When it comes to prospecting, one thing’s for sure: Catalogers are increasing the size of their list tests. But the reasons for the shift, as well as how they’re faring with subsequent rollouts, is subject for debate.
According to the 2000 Catalog Age Benchmark Report on Lists, 44% of respondents said that when testing a list, they typically ordered 5,000-9,999 names, while just 18% said that 10,000-24,999 names was the norm. But in the 2002 Benchmark Report (March 1 issue), 38% said their typical test size was 5,000-9,999 names, while 41% typically ordered 10,000-24,999 test names.
John Lenser, who heads up the San Rafael, CA-based catalog consulting and list firm that bears his name, blames the need for bigger tests on the increase in Internet orders. “We have to increase the test size of virtually all lists for our clients to get a valid reading,” he says.
Before e-commerce, catalogers could trace more than 90% of their orders back to the source of the name. “But the capture of key codes on the Internet is significantly lower than it is through print catalogs,” Lenser notes. So now catalogers have to test more names from each source to compensate for the fact that fewer of those names will be traceable.
Indeed, results from larger size list tests provide more confidence, says Steve Rowley, president of The Paragon. The Westerly, RI-based gifts cataloger typically tests lists in the 10,000-name range, he says. “You want to make sure you get enough actionable response before you roll out.”
Better testing through profiling
On a more positive note, Frank Foster, CEO of military-medals cataloger Medals of America, has increased the size of his tests because he’s more certain of the results. Typical test sizes for the $5 million-$10 million mailer have doubled over the past few years to 10,000 names.
“List management has become more sophisticated,” Foster says. “Once you profile your demographics through [co-op database provider] Abacus, you have a pretty good idea of where to go and if a list is going to be worthwhile to begin with. You’re pretty sure you’re going to have a hit, so then the question becomes how far into the list you can go.”
Sales at Fountain Inn, SC-based Medals of America have increased 25% during the past year on a 20%-25% increase in prospecting, Foster says. Because World War II veterans are the cataloger’s loyalest customers, Foster says that it’s fairly easy to spot potentially successful files — such as lists from Veterans of Foreign Wars and similar organizations and subscriber files of historical magazines.
Another cataloger that has increased the size of its list tests, Gifts.com, has done so even as it tests fewer lists. In fact, the catalog division of Pleasantville, NY-based Reader’s Digest Association has cut back on prospecting altogether this year.
“Beyond mailing as deeply into our house file as we can before prospecting, our preference is to see if we can get a few lists that we can test mail deeply that will work — as opposed to renting from 300 catalog lists,” says Gifts.com president Ralph Pinto. “The business isn’t scalable when you work with a lot of lists.”
One drawback to testing 10,000 or more names, Pinto says, is that the rollouts are generally less effective. Conventional wisdom has long held that a response from a full-scale rollout of a prospecting list will be lower than from the initial test. But as tests get larger, Pinto says, the drop in response between the test and the rollout becomes more marked.
“If we test 10,000 names from a list with large potential, the test works,” Pinto says. “But when we try to roll it out and go for, say, 50,000 names, it doesn’t work, because we’ve already used the cream of the crop, the best 10,000 names, in the test.”
When testing a list, Gifts.com, which mails the Gifts.com, Good Catalog, and Good Finds catalogs, selects the 10,000 names that scored the highest in terms of RFM (recency, frequency, and monetary value). “You don’t want to lose your shirt even if it’s just a test, given all the other pressures of this business,” Pinto explains.