After several years in which companies emphasized cost containment over growth investment, mailers are once again looking to boost their business. If you make your house file available for rental, that’s excellent news for you.
But marketers are getting more sophisticated with the tools they use to select and mine lists. If you want to generate incremental income, you need to accommodate renters. Here are some suggestions how:
1 & 2 Modeling Two types of models in particular will help here: response models and “good customer” models.
With response modeling, you build models through third parties based on the results of your past overall mailings. Mailers apply response models against proven lists in order to go deeper and expand usage, as well as again marginal lists to tap into the profitable segments within them. Increased performance as a result of the models typically ranges between 25% and 50%.
With good-customer modeling, you send to a third-party modeler a random sampling of your house file and the list you’re renting. The data sent include recency, frequency, monetary value, and products purchased. Each party’s data are then overlaid with demographic and lifestyle data. The model is developed based on the synergies between data on both files. As with response models, these are used to expand usage from proven lists and to cull the best names from marginal lists. Increased performance as a result of the models ranges from 15% to 25%.
To make the economics of these types of models work, list owners must generally provide lists at base price only, selects waived. The downside is obvious: lower profit margin per order. The upside, however, is significant. For continuation expansion, incremental revenue is delivered, significantly increasing the yearly revenue for once-stagnant users. Where your list is not meeting expectations, these modeling techniques mean the difference between little or no usage to steady usage on a yearly basis.
3. Alternate-channel buyers Channel selectivity will benefit your bottom line. E-tailers and multichannel merchants continue to seek out lists offering channel selectivity. Adding this level of segmentation can generate $10 – $15 IS THIS PER/M?? OR $10,000-$15,000? in additional, noncommissioned income to your bottom line. It has been proven that these marketers will use both online and offline sourced names in their better seasons; however, in off-peak seasons they will streamline their selectivity, using mostly the online channel buyers.
4. Demographic selectivity Demographic selects made an overall significant impact on list owners’ bottom lines last year. As list universes have declined and list owners have limited competitive mailers’ usage, mailers have been turning to noncompetitive list sources to fill those voids. Demographic selectivity will give your list an edge in attracting those mailers. Demographic selects most appealing to direct marketers are age, income, presence of children and children’s age, home ownership, and marital status. In 2005 we continued to see an upward trend in requests for ethnic selects. The market continues to grow and the demand is such that the potential for incremental income is guaranteed.
5. Lifestyle selectivity Lifestyle selects do not garner the same demand that demographic selects will. Nonetheless, adding these to your file serves two purposes: You will generate incremental income from membership, nonprofit, and publication mailers, to name a few, and you and your list manager will learn a lot about your customers. The most highly sought-after lifestyle selects are gardening, reading, outdoor sports, and pet ownership/interest. We also continue to see an increase in religion-related selects.
6. Order size Establish a minimum order quantity of 10,000 names. List owners who raised their minimum order quantity reaped additional bookings of several million names last year, equaling more than $400,000 in additional income.
7. Pricing Every six months review the data cards of your top 10 competitors and top five noncompetitive users. This allows you to determine your list’s cost in comparison to the prices your competitors and others in your marketplace charge.
Analyze everything—not only base price and select prices but also running charges, e-mail transmission charges, and tape fees. If you feel a price increase is warranted, keep in mind the state of the economy and the industry climate. We generally do not recommend increasing pricing by more than 5% at a time. Depending on the price increase, you may need to phase it in over time. 8. Package insert programs Marketers are using package inserts to drive traffic to their Websites, to sell products, and to building brand image. Launching a package insert program will deliver average net income in the range of $25/M-$35/M per renter. This equates to an average potential income of $125 – $210 per thousand packages shipped. As a standard, six inserts, weighing an average of 0.25 oz. each, are accepted per package, so the potential income per 1,000 packages shipped is actually $125-$210.
9. Blow-ins Blow-ins generate an average of $6,000-$10,000 in revenue per 1 million catalogs mailed. Blow-ins into house file mailings are commonplace, and we continue to see an increase in volume going into prospect catalogs. Generally speaking, list owners accept one or two noncompetitive blow-ins per catalog. Unlike house file mailings, blow-ins into prospect mailings must be cleared in advance with the list manager. When considering a blow-in program, keep in mind such factors as the weight of your catalog or mail piece and perceived image.
Chris Montana is senior vice president of Hackensack, NJ-based marketing firm Mokrynskidirect