Outside List Optimization
As a cataloger, it’s important to focus on ways to increase response rates from the prospect lists you use. You want to increase the revenue per catalog mailed.
Most likely, you adjust the common selects such as recency and dollars spent to improve results. This month, I’ll explore outside list optimization, another proven method to increase the effectiveness of your prospecting efforts.
There are two ways to use list optimization: selection and suppression. Each technique usually uses 10 percent to 20 percent of a given file.
This method is used for pre-merge lists. With this technique, you can use a compiled or subscriber file to capture affinity. Then use optimization to select the top 10 percent to 20 percent of the known catalog buyers.
For example, if you run a golf catalog, you might request 100,000 active subscriber names to optimize. For this universe, you can select the “best” 20,000 (i.e., 20 percent of the gross input) to mail.
This method is used post-merge to identify and suppress rental singles. After the merge, you can optimize rental singles and suppress the worst-scoring 10 percent to 20 percent. This method should yield a 5- percent to 15-percent (or greater) lift. It’s a good idea to mail a 5,000 to 10,000 back-test cell to monitor the suppression results in order to measure the exact lift you achieve.
Most outside catalog lists include names whose overall buying patterns aren’t typical of that particular list’s characteristics. A high-end gift list, for example, may include people who made a purchase for a special occasion, but who usually make purchases from lower-ticket gift catalogs. Optimization helps by identifying those prospects who don’t match the typical buying patterns of the customers on your own list. Suppressing these names after the merge can raise the results of the entire mailing.