How to Select Profitable Outside Lists

The most important factor in determining the success of a direct marketing campaign is the list (who you mail, e-mail, call, or a combination of the three).  Lists account for approximately 50% of the success of a direct marketing campaign.  With so much riding on list performance and over  60,000 postal, email and telephone mailing lists from more than 1,400 vendors  to choose from, it is crucial to spend the time to select, and rent the lists with the best potential ROI.

The first step is to decide who you want to mail or email.  You need to focus and define your ideal target audience(s) who will find your message and offer most relevant.   Who are the most likely responders?   They often have similar attributes to your  most profitable customer groups or have bought similar products or services from competitors.  You may want to create different versions of your direct mail or email piece for these different groups of people. Marketing automation tools make this easier than ever.  You’ll want to analyze your own in-house customer list to identify your best customers and find more people like them to mail to.  80% of your business often comes from 20% of your customers.  Do you know who these customers are and what characteristics do they have in common?  To increase sales most profitably, you want to attract new customers who will be profitable for you to sell to/serve.  Your best future customers will be most like your existing best customers.

What if you don’t have a mailing list?  You should still try to determine the characteristics
of your customers.  You may want to pay a list service provider such as D&B to get your existing customer list appended (attached) with more information about your existing customers to help you better determine their characteristics.  Write down the characteristics of your most profitable customers.  This becomes your list selection criteria for when evaluating and selecting new direct mail lists to rent.  You generally will want to list demographic information such as age, sex, income level, location, etc. as well as psychographic or lifestyle information (hobbies or interest they may have).  When mailing to businesses you’ll also want to know what’s called “firmographic” information as well (how many employees the company has, their revenue, etc.)

Armed with this information, you can then rent lists that match these characteristics.  List brokers can often arrange a merge purge of your customer list and lists you are considering renting (especially with larger databases) to determine the number of duplicates (people on both lists). The lists with the most duplicates (overlaps) with your existing customer list generally perform better than lists without many duplicates.  The duplicates indicate a new list has similar customers to those who buy from you now.

You will want to provide list brokers with a list recommendation request which typically would include history of lists you have rented for the campaign you are working on. Profitable lists are called continuation lists.  Lists you are trying out are called test
lists.  Continuation lists have the best profit potential until list fatigue sets in.
Lists are typically rented for 1X usage, although you can often negotiate multiuse or annual use discounts which only make sense for proven continuation lists.

Although the best way to find a good list broker is from experience and word of mouth, you can also find them from key direct marketing publications such as DM News and Target Marketing, from DMA annual conferences, from list broker links on the NextMark site and by asking who others use in direct marketing groups on LinkedIn.   Once you find them, it is like hitting gold.  Some have specialties (international, non-profit, etc.).  They
can help navigate you through the complex list world which includes everything from compiled to response lists and more.   They have access to services such as NextMark for searching for lists meeting your specific criteria and can provide you with a custom list recommendation which would include a summary and data
cards of the list recommendations.

Most marketers don’t realize they can also do their own search on NextMark.  They also may not know there could be 20 different lists under mergers and acquisitions attorney for instance, and the lists will often perform very differently based on a number of factors (e.g. list quality, recency, and the makeup of the  list).  Strong continuation lists can  often lead you to additional segments from these lists to consider testing.  List brokers will know or can  find out who is renting a list and the continuation renters of a list (they  rent again and again) which often leads to more profitable lists. Re-rental of a list is a good indicator that the list is performing well for another  company.   They often know which lists are not doing well for their clients or clients of their firm.

Not all lists are in the NextMark system.  Doing online Google searches including ones on  associations in your target area can often lead to additional lists which may or may not be on the market which you may be able to test subject to the approval of the listowner.  Listowners are often willing to exchange lists with you if you have a list for rent which saves list rental cost for both sides and could lead to future list rentals.

You generally need to submit a sample of your mail or email piece to your broker which is forwarded to the listowner for approval. The listowner may deny a rental to competitors or to offers they don’t feel comfortable with.  A lot of direct mail lists are not available as e-mail lists (especially association lists) but it is worth  inquiring about.  Most e-mail lists are opt-in and generally the listowner will not allow a renter to do their own e-mail blast or via a renter’s outside e-mail service provider.  Often, an e-mail list owner won’t even let a  renter have their e-mail list go into their merge purge at a 3rd  party data processing company.  I have  found a way around this is to find out if the listowner will allow you to just have their direct mail list of the list you are renting go into your merge  purge whereby additional codes are added to each record and then the e-mail addresses are added to the records that survive the merge purge and thus can be e-mailed after opt-outs.

The base price is the price you pay to rent a list before  additional selects (e.g. hotline which indicates recency, industry, geographic,  gender, etc.)  A good list broker can
often negotiate a special net on larger rentals (e.g. 50K quantity or more) and
on smaller quantities where you can show a high duplication rate on a
continuation list you are looking to rent vs. your in-house suppression file
and other rented lists on a recent merge purge report.  They can often get selects waived to cut your list rental cost and the waived selects won’t impact their commission which
they work hard to get.  When you need to hit a certain quantity to mail and there is a limited universe of lists to choose from, you can look to negotiate on marginally profitable lists at pricing needed to hit ROI objectives.

Here are some more tips for selecting the best lists:

The best names on a list are generally “Hotline” names. These are the people who are new to the list within the past three or  six months or who have purchased or responded within this timeframe.  It’s a good idea to rent these names first to  see what the response rate is. If the Hotline names don’t respond, generally the entire list won’t either.

Be selective and precise in selecting who to mail to.  Through data-mapping, a publisher of reference books can specifically target medium  to large academic libraries. This process of eliminating inappropriate people is called suppression.

In most cases you need to test many lists for responsiveness and evaluate them relative to cost.

Make sure your prospects likely to be interested in your offer also have a proven history of acting on offers that interest them.

It’s a best practice to check references for a new list supplier carefully, especially if they don’t come recommended by a trusted source.

Request samples of lists you are considering to check for accuracy on LinkedIn and more.

By selecting the best suited lists coupled with some out-of-the-box creative ideas and strong negotiating, I was able to turn a marginally profitable campaign during strong economic times into a subsequent campaign that earned $700K in profit for my employer, during the worst economic slump in nearly eight decades.  You can profit from the best lists and list selection too.

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About Mark Gottlieb

Accomplished, out-of-the-box thinking, marketing executive with a proven record of helping start up to Fortune 500 companies penetrate domestic and overseas markets. Adept at using direct marketing, social media, and MARCOM to accomplish company goals.
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