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SECRETS OF CHAIN AND MULTI-LEVEL LETTERSBe careful! Chain letter programs are generally not successful enough to make you rich! You can count on letters that claim the sender pulled in $20,000 the first time around, $80,000 the second time, and $180,000 the third time and so on being outright lies! It's best not to get involved in any kind of illegal chain letter schemes, because sooner or later the postal authorities will close them down. If the Postal Service finds that you are a willing participant in an illegal chain letter you could be fined, imprisoned, or both. Frequently, the postal authorities will issue a "Cease and Desist" Order. If this is ignored, they can close your postal box or even your home address to all incoming mail! Don't get involved with illegal chain letters. They cannot and will not solve your money problems. Anyone with experience in direct mail and a sense of integrity or pride in their business will either toss an illegal chain letter into the trash or send it on to the postal inspectors for their action. The primary reason that many chain letters don't work is that the chains frequently are not perpetuated honestly. Often, the only money actually made by a chain letter is pocketed by the originator. Sometimes the person starting and promoting a chain letter is able to pull in a few hundred to a few thousand dollars or so before the postal authorities catch up to him. However, getting in as the fifth, fourth, or third name on the list seldom brings much money in return - even after such participants have gone to the work and expense of sending out 1,000 or more letters. Some chain letters do nothing except cost you money! Any kind of multi-level or chain letter that requires you to send money to a "printing headquarters" for so many copies of the letter with your name and address imprinted on them is selling you printing services! They don't care whether you ever make a sale, or even if you never mail out one of the letters they're so willing to print up for you. They make their money up-front by furnishing you with printed paper! There are three basic forms of direct mail pyramid promotions, and each is open to the possibility of fraud or deception. Here's how they work: 1) Chain Letters - These letters offer nothing in return for your money but the perpetuation of the chain and the hope that others will send money on to you as you mail the letters out. Such letters often carry the warning that if you break the chain by failing to continue its distribution to new recipients, some accident or evil will befall you. Any letter involving a threat to your person (such as bad luck) is illegal and should be turned over to the postal inspectors in your area for investigation. Some letters avoid threatening you by promising good fortune and fabulous wealth if you continue the chain. Often, glowing accounts of the successes of folks who kept the chain going are given as an example to encourage your participation. You'll find it impossible to contact any of these people . . . generally because they just don't exist! Chain letters almost always include a list of three or four persons along with their addresses and instructions to send each person on the list something on the order of five dollars. You then remove the name at the top of the list and insert your own at the bottom. Supposedly, all persons receiving your letter will do the same, sending you money, and mailing out additional letters to folks who will also send you money until your name eventually moves up and off the list. Theoretically, you will receive hundreds . . . even thousands of letters with thousands of dollars in tax-free income. What could be better? These chain letters, besides being patently illegal, are open to fraud in several manners. First, there is no guarantee the chain will be perpetuated downline from you, nor that the promised riches and success will actually come your way. More importantly, however, there is the possibility that several of the names on the list belong to one person who began the chain in order to reap a few quick dollars before the letter is stopped by the postal authorities or before the chain collapses. Such an operator will often work from several different mailing addresses under different identities. All the names on the list may be the operator's own aliases, and he will be the only one making any profit from the bogus chain. Note that this type of fraud is not limited to the chain originator, but may be done by anyone who receives the letter -- in effect "re-originating" the letter. 2) Chain Letters Offering a Product or Service - Such letters are a new twist to beat the postal regulations that deem chain letters to be illegal. There is still disagreement among the authorities whether or not the addition of a product or service legalizes this type of chain letter. As with the first type of chain letter, the recipient is instructed to send money to the names on the list to receive his goods or service. Usually a short report is offered on some phase of multi-level selling or instructions on how and where to rent the best mailing lists for the continuation of the chain. Possibly, a set of recipes, several pairs of socks, dishtowels, or a dozen First Class postage stamps might be offered to induce the recipient to continue sending the letter. A letter from the supposed founder of the letter (often claiming to be written from some exotic vacation paradise or a luxurious retirement villa) is frequently included along with the instructions. Fantastic reports on the success of the chain will be included from folks across the country, recounting the wealth they have built up with this "New, Exciting, and 100% legal system of wealth-building." Again, finding these people to verify the information will probably be impossible. Once again, these letters are open to fraud and destined for eventual failure. A crafty operator may once again be using several names and addresses to reap a double or triple portion of your money. The chain must be continued by a minimum number of recipients for you to make any profit whatsoever. As we will illustrate later, a five percent (5%) response will only lose money for you at the first level. Remember, there is no guarantee that those who receive your letter will not by-pass sending you money before inserting their own name on the list, reprinting the material, and doing a mailing of their own. Thus, all you may have succeeded in doing is spending your own money on setting another person up in a fraudulent business and perpetuating a worthless scheme. 