How do you improve results from prospect lists? With postage costs set to increase in January, this question will be even more of a concern in the coming year.
Improving response from lists takes both strategic, big-picture thinking and operational, nuts-and-bolts action. Here are five strategies and actions to test to improve your prospect response.
1) Match back your orders.
The response from your prospect lists may be significantly better than you realize. The challenge is tracking it.
Ten years ago most catalogers were tracking 90%-95% of their orders to specific lists or house file segments. Today many catalogers struggle to track 50% of their orders to a specific source. Internet orders are the primary culprit for this decrease in tracked orders.
Now the real challenge is to make sense of incomplete response data. You know the mailing worked, but which segments? In an effort to fill out their response data, catalogers will often reallocate their untracked orders by the percent of tracked orders for each list or segment.
This technique is better than nothing and can work for house files. But a solely percentage-based reallocation tends to give prospect lists the short end of the stick. In one head-to-head comparison of a percentage-based reallocation vs. a more exhaustive name-and-address-based match-back, the percentage-based reallocation underreported response from prospect lists by as much as 50%! The name-and-address-based match-back turned several “loser” lists into clear winners.
One reason for this discrepancy is a direct result of operations at the contact center. Typically a contact center is more successful in finding an existing customer’s record and subsequently that customer’s source code than in finding a prospect name on a finder file. Thus a higher percentage of house names get tracked to their source codes as compared to the prospects. When the untracked orders are then reallocated, the prospect lists get fewer orders assigned to them.
An effective technique is first to run a more intensive match-back based on some form of name and address and then to reallocate the remaining unmatched orders by each list’s tracked percentage. This process will more accurately reflect how each list and segment performed while reducing the pool of untracked orders.
It’s important to know that any percentage-based reallocation, no matter how small, is not a perfect technique. In conjunction with a match-back, however, it is reasonable for determining the source of untracked orders. Before any reallocation takes place, you may find that some prospect lists are performing at acceptable levels.
2) Place your list on the market.
The adage about getting out of a relationship what you put into it holds true for working with list firms. If you are only renting lists through your brokers while not giving them any leverage with a reciprocal list to dangle in front of list owners, your pool of rental lists will be limited.
Many catalogers, especially smaller, b-to-b companies, are understandably hesitant about placing their lists on the market for rent. These mailers rightly understand that their list is the lifeblood of their business. But there are a few points to consider before making this decision your final answer.
First, when you place your list on the market, you still maintain complete control over who rents or exchanges with your file. Contracts with reputable list companies will include language that gives you final clearance of all rentals or exchanges.
The second point to consider is that if you are the proverbial David in a competitive field of Goliaths, exchanging with larger companies is usually to your advantage. Why? Typically the larger cataloger will have a greater percentage of your names on its house file than you will have of its names. Depending on your net-name agreement, this means that you likely will mail more of the larger company’s unique names than it will mail of yours.
If you are the owner or manager of a smaller list, it often is to your advantage to maintain a high net-name percentage in your list rental agreement. If a larger company tries to change the net agreement at a later date, just remember that you don’t have to rent to it after you have met the obligations of any outstanding reciprocal agreements.
Before making a decision to cut someone off from your list, however, go back and check your response data. Often smaller companies have a unique competitive advantage over their larger rivals. They can siphon off customers who have become disillusioned with the big players. You may discover that the list of your larger competitor is a real cash cow for your company, and the new net terms do you no real harm.
3) Mail your multibuyers selectively.
All multibuyers are not created equal. As a rule of thumb, the multibuyers from your best-performing lists will respond better than those from weaker lists. In fact, multibuyers from a weak list may not perform any better than the first time they were mailed. So mail your multibuyers, but mail them selectively.
A clue as to how multibuyers will perform can be found in your merge/purge report. Generally speaking, the higher the percentage of matches of a prospect file to your house file, the better that prospect list will perform for you. The reason is simple: This higher percentage of matches indicates that these prospective customers are similar to your current customers.
If you have only enough money to mail some of your multibuyers, place a higher priority on the lists that have a high hit rate against your house file or against other strong-performing prospect lists. This simple technique will usually improve the results of your multibuyer mailings.
4) Test offers for your prospects.
If you are mailing the same offer to your prospects as to your house file, you may be making a big mistake. For example, many catalogers find that a discounted shipping offer is essential for prospect lists to perform at an acceptable rate. Once these buyers are satisfied with their experience with your company, they are more likely to repurchase without as strong an incentive.
On the other hand, remember this important point: The wrong offer can depress response. This may seem strange, but free shipping or half-off shipping can depress response from prospects. The point is that without testing, you don’t know. Continually test new offers for your prospects. And remember, the most expensive offer doesn’t always get the most response.
5) Test off-category lists with product-purchase appends.
To boost list revenue, many list owners offer a variety of selects on their files based on appended data. For example, a lifestyle magazine publisher can offer a variety of selects on its file for anything from clothing to food purchases. These purchases weren’t made directly from the magazine publisher but were from catalogers or Web merchants, usually within the past 12 months.
For consumer mailers who have tapped their available list universe, these appended lists can be a rich source of new names. (But check if the appended data are transactional and not self-reported. Data from transactional appends will usually outperform data from surveys.)
Using the appended data increases the cost of renting the file, but it is a straight dollars-and-cents test. Once you have accounted for the extra expenses and have tracked all of the response, you will be able to make a clear decision of whether the list worked for you.
When you test these lists, you may find that they have a high duplication rate with your house file and with other “straight select” prospect lists. As previously noted, this is not necessarily a bad thing and in fact can indicate a highly responsive file. Just realize that you may be short of names after the merge, so have contingency plans in place.
A benefit of these appended lists is that you may be one of the few mailers in your category using them. This is a big advantage to you, which can show itself in a healthy response that makes up for the higher duplication rate and extra expense of the names.
George Hague is senior marketing strategist at J. Schmid & Assoc., a Mission, KS-based catalog consulting firm.