What You Should Know About Using Lists
Last month, I discussed the importance of the merge/purge. This month, I’ll examine what goes into a list merge and what you should know about using outside prospect lists.
I’ll review what to look for when testing a new list, how to expand your prospecting universe maximizing contribution performance and important considerations when starting a new catalog.
Planning your circulation strategy from the bottom up and knowing how to prospect is critical to the success of any catalog.
Questions to Ask When Examining a New File
How actively is the mailer prospecting? When testing a list for the first time, it’s always a good idea to determine the list owner’s 0-to-6-month file size as a percentage of its 0-to-12-month file.
If the 0-to-6-month file size is greater than 50 percent of its total 12-month buyer file, the list owner is actively prospecting and adding new names to the housefile. This should be a top consideration when deciding which lists to test, because it means the file is fresh and full of active mail-order catalog buyers. This also is important when planning list continuations; you want to target outside lists that are prospecting and growing themselves.
How well is the list maintained? Be sure the files you use are updated and regularly run through the proper list hygiene. Run NCOA (National Change of Address) on every prospect list going into your merge. This gives you an idea of how well the list owners maintain their files.
What list selections are available? Often, the list selections shown on a data card don’t include all of the selects available. For example, you may be able to select or omit based on product category information, demographics or seasonal purchase. While select charges add to your costs, the lift in response you may get can justify the expense.
Tactics to Try
Test lists that are out of category. To expand your prospecting universe, find lists that work for your offer but aren’t in your particular product category. Although the success rate is lower than testing lists in your particular category, when you find a list that works, it opens a new universe of prospect names for you to use. This is a key consideration if you want to grow your business beyond the normal limits of your primary market. Testing out of category also can provide insight for other product categories into which you may want to expand.
Find out what other mailers are using the list. Knowing this will give you an idea of how the list works for other mailers in your market (be sure your broker tells you only the names of the catalog firms that are using the list on a continuing basis). You also can request usage on your continuations to develop your own new test ideas. But list usage doesn’t always mean the usage is both ways. You still must consider all factors when deciding to test a particular list for the first time.
Find out how the file “nets out” in the merge. If you’re mailing a list in your own product category, you can expect to net out of the merge at a similar rate to those lists you use on a continuing basis. In other words, the percentage of names you lose in the merge (gross names ordered vs. net names out of the merge) should be similar to lists you’ve already used successfully.
Actually, the higher the duplicate percentage, the greater chance the list will work for your offer. If the retention rate is significantly higher, the list probably doesn’t have a synergistic base to your continuations. It’s less likely to perform as well for your offer.
The exception is if you’re testing out of category. In this case, the percentage lost in the merge will most likely be low. With out-of-category lists, what you net out of the merge isn’t a significant indicator of the potential performance of the list.
When retesting a given list, gradually increase the number of names you take as you roll out. Resist the temptation to more than double the number of names you rent each time. And be sure you read the results of the retest before you test it again. The results may not hold up, so it’s important to test as you go.
Expand Your Market, Maximize Continuing Performance
Look at how well each continuation list does over time. It’s not enough to look at performance for each drop. Rather, it’s more important to look at the perform-ance of a list during a longer period of time.
For example, how many times can you mail each list per year or per season? Can you mail more? If so, when? Or are you over-mailing the list? The danger of over-mailing is that performance can decline to where it looks like you can no longer use the list. Yet it may be that the list just needs to be mailed less frequently.
Use zip models. Zip models can be used to improve perform-ance. A good use for zip models is when selecting lower-performing segments of a file (deeper selections) or when using a large file that performs marginally.
Continually re-evaluate selects on list continuations. If you have mailings that typically are lower-performers, consider mailing a tighter select from your list continuations rather than taking fewer names from the same select.
For example, if you normally select a $50+ three-month buyer, try using a $75+ two-month buyer select. This often will counteract the lower performance of the mailing.
Understand your demographics and customer base. Don’t try to use your list selection to change your customer base. You can’t appeal to a different audience without changing your merchandising, and you shouldn’t abandon your existing customer base. In other words, you won’t appeal to a younger
audience simply by mailing younger lists.
Look beyond standard performance indicators. In addition to response rate, average order size and revenue per catalog, look at performance indexes. Then, if a list over- or under-performs, you’ll know the relative performance of that list compared with other lists you’re using. This will help you plan for and evaluate list perform-ances overall.
Understand sporadic performance. If it appears that a list is working only sporadically, try to look for a few patterns. It could be that your offer isn’t appealing to a particular list only at certain times of the year. Or it may be that the customers the list owner brings onto the file don’t, at times, find your offer of interest. Either way, if you see a pattern, you can limit when you mail the file to help ensure success.
Watch exchange balances. If you’re in a highly competitive market, this step is essential. Often your best lists won’t let you use their files if the exchange balance is out of line. Be your own monitor in this case, so you don’t get caught short on names (particularly good names) unexpectedly.
Keep relationships open. It’s always favorable to have a good relationship with the list owners you work with and who are important to you. Sometimes this happens directly, or sometimes your list broker or list manager is your representative. Conferences are a good place to get this started.
If you’re starting a new catalog or spinning off a new title, here are some important considerations:
Get counts on competitive mailers to see how much your potential core lists will contribute to your mail plan. Is the available universe large enough to build your business?
Talk to a seasoned list broker. Look for one who has experience in your specific market. He or she will help you prepare for the unexpected and will save you time and money in the end.
Discern how competitive and restrictive the market is. Specific list owners may restrict you from using their files until you have a buyer file to exchange with them. So it might take some time before you can use a key list. And once you’re established, you may continue to be restricted to using only the amount of names you can offer the other list owners in return.
Test all cooperative databases. This is a good way to overcome the potential shortage of good lists. These lists traditionally are less expensive and most effective. But you won’t be able to rent names from a co-op until you have enough (at least 5,000) names to contribute to the database for modeling purposes.
Growing a catalog business depends on list testing, and list testing depends on using effective techniques that will help you maximize contribution to profit and overhead. Proceed carefully, and use the services of industry professionals who can help you.
Stephen R. Lett is president of Lett Direct, a catalog consulting firm specializing in circulation planning, forecasting and analysis. He spent the first 25 years of his career with leading catalog companies. He can be reached at (302) 541-0608 or by e-mail at www.lettdirect.com.