3) Multi-Level Programs - Such letters involve both a product and the recruitment of new members into the program. Many focus on the recruitment of new dealers to build the participants' income, whereas others focus on the sale of the products offered. Many such programs have been highly successful across the years, including Shaklee, Nutrition Express, and Amway. Programs that are new member oriented merely seek to expand your income by adding new recruits who pay a membership fee to join the organization. While a limited service or product will be involved and offered for sale, the real money is through finding and enlisting new members. Your payoff comes from the percentage of the membership fee you receive down the pyramid to a specified number of levels. For example, you join by paying a $25 fee to the organization which will pay you a bonus for new members down three levels. Thus, for each new member you personally recruit, you may receive a $5 bonus. Each of those new members will seek to enlist new recruits, and from this group your payoff may be $3 per recruit. Their new recruits may bring you an additional $1. As mentioned, the product or service offered is less important than the perpetuation of the program by the addition of new participants. Product-oriented programs focus more on the selling of the product than the recruitment of new members. You make your profit not only from the selling of merchandise yourself, but also you will receive a percentage of the sales made by all the persons you have recruited to sell for you. Profit will therefore be increased by greater sales and is not as dependent upon recruitment. Most programs will require that you purchase a minimum amount of the product each month. If you do not do so, you are dropped from the program and your future earnings go either to the company or to your sponsor, or a combination of the two. ******************************* While it is true that numerous programs of all three types listed above have made a great deal of money for a limited number of participants across the years, the statistics indicate that only a select few will benefit. For example: Let us suppose that a single individual developed a legal chain letter that would generate a five percent (5%) response (direct mail advertisers agree that a 3 - 7% response is average). Mailing 1,000 letters he would receive 50 responses. Those fifty would each mail 1,000 letters, adding 2,500 new participants. At the third level the 2,500 participants would mail out 2.5 million letters to new individuals for a response of 125,000. The next mailing of 1,000 by each participant would necessitate a fresh mailing list of 125 million names, or roughly half the population of the United States. If the expected 5% did actually respond (6.25 million people) the next mailing would have to include over six billion people, more than the entire population of the world! The financial prospects of such a letter are no better. Each person that mails out 1,000 letters asking for the recipient to send in $5 and receives a response rate of 5% will only reap $250 from the next level down participants! Mailing by Third Class Bulk Rate, the cost of sending out 1,000 letters would be approximately $198, plus $80 for the printing of the letters and the cost of envelopes, and $50 more for the purchase of a 1,000 name mailing list. Thus, on a mailing of 1,000 pieces your cost would be $328 and your return $250 - a loss of $78. This does not even take into account the additional expenses of mailing the return product to all the respondents! Obviously, you must depend on making money from the third and fourth levels down. What do you think? Will you? Many chain letter operators who claim to be making a comfortable living explain their operations to us as follows. On a single mailing of 1,000 letters with their name in the fourth position and seeking a $5 payment, they will receive a minimum 1% response - 10 letters containing $5 each for a total of $50. So far, they are in the red. However, when those 10 people mail 1,000 letters each and if they reap the same 1% response, the originator's name is in position three and will receive an additional $500 from 100 responses. At the third level, 100,000 letters bringing a 1% response will pay the person in position two $5,000. On the final go-around, with the name in position one and a mailing of 1,000 letters by 1,000 people, the top name receives $50,000 - for a grand total of $55,550 from less than a $328 investment! Does it really work out that well? Many people claim it does. Suppose the letter only asks for $2. Using the example above, you would stand to gross $22,220. Only $1? Gross only $11,110. Suppose the percentage of people who responded each time was only one-half of one percent. A $5 report would bring in $3,900 and a $1 report would gross $780. You can see from these examples that the percentage of response is critical in calculating your chain letter profits. Many people think that they will be the first person to make it big with a chain by incorporating a new twist - offering a product in exchange for the money mailed to the persons on the list. So, if you're one of these people, and you think that by offering some sort of product you can achieve big success, here's some advice. You must send out large amounts of mail, as cheaply as possible, to achieve any level of success that will meet or exceed your expenses. Successful multi-level operations send out several thousand letters at a time to generate the response necessary to cover their costs. Always send your letters by Third Class Bulk Rate to achieve the maximum discount possible. Normal size mailings will qualify for the 19.8 cents Bulk Rate postage. Large mailings may qualify for significantly lower rates by sorting the mail down to the sequence in which the letter carrier walks his route and by bar-coding the mail using zip plus four codes. Check with your local Postmaster for details. Never mail your letter to any established business, especially known mail order dealers. Instead, find a reputable mailing list company offering the rental of a list of Opportunity Seekers. Don't be taken in by advertisements in mail order publications offering small quantities of names for $10 to $15 per hundred. These offers are made by small mail order operators drawing from small databases of names that have been mailed to time and again. These names will not prove responsive to your offer. Deal only with the larger, established, and reputable mailing list companies. Many multi-level letters will list the names of reputable list brokers. You can also check the Yellow Pages in your area. Call and talk with the list broker on the telephone. A good broker will tell you how his list can help you. If he cannot help you, he should be able to refer you to someone who can. Expect to pay $40 to $100 per thousand names, with a minimum order of one to five thousand. What about multi-level programs by mail? Many are simply "people pyramids" perpetuated by folks who make their profits from the collection of new member fees. Before you get taken in, determine if you would like to have the product they're offering. If so, send for it. But, before you start sending out letters to recruit new members, do some common sense market research. What's the real value of the product? How many people will stand in line to buy it? How much of your time and money is it going to cost you in order to make a hundred dollars a week in clear profits? If you are going to participate in a chain or multi-level letter, be sure that: 1) the offer itself is a reasonably attractive one; 2) the literature you send out is clean, crisp copy - no smudges or blurry letters; and 3) you mail out to a current list of opportunity seekers. Important: Should you receive a chain letter purporting to sell books or money-making reports, read the offer carefully. If there is a book or report of interest to you, write to the dealer who supplied you with this report. You generally will be able to secure the report in question or one that better fits your interests and needs, and more than likely at a lower cost. There is no need to become involved with a multi-level program when you can save money and learn how to generate extra income more effectively through a traditional mail order operation. Success with anything is simply a matter of having something different that appeals to the wants and desires of the greatest number of consumers possible. Target your sales efforts to reach the people who want it badly enough to stand in line to buy it, and then make it as painless as possible for them to achieve satisfaction by purchasing your item that fulfills their needs. The author hopes that this report has answered most of your questions about chain and
multi-level letters. Good Luck in all your money-making ventures. |
