List Buying Versus List Building

When it comes to creating prospect lists, quality rules over quantity. But, does quality have to be built from the ground up, or can it be purchased for a price?

Michael Peterman, CEO of integrated marketing services company VeraData, and Rob Sanchez, CEO of direct marketing solutions provider MeritDirect, agree that marketers must do both to construct the highest-quality prospect lists.

“You have to build your house file, but you have to go out and acquire data, do prospecting, and do customer acquisition off of a broad range of data sets where you’re looking to get more customers in your database,” Sanchez says.

Sanchez explains that compiling prospect lists is “not a total linear process” and advises companies to analyze their customer profiles and data before determining whether to build or buy. When creating a customer profile, Sanchez suggests merging the demographic with the behavioral information, such as a prospect’s title, function, and purchase history for the B2B space and age and lifestyle data for the B2C space. But above all, Sanchez says, quality rules over quantity. “If you’re buying really, really cheap, there’s a reason.”

On the other hand, Peterman urges organizations to begin with buying a list. While Peterman acknowledges that organically building a list through referrals, word of mouth, and social media can often enhance its value, he says that businesses need to start with a solid prospect base, and that buying lessens the risks of trial and error.

“It’ll cost you more to build,” Peterman says. “It’s going to take longer periods of time; it’s going to become frustrating, and typically [marketers] will get jaded and form false opinions of what [prospects are] out there.”

Peterman argues that organizations often lack the analytics tools required to effectively predict customer behaviors and advocates leaving the struggles of maintaining and finding the right targeted list to the professionals. “It would be like asking, ‘Why don’t you build your own house?’” Peterman says. “Of course I can use a hammer. I know what nails are…but I promise you a tornado or hurricane would totally knock it down…. When you have that discipline available to you, why would you try to do it yourself?”

The answer, some experts say, is risk. According to Chris Kolbenschlag, director of deliverability at marketing platform provider Bronto Software, the right time to buy a list is never. Kolbenschlag says organizations that buy lists aren’t getting customers’ expressed consent, and that buying lists can often lead to spam traps that can “sabotage” a company’s reputation.

“When you don’t have permission, you don’t have engagement,” Kolbenschlag says. “No permission leads to high complaint rates, high bounce rates, high unsubscribes, low-quality addresses, and that leads to unengaged [prospects].”

To avoid this, Kolbenschlag advises marketers to use an opt-in rather than an opt-out data collection method, because opt-ins provide customers with an opportunity to “raise their hand” and volunteer to be targeted rather than be lumped together and grouped into receiving unwanted messages. “What if somebody keeps deleting [your messages]?” he asks, adding that marketers often “don’t get that message saying, ‘I don’t want it.’”

But whether building or buying a list, customer data may originate from an outside source, such as the Internet, to which consumers may not have given their expressed consent, Sanchez argues. That’s the benefit of a purchased list, he says: Companies that buy a list can create prospect email campaigns to generate opt-ins and leads and, eventually, conversions.

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