An Inspired Marketing Technique

As you, your friends and your acquaintances will soon discover, a world full of risks is in the process of adding another. It’s not a tax – though I suspect there’ll be lots more of those in store – nor does it relate to overregulation by the government, despite the fact there’ll be plenty of that too. This risk is of a different sort; it involves marketing. If your immediate reaction is to dismiss this as something of no concern to you, then slow down. This is an important factor in the lives of us all. If you think otherwise, just consider the fact our president is a master of the subject … essentially explaining why he is our president.

Before we get down to the details of this particular article, let me assure you the professional marketing business is not a field for amateurs. When a modern well-run firm institutes a sales campaign of any sort, it normally employs the services of a sophisticated marketing organization. Such operations utilize the latest tried and tested techniques.

No longer do sales presentations rely upon intuition or seat-of-the-pants experimentation. The results of specific approaches have been tried and tested, normally with a known predicted statistical accuracy. The likely prospects for the products offered are not chosen by guesswork. With this understood, lets take a close look at a cleverly devious way to generate a profit.

One of the tougher jobs in business is finding customers. If you operate a barbershop, getting some local kids to pass out cards around the neighborhood may help. If it’s a restaurant you run, possibly local radio or television will bring diners to your door. Alternate methods include billboards, newspaper and magazine ads, telemarketing, or e-mail solicitation (God forbid you employ SPAM). Yet another method is direct mail advertising where you stuff an envelope with glitzy brochures, discount coupons, and implausible testimonials. These are standard ways of encouraging patronization – we’ve seen them all in various stages of good and bad taste.

Personally my all-time favorite commercial was the 12-second Pepsi spot, with the catchy jingle, used on radio up until 1958, which went: “Pepsi Cola hits the spot; twelve full ounces, that’s a lot; twice as much for a nickel too; Pepsi Cola is the drink for you; nickel, nickel, nickel, nickel … trickle, trickle, trickle, trickle.”

I’ll now describe another marketing device employed with increasing frequency. One such sample arrived recently in the mail. The standard white business window envelope, carrying a presorted postage permit imprint, shows a company name evoking a sound institutional image. Inside is a single sheet of 8½” by 11” paper, looking exactly like most invoices you receive from any number of vendors with whom you do business. All of the information you might require to pay your bill is prominently included: Customer number, Notice date, Description of services, Amount due: $37.76, the name to which the check should be made payable, final date payment must be remitted, instruction to send check but not cash, and a concluding statement: “All listings are final.” The lower third of the sheet contains the portion to be detached and mailed in the return envelope provided. It certainly seems like the sort of document generated by an established and reputable company.

Ah, yes … established and reputable. However, in my description I neglected to mention a couple of other things on the “invoice.” Tucked into the upper right corner, in tiny font, I found:

“This notice is a solicitation and receipt of payment will confirm your annual listing”

In addition, inserted directly above the remittance stub, in even tinier font, is the following disclosure::

“This offer is provided to millions of websites throughout the United States to enhance their Website exposure. This is not a bill, invoice or statement of account due. You are under no obligation to make a payment, unless you accept this offer.”

I’m guessing those two disclosures, though obviously designed to be overlooked or misinterpreted by many, were carefully worded and inserted so to avoid constituting the crime of using the mails to defraud. Whether various state laws prohibiting deceptive business practices of this sort are violated must be analyzed on a state by state basis. But as to the matter of business ethics, no uncertainties exist. The intent to bamboozle is as clear as it is blatant.

As an intellectual exercise, let’s contemplate what factors the designers used in the single most important consideration: why they selected a price of $37.76. Actually it’s a near-perfect number meeting several criteria. Most importantly, it guarantees a substantial return. Stationery, printing, and bulk postage costs come to less than 25 cents per unit, amounting to about $250 per thousand. Even if no more than 3 percent of recipients are duped into paying, the scam artists receive $1,132, representing over 450 percent return on their outlay. If, as is likely, these are mailed out by the hundreds of thousands, the potential profit is immense.

The next consideration on the $37.76 figure is its probable effect when the bill is received – an amount in uneven dollars and cents, appearing to be a bill for some sort of purchase, while small enough not to trigger suspicion or overcome the natural lethargy and indifference gripping most people. It’s easier to pay it than take the time and trouble to verify it. Finally, it’s an amount less than that established by many large and medium sized firms requiring the Payment Department to confirm with the Order Department before paying. An invoice of this sort can easily slip through without scrutiny.

I’d now like to evaluate what I’ve titled “An Inspired Marketing Technique.” As I view the workings, evaluated from the standpoint of the perpetrators, it’s indeed a shrewd operation. Though I personally despise con artists as a group, I admire the ingenuity that went into this creation. It truly reflects what we, here in the early stage of the 21st century, have come to recognize as corporate mentality. Although the dollar value on each “picking” is small, this particular swindle is worthy of any Volkswagen or Wells Fargo executive. To paraphrase Winston Churchill: “Never have so many been bilked so much by so few.”

So in summing this up, what’s the message I want to convey? This mock invoice is but a straw in the wind. Today it may come from a lone bunko artist, but its potential for profit is immense. This fact will not be lost on what we regard as the legitimate business community. I fully expect within a short while the device will be used, in varying forms, by many of America’s most prestigious companies. My advice: Be prepared to scrutinize what you receive. You ain’t seen nothin’ yet.

Al Jacobs, a professional investor for nearly a half-century, issues a monthly newsletter in which he shares his financial knowledge and experience. You may view it on http://www.roadwaytoprosperity.com.