 Lawrance Direct, LLC
Finding Your Way Through the Mailing List Swamp. (NOTE: This article is presented as a service to you from Lawrance Direct. It is used with permission of the author. We hope this article helps you with some of your questions regarding Mailing Lists. For more information contact Lawrance Direct at 1-800-639-7927 / 603-622-9330 or e-mail info@lawrancedirect.com) "I would to God thou and I knew where a commodity of good names were to be bought."
To appreciate the importance of the list to your overall marketing effort, consider the oft-quoted 40-40-20 rule: 40% of the success of your mailing depends on the quality of the lists. (The other 40% is the offer, and 20% is the creative.) But even Shakespeare himself couldn't write a successful mailing if it were sent to inaccurate lists. "Junk mail," I like to say, "is an offer sent to the wrong person." Further, the cost of list rental has skyrocketed in recent years, making list testing considerably more expensive. We can no longer throw another three or four lists into the test matrix just for the hell of it as we once did when lists were $25 per thousand and gas was 32c a gallon. How Many Lists Are There? Standard Rate and Data Service, a mainstay of the list marketing industry and publishers of the SRDS Direct Marketing List Source, recently announced some 16,000 lists in its database, available to subscribers who purchase their proprietary software. Dun & Bradstreet's DB Marketplace boasts more than 10 million U.S. businesses on CD-ROM (Slice and dice it into as many segments as you need. 60% of that total are companies with four or fewer employees.), and Database America's business file touts 11 million companies. [Web Tip]: These list resources -- and many others -- are available online. See the URLs at the end of this chapter.] In his landmark guide, The Complete Direct Mail List Handbook (Prentice-Hall, 1988), list guru Ed Burnett estimates there are some 20,000 lists available commercially. So obviously, there are lists and there are lists, and most mailers experience their share of dogs on a regular basis. I'll cover some of the basics here, with the caveat that I'm not a list broker, and your best chance of assembling an effective list matrix is by working with a reputable broker. More about brokers in a bit. Types of Lists You should be aware of the different types of lists and list compilation methods. They yield substantial differences in results. Basically, there are five categories of lists: 1. House List This is number one. Your house list will always be your best responding list for the same reason a $5000 political contributor gets his phone call returned: they know you. Your house list is composed of your customers. They have bought something from you at least once. They can be presumed to be familiar with your company and your product, and satisfied with both. If you're not aggressively building your house list and maintaining it on a computerized database...maybe you'd be happier driving a cab. A house list may also consist of inquirers if you're primarily into lead generation -- people who have written or called directly to obtain information. If you're a fund raiser, your house list is your donor file. 2. Response Lists A response list is composed of people who have responded to a direct marketing offer. Preferably by buying something, but perhaps also by requesting information, or businesspeople who have said "OK" to a free subscription to a controlled-circulation business publication. Already you can detect differences in quality here. The person who paid cash for a product is clearly a more valuable prospect than either of the others...unless the business publication subscriber happens to be director of jet engine procurement for United Airlines and you're the jet engine marketing director at GE. Everything is relative. Actually, multi-magazine publishers, like McGraw-Hill, Chilton, Cahners, CMP/Miller Freeman, and Penton offer large, unduplicated databases of their business/trade publication subscribers as "direct mail buyers" because they said "Yes" to a free subscription, or otherwise qualified themselves via a questionnaire. You'll have to decide if you want to consider that a response list. They did take the time to fill out the Qualification Form, and for them, time is money. These companies also offer a variety of marketing tools and services. A list of similar businesspeople who paid for their subscriptions may be expected to produce better-qualified prospects, all other factors being equal. Indeed, that holds true for response lists generally -- but then, all other factors are seldom equal. Also, response lists cost more to rent than compiled lists. Surprising as it may seem, your best bet for selling a bible by mail is a person who just bought a bible by mail. You may have a problem getting hold of that list, however, since the owner likely won't rent it to a competitor. (Although they might trade with you if the list universe is close.) In many niche markets, however (especially business markets), the availability of high-quantity response lists can thin out quickly, which means if you're going to sustain any kind of volume mailing program you'll need to rely on... 3. Compiled Lists Compiled lists are those that are assembled from existing data sources, either public or proprietary. They can also be custom compiled from special sources or combinations of sources. Compiled lists start with phone books from which names and addresses are captured in volume, then spot-verified by telephone. White pages yield consumer names (three-line addresses), and yellow pages yield businesses (four-line