Internet and Mail Order Business Opportunities 7
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What about chain letters that sell recipes or booklets—do they work?
People who try these chain letters invariably report little or no response to their mailings. Thus they wind up throwing away all the money they spent on paper, envelopes, labels, mailing-list rental, and postage.
The only people who might possibly make money on any of these chain letters are the mailing-list companies that are often named in the letters. These companies often specialize in renting names of opportunity seekers. They may be referred to in letters as a source for fresh, hot, or quality mailing lists that will increase the response to your mailing or make it easier (by supplying you with preprinted labels) to mail out hundreds of copies of the chain letters.
Are such chain letters legal?
Some chain letters claim to be legal because they sell a product or service. Nevertheless, the United States Postal Service, in a booklet called A Consumer's Guide to Postal Crime Prevention, has the following to say about chain letters:
Don't waste your money . . . chain letters are a form of lottery and may violate federal mail fraud laws. The same three elements that apply to lotteries (payment, prize, and chance) also make these schemes illegal.
Should I rent a mailing list and send everyone on the mailing list a catalog or brochure describing my products?
You have to work out the mathematics to decide whether the cost of the mailing-list rental, the postage, and the preparation of a direct mail package would bring you enough new customers and potential repeat customers to be worthwhile. If you have a clear picture of your target market (for example, all chemical engineers with IBM computers or 25-year-old males who like water sports) and can find an appropriate mailing list to rent, you may get a 1 to 2 percent response rate to your mailing. The 1 to 2 percent figure is about average for a targeted mailing that is not to already-existing customers of a company. Your actual response rate, depending on the product, what actually goes into the mailing, and many other factors, could be much higher or lower. If you think you can make a profit on a 1 to 2 percent response rate and won't go broke if you try and don't make a profit, do the mailing. (You may have to order a minimum of 5,000 names. Ask ahead of time if you want to rent fewer than that.)
TIP: If you are on a tight budget and can't afford to take a chance sending out 5,000 brochures in the mail, try building your own small mailing list if you sell to businesses. Often buying guides in trade magazines will list contact information for companies. You could also call businesses you think might be potential customers and ask who is responsible for purchasing what you sell. You may also be able to swap customer lists with other small, noncompeting businesses. If your small list draws enough responses, then consider renting a larger mailing list.
Response rates on residential mailing lists will be much, much lower. One-tenth of 1 percent or less is a typical response to mailings sent to all people in a neighborhood.
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