July 13, 2011   |   Vol. 10   |   Issue 7
Rick Whelan, President

LISTS – Strategies and Tactics

A Marketing Fundamental

Of all the tactical choices a successful direct marketer may make—whether recruiting members, selling subscriptions, or promoting an event—arguably the most critical is selecting appropriate prospect lists. List choices can make or break a campaign because they are the links between offer and prospect. We choose offers carefully, we often agonize over copy, and so we should give list selection nothing less than our full attention.

Lists are one of the biggest direct marketing expenses. Proper list choices are basic to the cost and ultimately the bottom line success of most direct marketing projects.

Over 32 years we have learned a lot about lists, and have compiled a long inventory of basic truths about list selection and performance. This edition of the MGITipster shares some of what we have discovered along the way.

Selection

Thousands of lists are available to marketers today, and it’s an unfortunate fact that about the only way to find out which lists work is to rent and test them. All lists are not equal and they are categorized by source, including:

• Active members, customers, and donors who belong to an organization, have recently made a purchase, or who have recently given to a cause or charity. These are generally the most productive and expensive lists of all.
• Lesser in quality, but still better than most, are former members, customers, and donors. The more recently a name has been added to a list, the more likely the list is to be successful.
• Inquirers about an organization, a product, or a charitable donation.
• Nominations or referrals, i.e., those who have been recommended by someone else.
• Next in quality are direct-response buyers of similar products or services who used the same channel. Don’t assume because prospects bought something that they will buy anything and because they joined by mail that they will also join online.
• Last in quality and lowest in cost are compiled names from licensing records, directories, and rosters. These are the least expensive and sometimes are worth their asking price.

That said, the most expensive response lists generally are worth their price because they result in higher level response rates. Most direct response lists cost $50 to $150 more than compiled lists but they can usually be expected to perform well enough to justify their prices.

At the same time, when looking at lists, the tried and true RFM formula—Recency, Frequency, and Monetary Value—still works. So look for lists that have more recent transaction histories, that are rented frequently, and that have the value of the goods or services close to what you are selling.

Testing

It’s sound practice when testing a list for the first time to select the best prospects available, such as those names most recently added (sometimes referred to as “hotline” names) and whose segmentations are as close a match to your target demographic as possible. Even though you may be charged an extra premium to rent those names, they are usually worth it.

If the best prospects do not respond, it’s unlikely any prospects from that list will perform well. On the other hand, if the test succeeds, marketers follow an expansion process by retesting level-by-level. If 6- to 12-month hotlines new to the file worked, test 12- to 24-month hotlines next, then 36-month, and finally no hotline if the lists continue to produce.

Say the segment you tested was by the title of President, and it performed well. Next you would want to branch out to other appropriate titles. Test Senior Vice Presidents and Vice Presidents, and if they succeed, begin testing by income or company size. It’s a process that can be quite lengthy and it’s often tempting to skip a step or two to speed the process.

Keep in mind that list tests generally perform better than list rollouts, so you will want to order a larger quantity to compensate for this as testing progresses.

Deployment

Multibuyers can be not only one of your best responding lists but also your least expensive prospects. Multibuyers are duplicate names and addresses within a single list or among several lists. Because you are renting them you have the right to mail them. So, if a name appears four times, it can be used once in the original mailing and in three subsequent mailings if desired.

And generally it is desirable to do so. Because multibuyer names are prospects that appear on more than one list, they tend to have a greater affinity than single buyers. They may appear on a membership list, as well as a bookbuyers’ list, so they are more engaged, more connected, and, therefore, more likely to respond to your offer.

Merge/purge reports can often foretell how well lists will perform before they are used. If a list has a low keep rate (there are quite a few matches with other lists), then odds are the list will be productive because many of the same prospects share the same space. If the keep rate is low (there are very few matches with other lists), then odds are the list won’t produce very well.

We’ve found over the years that the best lists are the most robust and resilient. A poorly performing prospect file can begin to disappoint after one or two uses, but a strong performer can be used again and again. That’s because good lists have depth as well as breadth and over time tend to replenish themselves with new names that are just as qualified as the older ones.

Lists are a vital component in any marketing effort and should be treated with care and great respect for they are essential to a successful campaign.

If you would like MGI’s assistance with list research for marketing projects, contact call Rick Whelan, MGI’s President, at 703.706.0350 or rick@marketinggeneral.com.