addresses). R.H. Donnelly/ Metromail is the principal compiler of phone book lists. Other sources of compiled lists include trade show attendees, automobile registrations (currently under fire for privacy concerns and may become tightly regulated), association memberships, product warranty cards, sweepstakes entrants (choose "Yes" or "No" respondents), occupant lists, and more. Largely because the purchase behavior is missing, or cannot be quantified, compiled lists usually pull at lower rates than response lists -- but then, they usually cost less. 4. Data Banks Both business and consumer lists, response and compiled, are available in data banks. These are large databases of lists that have been compiled, combined, de-duplicated, and enhanced. Enhancing means the files have been overlaid with census data and various other types of demographic and psychographic (i.e., lifestyle) data. Consumer lists can be enhanced with such demographic overlays as driver license data, median age, median home ownership and value, make and value of car, dates of birth of household members, and more. Psychographic characteristics include hobbies, special interests, product ownership, and more. (Demographic data may show I own an expensive car. But is it a Lincoln Continental or a Porsche? The difference may be important to you.) Psychographic data is collected via mail and telephone for inclusion in various "lifestyle" lists or overlays to lists. SRDS and The Polk Company jointly publish The Lifestyle Market Analyst . As their ad puts it, "You'll find out who owns a dog, who attends cultural events, who uses home video games and who uses a personal computer." The Analyst identifies magazines and mailing lists that target these special interests. They claim to profile 19 million households. Another primary source of consumer lists is catalog buyers. The Millard Group in Peterborough, NH, is a major source of catalog lists and manages many of the leading catalog and publishing lists. Some large data banks consist of catalog multi-buyers, unduplicated and enhanced with other data. Business enhancement is more limited. SIC codes and phone number are two key pieces of information most users seek. The SIC code tells us what business or industry the company is in, and the phone number facilitates the call we often need to make to determine the individual's decision-making functions and purchase intentions...or to (hopefully) get referred to the right person in the company. Other data enhancements include number of employees, sales volume, and various county, city, and metro codes. Among the richest data banks for this kind of information are the business publishing databases mentioned above. McGraw-Hill, Cahners, et al. put big bucks into gathering the kind of marketing data mailers seek, and it's usually dependable. Some list brokers manage large data banks as well. Companies that publish specialized lists like Dun & Bradstreet can add credit information and both Market Data Retrieval and CMG Group provide enhanced school lists. [Web Tip]: 5. E-Lists. The newest addition to the list universe is the e-list, gathered either from e-mail or directly from the World Wide Web. The common standard for e-lists today is the "opt-in" list, indicating that the individual has agreed to have his or her e-mail address available for mailings. However, there are many slips between the "opt" and the "in" so tread cautiously. As with hard copy lists, e-lists are being used most effectively when they are customer lists or at least inquirers to the mailer. The cost of mailing your own e-list is virtually (sorry!) free, so begin gathering customer e-mail addresses ASAP.
List Rental Costs Speaking of costs, I frequently hear someone say they "bought" a list. You should understand that lists are rented for one-time use only. List owners protect their lists by seeding them with dummy names and otherwise monitoring their usage. Mail a list a second time without paying for it, and you'll be hearing from an attorney pretty quick. Most lists are rented in minimum quantities of 5,000 names, which for most mailers is about the right test quantity per panel. Some very popular lists double that minimum to 10,000. You don't need to mail to all the names you rent, however. Today, for budgeting purposes, estimate lists at $100 per thousand ($100/M) and you'll be pretty close. Some are more, some are less. Compiled lists may average slightly less, $85-$90/M. High-tech lists tend to start at $100/M and can double that. For a current project, for example, a client plans to mail IBM AS/400 computer locations. A list of 5,900 locations (32,290 names or an average of 5.5 names per location) on CD-ROM costs $19, 425 or $329 per location. Each file includes detailed sales and contact data for each location. Whatever the base price, special selections can increase that price quickly. State selections, male/female, income, and other segmentations each add $5, $10, or even $15/M to your base cost. Some negotiation on price may also be possible. Net Names and Net Net Names If you're renting a number of lists from one source, you may be able to negotiate a "net names" agreement, paying only for those names that survive a "merge-purge" or de-duplication process. A "net net name" agreement runs the lists against certain specified screens for bad debt, certain zip code suppression, income, and other factors. Usually, you need to be mailing large quantities to make these types of screenings pay out. Hotlines "Hotlines" are those names that have come onto the file in the last 30 days or 60 days or whatever, depending on the list. That is, they are the most recent names on the file. Most