Just How Hot Are Those Hotlines?
"It seems like hotline names are the only thing worth mailing on some lists."
"Hotline names must be better -- see they charge more."
If you talk to circulation directors, list brokers and marketing managers, you'll probably hear statements like the above. Renting hotline names is a staple of most mailing programs. The experience of two colleagues of mine, however, might have you wondering how hot those hotline names really are.
The two, Kevin Leo and Jim Kobs, are adjunct professors at Northwestern University and teach direct marketing to graduate students. At the start of each fall's term, they ask their students to make a mail-order purchase under a unique, disguised name.
The companies involved include music clubs, gift catalogs, subscriptions and even some business-to-business offers. Students then track their mailboxes daily for subsequent offers from the company from which they purchased and from any other companies renting the mailing list. The students report back at the end of the term.
During the whole school term, only 25 percent of students report getting any mailings from the company from which they made a mail-order purchase. And only one student in the last two years has reported receiving mailings from companies renting the decoy name. (The student had ordered from a gardening catalog that had mailed its own offers to the student and rented her name out to an additional mailer.)
"This is all somewhat surprising," said Jim Dolan, a list industry veteran. "With most experts agreeing that recency is the most important element in recency/frequency/monetary value calculations, the sooner a marketer can mail a new name, the better the results should be."
If the list owner isn't mailing these decoy names as hotlines, do you think that the names you are renting from them are truly hotlines? You know you are paying more, but do you just think you're truly getting recency?
"Part of the problem may be the definition of what is hot," said Jeff Sutton, a Chicago-based list broker. Some lists are updated in batches and not frequently enough. The "what" that mailers want to buy is recent purchase history.
For some lists, though, it seems the "what" that is delivered is names, which are simply newly updated but which reflect weeks-old purchase behavior because of the file-updating schedule. "You won't be getting the response boost you think you are paying for," Sutton said.
Here are some things you can do:
* Ask. When the data card says "quarterly hotline," does that mean "actually bought in the last 90 days?", "added to the file in an update the last 90 days (regardless of how much earlier he/she had bought)?" or "made a purchase in the quarter previous to the current one (e.g. bought in the first quarter of 1998, even though you are ordering the names in June 1998)?"
* Make a decoy purchase. If a list is particularly important for you, buy from it. See how quickly they fulfill, how quickly they re-mail you another offer and how quickly your decoy name shows up in other companies' mailings and your own company's mailings.
* Test names from the 12-month select or even full file as well as renting from the hotline selection. Make sure your 12-month or full-file order includes all names, not just nonhotline. Compare the results to see whether you truly are getting the recency lift you expect from hotlines. If not, why pay for it?
Although it is possible to ask for brokers to clarify each individual list's definition of "hotline" with each test order the broker places, wouldn't it be nice to have an industry-wide definition of the term "hotline"? If this is as big a source of confusion for you as it is for some of my clients, would you join me in asking the list managers with which you deal to standardize the terminology? If list managers can't clarify these terms, perhaps the DMA List Council could take on the project?
There is one final equally important question for you as a marketer and list owner: Just how fast are you in adding new names to your own file for remailing and for rental to other mailers?
Tom Byrne is senior consultant at Kobs Gregory Passavant, Chicago.