Dial 1-900 For Increase Profits
Would you like to start a business in which you don't have to
make anything and your product is information, but can earn
profits of more than 95 percent? Of course you would. Such
a business does exist and is predicted to be a 20 billion
dollar a year industry by the year 2005.
New technology in the telecommunication industry, now offers
hundreds of ways that entrepreneurs can make huge profits
operating a "Pay-Per-Call" business. This business will make
hundreds of fast-track entrepreneurs rich during the 1990's.
Why not you?
Several Information Providers (nicknamed "IP's" in industry
circles) are now grossing between $5,000 and $50,000 a month
by providing information on a pay-per-call basis. For a very
select group of IP's, monthly income exceeds $100,000. And
for a few (mostly in the provocative sexually explicit field)
monthly income has reached upwards to half a million dollars!
This very hot new business opportunity is, the fastest growing,
most exciting, money-making opportunity of the 90's.
This business is the 900-number telephone information service.
In this business, unlike toll-free 800 numbers, every time
someone calls your 900 number, a charge appears on his phone
bill, and you make a profit. The caller pays for the information
or service he receives via his phone and the phone company acts
as your collection agency.
The per-minute charge makes this business interesting and
profitable. Charges range from as low as 50 cents to as high
as $50 per minute; during his lunch hour, a stockbroker in New
York charges $50 per minute to give hot stock tips to 900 number
You may already be familiar with some types of 900 number
services; sport updates, weather and traffic updates, romance
and dating lines, and so forth. However, these common services
only scratch the surface of the fascinating information you
can provide through a 900-number program. Consider these two
successes: Surf line and Alaska Men's Magazine. The former is
a local Malibu, California-area, number that provides instant
updates on surfing conditions. Surfing fans, who live for that
perfect wave, often call this number several times a day and
spend about $1 a minute for the privilege.
Alaska Men's Magazine's 900 number sells information about
eligible bachelors who live in Alaska. It is an instant
personal/mate wanted advertising service. It is successful
because few women live in Alaska, so many Alaskan men are
looking for spouses, and many women in the lower forty-eight
states are looking for husbands.
America's Funniest Home Videos invited the nation to help
select the winner of the $100,000 grand prize for the funniest
american home video. One annoucement made by the host, Bob
Saggett (lasting approximately five minutes), resulted in
another $250,000 program grossing, by my calculations very
nearly enough to pay the the $100,000 grand prize. This next
example is the cream of the crop.
The Wheel Of Fortune ran a 21 day program. Each week Pat
Sajack invited callers to call and play Wheel Of Fortune. The
cost of the call was $2.00 per minute. Through the course of
21 days The Wheel Of Fortune received 4.7 million calls.
That's 4.7 million calls, not minutes. The average number
of minutes each caller was on the line was five minutes and
the average cost of a call was $10. Forty-Seven Million
dollars was grossed in less than 30 days.
This is only a small sampling of the many uses a 900 line can
be used for Dozens of categories for 900-number services exist,
but they boil down to four basic concepts: romance, financial,
maintenance, and entertainment.
"Romance" line- that is, true confession, dating, and similar
topics--now earn about 80 percent of all industry revenues.
However, like the video industry, that situation is changing
rapidly as the business becomes more professional and offers
stronger concepts to consumers.
"Financial" appeals to people's urges to make money, save
money: stock and bond price lines, sports updates for gamblers,
and horse racing lines.
"Maintenance" refers to technical support lines. A computer
operator, for example, must call a technical support number
because they are having problems with either there software
"Entertainment" refers to everything else, mostly for
recreational purposes: miscellaneous products and services,
soap opera updates, rock stars, and contest.
FIVE SERVICE METHODS
To satisfy these four basic concepts, you can offer one of the
five methods which your target market can call:
* Interactive auditext--pre-recorded messages responds
to caller's choice.
