Prospecting Tips for Long-Term Value
Start with this basic rule of prospecting: seek prospects with the potential to move beyond a one-time buyer. Do the extra statistical and mathematical legwork when evaluating any prospect pool. If you don't create, track and calculate an extended ROI model complete with a longer-term lifetime value analysis, even your tried-and-true sources could look like a good deal in the short run but won't have the predictive matches for repeat business.
So whether you're sticking to basics or getting creative with prospecting ideas, do your homework on cost and projected LTV.
The obvious best place to look for business outside your 12-month and hot files is self-selectors or inquiries. These people raise their hand to get your catalogs, typically from a response to a DM space ad in a magazine or newspaper, a business reply card, e-mail or online promotion or even a cross-promotion with a complimentary catalog.
The next-most-effective prospecting source is modeled buyers through list rentals and exchanges for "DM sold" buyers of similar products to your mix. You also can prospect with outside subscription lists or even compiled lists, but ensure you're running them against the "DM sold" qualification. "DM sold" is still the No. 1 predictive factor when judging the quality of a prospect source. And don't underestimate the idea of pure list exchanges, even to direct competitors. The upside in response and ROI typically outweighs potential lost business or lost customers.
An overlooked asset is your lapsed customers. We often see dramatic results when old data files are mined for customers who have not purchased within years but score high when run against solid modeling techniques. Many times old data are hard to gather and don't have the correct transaction fields appended. When you do the extra work to cleanse and test these sources, however, you may be pleasantly surprised to find reactivation segments competing with and sometimes beating 12-month lists purchased from third-party sources. Often just basic list hygiene and NCOA cleansing will get many lapsed names to respond.
One last idea with lapsed customers: We have found that certain cells just do not respond well when contacted frequently, so test contact strategies with only key seasonal contacts. You'll find pockets of longer recency and frequency attributes that would still score high because of monetary and other LTV factors.
Take advantage of "list optimizer" enhancement options with the handful of transaction-based database cooperatives. Though this is an added expense, this qualifying layer often will pay for itself many times over.
Those are the basics, but what about getting a little more daring?
Also, any names gathered at retail, while not "DM sold" qualified, potentially have brand and product affinities to your catalog efforts. Try them until they prove otherwise.
Other moderately adventuresome prospecting includes testing DRTV and extended radio spots. With a soft economy and a proliferation of cable channels, costs have never been lower. The Sharper Image, always a catalog leader, continues to do a masterful job in leading with this technique. While you do have to focus on a key product or line because of media format, these inquiries and responders typically perform well because they attract self-selectors.
A solo product offering also can be effective at getting response for your catalog through a key product entry point. Frontgate used this technique effectively last summer with its Electronic Mosquito Capturing System. A variation on this theme is testing an insertion slot in a monthly credit card statement from banks, other credit managers and petroleum companies.
Five other moderate-risk prospect methods include:
1. Package insert programs that put your catalog in outbound packages of complementary catalog offerings.
2. "Add-A-Name" method of getting more efficient postage rates by filling out delivery sorts with modeled names in certain carrier routes.
3. New mover lists are good for any home, décor, or just about any other hard goods catalog.
4. Newspaper free-standing inserts.
5. Bundle your name with other brands in cooperative catalogs such as Sky Mall or a card deck buy.
Finally, for the more aggressive hunters there are other prospecting venues to consider. Only consider these as part of a balanced prospecting plan, and only if the cost-effectiveness of the ROI is high either by being ridiculously cheap, or by being well-qualified enough to have at least close to average LTV scores. These methods include:
· Viral marketing. Start a pass-around offer through e-mail or even in your next catalog that encourages multiple responses to a single promotional offer.
· Event marketing. Market to the interests and activities your customers participate in. Sporting events, concerts, trade shows and other well-attended gatherings can be cost-effective places to get your book in the hands of people who are considered enthusiasts and who typically have a high "DM sold" propensity.
· Public relations. Gain brand awareness through newsworthy discussions of interesting new products to generate both product sales and catalog inquiries.
· Gift card exchanges. Exchange like-valued gift cards or promotional offers to distribute as an incentive for trial purchase.
· Vendor list exchange. Try mailing a successful key supplier's database if it has any appended data that meet your judgment criteria.
· Co-operative mailings. Find a complementary catalog program that is similar but doesn't compete.
· Affiliate mailings. Mail to a selection from a database with similar demographics to yours with an official endorsement, such as "Compliments of Vanity Fair."
· EBay and other online marketplaces. Catalogers have been mining this avenue by selling product, which then gives the opportunity to ship a catalog with an order.
If you're looking for that undiscovered silver bullet in catalog prospecting, it doesn't exist because of the proliferation of product offering and DM efforts that exist in our over-saturated marketplace. But that gives you the chance to choose from many prospecting options and test, test, test.