Why Some Lists Work, Others Don't
You are left with the question: Why do some lists work and others do not?
The more "alike" the prospect on the mailing list that you are considering is to your customers, the more success you will have. So the first thing you must do is determine what your current customers are like, including what kind of offer you originally sent to them that converted them from prospects into customers.
First, it is important to look at what will make a list work. Depending on your offer, the importance of these characteristics will vary.
• Is the list owner renting your list? If so, there is a good chance that list will work for you. Conversely, if the list owner tested your list but did not continue, there is a good chance its list will not work for you, either.
• Are the prospects within your defined target market? An urban homeowner who spent $500-plus on a mail-order product will still not buy your snow blower, which is only practical for someone with 2 or more acres.
• Gender. What percentage of your list is male? If the list is 50-50, that does not mean you can select just the male names. If you sell a "macho" product and you select just the male names from a list that is only 50 percent male, there is a good chance your offer will bomb.
• There is a difference between demographics and the type of purchase. A 900-number psychic reading company might generate an average order of $90. But the average income is $28,000. You must study the actual nature of the offer that was made to determine whether it is a fit for your offer.
• How did the people pay? Did the buyers on the list you are considering pay by check or credit card? If you are making a cash (check) offer, renting the names of people who bought using a credit card will hurt your response.
• Seasonality is different from recency. Your offer might be affected by seasonality. If you send a Christmas offer, you probably will be better off renting the names of people who responded to a Christmas offer last year than a 30-day hotline.
• New-to-file or repeat? When you think in terms of recency, differentiate between new-to-file names and repeat buyers.
• What is the nature of the proposition? Are people buying as a result of a $10 million sweepstakes? Are they buying because they also get a half-dozen mystery gifts? If any of these are true, your straight, no-frills, no-sweepstakes offer probably will not work.
• Dollar value. Carefully check the dollar value of the buyers on the list you are renting. It is almost impossible to get $200 out of a $2 buyer.
• What were the terms and method of payment on the list you are renting? Was it "send no money now, we will bill you later?" Was it a free trial? Was it to pay four equal installments of $12.64? Even though these people made a $50 purchase, that does not make them prospects for your $49.95 cash-with-order offer.
• What is the income and socioeconomic status of the list? A $50 purchase is not as important as whether this $50 purchase was a necessity item compared with a discretionary or luxury item.
• What is the effect of the presence of children? If you sell a juvenile life insurance product, presence of children is critical, and that information might be hard to ascertain from simply reading a data card.
• What is the length of residence of the people on the list? The longer a person lives at a location, the more conservative he is and the less likely he is to try something new. That is one reason why "new move" names work so well for a wide array of products and services.
• Are they homeowners or apartment dwellers? Surprisingly, apartment dwellers often outperform homeowners on many tests for a wide variety of products and services.
• What is the marital status? You might be surprised by the difference in response.
• What is the churn on the list? The more activity on a file, the better the response will be to most offers to that file.
• Is there modeling capability? Though you may be able to model a list that you rent, the list owner really knows and understands each segment of its list.
• Are they really buyers? Or are they inquiry names? Many data cards list the two groups together: buyers and inquirers.
• Are the names deliverable? This is a bigger problem when renting international names rather than domestic names. Remember that 20 percent of the country moves each year.
• Is the list saturated? The flip side of the comment regarding churn is overuse of a list. This is especially true in telemarketing.
• Selectivity is important. The more selections that are offered, the more segments there are to test or suppress.
• Who is the list owner? Some list owners have a reputation for offering lists that are not exactly as advertised.
• Who is the list manager? As noted above with list owners, one of the most upsetting problems in the list industry is that some list managers are not ethical.
• Exactly what was the source of the names? Was it direct mail? Was it telemarketing or space or television or possibly the Internet?
• Recency is considered critical to most mailers. Many people now mail weekly hotlines. The importance of recency cannot be stressed enough.
• How consistent are the names? Several companies have more than one offer, yet they combine responses to all their offers into one list.
• How beat-up is the list? Several years ago, when 900-number mailings were the rage, one marketer sent 20 promotions to each buyer before releasing the names to the market.
• Are special positions being offered? It is often important to find out who is mailing the list before you and to try and negotiate a priority position so you can mail before your competition.
• Is the list owner holding back multibuyers or any other group of names? If the list you receive does not include the "best" names, your response will be decreased.
• Does your list broker manage the list? Many times list brokers will "push" a list that they are managing.
• What psychological hot buttons did the consumer originally respond to? Good examples of these are people who make a donation only because they received a mailing with a dozen free greeting cards or a package of address labels, and they feel guilty. People who respond to sweepstakes mailings will often be unresponsive to nonsweeps mailings. The product was irrelevant; the psychological hot button, the gift or the sweepstakes, is what made the person respond.
• Are there a lot of tests but few continuations? Be wary of those lists that have a plethora of tests but few continuations.
• Mail the best segment first. If your offer does not work to your most promising lists and list segments, it probably will not work to the less favorable ones.
• Use competitive lists. The odds that any new list you test will work are against you. However, if you use a category of list that is working, be sure to test every other list in the category. If you profitably mail a new-parent list, test every other new-parent list. If you profitably mail a new-move (change-of-address) list, be sure to test other new-move lists. Every compiled list is different. You stand a much higher chance of getting a second or third new-mover list to work if you have one that already works rather than getting a brand-new category of names to work for you.
In any direct response business, the object is to get as many lists as possible to work, and to get the largest universe as possible to work.
If a list was tested and it was marginally unprofitable, this data may be very helpful. Instead of simply discarding the list, you can use this test to help you consider segments of the list that might prove profitable.
These criteria should also help you avoid predictable disasters.