The reading level for this article is Novice
Thank God, the worst that can happen to you in direct mail is you lose money. I mean, considering the grand scheme of things—like major sicknesses, car wrecks, or that occasional bad bottle of wine—it’s not too bad. But still, it stinks.
Kindly remember, the only reason you’re in the mail is to make a profit. No, don’t give me that "I just want to get this on the market! I’ll make money on the next one" crap. How many marketers have told me that? If you don’t make money, you won’t be in the mail again. Without profit, there isn’t any next mailing. It’s a necessary part of running any business. In fact, profit is why you are in business. Any arguments?
You can make lots of mistakes in direct mail. You can create a terrible mailing package that no one will open. You can set your price too high—or too low—and people won’t buy. You can offer your products at the wrong time—heck yes, we always celebrate Christmas this late in January.
But nothing is as bad as mailing to the wrong list. Poor list selection is the worst mistake you can make in direct mail. Yep.
When you mail to the wrong list, you get experience—which is what you get when you don’t make any money. No one orders at all. Chevy hubcaps to Buick owners. Radios to the deaf. Bottle caps to a tuna factory. A simple mistake in the list changes all the hard work you put into your mailing from the "we made money" side of your spreadsheet to the "we got experience" side. So here’s how to correct it.
The first consideration in any—and every—marketing campaign is to define your audience. Precisely who is your market? The more precisely you can define your perfect target audience, the better you’ll be able to aim your mailing, and the better your response will be. And the name of the game in direct mail is to maximize response per thousand—to make that one extra person in 1,000 stop, look, pick up the phone, and call.
Anyone can put a direct mail piece together and drop it off at the post office (barring disgruntled post office workers wielding semi-automatics). But without knowing who your target market is, you certainly won’t score any sales.
You know, direct mail really is like shooting fish in a barrel. First, you’ve got to find the right barrels. After defining your markets, this is selecting the right lists. Then you’ve got to figure out which barrel has the most fish. That’s buying the list with the most prospects. Narrowing the size of the list even further with the proper list selection overlays—such as recency, frequency, and monetary purchase criteria—is like reducing the size of the barrel even more, then making sure the fish are big. Now you have a better chance of shooting the most fish with each shot—er, getting the most response from each mailing. Well, you know what I mean.
In direct mail, the more closely you identify your perfect prospect, the more tightly you specify your list, the better your response. The better your response = the more money you make per 1,000 packages mailed. Simple as that. An example: Suppose you’re selling a pilot’s bag to airplane pilots. You mail to a list of owners of small airplanes that was compiled from airplane registrations. Your response is 1%, and you break even. But ugh, all that work and you didn’t make any profit.
Take the same scenario, but this time you mail to a list of airplane pilots that was compiled from a list of flying instructors. These pilots are airplane enthusiasts, and they practically live, eat, and sleep airplanes. Since your bag has a cool picture of a plane on it, they love it. Your mailing draws 2%, and you make a little money. OK, you’re warming up.
Now you try a different tack: You mail to a list of mail order buyers who have recently made a purchase from an airplane specialty catalog such as Sporty’s Aviation Catalog. This time your mailing brings in a 6% response. Wow. You laugh all the way to the bank thinking how easy it is to make money in direct mail; you buy that new car you were looking at, and on the way home that cheerleader you were always eyeing in high school sees you in your new car and gives you a whirl. You’re having that nice day everyone keeps telling you to have. Old relatives drop by unexpectedly to swim in your pool.
Now you’re getting smart. You buy a list of (1) flying instructors who (2) own (3) planes and who have recently made a purchase (4) specifically from a catalog of airplane specialty items such as Sporty’s. Bingo. Your mailing draws 9%. You purchase the bank, you drop that cute little blond cheerleader, and you marry one of your depositors—the rich and beautiful sole daughter of a wealthy Texas billionaire who has just celebrated his 94th birthday. All from the correct selection of a better list. Now you see the value of specifying and purchasing the correct mailing list. Hey, if this really happens, send me a nice bottle of champagne. Hmmm. If this really, really happens, wrap that bottle in hundreds.
Granted, list research and selection is not glamorous work. It’s the behind-the-scenes grind to figure out and specify the best list parameters. It’s not like creating a slick, eye-catching brochure. But you can see your mailing go from no response to profitable in a hurry, just in the extra attention to and correct selection of your mailing list.
Here’s how the list industry works. Lists are big business. No, I mean lists are really big business. All of the big-name direct marketing magazines like Target Marketing, Catalog Age, Direct, and DM News have full-page ads for lists. Ads costing $4,000, $5,000, $6,000 an issue—issue after issue. Lists are big, big business. Where to start: Get all these magazines for free by following the directions on page 262 of my first book, How To Market a Product for Under $500, or in this book, in the chapter "Magazine Publishers Hate Me." Call the list management companies (a.k.a. list brokers) that run these ads and inquire. Just remember, even though you are the purchaser, the brokers work for the LIST OWNER. So make sure you get tough with them about answering your questions.
