 the first time they use it, and if they use it subsequently, I get a check for $25,000 each time. Plus I always have the right to sell it to anyone else outside their market. I retain a perpetual interest in repeat business, so although I wrote the thing once I still get checks forever, often from several different people. And if I ever get into a cash flow difficulty, I can go to one of them and say, “You’re paying me $5,000 a month on this residual, and it looks like you’ll be paying me for 3 more years. How would you like to give me $25,000 now and buy yourself out of the contract?” You have all these possibilities. Does that make sense? Carol: It does. Jay: One thing I’ve learned is that in the nebulous, embryonic state when nothing is established, you can make up any deal you want, and people will agree because there’s nothing there. The thing to do, though, is to not make demands. Just approach it in a business-like way. “Here is what I want to do. I willing to do it on my own. Here is what I propose receiving in return for taking the risk upon myself and building your business.” Here’s another example: You go to your printing guy and you make an arrangement whereby you have a territory that only you can work, or an industry that he is not working that only you can prospect in, and you tie that up as your proprietary right for 3 years. Carol: He’s not working much of anything. Jay: That brings up another point something to watch out for. When you start succeeding at a deal like this, people can start getting greedy. The tragedy is that people so often have a falling

out when there’s money on the table, and it’s shame. So what you have to do is think through all the ramifications before you tie up the deal. If you are inclined to get involved with that printer, I would stake out every industrial application, every geographical area, every generic type of business that he is not catering to, and to the extent that it is not overkill, I would have him acknowledge in writing that those are your territories for a period of time, provided you deliver a minimum amount of performance. Carol: You mean obligate myself to... Jay: No, you’ve got a performance obligation, but it’s not necessarily incumbent on you yourself. For example, you agree to spend 6 months full time working a given territory at least 40 hours a month - but you have the right to have it be done by somebody in your employ. And as long as you fulfill this requirement, the contract is binding. The deal is that you get a residual for 4 or 5 years or whatever, and the printer can’t assign it or take it away. He can buy it from you, but on a negotiated basis. So then if you spend 6 months building something - either by yourself or with the help of someone you hire - you can turn it over to a younger person or a semi-retired person, and pay them 1/4 of your commission. Then you can put your efforts into something else, knowing you have this cash flow and that the printer can’t cut you off just because you’re not performing. I have a cardinal rule that I don’t do anything until it’s tied up in a simple letter of agreement that’s indisputable. When they have to pay off is not the time to try to get deals or to get them to sign affidavits. Carol:

Do most people go for these deals?

Jay: Why shouldn’t they? - because you are going to explore and develop markets they haven’t even tried to tap. Why should that printer care if you make money for 5 years if it’s money he never would have made and if you’re doing the whole thing on your time? If you bring in business that they didn’t have, it shouldn’t matter whether you work one hour, twenty hours, or no hours. As long as they get business they didn’t have, you’re entitled to a perpetual. You have earned it. That’s the argument. But you tie it up so the guy can’t throw you out if you later decide you don’t want to do the work anymore. You have a contract and the contract says you get paid for 5 years, no one else can take the territory, and he pays you 30 days after they pay him. And if he doesn’t do it, you can take him to court or something. Carol: Well, if I’m supposed to be a printing salesperson, I would like to know how best to get past the secretary, how best to see the person I am supposed to see in order to do all of this. Jay:

Have you read my material covering the concept of a unique selling proposition?

Carol: No. Jay: When we finish this consultation, read it. Read all the reports sequentially. And don’t just read them once. It’s taken 20 years to learn what I’ve learned. It took me a year to write it down. There’s simply no way anyone could comprehend it all by reading it in a few hours. Read it at least 2 or 3 or 4 times, the first time just to get a flavor. The second time is hardest, because it seems almost like boring reading. The third time, everything should start coming alive for you

