You can make lots of mistakes in direct mail. You can create a terrible mailing package that no one will open. You can set your price too high–or too low–and people won’t buy. You can offer your products at the wrong time (heck, yes, we always celebrate Christmas this late in January). But nothing is as bad as mailing to the wrong list.
In direct mail, the more closely you identify your perfect prospect, the more tightly you specify your list, the better your response. The better your response, the more money you make. Simple as that.
With any mailing you are considering, first figure out exactly what groups or what characteristics make up the perfect target audience for your offer. Then try to find a list that closely matches them.
An example: Suppose you’re selling a pilot’s bag for airplane pilots. You mail to a list of owners of small airplanes that was compiled from airplane registrations. Your response is 1 percent, and you break even. But ugh, all that work and you didn’t make any profit.
Take the same product, but this time you mail to a list of airplane pilots that was compiled from a list of flying instructors. These pilots are airplane enthusiasts. Since your bag has a cool picture of a plane on it, they love it. Your mailing draws 2 percent, and you make a little money.
But you can do better. You mail to a list of mail order buyers who have recently made a purchase from an airplane specialty catalog. This time you get a 6 percent response. Wow. You laugh all the way to the bank.
Now you’re getting smart. You buy a list of flying instructors who own planes and have recently made a purchase from a catalog of airplane specialty items. Your mailing draws 9 percent. You purchase the bank.
Lists are big business. All the big-name direct marketing magazines, such as Target Marketing, Catalog Age, Direct, and DM News, have full-page ads for lists. (See “Where to Look for Lists” on page 5 and call the magazines for sample copies.) Then call the list management companies (a.k.a. list brokers) that run these ads for information. Just know who your target market is, and they’ll help you.
There are two types of lists: compiled lists and response lists. Compiled lists consist of names and records that have been gathered, collected, and entered into a database (for instance, vehicle owners or high school teachers). Many lists are compiled from directories or from phone books across the U.S. (think photography shops or luggage dealers). Compiled information–like fish–gets old quickly and doesn’t age well.
Response lists consist of names and records about people who have in fact responded to an ad, a catalog, a direct mail package, or some other kind of offer.
Questions You Should Ask
If you are buying a response list, ask whether it includes actual purchasers or merely inquirers (who are of less value). Also ask how old the names on the list are; how often it’s updated; and how often, as well as how recently, it has been “cleaned” (i.e., had the nondeliverables removed). Ask the broker or list manager for a “data card” that shows list specifications and usage. Believe one-third of what you read on the data card.
“Recency” is a key factor in the success of a mailing list, so ask how recently the people on the list have made a purchase. Most lists have “hot name” buyers who have purchased within the past month–or two or three. Get these names; if your mailing doesn’t work to this group, it surely won’t work to the rest of the list. Also ask about “names by frequency of purchase” and by the amount of money spent on each purchase. The standard for measuring the quality of most mail order response lists is RFM, standing for Recency, Frequency, Monetary.
You can specify an “overlay” for almost any list. Overlays of your selection criteria (called “selects”) can be for age, occupation, title, income, location, demographic, or hundreds of other parameters. For example, with compiled lists, you might restrict your mailing with a geographic overlay (flower shops in just a few selected states), or a business-specific overlay (small-animal-only veterinarians, lawyers making over $100,000 a year; businesses with more than 25 employees). With response lists, you can restrict your mailing to people who have spent over a certain amount or (one of my favorites) to “multibuyers” who have bought from several catalogs.
Once you find a list that looks good, ask how many other mailers have tested it. Tests in direct mail are usually 5,000 names, but you can mail fewer. Find out how many people “continued” (their test mailing drew a response good enough for them to mail to more names on the list). Then ask how many ordered names for another “continuation” (they absolutely did make money and it was worth the effort). And after that, ask how many people had great success and “rolled out” (mailed to the whole rest of the list). If the list is great, many mailers will do this.
