The Secret of Starting an Instantly Successful Business

Creating Better Wants

July 2007 By Denny Hatch

multipage

This concept is spot-on, not only in terms of writing copy but also starting a business, running a business or expanding a business. The fledgling entrepreneur who dreams up a product or service, invests in producing it and then, after the fact, gets around to figuring out who will buy it—and how to market it—will lose a lot of money.

Why I Started a Business
When I was fired from my agency job in 1976, I decided to give freelance direct mail copywriting a shot. I doubled my income the first year and doubled that the second year.

But direct mail was tough. Unlike space advertising, which is immediately available the day a magazine or newspaper is published—direct mail is secret and those that created it are secretive.

I would get an assignment and wonder what would be the best approach—envelope size, length of letter, size of brochure (if a brochure at all). My work was intuitive, not based on known information.

A number of times in this publication I have mentioned hearing Dorothy Kerr, then circulation director of U.S. News & World Report at a Direct Mail Writers Guild luncheon in New York. “The way to be successful in this business is to see who’s mailing what,” Kerr said. “Watch for those mailings that keep coming in over and over again—which means that they are controls and making money—and then steal smart.”

Kerr’s speech changed my life. What she said was so obvious.

The Beginnings
I started slowly, sorting and cataloging the direct mail that came to the house and that of a few friends. Gradually the collection grew from one file drawer to two and then four. Periodically I would hire high school students to come in and help me sort and catalog. I had no clear thought as to how to turn this collection into a business. But I kept collecting. My wife, Peggy, thought I was cuckoo, but always supported me in whatever I did. I did know that the collection was enormously useful to me in my freelance copywriting work.

Remington
One September I received a call from consultant Jerry Gaylord. Victor “I liked the shaver so much that I bought the company” Kiam of Remington not only wanted to get into the catalog business, but also expected to have a catalog out in time for Christmas. As I said, this was September. Could I write and design a 16-page catalog in a week? I said yes. Gaylord and I met with the Remington people in Bridgeport, Conn., and as I was leaving the meeting with two huge shopping bags of merchandise, Gaylord turned to me and said: “Oh, by the way, we’ll need an order form, too.”

I winced. The order form is perhaps the most important element of a catalog. Screw up the order form so that people have a tough time ordering and the catalog will bomb. The order form is also a horrendously complex document with many parts. Not only are there lines to write in item numbers, descriptions, sizes and prices, but also ship-to/bill-to instructions, credit card information, gift shipments with handwritten holiday messages in each one, initials to be engraved on certain items, plus the guarantee and the schedule of shipping charges. You cannot forget to include the address of the company and the 800 number for the person who likes to order by phone. The order form must be easy to use and should make the customer feel good about doing business with you. It is a much a selling tool as the catalog itself.

Mercifully I had a file of catalog order forms. I spread 15 or 20 on my big desk, chose six that looked relatively simple, and stole smart, picking up different elements from each one. In two hours—rather than five days—I had an order form. It was no world-beater in creativity. But it was usable; all bases were touched; nothing was left out. It adhered to one of the universal rules of direct mail: Make it as easy as possible for the customer to order.

Only because of my giant swipe file was I able to meet Victor Kiam’s impossible deadline. That order form lasted for several years and worked fine. Gaylord built for Kiam a growing and profitable catalog business that lasted for eight years.

Enter Harry Walsh
In the 1960s to the 1980s there were a few superstar direct mail writers: John Francis Tighe, Robert Haydon Jones, Linda Wells, Frank Johnson, Chris Stagg, Hank Burnett, Bill Jayme and Harry Walsh. Walsh was a gruff, red-haired, hard-drinking, six-foot-tall former gunnery instructor in World War II and an alumnus of Ogilvy & Mather. He lived and worked in Westport, Conn., just up the Merritt Parkway from my house in Stamford. Every now and again he would call me up to say he had a new assignment and ask if he could look through my files to see what others had done.

After finding what he wanted, and making photocopies, he would invariably offer payment, which I refused. “Okay,” he said, “the next time I come down and use the files, I’ll buy you lunch.”

A month later Walsh and I were settling in for the first of several white ones at La Bretagne in Stamford when he said: “You know, I’d pay to be a member of your archive service so I could come down and use your library.”

“If you were a paying member,” I replied, “I’d have to send you regular information so you would know what was in there. And that sounds like a newsletter.”

I came home and told Peggy I wanted to start a newsletter based on our files. She said that cash flow for a newsletter couldn’t be any worse than that for a freelancer and immediately agreed. I wrote a direct mail package for a nonexistent publication called WHO’S MAILING WHAT! and sent out 10,000 pieces. We got 150 subscribers at $99 cash with order, which brought in enough money to do a 35,000 mailing and we were in business. The year was 1984.