because you’ll see applications. Keep a notebook handy, have a tape recorder nearby so you can record ideas as you get them, because it should open up vast opportunities. The strongest suggestion I can make to you is even if you think you want to sell printing because someone has offered it to you, contemplate the whole range of possibilities first. Always think in terms of efficiency. Leverage. Leverage is the thematic rule that runs through everything I do. Let’s say you sell your silk-screening equipment and you get $12,000 for it. When you vacation, where do you go? Carol: The last couple of times, I took my daughter and went to the Caribbean. We have a friend down there who has a condo on a nice beach. Jay: I would do the following. I would take those marketing reports with me, I would use $1,000 or $2,000 of the money that I get from selling the silk-screening equipment, and I would go to my friend’s condo on the beach. And every day I would read those reports and start making notes. I’d also get the Yellow Pages from any large city and I’d go through them from front to back looking at categories of businesses to see if any of them interest me. You can be anything you want - you can engage in any business you want - if you understand the way of thinking I’ve been telling you about. The printing business may be just right for you. But there may be something else that for the same amount of time and energy could make you 3 times the initial profit and 10 times the residual profit. Why limit yourself? The smart person looks at lots of deals before even making an offer. Because as you look you start seeing possibilities. Money is the least precious commodity, really. Your time, your energy are far more precious. Wouldn’t it be sad to work your tail off 8 hours a day and make X dollars, when the same amount of effort would have made you 10X in some other endeavor, and residually 100X? I don’t know what the right area is for you, but I do know that the thing to do is to read my material, slowly and repetitively. And make notes. Make them detailed enough so that a week or two later you’re not confused about what you were trying to tell yourself. I would get graph paper and do grids where you list businesses and criteria and see which ones mesh best for you. And go through the Yellow Pages, where you’ll find every kind of crazy, off-beat thing. And if there’s something you are interested in, call the person. You have nothing to lose, except maybe you’ll feel some embarrassment. Call somebody and say, “I don’t know anything about your business, but it sounds like something I might be interested in going into. I have time, I have energy, I have some capital. I may want to propose some kind of joint venture, or have you teach me about your business for a fee. Would you consider talking with me in person or over the phone for 10 minutes at your convenience? After we talk, if I think I’m interested, I will make you a proposition where, at the very least, you can educate me in return for compensation.” Just talk to a lot of people. People will educate you, and you will become adroit at interviewing an subtly interrogating, and you will learn a lot about a lot of businesses. You’ll broaden your perspective, you’ll see all sorts of possibilities. Then when the time comes to decide on what area or areas to pursue, you’ll have the broadest possible basis for deciding. Does that make sense to you? Carol: Yes, it does.

Jay: And don’t be in such a hurry that you let your emotions rule. Take two weeks and read and think about it and make copious notes. Then read your notes and then walk on the beach and don’t even think about it. Let the subconscious gestate. I’m not a positive-thinking zealot, but I think if you put enough possibilities into your mental computer, it will come up with the answers for you. But if you only put one possibility in, it will only come up with one answer. Carol:

That makes sense. Are there some other basic principles I can go by?