It’s also important to ask how many other mailers have used the list recently. You want to rent a list that gets some use, but you don’t want yours to be the 30th mailer your potential buyer receives that month.
When You’ve Made a Match
If your business is a small one with limited funds, I recommend mailing to only 1,000 names of an untested list; 2,000 at most. Unfortunately, most major mailers test in quantities of 5,000 names, and many list owners will not rent you fewer records. This doesn’t mean you have to mail to all 5,000 names, but you may have to purchase them.
Lists are generally sold for a single use (unless you pay a premium for multiple use) and typically cost between $65 and $85 per thousand records. They’re available on disk and tape, and printed out on paper or pressure-sensitive labels. Phone numbers cost extra. Niche market lists can sell for upwards of $150/M.
Residential lists are a special case. They’re low in cost ($20 per thousand) and may or may not come with a name in the name field. If there is no name, I always have the computer house imprint “To Our Friends at” or “To Our Neighbors at” on the top line.
Of course, the best list of all–bar none–is your own house list of current and past customers. These are the folks who know you and trust you; they’ve experienced that great customer service you offer and are now willing to buy something else from you if you would only let them know it’s available.
Jeffrey Dobkin is the author of How to Market a Product for Under $500 and Uncommon Marketing Techniques. More information on mailing lists is available in these books and in his articles, which include “Marketing Through Associations,” “Shopping for a List On-line,” “12 Questions to Ask a List Broker,” and “Free Catalogs of Mailing Lists” ($2 each with a large SASE). For more info or to place an order, call 800/234-IDEA; fax 610/642-6832; write The Danielle Adams Publishing Company, Box 100, Merion Station, PA 19066; or visit www.dobkin.com.
Where to Look for Lists
Most magazine publishers sell their subscriber lists. You can probably get a magazine subscription list that goes straight to your targeted buyers. Check Burrelle’s Directory of Magazines (800/USMEDIA), Bacons (800/621-0561), SRDS (800/851-SRDS), and Oxbridge Communications Standard Periodical Directory (800/955-0231) for specialty magazines geared to any particular industry. These reference books are available in libraries.
Catalog houses. Catalog houses earn a good portion of their revenue from the sale of their lists. Call and ask for their business office; then ask who handles their list sales.
Associations. Better trade associations always list their industry’s major players. Local associations like the Chamber of Commerce are usually good for local business names. Reference directories of associations include the National Trade and Professional Associations of the United States and the State and Regional Associations of the U.S. (www.columbiabooks.com; 888/265-0600). Association lists and data are also available in the Encyclopedia of Associations by The Gale Group (800/877-GALE) on disk, CD, and online through Lexis-Nexis.
Trade shows. Conventions usually offer lists of both attendees and exhibitors. Check out www.tscentral.com and www.tradeshowweek.com.
Libraries. Two more excellent sources available in libraries are the SRDS Direct Marketing List Source™ (800/851-SRDS) and the Oxbridge Communications National Directory of Mailing Lists (800/955-0231).
List brokers. List brokers are in the phone book in every major city. Make sure you ask tons of questions before handing over any money. The broker actually works for the list owner, so take that into consideration when you ask for information and negotiate price. Hugo Dunhill (800/223-6454), American Business Lists (800/555-5335), Best Mailing Lists (800/692-2378), CompilersPlus (800/431-2914), and Edith Roman (800/223-2194)—among others—sell through catalogs of their own, which are free.
Direct mail trade magazines. A plethora of mailing list managers can be found in Catalog Age & Direct Magazines (203/358-9900), Target Marketing (215/238-5300), Direct Marketing (516/746-6700), and DM News (212/741-2095).
Competitors. You’d be surprised how many of your competitors will sell you their customers’ names. And other kinds of businesses that serve your market may sell their lists too.
The Internet. You just have to figure out which is the good stuff that you can use and which is the bad stuff that you’ve just spent the last two hours looking over and have now realized is pretty worthless.