In the early 1900s, Robert Collier was a mining engineer at a West Virginia coal mining company called the Powelton Mining Company.
In those days, the mining business was dominated by a few brokers in big cities.
The brokers collected coal orders from large industrial customers.
Then they turned around and bid these orders to mining companies in West Virginia. The mines with the cheapest price won the order and the broker kept most of the margins.
The competition among mining companies was so fierce that during good times, the mines operated only three days a week.
When times were tough, most mines could operate only one day a week and still make a profit. Amidst this ruthless environment, Robert Collier had an idea.
It turned out that the coal from the Powelton mines was great for making gas.
So Collier bypassed the brokers and sent a letter to every gas company within several hundred mile radius.
Here's the letter he wrote:
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How much are you paying per cubic foot for your gas? If we can show you how to cut the cost by a fourth, are you interested enough to prove it?
The XYZ Gas Company in Cincinnati has cut its cost by a fourth, and here are the figures as given in a letter from their Superintendent.
The ABC Company of Indianapolis have had similar experiences. We’ll be glad to send you the exact figures from each if you will take the time to read them.
But better than any figures from other plants is this chance to write new figures of your own in your plant. Send the enclosed card, without money.
On receipt of it, we will ship you a carload of Powelton screened gas coal, our regular standard quality.
Test it. Try it any way you wish. At the end of your tests, figure how much gas you get per pound of coal, and what that gas cost you!
If you don’t find that the Powelton Coal has saved you at least 25% on your coal cost, then that carload we send you won’t cost you one cent.
But if you do see where you can save from 25% to 33% of the cost on your gas, then you are to give us your contract for all the gas coal you use for the next year, at a price of $1.25 per ton f.o.b. Powelton, W.Va.
Remember, no savings – no cost. But if we save you 25%, we get your contract. Is it a go?
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The Powelton mining company received tons of new business, thanks to Collier's letter.
Collier's bosses asked him to do the same magic with another product of the company - coke (the kind used by steel manufacturers.)
This was harder to do.
He started by trying to understand the best use of their coke. They performed in-depth analysis of the coke. They spoke to various foundries. But found nothing that made their coke stand out.
Then a foundry in St. Louis, the Bucks Stove and Range Company asked them and several other mines to send a sample of coke.
The Bucks Stove and Range Company had a reputation for using the best ingredients regardless of cost.
Within days of sending their coke sample, Bucks had placed an order for Powelton coke.
It turned out that the Powelton coke had unusually high carbon content.
The high carbon content meant that, while good coke could melt 8 or 9 tons of iron, the Powelton coke was melting 15 tons of iron.
The Bucks Company saved 50% by using Powelton coke for every ton of iron they were melting.
Collier had found his positioning and used it to sell coke directly to other foundries in the region.
Collier would go on to make millions selling all kinds of products from encyclopedia's to rain coats via mail order.
Collier’s early success was based on three marketing fundamentals:
- His focus on understanding the customer's desires
- Putting the time and effort to understand the product's strength and it's positioning
- Great copy-writing that tapped into the customer's desires and positioned the product to meet those desires
Whether you are selling coal via a letter in the 1900s or building a brand on Instagram, these fundamental ideas continue to power marketing success to this day.
Do you agree?