The monthly newsletter offered analysis of current direct mail efforts and listed all the mailings we received in the prior month—usually 1,500 to 2,000 packages, or up to 25,000 a year. As well as offering commentary on current direct mail, we offered to make photocopies—folding dummies—of direct mail pieces for a fee, which meant ancillary income.

The point is, Harry Walsh told me he would pay for this service. In effect, this was a focus group of one. But as a freelance copywriter, I would pay for such a service, too. So that made two of us that believed in the possibility.

The Directory of Major Mailers
A number of vendors subscribed to the newsletter—printers, lettershops, list brokers, etc. Peggy and I got frequent calls from these folks asking how they could get the names and addresses of the mailers, so that they could bid on the business.

In June 1986 I heard a speech at the Newsletter Association meeting in Washington, D.C., by Russell Perkins, then—and now—America’s foremost expert on directory publishing. I showed Perkins what I had and asked if we were looking at an ancillary business. He immediately said yes, and we became partners. Today, “The Directory of Major Mailers and What They Mail” is still in business—and profitable—some 20 years later.

Here was another product that saw the light of day only because customers asked for it and we made it happen.

Who’s Charging What
Some of the best-kept secrets of direct mail in those early days were the names of the writers and designers, what their specialties were and what they charged.

For example, when I wanted to do a piece on the great copywriter for Boardroom Reports, Martin Edelston—founder and owner—not only refused to cooperate but also threatened to cancel all of the firm’s subscriptions to WHO’S MAILING WHAT! if I pursued this and divulged the writer’s name.

I received a ton of requests from mailers all over the country asking who did this or that mailing or asking for recommendations for freelance help. For a number of years we printed “Who’s Charging What!” in the newsletter, but in addition to contact information and fees (which was all we had room for) readers wanted to know areas of specialization and names of their clients.

The result: We pulled this feature out of the newsletter and turned it into a yearly directory, “Who’s Charging What,” which is still being published today.

Again, this little ancillary business—or “line extension”—grew out of requests from our customers.

After nine years of publishing these products out of our home in Stamford, our little publishing company was acquired by North American Publishing Company. Peggy and I moved to Philly to run these publications plus Target Marketing magazine.

These little products traveled well. Today WHO’S MAILING WHAT! is still being published under the name of Inside Direct Mail. The archive contains information on roughly 150,000 mailings in nearly 200 categories. Many of them have been flagged as controls and several hundred are “Grand Controls” that have been in the mail for three or more consecutive years. These represent pure marketing gold.

Disciplines other than designers and copywriters use the archive—direct marketers that want to see offers, premiums, pricing and competitive possibilities. Also the list community and number crunchers have embraced the archive, which enables them to create myriad special reports on all facets of direct mail.

“The Directory of Major Mailers”—which lists several thousand mailers along with the contact information and mailing package descriptions—is cross-indexed geographically, making it absolutely indispensable for anyone that is job hunting. You have just been laid off by a direct marketing company in Boston? The directory lists more than 80 major direct mailers in the Boston area.

Now both the archive and “The Directory of Major Mailers” are available on a Web site with the information—and many of the mailing packages—instantly downloadable. In addition, the Archive receives 20 to 50 packages every month from mailers that have not been seen before; these become prime prospects for vendors.

The future of these products? American direct mail is the best in the world for one reason only: With 300 million people (most of whom can read English and have discretionary income), 100 million households, 12 million businesses and a postal service that calls on every one of these entities every business day, it is possible to test down to a gnat’s eyebrow. Europe and Asia have nothing like this. American direct mail works in other countries—and in other languages—because it plays on the seven key copy drivers, the hot button emotions that cause people to act: fear, greed, guilt, anger, exclusivity, salvation and flattery.

I see a day when this niche business—now Internet-based—that provides American direct marketing know-how and helps to generate sales and profits will span the globe.

One more point: The WHO’S MAILING WHAT! archive contains over 20 years of information on what works and what does not. Nobody can successfully start a competing business. The Chinese cannot steal it.

During the 1980s, Peggy and I saw many businesses that went bust because the owners were fixated on growth. They sold out to venture capitalists, burned through money, and wound up owing their souls and owning nothing. We never borrowed money to make the business grow, so we owned the majority of it. (We had a partner with a small piece of it.) As a result, it was always profitable and we had something to sell.

Admittedly, none of these services was Amazon.com or Google or Yahoo or eBay that grew exponentially and is worth billions today. But they were all cash positive from day one, enormously valuable to subscribers and gave us a very pleasant lifestyle for the years that we ran them. Where most business start-ups fail within three years, these are still generating income and creating jobs after 23 years.

All of these were businesses that Peggy and I stumbled into—looking for some extra income to supplement our freelance copy and design.

They worked because we knew precisely who the audience was and they told us exactly what they wanted.

Coming shortly: “The Art and Science of the Dry Test.”