list data cards will indicate the monthly hotlines available. Because hotlines normally pull at higher rates that the core list, they cost more. If you determine that you can successfully mail a particular list's hotline exclusively, and are willing to pay the premium, that's fine. But beware the "hotline test" where a broker or list owner provides hotline names exclusively for a test, where you're planning to mail the core list. You'll get a skewed result in your test. It would be better, in my view, to mail the core list and anticipate a bump in response when you add hotline names later. Including both in your initial test will give you some indicators. If there are sufficient hotline names coming on line each month for you to use them exclusively, use them. Lucky you. Names vs. Titles In mailing business lists, you'll need to decide how reliable your names are. If you're satisfied the names are accurate, mail them. If the names are doubtful, use the title instead, since the title will likely still be there, even if the person isn't, and the piece may get passed along to the new person using that title. N.C.O.A. and List Hygiene This stands for National Change of Address, a constantly updated database generated by the U.S.P.S. and administered by selected service bureaus around the country. Wherever you get your lists, you want to be sure they have been run against the NCOA database for accuracy. Approximately 20% of Americans change their addresses every year, and any list deteriorates at about 50% per year. You also want to be sure you run your own lists against the NCOA file to save mailing costs and improve deliverability. Other forms of "list hygiene" include:
Costs and Testing There are certain thresholds one needs to reach in order to have a valid test. Test one list and all you'll know when you're done is that was a good (or bad) list. Is that enough for further marketing decisions? I don't think so. A rule of thumb for statistical reliability in list testing is to mail sufficient names to obtain at least 50 responses. If you anticipate a 1% response, that would indicate a 5,000 name mailing. If you anticipate fewer responses, increase the quantity accordingly. Other "musts" include:
You can expect that only about 30% of the lists you test will pay out, so the more lists you test, the more insurance you're buying, and the more you're learning about your market. Also, if you go into the mail expecting that the revenue from your initial test will fund the next level of testing, you're likely to be disappointed. You should have sufficient capital to test mail, adjust lists, offer, or creative based on results; and re-mail and re-mail again before seeing any substantial revenue. A software developer had put much time and money into a contact management/calendar program and after learning what it would take to get the product on the shelves in the retail channel, decided to go direct. I created a direct mail package, selected lists and generally supervised a mailing that pulled close to 4% response. I was delighted-- until the client told me, after the fact, that he had needed a 10% response to make enough to keep mailing. Ooops. In fact, if a "break even" analysis shows you need a 10% response in order to succeed, it probably won't happen. Rethink the project.
A List Selection Model In constructing a test mailing from list data sheets, I use a letter-number system for prioritizing lists. Letters -- A,B,C, etc. -- designate the list's closeness or compatibility with my customer profile. Since an exact fit would likely be available only from a direct competitor, and since they probably won't rent to you, your "A" designation will have to be approximate, but as close as you can get with the list selections you have. For example, if I'm promoting a newsletter on the subject of recruiting, I probably will have to live without subscribers to a hypothetical "Recruiting" magazine (unless I can work out a swap, which is always worth a phone call). But a compiled list of "corporate recruiters" would rate an "A." A list of human resources managers might also rate an "A," but a list of human resource directors or VPs wouldn't. Why? Because human resource managers often do the actual recruiting work. HR directors and vice presidents are somewhat removed from the day-to-day recruiting process (been there, done that) and probably wouldn't think they need hands-on advice on recruiting. Watch Out for Fuzzy Logic OK, you might say, but wouldn't HR directors want their people to know as much as possible about recruiting and pass the mailing piece along to them? Or, might not some of these HR VPs make hiring decisions? Sure, some might. But that's not a primary and normally anticipated behavior for this group. Be careful of that kind of fuzzy logic, tempting as it can be. It will have you selecting marginal lists, which will tend to drag down your aggregate response.. If the promotion or offer isn't directly related to the person receiving it, your odds of a sale drop dramatically. The numbers are assigned according to the total size of the list. Relative to the lists I have to choose from, the largest lists rate a "1," next largest a "2," etc. Smaller lists (3) can always be added to a continuation or rollout later at low incremental cost, rather than claiming a spot in the initial test. You don't want to mail too many small lists, since even if you get a good hit on some of them, there won't be many names to go back to. I then construct my test list A-1s first, A-2s, B-1s, B-2s, and so on. If you find yourself getting down into "C" lists rather quickly, you may have a list problem, or need to look further.