Questions to ask? Precisely who is the list audience made up of? Does the list include actual purchasers or merely inquirers (who are of less value)? How old are the names on the list? How often is it updated? How often—and how recently—has it been cleaned? Cleaning a list means the list owner passed it through the postal service NCOA (National Change Of Address) file and most of the old, outdated nondeliverables have been removed. If a list is clean, you won’t get a lot of your mailpieces back. Ask brokers for a data card, which shows list specifications.
When purchasing names to sell products to, ask how recently the people on the list have made a purchase. Recency is a key factor in mailing lists, and most lists have "Hot Name" selects—buyers who have purchased within the past month or two or three. Ask if you can get a select of multi-buyers—and ask how often they have purchased (frequency is another key factor in mailing lists, along with how much money has been spent on each purchase). The formula "recency, frequency, monetary" is the standard for measuring the quality of most mail order purchaser lists.
Ask how often the list has been rented. You don’t want to get a list that has been rented toooo often and may suffer from list fatigue. Or a list that is never rented, because there’s probably a reason no one is using it—no one is getting a response from that particular market or that list.
Ask how many other mailers have tested the list. Tests in direct mail are usually 5,000 names, and only a few list owners will rent you a lesser number of records. This doesn’t mean you have to mail to all 5,000 names, but you may have to purchase them. Ask how many people continued after their test—meaning their test mailing drew a response and they mailed to it again. Ask how many ordered names for another continuation, meaning they absolutely did make money and it was worth the effort. Then ask how many people rolled out—mailed to the rest of the entire list.
Ask the origin of the list. A common source of names is records that have been compiled in some fashion. Compilers may acquire their names through public records such as vehicle registrations or state records of high school teachers. Directories, such as a directory of plant maintenance engineers, are usually compiled lists. Many lists are compiled from listings in the phone books across the U.S. Examples would be all the veterinarians or all the luggage dealers in the United States. Or all the plumbing supply dealers. Don’t forget that you can specify an overlay for these lists, like a demographic overlay of plumbers located in a few selected states such as New Jersey, Pennsylvania, and New York, or a business-specific overlay such as small-animal-only veterinarians.
Keep in mind that compiled information—like fish—gets old rather quickly and doesn’t age particularly well. Even though some firms pay for postage on returns, that won’t be of much help when you are staring at a couple of mail sacks full of crushed, mutilated returned mail. Some compiled lists are excellent, but some are horrible—and compiled lists are usually my least favorite way to purchase records, but sometimes a necessary evil.
Guaranteed delivery of 93% may sound good up front, but it is actually pretty mediocre. In reality, a minimum of 10% of your mail is going awry; more likely, 20%. Guaranteed deliverability of 95% is still just fair. 98% is good, 99% better. These lists are out there. Another common source of names is magazine subscribers. These lists are usually very good—when a subscriber moves and the publisher gets the magazine back, it costs him money, so most publishers are extremely prompt with their name and address corrections. Call a magazine publisher and ask if his subscriber list is for sale, then ask for the name of his list broker.
Trade associations are usually an excellent source of mailing lists. Better associations always contain the major industry players. Local associations like the Chamber of Commerce are good for local business names. You can select by business size, number of employees, SIC code (the government’s industry classification of each business), or any of a multitude of other selection parameters.
Two excellent resources for investigating lists at the library are the SRDS Direct Marketing List Source™ and the Oxbridge Communications National Directory of Mailing Lists.
We use the Oxbridge directory in our own office—it’s thorough and exceptionally easy to use. List brokers are found in the phone book in every major city. They can be heaven, supplying incredible information, or hell—looking for that fast buck. Make sure you ask tons of questions before handing over any money.
Lists are sold for a single use (unless you pay a premium for multiple uses) and usually cost between $65 and $85 per 1,000 records. They’re available on disk, tape, and printed out on paper or pressure-sensitive labels. Residential lists are low in cost at $20 per thousand, and may or may not come with a name in the name field. If there is no name, I always have the computer house imprint "To our Friends at" or "To our Neighbors at" on the top line.
Several companies now offer lists of every business or every person in the U.S. on CD-ROM. These products allow you to create your own list criteria and generate your own mailing lists. Some of the better programs make it easy and fast to use their CD-ROM products. Whatever you do, don’t settle for a mediocre list, unless you want mediocre (or worse) results. Spend some extra time in this most important arena to tighten your criteria, and search out the best lists you can. Then test several. It’s worth the extra time and money to target your audience with precision and come up a winner at the post office.