Response rates for mailings have continued to drop off during the past several years. With the large number of catalogs arriving in mailboxes each day, companies must develop a clear message with great creative in order to be noticed.
In addition, it is essential to understand your 12-month customer value as well as the acquisition cost. In this highly competitive market, it is important not to over invest in acquisition, or you may be putting your company at risk of financial ruin. The cost of acquisition should not exceed the 12-month value of a buyer unless your company decides for strategic reasons—such as the desire to show rapid growth prior to selling the company–to invest in customer acquisition.
Outside lists have historically been the primary source of prospecting. With increased rental costs and unreliable results, however, many catalogers have turned to the cooperative databases to fulfill most of their prospecting needs. Co-op models typically have 20%- 30% stronger results, not to mention more consistency from mailing to mailing. The potential universes available are also much larger in many cases than those available from straight list rental.
That’s not to say that you can’t successfully process renting lists, of course. One way to help reduce rental costs is by negotiating a private exchange with list owners. This will allow you to use outside lists without rental and brokerage costs. Private exchanges can often be negotiated with lists that are not on the open market. These lists generally respond at a high level, since the names are not being repeatedly mailed other offers.
Alternative sources of prospecting, such as manufacturer buyer files, are also growing in importance. In some cases, the same manufacturers that supply your catalog sell direct to the consumer and will allow you to mail to their buyer file to further increase sales of their products. Even if your manufacturers don’t sell direct, ask them if they have a warranty or rebate list. These lists will perform very well, as the buyers have already purchased a product you sell.
Targeted club members and trade show names, attendees or buyers, can also be very successful for niche offers. You can build a proprietary prospecting database from these types of lists. By identifying multis within the prospecting database and against inactive buyer and inquiry names, and by optimization modeling, you can successfully mine these files.
With the Internet becoming a more and more important channel, instead of simply another ordering option, search engine optimization is crucial for prospecting. Many potential buyers do not know they want to purchase from you; however, they do know they want to purchase a particular product. For search engine marketing success, it’s imperative that your URL comes up among the first few listed on the search page.
Recently several companies have begun offering targeted display ads based on cookie tracking. These programs provide targeted Web media to support your prospecting efforts. Relevant display ads can be served up to cookies of people who visit your site, but do not buy. This is a very targeted, potentially highly responsive group of prospects. By serving up a display ad to these visitors, you can drive them back to your Website to ultimately purchase.
As response rates continue to fall off, companies need to work harder to find successful prospecting sources that will help them grow profitably. Think beyond traditional sources, and the opportunities are endless.
Michelle M. Farabaugh is a partner with San Rafael, CA-based marketing consultancy Lenser and pens a monthly column for LIST & DATA STRATEGIES.