The Marketing Wisdom of P.T. Barnum

Most people know P.T. Barnum from one of two things: either the circus that bears his name, or a quote incorrectly attributed to him: “There’s a sucker born every minute.” So one of the things he’s most famous for is something he never said, and the other is something he did late in his life. But he was a sharp entrepreneur for his entire career, and the secret I’ll share here is a secret that made him so. It’s one of the greatest secrets to discovering what it takes to succeed in my field, direct mail marketing, and in business in general.

The secret is to study the lives of people who have risen to the top. That’s one of the reasons that I and many of my colleagues like reading business biographies. Studying successful people-including Barnum-is invaluable to your business. It’s one of the reasons we like to coach people at my business, M.O.R.E., Inc., and why we recommend that you have business mentors. The more you can study what other people are doing, the more successful you can be in your business-especially if you study people who have achieved success in the field you’re trying to achieve success in.

P.T. Barnum himself was a brilliant marketer. In the year 1877, which by most accounts was a typical year for him, the cost of advertising and publicity for his circus came to over $100,000-equivalent to about $1.5 million in 2013 dollars. The lesson here is that you need to keep putting more and more of your money back into the marketing that provided your success in the first place. You need to discipline yourself to do this on a regular basis. One of the potential risks of newfound success is that you enjoy the spoils of that success a little too much-something you tend to see most dramatically in athletes.

An athlete might sign a big contract for tens of millions of dollars… and then you find out a few years later that they’re flat broke. They didn’t do anything productive with that money. You can sometimes fall to the same temptation in business; when you have success, you forget to repeat the thing that made you successful in the first place. Don’t let that happen to you. Always plow some of your revenue back into what made you money the first time. Don’t get overexcited by the money flowing in and go splurge, especially if you’re marketing using direct mail. Direct mail is expensive; if you don’t keep feeding the machine, you’ll find yourself without the money you need to keep making more money.

The best strategy is to put a specific percentage of all of the money that comes in back into doing more mailings. Come up with a formula that works best for your model. For example, you might put 20% of gross revenue into an advertising fund. Then every week or every month-whatever your mailing schedule is-take that 20% and spend it on more direct mail. Do that, and your business will consistently grow.

Again, don’t fall for the temptation of blowing all your money as it comes in. It’s a temptation we all face, especially the first time we experience success. The risk is that you’ll want to pay off your car all at once, take a fancy vacation, or build that swimming pool out back with your newfound money. You should take a percentage of it and go have fun with it. You deserve it. You’ve built something successful and are entitled to enjoy it. But invest some of it for the lean times later, and keep a significant percentage aside for continuing and expanding your marketing efforts. That way, you’ll never find yourself without the money you need to continue fueling your business.

Let’s look at a few examples of people who’ve failed to follow that advice. My colleague Russ Von Hoelscher once found himself yielding to the temptation. When he first started to make a lot of money as a young man, in one year he bought a Chrysler Newport, then a Thunderbird, then a Cadillac-one after the other. He also bought a house and a number of other things before he realized he was overdoing it.

Here’s another example: I recently read about a man who played for the Houston Oilers football team and made about $70 million over an eight-year career. In 2012, he was arrested in a 7-11 store in a suburb of Houston, robbing a clerk of $300 at gunpoint. That’s a sad fall. For most people, $70 million would last a lifetime.

Similarly, I had a good friend who got started with the direct response business, hit it big right out of the gate, and soon had thousands of dollars a month pouring in every month. Suddenly, he had more money than he’d ever made in his life. What did he do? He went and rented a huge office, filled it up with office furniture and a phone system, bought all kinds of other stuff-and then didn’t have any money to put back into the business. All of a sudden, he was broke. This is commonplace.

So spend your money, but make it serve you well so you can get more of it. Don’t blow it! Too many of us just don’t know how to handle money when we make a lot of it. If you need help, find a trustworthy financial planner to help you manage it.

If you want to learn how to make a lot of money in the first place, look at people like P.T. Barnum, people who have made careers of promoting big events. These people really have to know what they’re doing to get people to flock in. You can also learn a great deal from evangelists. Recently, I was flipping through channels on the TV when I came across an old Billy Graham Crusade on a show called Billy Graham Classics. Graham was an excellent motivational speaker, and I was struck by just how effective he was when speaking for the glory of Christ. He was at Madison Square Garden, and held 10,000-plus people in the palm of his hand. He was such a great messenger.

Pay attention to those people who know how to motivate, no matter their field, put their methods into action, and you will make lots of money. But again, be sure to set aside seed money for your next campaign before you start spending! It takes self discipline, but you have to do this. Put some of your money back into what made that money in the first place.