How to Prospect More Effectively (1,575 words)
By Stephen R. Lett
You must prospect for new buyers to grow your business. But prospecting can be expensive.
Most catalogers prospect at an incremental loss*. Even so, acquiring new buyers is important to the health of your business. This month, I'll explore ways to prospect cost effectively for new buyers.
Why It's Important
There's a certain attrition rate associated with a typical catalog housefile. People die, others move, and some become dissatisfied. It's important to add new buyers to your housefile to maintain a certain level of revenue and/or to grow your business.
Rule of thumb: The percent increase in revenue growth will approximate the percent increase in your 12-month buyer file. For example, if your 12-month buyer file grows by 15 percent, your gross demand revenue will increase by about the same amount. The growth of your 12-month housefile obviously results from acquiring new buyers, but growth also can come from re-activating former buyers. Regardless of the source, focus on growing your 12-month buyer file to boost your business.
How and When
When prospecting, consider how and when to roll out list continuations (the proven lists), as well as new lists you haven't previously tested. Generally, the better-performing lists have a limited universe of names available. So testing new lists and expanding your prospecting universe is critical to finding enough good names to mail.
All lists available for rental will fall into one of these categories: direct-response buyer lists, (e.g., catalog buyers); subscriber lists (e.g., magazines, newsletters); and compiled lists. The cooperative databases (e.g., Abacus, I-Behavior, Z-24, Prefer Network) are direct-response catalog-buyer lists. Naturally, these types of lists tend to work best for catalogers. But subscriber and compiled lists also can work for your offer. They can represent a source of new names to help you expand your prospecting universe.