Jay: Take the position of serving, not selling. Everybody else wants to sell. You serve. Whatever field you are in, prepare information or services or reports for the people you are trying to gain as customers that would show them how to markedly improve their utilization of what you offer, whether they use your services or not. Let’s say you want to go into printing. Have somebody create for you a booklet or report on 48 ways a business can profit more from printing - how to buy better, how to use printing more effectively, how to get better impact from printed materials. A booklet that would be so useful that anyone who buys printing would be a fool not to want it. Then offer that booklet free to prospects as a test. Call up and say, “My name is Carol Jones. I’m a printing consultant. While I would naturally like to have your business, I am calling for more of a service-oriented reason. My firm has just completed publication of a rather exciting report the likes of which we don’t think exist anywhere else, and the title of it is “48 Ways Your Company Can Save Money And Profit More From The Printing You Currently Buy.” It tells you better ways to buy, better usage of graphics, better ways to use a print broker, ways to get things done for nothing. I would like to give you a copy and tell you the essence of it in person. Or I could do it over the telephone right now if you like, or at a time that is convenient for you. Admittedly, I am hoping that by showing you ways you could save 10 or 20 or 30 thousand dollars or more a year on the printing you currently buy, you will give me a chance to at least bid on some of your future work. However, whether you do or don’t, I want to offer you this information. There’s no obligation. I won’t harass you, and I can assure you it will be a beneficial, informative, and educational meeting or phone call. Do you have the time today? Should we do it right now? Otherwise, I am available either Tuesday or Wednesday.” That’s pretty powerful, don’t you think? Carol: Yes, that’s talking to the customer. But how are you going to get around the secretary to get to the person in charge? Jay: You tell the secretary the same thing. You say, “Every printer in town is trying to sell you printing. All they want to do is get your business. I do not. I only want to get paid if I can show you ways to make more profit and derive better utilization on the printing you are already doing. I have prepared a report that’s incredible. I would like to present it to your boss in person, but I am willing to send it to him instead. Please tell him that I will give him this report, but I would also like to take 6 minutes of my time to give him a distillation of the 10 best concepts contained in the report, at which time I will give him a 1-minute pitch telling him the advantages of my company and how we are committed to serve and augment his printing needs. If you are willing to let me talk to him, I assure you I won’t try to sell him. Just tell him that 4 of the 5 minutes will be informative to him, and 60 seconds minimum will just be a quick overview of why we’re unique and why it pays to consider us after you’ve saved the money - and whether you use us or not, I am sure I will give him ways to save money during our 6-minute meeting. The only way I will stay longer is if he asks me to. I’ll pick up at the end of 6 minutes, win, lose, or draw, and walk out the door, but I will leave him something that I humbly think will make him or your firm 5 or 10 or 25 thousand dollars in savings - out of which you could ask him for a raise, if you like, or bigger bonuses, or a bigger Christmas party, or a nicer desk or dictating

machine. So please help me. I assure you he will be appreciative of the information.” That’s a pretty powerful approach. Carol: What would your suggestions be for getting a booklet like this produced when I know nothing about printing? Jay: What if you wrote to every printing company in your city and said that you are putting together a book teaching people how to improve their utilization of printing, and tell them: “I’m looking for contributing editors. If you contribute, I’ll give you full acknowledgement in the book - you and your company. If you’re interested, I’ll set up a telephone interview with you. Just send back this card and tell me the areas you think you would like to write about. And if you are not a good writer but have good concepts, I can have it ghost written for you.” Send it out to 600 printers. I’m sure you’ll get 20 or 30 who are interested. If you don’t, go back and try another one. This time, say, “I want to engage anyone who has a concept or an idea that can save printing buyers at least 10 or 5 percent by being more efficient or by selecting paper stock more judiciously, or using color more effectively - whatever ways will make it more economical for the user - and I will pay $100 per concept.” When you start reading my material and shame on you, Carol, for not reading it yet - it will give you a way of thinking. This is but one example. Does it sound exciting to you? Carol: It does. Jay: And in the process, in talking to people, you will get an education to boot. Record your phone conversations so you can listen to them over and over. The people you talk to will teach you how to be an expert at printing even though you don’t know anything about it when you start. If you have 20 people teach you their perspective on printing in one fell swoop, and if each person has 20 years’ experience, it’s like getting 400 years of expertise, isn’t it? And even if you decided afterwards that you don’t want to go into printing, you will have created this product that you can sell to printers as a premium that they can give to their prospects. You could sell it to printers not only in your city, but all over the country to use as a sales tool. Do you see the possibilities? Carol:

I sure do.

Jay: Or you could run ads in the business section of the newspaper describing this book and saying, “It normally costs $39, but it is free to anyone who will allow us to talk to them about our printing company’s services for 5 minutes. Just phone and set it up with our secretary.” The possibilities are unlimited. Carol:

I’m beginning to see that.

Jay: The whole thing is to adopt a philosophy: it’s you controlling the situation, not the situation controlling you. Carol: If you were in the process of looking for people to hire on a residual basis like you have talked about, would you advertise for people in the newspaper, or what? Jay: You could offer a neat concept where the employee could keep getting paid forever if they bring in a new customer - that is for as long as the customer keeps dealing with your printing company - whether the employee services the customer or not. In other words, they can work for you for 6 months and make an income for life. That’s a pretty compelling offer, isn’t it?

