Quote:
Originally Posted by nota
does the 1 .5 return inc the shipping and handling profits ?
or is that purely what the whole scam runs on
if they charge 7.95 to ship
what do they really pay for mass shipping a buck and change ?
|
Let's take the $10k test amount.
Commercial time is inventory that expires. Once it's gone it's gone. So much like anything else the closer you get to a _____ expiring the cheaper it gets, think seats on a plane. You can buy media at the last minute for pennies on the dollar.
You don't care where the spots run. You do set some demographic parameters for your media buyer but the reality is almost everyone has expiring unsold media.
You run your spots, it has a unique phone number for each different network or some other identifying attribute like the value of the offer. That is how the call center knows when and where the spots ran. The next morning over coffee you look at the report from the call center. You ran on 10 networks, 1 got you a 2.0 MER, woot, 5 got you 1.5 or better, nice, 4 underperformed. You take a closer look at the under performers looking at day part, night parts etc... One did well at 3 AM and one did well at 3 PM.
You call your media buyer and tell them take the money from one of the turds and stick it on the 2.0 to increase frequency. Take the other turd and stick the money on the 1.5's. Condense all the spend on the other 2 from all day to the 3 AM and PM time slots.
You do this every day and what happens is the spot "finds it's audience" and you start slamming money at it.
Now the money side. Works a bunch of different ways but generally you take 85% of what you made each day and stick it back into the media.
For every $1 you spent you got back at least $1.50 so you stick $1.25 back into media and if your MER holds firm you made $1.90, you stick 85%, $1.60 back into media which turns into $2,40 back, rinse and repeat. You can go from $10k in media spend to $1,000,000 faster than you can count the money. And you are generating $1,500,000 in revenue.
For that to work the total COGS of your product can not exceed 25% of the sale price and that includes the "But wait, there's more, buy now and we'll send you 2 ____ for only $__.95" That's why the stuff is generally crap.
Ever see the ones that say Pay nothing now, just S/H. That typically means the COGS plus the S/H are less than what you pay for the S/H. Shipping is a profit center.
You called for a $9.95 item but I've got a killer call center answering the phones with an upsell script. By the time my gal gets done with you you just bought $60.00 worth of crap from me.
The other thing that makes it all work is the "4-6 weeks for shipping".
We don't carry inventory.
We build a very small number of units for the people that will pay extra for expedited shipping. The rest of the "regular" orders we don't actually build the product until after it's sold, that's why 4-6 weeks to get it. We took your money and are using it to manufacture the goods.
If after 2 weeks of testing the product is a turd we kill it and refund your money and we are not sitting on inventory. Very low risk.
The stuff that makes the real money is continuity items, vitamins, cosmetics anything that I can ship you every month and bang your card for every month. I'm not spending money to acquire you, I've got you and I've got your CC number. It typically will take someone 3 months to actually remember to call and cancel that $9.95 a month recurring charge and when you try I've got a killer closer at the call center whose job is it to convince you "you haven't used it long enough, give it 2 more months, isn't $10 worth having better ____, it takes a little longer for some people to see results" and it will take that person another 3 months to remember to call back and cancel. I just got another $50.00 out of you.