Are the best lists in-house or rented?

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The gloves are off
The gloves are off

List selection is important to direct marketers, who often have to decide whether to send an offer to their existing customer file or a rented list. Experts weigh the benefits of each.

CONTENDER
Rob Fitzgerald
President of Walter Karl, an InfoGroup company
Former VP of Walter Karl Interactive

In many cases, marketers' sales goals are higher than what they can get from their current customers. Renting an out­side list is important to maintain a good pipeline of fresh prospects and custom­ers in a targeted fashion. List rental can increase sales above and beyond your current customers and test new markets, creative or calls to action in a speedy, efficient and cost-effective manner — increasing both the current house file and brand awareness.

Obviously, there is a higher upfront dollar cost to rent a new list vs. mailing to an in-house list. Note that house file campaigns require more internal resources, including creative development, mailing schedules and deployment. In contrast, when a list is rented, list firms provide exclusive, full service, e-marketing expertise regarding creative help, appropriate segmenta­tion, deployment and deliverability services. This can alleviate some strain on the internal marketing department. Also, consider the frequency and recent dollar amounts that the house file has generated, which could fatigue if con­tacted too much.

When sales from your internal house file begin to drop off, e-mail prospect­ing is a great way to supplement those sales. Our benchmarks have shown that customers attained through targeted direct e-mail have a higher lifetime value over many other online acquisition methods.

CONTENDER
Geoff Batrouney
EVP of Estee Marketing Group
Former COO, The Company Store; director of marketing, The Coca-Cola Catalog

Given the choice between investing in lists — through rental, exchange or participation in database alliances — to build a house file of buyers vs. simply renting lists, 99% of marketers will opt to create the house file. Why? Econom­ics, of course.

A rental list of any sort from any source can at times be mailed profitably, but typically, a mailer rents lists and know­ingly loses a controlled sum of money in order to “buy” the buyer. When mailed, as we can all attest, a house file buyer will always outperform a prospect, often by a factor of 20 or more. The question then becomes, “Why does a house file buyer outperform a prospect by such a wide margin, time after time?”, not, “Should I build a house file of buyers?”

One of the more reasonable answers is rooted in the concept of affinity — a golden thread that ties the buyer to the mailer. That relationship is based on the buyer's response to the mailer's creative, the offer, the merchandise, the timing, the pricing — even the copy. That relationship can not be replicated. The prospect is tied to the catalog from which he or she came, and does not transfer that loyalty readily. It takes time — and time is money — but culti­vating the buyer pays huge dividends over the commercial life of that “golden thread” relationship.

That is why our direct marketing world is defined by, and driven by, house files of known buyers.


DMNews' DECISION

Batrouney points out that long-term economics support investing in a house list and, surely, it is the basis of successful direct programs. However, renting new lists can provide a much needed extension and testing ground for marketers who have reached the limits of a house file, as Fitzgerald notes — providing new buyers for the in-house list.

Batrouney points out that long-term economics support investing in a house list and, surely, it is the basis of successful direct programs. However, renting new lists can provide a much needed extension and testing ground for marketers who have reached the limits of a house file, as Fitzgerald notes — providing new buyers for the in-house list.

Have your say: E-mail your view to cara.wood@dmnews.com

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