* Live audio: an operator or group discussion interacts with
a caller. Obviously, this is more expensive for you to operate
than pre-recorded messages.
* Interactive video: a caller's personal computer retrieves text
and graphics from an on-line data base.
* Facsimile: sends pre-stored faxes of printed information in
response to caller request. News reports, stock reports and
so forth can be made available through pre-programmed
computerized fax services.
* Messaging: callers leave recorded messages, such as their
name, address, product specifications, order information, etc.
TWO TYPES OF SERVICE
Once you choose a method that suits your concept, you have to
decide whether to market it locally or nationally. A national
line uses a 900 number offered through one of four national
common carriers. Telesphere Information Services 900, AT&T,
Sprint Gateways, and MCI. Or, if you want to start locally,
you can contract with your local telephone company for a local
or regional 976 line.
T. Harv Eker, a young California entrepreneur known as the
"Biz Opp Wiz," said in a recent report on 900-number service
business, " I recommend that a small " infopreneur" start with
a local 976 number to learn the ins and outs of this risky
business. You can study your target market and test your
advertising and your service idea for far less than it costs
to start a 900 service."
Experts show that eight or nine out of every ten 900 services
fail. However, if your concept hits big, you can make phenomenal
profits. And you can reduce your risk by following the experts'
advice about how to choose and market the best idea.
Russ Blackwell, an executive with Microlog Corp., a major 900
service bureau explains, " In 90 percent of the lines, call
volumes do not reach anticipated levels. The services may
still make money, but they often do not make as much as the
The reasons this occurs are numerous.
First, people's profits fall short of their expectations
because they got overly excited about this business and
forecast profits far higher than any they should reasonably
Second, people try to sell bad ideas. For example, Blackwell
says, "One service tried to sell insurance to the elderly. It
was a legitimate application, but hardly anyone called because
senior citizens rarely use 900 numbers. They think it has a
stigma, and they prefer to make toll-free calls.
Instead, Blackwell asserts, the largest target market research
young people between the ages of fifteen and twenty-five--in
short, impulse buyers.
Other seemingly good 900 information ideas that flopped include
quilting information and gardening information. Why did these
ideas fail? They did not meet the essential criteria that
experts have learned make a 900 number successful.
1. PERCEIVED VALUE: People must believe they receive a high
value from the information. They must think that the information
is worth the price of 95 cents a minute, $25 a call, or whatever
the service charges. If people can get the information for free
or cheaper elsewhere, they will not use your service.
Jim Coffee, General Manager of Audio Communications, Inc. (ACI),
insists, "You must carefully identify your target customer and
offer very significant value." By target customer, he means you
must analyze the demographics and buying habits of your
He adds, "The success of your program depends on two elements:
first, your content, which is measured by the average hold time
(AHT); and second, the quality of your marketing or your
advertising measured by the number of "connects" or calls.
AHT means that your callers are willing to stay on the line and
listen to the entire message or to interact with the program or
the operator. Your content must encourage them to stay on the
line and increase their charges.
2. IMMEDIATE VALUE: Futhermore, your callers must perceive that
they need the information you offer right now--IMMEDIATELY. This
factor is why Surf Line succeeds--surfers want to hit the
perfect wave right now-- and Quilt Line failed--quilters can
mosey over to the library and lock up the right stitch when
they feel like it.
3. REPEAT CALLS: Once your callers reach your information
service, they must call back again and again. Your content must
repeatedly satisfy a continuing need. Stock prices change every
day, the weather changes every hour, traffic conditions change
often during rush hours, people often want to make contact with
potential dates. Repeat calls make or break this business.
Eker notes that your 900 service must also make the information
convenient and easy to reach. It must be far more convenient
than any other method or medium. A caller should only push a
few buttons to reach the desired information, or go only
through one operator.
SECRETS OF STARTING UP
Your first task is to think of a concept that meets these
criteria. Second, you must identify an easily reached target
market. Eker advises that you start with a tried-and-true
category at the local level. This could include sports line
or "conditions" line-local beach, skiing, vacation, traffic,
or similar line that affects people's leisure or driving time.