Carol:

Yes.

Jay: You can also give finder’s fees. And you can run ads to find finders. Think about all the people who call on businesses who are uniquely positioned. They don’t sell printing, but they could sell printing if they knew they would get, say, 10 percent, or maybe $100, for making a onetime introduction. You would like for them to help maintain the customer, but if they didn’t want to, you’d still pay them as long as the customer stayed with you. It’s a powerful concept, and you can get absolutely rich adhering to it. But you can’t get chintzy. If you build a big business because people have taken you up on the deal and then they leave, and you owe them, say, $2,000 a month each, you can’t be mad about having to pay it. You could negotiate with them and say, “Look, I’m not trying to dishonor my deal, but instead of small monthly payments, would you consider letting me buy you out for $10,000 cash, paid immediately?” There’s a moral facet to this. If°you breach it, you will kill your own goose. Does that make sense? Carol: It makes sense. Jay: I paid one man $150,000 for introducing me to somebody one time, and I resented that I hadn’t required more performance from him. But it was my fault, and although I didn’t want to pay him, I had made a deal. So I paid him $150,000 - and it made me a million. You have to be very careful not to kill your own goose. Carol: If you were going to write an ad suggesting to people that they could earn extra money by calling on the same customers they are now, utilizing the idea you spoke about, how would you word it? Jay: I would say something like, “If you are calling on companies that could also use our printing services, we have a proposition you should find irresistible. Secure them for us as a customer and we’ll take over all the liaison and coordination and pay you your commission for life - in other words, for as long as the customer keeps using us, you get paid.” Carol: But it’s not something you would want to put in classified ads in the salespersons section, is it? Jay: Why not? Carol: I think it would be better to put it in another section of the paper. Jay: Again, you are at a disadvantage because you have not yet read my marketing reports. There is no clear-cut answer that can be given in advance. You don’t have the right to make a decision affecting your fate based on conjecture. Rather, you have the obligation to try out a lot of things. Run an ad in the business section, the sports section, the employment section. Then analyze which one brings not only the most response, but the best quality response - and that’s the one that you keep going with. The ones that don’t work, you stop running. Don’t run a big ad until you try little ones. Because if you run a big ad in the sports section and the ad doesn’t work, you wasted $4,000 when you could have wasted only $400. Don’t try to make a decision without testing. One approach could prove to be 10 times more profitable than another.

You have to say to yourself, “0kay, I’m going to experiment. I’m going to try $3,000 on ads over the next two weeks or months or whatever. I’m going to try this one on Sunday, and this one next Sunday, and I’m going to have them call and ask for a different person each time. One time they will be told to call and ask for Carol, another time they’ll ask for Mrs. Jones, and another time Carol Jones” - so you know which ads the calls came from. Then you analyze and find out not only the quantity but also the quality - which people end up working with you and how well they perform. Then maybe you wait two months and run the ads again. Patience is really a virtue here, because if you can afford to live long enough out of your pocket, you should do as much experimenting now as you can, and just patiently wait to let the responses play themselves out. Then, by the time you really need money, you will know the exact right way to use most of your time, energy, and capital. You’ll know which ads to run and where to run them, and then you can start to really build. You see what I’m saying? Carol:

Yes.

Jay: You know, when you get pregnant, it takes 9 months to gestate a child. You may want to give birth in 3 because you’re tired, but you have to let it play itself out. You want a child that’s healthy. What I’m talking about is don’t try to short circuit. Take your time and analyze everything. Keep impeccably good records, and that will give you the answers - because any question you could ask me about your market can be answered by putting the question to the test in the market itself and letting the people respond. * * * * Leverage, leverage. leverage. Look for ways to leverage everything. If you come up with an idea that works, find ways to license that same idea to others. If you know you can help someone build their business, offer a deal where you’ll do it for free, but lock in a percentage that will bring you income for years. If there are people who have expertise you lack, get their help in turning that expertise into profit. Remember, when you make a deal, you can write your own rules, and the sky’s the limit. But protect yourself by getting it in writing before the cash starts to flow.