A Marketing Secret I Waited 40 Years to Reveal

These were all smart, educated, and reasonably experienced executives – some in marketing, some in product development, and even a handful of CFOs and CEOs. And yet they were surprised to hear me tell them that the first thing that JS and I always did after a successful new product launch was to “knock off” our new product.

“Why would you do that?” their faces were saying. “Why compete with yourself?” And “Wouldn’t it be better to put your time, creativity, and capital into taking advantage of the momentum you have and expanding your sales campaign and claiming the largest possible hold of the market?”

I’ve never been an either-or person. When given an option to do one thing or another, I invariably chose to do both.

And that’s how I approached the marketing situation about which we were talking. I suppose that’s one reason I’d never second-guessed my “secret.”

Having taken advantage of it for so many years, I assumed it was obvious and that every other business owner and marketing chief was doing it.

But that wasn’t the case. On the contrary, what all these smart young people were doing was exactly the opposite of what I believed they were doing. Instead of replicating their considerable success by quickly creating and marketing a second version of it, they were focusing solely on rolling out the one-product campaign and trying to keep their competitors from finding out and imitating them.

This doesn’t work for every business and every industry. It probably wouldn’t work for SpaceX or Lionsgate films or for an Italian restaurant. But it can and should work for many other businesses – especially businesses that make money selling information, ideas, or advice.

And this is it: If you are lucky enough to have a successful launch of a new product, the moment that you can see that it and the campaign you used to sell it has legs, you should create a similar, knock-off product and start selling that into the marketplace – in competition against your own products – as soon as you possibly can.

I learned this secret many years ago when JSN and I were selling systems for handicapping gambling – everything from football games to horse races to the lottery. Our first big hit was a system developed by a British mathematician who had figured out how to improve one’s odds in betting on thoroughbred racing (I think it was). You could say our success with that product was luck in that horse racing was gaining popularity at the time, and so was the idea of betting systems based on math and/or science.

Within three weeks of our first returns, we began seeing other pieces in the mail, competing with our “Professor Harold.” There was Professor Llyod and Professor Henry – and the copy they used to sell their systems was remarkably similar to that of our own.

We were a bit perturbed that so many of our competitors were so blatantly knocking us off. So we sent them a few lawyer letters that they ignored and doubled down on our media buys to try to stay in first place.

And we did. For about three months. Then the knock-off product that was running in second place began renting more names than we were. Which meant that they were making more sales. We continued to put out different versions of our Professor Harold promotions, but as every week passed, we fell further and further behind.

Before we knew it, we were in third place. And after that, for as long as that trend lasted, which was nearly three years, we never regained our lead. It was irksome to see two of our competitors – who had done nothing more than copy our product and our promotion – take away what should have been millions of dollars of revenue for us.

The next time that happened – with a financial advice product about six months later – I didn’t even talk to JSN about what I was going to do. As soon as I could see that we had another big winner on our hands, I immediately wrote another marketing campaign, selling a very similar product with a very similar pitch but with a very different name. That campaign was in the mail in less than three weeks.

And it did almost as well as the first one, coming in at about 80% of the original, which was great for us.

In knocking off our own product so quickly, we were able to get our second promotion out there well before our competitors came in with their knock-offs. So the best they could do for the moment was third place, which made us feel vindicated in a way. But there was another benefit that we hadn’t anticipated, By claiming the first two positions in the market, we had, in total, about 160% more front-end buyers to sell back-end products to. We also discovered, to our immense pleasure, that we could get our highest responses by selling our first product to our second list of buyers, and vice versa.

JSN was – as you can imagine – very happy with my decision to knock off our own product and seize the two top positions in that marketplace. It became standard protocol for our company. And for a while, when we had an especially strong new product launch, we would create two knockoffs and seize all three of the top spots.

It was almost amazing how well this worked. We quickly gained the lion’s share of that market and kept it until the trend ended. The combination of being first and second gave us a host of unexpected marketing advantages, such as priority positioning, lower list rental fees, and more cooperation from list brokers generally that made it virtually impossible for our competitors to catch up with us.

Over the long haul, the response rates for those knock-off promotions were between 60% and 80% of original. And if I remember correctly, we never did knock off promotions with a response rate of less than 50%. Since we were making good money on 50%, it made the rollout simpler, safer, and much larger.