Most important, you must develop a highly targeted marketing
plan to reach you audience. To do this, find out from your
local media--newspapers, radio, TV, cable, magazines, etc.--
about their audiences. Then, select the media and develop
advertising that will reach your audience.
As one example, a traffic line will be most popular in the
mornings and afternoons during prime drive times, so a local
radio advertisement targeted at young workers who listen to
a rock station may make sense. Unfortunately, in the radio
business, "drive time is prime time," and you pay higher rates.
You could explore placing some less expensive radio ads just
before prime drive times begins (about 7 a.m. and 3 to 4 p.m.
in most markets) to reduce your costs. You should blend a series
of ads, some before, some during, and some after drive time to
reach the greatest number of people.
On the other hand, Eker says, sharing a little known secret,
"The best place to advertise a 900-number services may be your
local cable TV channels. Although most people don't know this,
you can buy local cable TV ads placed on national cable channels
very, very inexpensively--as low as $1 per minute for local
broadcast TV. Each local Tv company receives two minutes per
hour for local advertising on each channel. So, for example,
you could advertise a Sports Line on ESPN, WTBS, TNT, WOR, or
WGN and reach almost all the sports fanatics in your area. And
do so for as low as $12,000 a year.
In short, you must thoroughly, search for the best marketing
alternatives and have the available financial resources to
Once you think you have a terrific, saleable idea, getting
started in this business is very simple. Although you could
buy your own equipment to hook up to the common carriers, that
equipment can cost tens of thousands of dollars. Instead, use
what is called a service bureau.
A service bureau handles all of the operational details. You
simple pay its start-up charges and on-going fees and make
your information available. You either provide cassette tapes
or call in to change the information as you need to do so. It
takes as few as two or three days to get your service on line.
Or, in an interesting variation, you can work with another
information provider (IP) in a joint venture to sell a service
that the other often larger IP cannot do. Many major newspapers
and magazines are using joint ventures and partnerships to
establish line services. In this case, you may receive a
percentage of the profits, usually 25 percent, a royalty, or
a continuing fee.
Coffee's ACI and other service bureaus that double as
information providers also offer joint ventures and partnerships.
If you don't have the money to carry a marketing program, this
may be a good way to go and reduce your start-up costs, yet lets
you get started in this lucrative opportunity.
Another secret to this business, says Eker, is that you must
be prepared to cut your losses--FAST. You should also plan a
to test a range of program concepts through various media.
This business works like the direct mail and catalog business.
You must test your services, prices, and advertising again
and again to find the right formula. When you hit it big, you
then should run with the winning combination. But if an ad
doesn't draw many callers, or even if the call volumes are
just not high enough to make the profit you want, discontinue
the service quickly and try something else. Or better, have
another services already underway.
When you hit, you can make amazing high profits. On average,
900 numbers charge $1 for the first minute and 75 cents for
additional minutes. The average call lasts three to five
minutes, so your revenues per call average $2.50 to $4.
If you invest $40,000 you only need 10,000 to 16,000 calls
to break even.
Your cost on each call will equal $1.50, giving you a profit
margin of about 40 percent per call before you deduct your
overhead, operating costs, and taxes.
Here is what a typical month's revenues, expenses, and
resulting profit might look like:
Monthly Revenues: $100,000 (25,000 calls at $4 per call)
Fees to the Carrier: $40,000 (average 40% of gross)
Fees to service: $3,000
Total expenses: $93,000
Monthly profit: $7,000
If you invest $60,000 in the total start-up, your return
on your investment per month would equal 11.7 percent.
More likely, Eker notes, a national start-up that would
generate $100,000 per month in revenues would realize 8
to 13 percent per month. "The goal is to realize between
$1.08 and $1.13 for every $1 you invest," he notes.
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