Database marketing within the list industry is gaining momentum and growing in sophistication. However, there still are some basic tips regarding the selection and evaluation of lists and compilation of data that are too often overlooked.
To achieve the maximum benefits from database marketing and your list resources, there are several things to keep in mind, including:
* Recognize that response lists almost always outperform compiled lists. Know the strengths of each and use them accordingly.
* Your focus on list selection and the test matrix will have more effect on the success of your direct marketing program than any other factor.
* If you maintain your house file (in-house list) properly and update addresses and customer records with new purchase transactions, you will improve the response levels of future upgrade mailings significantly. Know your customers. Ask yourself, “Are they ready for an upgrade?”
* Before mailing an outside list, take a good hard look at the names and addresses. You can learn a lot by assessing a list before mailing it. Among the key factors to consider are: Do the names and addresses look “clean,” and are there obvious duplicates?
* Your house file is a gold mine. It almost always will pull much better than outside rented lists. It is not uncommon to enjoy response levels many times greater with the house list.
* Use geographic, demographic and psychographic data to identify your markets.
* Increase sales and profits by learning which customers spend the most and why. Know who are your best, next to best and developing customers. Reduce advertising and promotion expenses by only targeting customers who are likely to respond.
* Use your database to improve brand loyalty. It is one of the most effective tools for this purpose.
* Use your database to analyze product affinity. To do so, identify groups of customers with similar buying influences based on product sales history.
* Recognize that purchase history is more valuable than all of the other demographic statistics available. This is simply because it is a more accurate predictor of future purchasing.
* The list, the offer and the creative are the most important factors that influence response. All must be tested. However, the list is the most critical of these components, with as much as 3,000 percent impact on your response results. Regrettably, most marketers spend the majority of their time concerned with the creative when they should be focusing on and learning more about lists.
If a direct marketing campaign has a great offer being sent to a good list, the mailer will have better results than if there is a great looking package being sent to a poor list. Good creative is important, and exceptional creative can sometimes turn a loser into a winner, but the No. 1 mistake made is taking the list factor for granted.
* Always test a list in small quantities (5,000-10,000 names) before continuing with a larger quantity or roll-out. Roll-outs should not exceed five to 10 times the quantity tested.
The primary advantages of direct marketing are that it is statistically projectable and infinitely more cost-effective than other means of reaching an end-user. By applying these basic guidelines, mailers give themselves the opportunity to capitalize on these advantages.
David O. Schwartz is president of 21st Century Marketing, Farmingdale, NY.