Couple of points about Chapter 16 of Claude Hopkins’ “Scientific Advertising”…
Firstly, when Hopkins talks about “Leaning On Dealers” he is not referring to the use of coercion or other standover tactics to get dealers to stock product! This isn’t meant to be about “Scientific Advertising For Organized Crime!”
Rather, Hopkins is talking about relying on dealers for distribution (and the problems with that).
Interesting example of how the meaning of language has subtly changed since Hopkins’s day.
Secondly…
…as with Chapter 14 “Getting Distribution”, this chapter is still relevant to direct marketers and internet marketers (think affiliate marketing).
So what does Hopkins have to say? Well…
“We cannot depend much in most lines on the active help of jobbers or of dealers.”
And the reason is that they are busy! Quite naturally, they are focused on making money for themselves. That’s exactly how it should be.
But the implication for the marketer is that if you are going to use dealers you, in effect, have two selling tasks.
To sell the end customer and to sell the dealer on helping you.
There may well be good reasons for using dealers or resellers but as a marketer you need to be crystal clear about the economics involved.
You still have to advertise to bring in customers and at the same time you have to give away a significant part of the margin to the dealer.
So using dealers tends to be expensive.
Here are some of Hopkins’ observations about what works and what doesn’t from his many marketing campaigns…
1. Giving dealers extra help in the expectation that they will promote the product harder is usually futile. Even if an individual dealer does make the extra effort, the sales usually come from another dealer rather than being extra sales.
2. People who buy only from the recommendation of a dealer are unlikely to stick as long term customers. They’ll switch at the next “special” recommendation.
3. Incentives to dealers rarely get an adequate return. Discounts and gifts would be better spent in getting new customers.
4. “Free” goods (given to dealers) still have to be sold and eat into margins.
5. Displays and other promotional collateral is often wasted.
Of course, Hopkins came to these conclusions because he tested…
“These are facts to find out. Try one town in one way, one in another…In many lines such tests will show that costly displays are worthless.”
Testing was central to everything Hopkins did. He was scornful of what we today call image or brand advertising…
“This is all in line of general publicity, so popular long ago. Casting bread upon the waters and hoping for its return.”
Contrary to the hopes of Hopkins, this approach is still widespread today…and still as unproductive.
Hammering home the broad theme of the book…
“Your object in all advertising is to buy new customers at a price which pays a profit. You have no interest in centering trade at any particular store. Learn what your consumers cost and what they buy. If they cost you one dollar each, figure that every wasted dollar costs you a possible customer.”
“Your business will be built in that way, not by dealer help. You must do your own selling, make your own success. Be content if dealers fill the orders that you bring.”
I’d echo those comments, based on my own experience with my clients. Dealers and resellers will carry your products when there is demand from customers.
And it’s you that has to create that demand. Dealers won’t do it for you.
But what about affiliate marketing, especially on the internet?
Well, that changes the economics, it’s true. You only pay commissions on sales and it can be cost effective even if you’re giving up a large percentage.
But the general principle about creating demand remains true. In most cases you need to provide affiliates with strong support in the form of copy and other marketing material they can use.
And most affiliates who sign up for programs will make few, if any, sales.
So yes, affiliate marketing can be effective but it’s not free. There’s a cost involved and the business decision is whether it’s the best approach.
As a final observation on “affiliates” the most successful use tends to be when it’s more in the nature of a joint venture.
Think of the big, successful “Product Launch” campaigns on the internet. The “affiliates” are usually close associates of the marketer and it’s more like a reciprocal network.
So, as Hopkins said, at the end of the day it’s your own efforts that will bring success.