M&T Bank : Creating Direct Mail Lists
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Business Resource Center

The secrets to creating great direct mail lists
By Don Sadler

When it comes to direct mail, there are three components to any campaign - the creative concept, the offer and the mailing list. Of these three, which one do you think is most critical to the mailing's success?

Experts agree hands-down that the mailing list is by far the most critical success factor in any direct mail effort. The fact is, the most creative concept and alluring offer in the world will fail miserably if they're mailed to the wrong list.

Still, too many businesses pour all their time and resources into creative and treat their mailing list almost as an afterthought. Sure, creating an effective, targeted direct mail list requires extra time and effort. But the process doesn't have to be as tedious and intimidating as many businesses fear it will be.

Targeting your best prospects

The premise behind developing a targeted direct mail list is simple: You want to mail to people who are most likely to buy Your product or service. In determining this, "you must take a systematic, focused approach, rather than just mass mailing to the population at large," says Charlene Hooker, sales and marketing consultant with info.USA.

The most logical place to start is with your current customers, from whom you can create profiles of your ideal prospects. "The center of your prospect bulls-eye is your current customer list," says Mark Almand, director of marketing for Elliott Wave International, a market forecasting firm that relies heavily on direct mail to sell its market reports. "The people closest to the center are those that share most of your customers' attributes: income range, geographic area, magazine preferences, etc. As you move out from the center, prospects share fewer and fewer characteristics."

Once you've defined a profile of your best potential customers, it's time to go about the process of gathering actual names for your mailing list. Your best bet is to engage the services of a list broker. List brokers are similar to real estate brokers - they represent your interest in finding and obtaining the lists you want. They are paid on a commission basis by the list owner or provider, so there's no cost to you to tap their expertise.

List brokers will make recommendations on the best mailing lists for your needs. In addition, they can provide a number of other valuable services, such as clearing your mail dates with list owners, providing details of your mailing campaign to list sources, and providing valuable information to you regarding the list's performance history, such as which mailers have used it before and how successful it was for them.


Mailing list basics

  • The minimum order size for most lists is 5,000 names. Rather than buying an even 5,000 names, direct mail expert Mark Almand recommends purchasing an "odd lot" number of names (such as 5,100) to ensure that you're buying a random sampling of every "nth" name.
  • List costs vary widely, but you can generally expect to pay anywhere from $40 per thousand names up to over $100 per thousand, depending on how specialized your market is and how important factors such as those listed above are to the success of your mailing.
  • You can receive your list on cheshire (paper) or pressure sensitive (peel and stick) labels, magnetic tape, diskette or CD-ROM.
  • The percentage of returns you can expect from your mailing also varies widely, but an 8%-10% return rate is not unusual for a compiled list.  

Types of mailing lists

Direct mail lists can be broken into two main categories: response lists and compiled lists. Response lists are lists of people who have bought or inquired about something by mail before. Compiled lists are lists in which names are categorized by some specific set of criteria.

For example, if you're selling hand-made Christmas ornaments by mail, you could buy a list of people who have bought Christmas decorations and trinkets by mail before. But these respondents would not be categorized by any type of demographic - they're simply responders. On the other hand, if you believe that your best prospects for buying your ornaments are women over age 40 who earn more than $50,000 a year and this is specifically who you want to mail to, you'd want to buy a compiled list according to these criteria.

If you're selling by mail, a response list should outperform a compiled list (all other things being equal) because the best prospect for a product being sold by mail generally is someone who has bought a similar product by mail. Ever notice, for example, how as soon as you buy something by mail, you're bombarded with mail-order catalogs for similar products? Now you know why.

A hot buzzword in the response list industry currently is "hotline" names - names of recent responders. All other things being equal, these names should respond better than the balance of a list. But recency isn't always relevant, and different list providers define recency differently - ranging from responders within the past month all the way out to six months. Expect to pay an extra $5-$20 per thousand for hotline names.

Beyond recency, what are other factors and criteria that can be incorporated to create a custom targeted mailing list? Consider these list "selects" that you can choose from:

  • Demographics: consumer (e.g., age, gender, income, location, family size)
  • Demographics: business (e.g., number of employees, revenues, age of company, job function or title)
  • Level of response (inquirer or buyer?)
  • Average order size
  • Type of media responded to (e.g., direct mail, TV, radio, telemarketing)
  • Frequency of purchase
  • Purchase method, especially credit card


Follow the rules

As Hooker notes, "Mailing lists are rented, not sold." This means that, unless otherwise stated, mailing list rentals are for one-time usage only. "Businesses should be very careful to follow the rules with respect to the use of a mailing list," says Almand. "Mailing lists are extremely valuable property, so companies that rent lists take steps to protect them closely.

"But it's all negotiable, and most list providers are willing to negotiate rates for multiple list usage. Also remember that the names of people who respond to your mailing become yours - you've invested resources to generate that response."

The most common question businesses have about direct mail, of course, is what constitutes a good response rate? While 2%-3% is generally considered good, there are far too many variables involved in direct mail to quote any specific response rate as being average or even "good."

"The more relevant question to ask," says Almand, "is how much business resulted from the responses you did get, and did this business result in a positive return on investment for the mailing? I look for 100% of the total cost of my mailing back in new business after one year."


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Don Sadler is a freelance business writer and editor based in Atlanta, GA.

 
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