Lenser: Drop Your Bottom 20%

May 22, 2006 11:01 PM  By

If you ask John Lenser, the old adage “You can lead a horse to water, but you can’t make him drink” applies directly to the unique names you are prospecting to. You can mail to every name you rent, but some of those prospects will never respond.

With that in mind, Lenser, the president and founder of the San Rafael, CA-based catalog consultancy that bears his name, told attendees during a session at ACCM earlier that not mailing to every name on a rental file will improve both results and savings.

“Mailers often feel compelled to send to every name they bought because they spent 2-cents per name,” Lenser said. “It’s better to throw out a 2-cent marginal name than spend 60-cents to mail to each one.” Though the multichannel trend has been for catalogers to increase circulations, he advises dropping the least-desirable 20% of unique names you are using to prospect new customers.

Lenser’s theory is simple: No matter how many times you segment an outside list, run the names through a merge/purge, or optimize them through the cooperative databases, you’re still going to have names that do not fit your operation’s criteria.

With that in mind, the unique names that should be kept are the ones with the best recency/frequency/monetary (RFM) values. The ones with lower scores should be pitched. “The more successful you are at pitching the losers, the better your response rate will be,” Lenser said. And of course, pitching the least desirable names is also helps you cut down your mailing costs.

For example, if you have a list of 500,000 names, at 2-cents each, and drop Lenser’s recommended 20%, you would eat $2,000 in list costs. But if you mailed to those 100,000 marginal names, at 60-cents per mailing, you’d be spending $60,000 to mail catalogs to people who most likely will not buy.