Of List Brokers and List Managers List brokers have access to all or almost all lists available for rent. They consult with you, determine your needs, and make recommendations. Their fee is paid by the list owners in the form of a commission, roughly 20%. If they sub-rent from "exclusive" list representatives, they split some of that. Whatever the case, the list broker represents you and your interests. List managers handle a wide variety of lists. That is, they market them to the list rental marketplace, either directly to you, or through a broker. They represent the list owner in maximizing the revenue from his or her list. If you're a relatively small mailer, say 200,000 pieces a year or less, find one broker and give him or her all your business so the broker has an opportunity to learn more about your business and the lists that serve your needs. He or she will also have a stake in your success. By all means, talk to list managers, too. You can learn a lot about lists that way. And if you can develop a good relationship with the list manager, great! Just don't forget that the list manager has a vested interest in the lists he or she represents. That may work well for you, if the management is large enough to encompass your needs. It is sometimes difficult to find a broker who will give his or her full time and attention to a person needing only 10,000 names for a test. But they do exist, and they hope your business with them will grow as you grow. When you find one of these, hold on. One thing a broker cannot do is tell you a list's rate of response for another mailer. They can, however, tell you the list usage; who rented the list and, more important, who came back for continuations (2nd or 3rd test mailings to larger quantities of names) and rollouts (large-volume campaigns). List Formats Lists are provided in several forms: Cheshire labels, pressure-sensitive labels, and magnetic tape, diskette or CD-ROM for direct (ink jet) addressing. Cheshire labels telegraph "advertising mail" to recipients and are the least desirable. By far the best addressing strategy is to use magnetic tape and direct-address --ink jet or laser -- on the order form (to show through a window envelope), on the top of the letter (ditto), or on the outside of a closed face envelope. (One direct marketing agency I know refuses to take a client who insists on using Cheshire labels.) In some mail formats, you can have computer personalization in more than one place. Some additional points to remember when renting and using lists: * Be sure all lists are coded by test panel (or order forms are coded if the record is not on the return piece) so you can record results by list. * Make list selections by "Nth" name to spread your test evenly across the list. * Always eyeball the list before you mail. You might even pull some names at random and call them to verify that they are who you think they are. * Remember that the list owner will require a sample mailing piece before approving the list rental. Plan ahead. List Resources So where do you find all these great lists? Here are some places to go, at least initially. As mentioned earlier, your best bet, especially for response lists, is to work with an experienced broker. You'll find brokers and other list sources (along with tons of helpful how-to information on direct marketing and list dynamics) listed in several direct marketing publications and on their web sites, including: Target Marketing Magazine, 800-777-8074 (www.targetonline.com) DM News, 212-925-7300 (www.dmnews.com) DIRECT Magazine, 203-358-9900 (www.mediacentral.com/direct) Direct Marketing Magazine, 800-229-6700 Marketing Tools, 800-828-1133, (www.marketingtools.com) Catalog Age, 203-358-9900 Also check your local yellow pages under Advertising, Direct Mail, Lists; the Manhattan yellow pages; or check with your local direct marketing club or association. There's a comprehensive listing of associations and local clubs in the Appendix. The Direct Marketing Association (DMA) can also provide referrals in your area: 212-768-7277. (www.the-dma.org.)
12 Vital Questions to Ask Your List Broker (Your broker should provide you with a "Data Sheet" for each list that answers some or all of the following questions. 1. Who is on the list? 2. Is it a list of everyone who responded, or of actual buyers? 3. How recent is the list? When was the list last updated? 4. If it is a list of actual purchasers (response list), how recently were the purchases made? 5. Can you get a "hotline" select? 6. How often has this list been rented? 7. Has the list been tested? 8. After testing, did the renter continue to rollout? 9. Did the mailer rent the list for a follow-up mailing? 10. Where did the list come from? ("100% Direct Mail" is the best source.) 11. If the list came from the company that compiled it, ask for a sample of the mailing. This may be the best way to determine the relevance of the list for your mailing. 12. Is the list clean? How often does the owner clean it? Has it been NCOA'd? CASS certified? -- D1rect Ma1l 3Y 7HE NUM3ER5, USPS # # # Copyright 2001, George Duncan, All Rights Reserved. Excerpted from Streetwise Direct Marketing by George Duncan, Adams Media
© 2004, Lawrance Direct, LLC.
1-800-639-7927 | 603-622-9330 info@lawrancedirect.com | www.LawranceDirect.com |