News
 How to Choose High-Performing Mailing Lists
By Rick Brough, director of consulting services, Transcontinental Database Marketing
If you're a mailer seeking advice about
making the best list selections, you've come to the
right place. The following suggestions should give
you an edge.
Profile your house list. House lists can help
determine how to apply targeted selections on
prospect lists. For example, a concentration of ZIP
codes on the house list may be an indication that
you should test targeted mailings to other
individuals in the area or mail to areas with a
similar profile. People who live in the same
neighborhoods typically share similar attributes —
income and other demographics.
Do a cost-benefit analysis. With list
selection likely being the most critical success
factor in a direct marketing campaign, you can't
afford to make mistakes. The old model of low
response rates being offset by relatively low costs
doesn't exist anymore. Postage alone makes waste
very expensive and can easily reduce the expected
return on investment from an otherwise
well-conceived campaign. There are many lists to
choose from, so you have to begin with a
cost-benefit analysis which factors in cost per
thousand names (CPM) on one side of the equation and
response rates on the other.
Be aware of the different lists that are on the
market. It's critical to be informed about
various lists before making your selections. The
least expensive and most widely available are files
compiled from phone directories and other public
sources. Usually these will have the lowest CPM —
about $90 — but also the least specificity. Moving
up the ladder, targeted lists of subscribers may be
sourced from general- or special-interest magazines.
The smaller special-interest lists will have a
higher CPM at approximately $120 to $150 and up, but
also the highest potential response rates if subs
relate well to your offer. Often the priciest files
include names proven to be direct mail responsive
(or better still, responsive to offers ranging from
specific products or services to those containing
premiums or other incentives). These lists come from
catalogers, nonprofits and other marketers.
Combine files to arrive at the quantity of names
required. A common challenge is obtaining the
volume of names needed to reach marketing goals.
Renting multiple lists often solves this problem but
also introduces the possibility of duplicate names,
an obvious source of waste — and an annoyance to
recipients. The best way to avoid dupes is to rent
on a net-name basis: When two lists are
merge/purged, you only pay for the non-duplicate
names.
Ask questions. Be certain to inquire about
the recency of compiled lists and the last
verification date of subscriber and other targeted
lists. Age definitely will affect quality — and
responsiveness. You'll also want to identify
geo-demographic selects: age, gender, job title,
income, market segment, geographic location and so
on. Expect to pay approximately an additional $5 to
$10 per 1,000 names for each select. Telephone
numbers and e-mail addresses also carry surcharges.
Finally, find out the renter's list hygiene
practices. It'll help you evaluate the services you
might have to perform yourself.
Consider frequency up front. You can rent
lists for one-time or multiple uses. Generally
there's a discount for multiples. You should know
that owners insert seed names into their lists to
identify each time the file is mailed, but renters
are free to mail at no additional charge to those
who purchase or make an inquiry. Just keep careful
records to document your legitimate future use of
the name.
Test, test, test. Smart marketers are
constantly testing new lists to see if they can
improve results. Remember: If you want to test both
lists and, say, an offer, you need to plan ahead to
ensure sufficient quantities for each component to
be tested, and you must employ random sampling to
ensure the components are similar in every way
except for the characteristic you're examining.
Track results. Testing requires that you can
identify and track response. If you're providing a
coupon, for example, then you should have a
different barcode for each criterion including list
source. For e-mail, track open rates and
clickthroughs to gather information, even if it's
the custom offer code. For more detailed tracking,
invite responders to a personalized landing page
where they can log in with a supplied password and
receive tailored information.
Measure what you tracked. Too frequently
direct marketers only measure response rates or the
number of responders divided by the total number of
records expressed as a percentage. But determining
true ROI requires measuring sales, cost of goods
sold, list CPM and all other marketing costs.
Factoring overhead and other costs isn't required
because you're only calculating marketing's
contribution. Since the lists and other targeting
components will all have different quantities,
comparing lists requires a comparable measure be
calculated. I recommend using a net marketing
contribution per 1,000 records.
---Source: List & Data
Strateies Jan 1, 2009 newsletter (www.multichannel
merchant@pbinews.com.) Rick Brough is director of
consulting services at Transcontinental Database
Marketing in Toronto. Reach him at rick.brough@transcontinental.ca.
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