The Evolution of List Selling Into Direct Marketing

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Not long ago there were only a handful of mailing lists on the market. But as soon as people realized they could make money, gain information on new markets and potentially expand their own product line, they started managing lists. Thus, a new business was born in the direct marketing industry.


Most of the lists that were successful in the beginning were buyers lists containing the names of people who bought something through the mail. It made sense. If you were doing a mailing, obviously you wanted to use a mailing list of people who had responded to a product offer before.


The first mailings to these buyers lists got results for businesses using them. It was easy to bring in new customers and pick the low-hanging fruit. But as businesses matured they wanted more growth, so they continued to look for new customers. But it became more difficult and more expensive. It was now up to list brokers to be more creative in finding new sources for lists; thus the evolution of response lists to compiled lists.


As list brokers looked elsewhere to find more buyers lists, lists came of people who responded to offers in space ads or TV commercials. It didn't take long for brokers to begin selling these types of lists to marketers anxious to boost their sales with a direct mail campaign. But when marketers tried them, they got a surprising result: The lists didn't work and no one could make them work. Why? Because all responders are not equal. For example, infomercial respondents are the ultimate impulse buyers. These type of buyers can't be treated the same as mail-order buyers. Another big difference is that TV-generated names cool down faster and they have to be marketed quickly. Today, we have the technology to update the names faster and get these lists to the marketplace quicker.


When selling the different buyers lists, list management companies and brokers quickly became savvy and realized that matching a specific product or offer with a specific list or combination of lists would produce the best results. They figured out that buyers lists work well in vertical markets vs. mailing to a large mass of all buyers. For example, if someone wants to offer a car special, list brokers would locate an automotive buyers list. Same is true for the financial market or restaurant market.


But what about mass marketing? Mass market lists or phone lists used to be made fun of because people would say that they weren't targeted. There was no way to determine if these people were potential direct mail buyers. So faced once again with a challenge, list brokers and list management companies found a way to make them work. Today, US West, Ameritech, Bell Atlantic and other phone lists have proven to be very effective. They are profitable and important to mail programs because you can target new business connects or new people who just moved to the area. Also, neighborhood or local offers work well with these lists.


After phone lists came compiled lists. Companies have built tremendous businesses on compiled files and their clients have been the benefactors of this targeted approach for response mailings. Essentially, compiled lists start with a basic source (i.e., yellow pages, membership rosters) and the original data is enhanced. The result is a rich compilation of many data elements, which can be segmented multiple ways for precise marketing.


Now that brings us to the present, where the industry is very attune to the different ways people respond to offers and the many different list sources available. The business has evolved from list selling to true direct marketing specialization. Today, firms use a combination of buyers lists, subscriber lists and compiled lists and merge them, enhance them and apply tools like modeling and profiling. They also segment a list by product, recency and lifestyle or demographic data vs. mailing to every name on a list. Twenty years ago, it wasn't possible.


<I>Sheldon Zaslansky is president of Walter Karl Companies, Greenwich, CT, a division of infoUSA.<I>
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