Copyright 2005 Nick James
In my previous article How To Be 100% Sure That Your New Product Is A Winner We have discussed dropping losers.
I hope I have given you message strongly enough. But same principle applies to milking winners. When you get a winner in-demand product, it is a license temporarily to print money.
You will have so much of folding stuff pouring through your letterbox or credit card numbers blocking up your email account... that you will hardly know what to do with it.
HOWEVER: Every product has a strictly limited life-span. It doesn't matter how well product performed in early weeks, response will gradually tail-off over a couple of months - year to a point where product starts losing money. There are two big factors which cause this:
1. Everyone has seen your marketing material (emails, web-pages, direct mail letters, postcards, newspaper ads etc) a hundred times, and those that are going to buy product, have, in main, bought it already.
2. You 'lucked-into' a mood of moment. For example, everyone's suddenly worried about car security at exactly moment you advertise your steering-wheel lock. This mood will rapidly pass as population (driven by media) move on to next area of worry or concern. (What a terrible cynic I am.).
I have seen people make lots of money on a product, and then hand up to 50% of it back to newspapers as they attempt to breathe life into a dying market. I have seen a single advert in The Sun take one thousand orders for a £49.95 product. Then, six weeks later (after product has been heavily advertised), I have seen identical advert pull in only eighty or so replies (and of course, lose big money). You must listen when market says it has had enough of your product. Getting out early is a sure-fire way of keeping most of money you have made.
It's same with stock market. Everyone aims to sell at exactly peak of market, and buy at exactly trough. But, of course in reality, these peaks and troughs are impossible to predict accurately. The stock-market winners sell early, and buy early. The losers sell too late and buy too late - they stay on roller-coaster too long. They hang on to a rising market out of greed, thinking market will rise forever.
The same is true of product development and direct marketing. When you get a winner, it is tremendously exciting. But your greed can make you hang onto product long after it should have been dead and buried.
Want to know a sure-fire indicator of when to pull out?
Quite simply, you should pull out when all other developers and marketer boys (and gals) start piling in after your initial campaign. This takes tremendous self-discipline, but pays enormous dividends. The strong temptation is to hang on, and hang on. If an advert fails, you attribute it to something funny about that particular issue of paper, or day of week. You advertise again and again, spurred on by glint of gold.
Also, another factor comes into play here (and I'm telling you 100% solid truth); it is distraction factor. You see, you don't run this huge mail-order organisation, do you? There is no 'packing and shipping' department; that's YOU in shed/garage, late at night. So when you get a winner, chances are that you will be overwhelmed trying to keep up with sourcing and shipping product. This will take 100% of your time. Meanwhile, every newspaper from Golden Labrador Weekly, to Clay Pigeon Shooting Times will be on phone pestering you for an advert. The danger is that you will just say 'Yes, yes, yes' to all these people, and end up spending tens of thousands of pounds on a dying product.
The solution is to keep your eye firmly on ball. Retain your policy of only taking adverts in mainstream press I advised. Don't go too crazy with adverts, as this will alert all other mail-order boys, and push rates up. As soon as papers see that you have a winner, suddenly rates go up, and adverts become hard to get away. You must play a double-double bluff game here. Above all, never let on to anyone how well your advert is doing. If asked by someone trying to sell you space, you tell them that response was lousy, but that you are going to give it one more go. Could they offer a cheaper rate? When you have a mail-order winner, beware fatal combination of: