Direct Response

Imagine that you are about to run the next hottest offer.  You know, the Dr. Oz “Diet Product” of the year!  Or the next niche service that you’re the first to market Direct Response style!

Everything is lined up.  You have the hottest landing page, the presale copy is tight, your traffic source can quickly ramp up to 2,000+ leads a day, data monetization paths are built out, and the CPA backs out lower than your costs.  Everything is looking spot on.

You light it up and the leads start pouring in.  Within a week you’re witnessing daily ACH deposits from your merchant processor:

Day 3:  $10,201.38

Day 4:  $18,393.00

Day 5:  $23,294.21

Day 6:  $32,348.51….

 

Day 45:  $149,239.62

Day 46:  $194,215.46

Day 47:  $219,048.15

Day 48:  $231,593.59…..

 

You’re killing it!  The traffic source is on weekly terms, inventory is prepaid, and a couple of local losers you knew from high school are answering customer support inquiries at minimum wage.  Things are good, so why not splurge a little.

So you go out and treat yourself to a new car, fancy watch, and a designer wardrobe.  To “network” on the weekends you start buying up bottle service.  You’re crushing it and you want everyone to know.  After all, you’re a fucking marketing genius, right?

Then on Day 90 you get your first chargeback.  The degenerates answering your customer support inquiries try to bring it to your attention, but you write it off as an anomaly.

Before you know it, you’re receiving chargeback inquiries daily.  Visa pulls each retrieval out of your account.

Day 90:  $384,201.04

Day 91:  $382,193.09

Day 93:  371,939.31

Customers are calling up irate because they have to wait on hold for customer service for up to 1 hour.

Refund requests go ignored because your customer service reps are overwhelmed.  A couple of them quit.  The others do their best to respond to the inquiries but end up half-assing due to the overflow of client inquiries.

What’s worse is that the deposits are shrinking by the day, yet the media costs and inventory costs are remaining the same.  This is in part due to the new 10% rolling reserve your merchant bank has placed on your account because you exceeded 1% in Visa Charge Backs in 1 month & hit over 100 transactions.

Day 114:  $294,919.13

Day 115:  $271,992.48

Day 116:  $265,291.94
A  few weeks later you roll-out of bed and start your daily routine by logging into your bank to check the daily deposit.   To your dismay the bank missed the  deposit.  This has never happened before.  Is it a holiday?  What in the hell is going on?

Day 132:  $0.00

You call your merchant bank right away and notify them very politely that your ACH was not received.  They advise you that they are transfering you to the “risk department.”   A representative from the risk department conveniently named “John Williams” advises you that a 100% hold has been placed on your merchant account for security purposes.  Mr. Williams notes that you can still process transactions and that the hold is temporary.  Mr. Williams advises you to continue shipping and handling customer inquiries during the review of your account.

In response you ask when the hold will come off of your account because you have invoices, employees, and other operating expenses.  Mr. Williams advises you that banks review can take up to 2 weeks OR LONGER.   He leaves it at that.

Day 133:  $0.00

Day 134:  $0.00

Day 135:  $0.00

You call back asking Mr. Williams for an update.  Mr. Williams is out of the office till next week

Day 136:  $0.00

Day 137:   $0.00

You receive an invoice from your media source, $1,019,399 is owed in media fees.   Also your inventory is almost out and you need to order again.  What are you going to do?  There’s only $153,924.00 in your bank account.   The campaign was maintaining its expenses on a week to week basis.  The profits were going toward making yourself feel big.

WTF, reality starts to sink in.  You’re in deep trouble if you don’t get the merchant account thing fixed ASAP.

Day 138:  $0.00

Day 139:  $0.00

Day 140:  $0.00

Day 141:  $0.00

Frantically you call the merchant bank.  The account is STILL UNDER REVIEW!!!!

The next invoice comes in from your traffic source.  Another $1,248,100.31.  They ramped things up.   They also advise you that they have not received payment from the last invoice and kindly remind you to submit payment.

FUCK!  What are you going to do?  You don’t want to call them and set off an alarm, because it took you a long time to get your traffic source to trust you enough to extend weekly terms.

Day 142:  $0.00

Your traffic source calls you up and you ignore their call.  You change your voicemail to “Hi I’m on vacation till next week.  Leave a message and I’ll call you back.”  Maybe this will buy you some time.

Day 143:  $0.00

Day 144:  $0.00

You receive the 6th voicemail from your traffic source.  They are pausing traffic and are demanding that you contact them right away.  There is now a balance of $2,837,419.13 owed and they want answers fast.

You also receive a voicemail from your fulfillment company.  They advise you that you have 14,000+ orders on hold because there’s no money left in your fulfillment account.   You need to send them $150,000.00 to replenish your account and release the hold.

To add an insult to an injury, your customer service reps all quit at the same time.  They cannot handle the level of complaints you’re receiving plus are totally irate about not getting paid for 3 weeks.  They start spreading rumors about how you’re going down and how your company totally sucks….

The following week you receive notice that your merchant account is shut down and that the bank will revisit releasing funds after 6 months.  The funds are held to payoff chargebacks that come in and refunds that are given to clients.  They are adding you to the “TMF,” which you later find out is the Terminated Merchant File.  The TMF database essentially prohibits you from ever procuring a domestic merchant account again.

Sound unrealistic?

 

Just ask my friend Trent Silver, a talented Direct Response Marketer who can drive thousands of leads to an offer but lacked the experience to build/sustain a viable business model.

Trent stumbled upon a niche cash for gold opportunity and cashed in on it.  Watch this video to see Trent’s experience at blowing up an offer without a solid infrastructure behind it.

Infrastructure, Infrastructure, Infrastructure

 

You’re probably reading this post because you’re a marketer.   You have creative ideas that sell like hot cakes.  When it comes to creating new products and running traffic you’re a 100% natural.   But after you generate a sale, your main focus shifts to upselling and cross-selling the new acquisition.  Don’t feel bad about it, you’re a marketer.  Good marketers know how to upsell, downsell, and cross-sell.  It’s what we do

Do you know what the opposite of a marketer is?  An operator!  And that’s exactly what you need!!!

While a marketer views a new sale as a “new acquisition,” an operator views a new sale as a “new client.”  Two totally different mindsets, both of which are critical to the long-term success of a Direct Response offer.

In order to sustain high volumes of new sales, invest heavily in a talented COO.  There’s a world’s difference in talent between a $80,000 COO and a $250,000+ COO.  You get what you pay for!

No need to fret if you can’t afford a strong operator at this junction, you’ll get there….

“O snail Climb Mount Fuji But slowly, slowly!” – Kobayashi Issa

 

The Buildout

 

Naturally most start-up companies do not start with a strong COO (unless you have outside capital involved, not a luxury that most of us get to enjoy).   Therefore you need to rely on available resources to get the ball rolling.  Here’s a couple tips:

-  Adopt technology that will allow your business to scale.  Depending on your business, I highly recommend:

Sharepoint – task management, group communication, project organization, and an internal wiki will add enormous value to your organization.  Plus Sharepoint seamlessly integrates with Outlook, which is the best email/calendar program I’ve used to date.

Salesforce CRM – hands down the best CRM for lead generation campaigns.  I highly recommend that you find a certificated SalesForce Developer to assist you in customizing Salesforce to your exact needs.  I suggest you only work with level 401 certified Salesforce developers (avoid non-certified “experts”)

Docusign – electronic contracts streamline the sales process.  Plus Docusign is now owned by Salesforce, which makes for a seamless integration!!!

Limelight CRM – this is the standard for Direct Response credit card sales.  I’ve yet to find another CRM that even comes close to the Limelight!  If you’re accepting credit cards online (running trials or straight sales), this is the CRM to go with.

Ringcentral - inexpensive office phones that are VOIP.

Linesystems - hook up with a good telecom company for your call floor (if you are vertically integrating).   Unlike Ringcentral – office admin use only -  a good telecom system will provide you with metrics such as dials, connects, average talk time, etc.  You need these metrics to make adjustments  Just make sure the phone system integrates with your CRM.

Call Center Today – call center consultants that have built out some of the best floors around.  These guys have soup-to-nuts programs that will save you 10 years of headaches.  I highly recommend them.

Focus Services – if you are outsourcing your Direct Response calls, this is a really good outbound call center to use.

 

-  Create a list of your weaknesses.  Organize the list from biggest to least.

Then invest in people to compliment your biggest weaknesses first, working your way down.   i.e.  I hate tax law.  Therefore one of the first hires was a good outside accounting firm to handle my books.  The last fucking thing in the world that I want to spend my time on is thinking about taxes.  Talk about a way to deaden entrepreneurial vivacity!

 

Reinvest In Your Business

 

What’s your exit strategy?  Is it an IPO, Acquisition, or do you just want to turn your venture into a cash-cow slot machine?

Understanding your exit strategy will help to determine where to invest your earnings at.   Here’s a couple of pointers:

-  Venture Capitalist look to build companies up so that you can exit on an IPO/Acquisition.  They rarely invest in agencies, rather they look for software tools that have scale.

-  For cash cow direct response offers, invest in strong systems that will turnkey your operation.

-  Invest in talented people that compliment your weaknesses.  Behind every successful marketer is a strong operator

Regardless of your exit strategy (you better have one), reinvest your initial earnings back into your infrastructure.   Since you have an offer that has the ability to scale, you need to strengthen your infrastructure.

Just make sure to test before you invest.  Sometimes what looks like an oasis in the desert is just a mirage….

But if you found water, invest in an infrastructure that will allow you to OWN THE MARKET.   Enjoy domination!