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There are several techniques
that come into consideration during the list selection process for
high-tech catalogers. Techniques that build awareness and uncover
working list universes, leading to ongoing and profitable direct
mail campaigns.
Two approaches that
can be implemented at the list-selection level: an impression
program and a hotline program. Both work in the microcomputer/software
catalog environment.
Gaining market share
and orders through impressions...
Impressions, a term
borrowed from advertising, relates to the number of times a potential
buyer sees your offer. Whether it is a catalog, direct mail piece,
or even a banner placed on the Internet's World Wide Web, controlling,
delivering, and measuring multiple impressions builds buyer confidence
in your product and organization, which is the path to the placement
of orders.
Think of a 'one-shot'
space advertisement for a unique, high-tech widget. The ad might
elicit a response from the small percentage of early adopters, however,
there are those who will order after they see continuity in the
ad, since the high impression rate makes them feel more comfortable.
By identifying and renting
working lists and then reusing specific segments of those lists
(with list owner approval), you can secure a strong impression rate
with potential buyers via direct mail.
Look at the average
range of response rates -- from fractions of a percent to the single
digits. Let's hypothetically say that a 50,000 name segment of LIST
A yields a 1.5% response -- generating a profitable ROI based on
your break even point.. That leaves 98.5% of the list universe still
available to purchase your product -- and they've already been 'primed'
by seeing your offer.
How many times should
you mail to the same individuals? The answer is quite simple: until
they are no longer profitable. You can compare it to a magazine
renewal effort. Secondly, with technical products, parts break,
computers change and people need confidence in their suppliers --
therefore the re-mail.
By implementing the
impression program and incorporating the classic 80-20 rule (80%
working lists, 20% tests), you will constantly refresh the program
while building a strong base of lists.
For example, if a mail
plan calls for a 500,000 name catalog mailing, 400,000 names should
be allocated for working lists with the remaining 100,000 for new
tests.
The 400,000 names should
be distributed over your portfolio of proven working lists, executing
reuses on profitable list segments. Close tracking and response
analysis is critical to monitoring when a reuse segment starts to
drop in profitability so that it can be refreshed with a new segment
of names from the list's 12 month universe.
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The remaining 100,000
names should be allocated for new list tests. Though 5,000 names
is a popular test quantity,
this scenario would call for a 10,000 test quantity, factoring in
the presence of duplicate names due to the merge-purge.
The remaining 100,000
names should be allocated for new list tests. Though 5,000 names
is a popular test quantity, this scenario would call for a 10,000
test quantity, factoring in the presence of duplicate names due
to the merge-purge.
The tests lists should
be ranked least important in the merge, attributing the duplicates
in the test lists to your house file and working lists. Using this
methodology, what you are left with, after the duplicates are removed,
is a 'pure' test based on absolute unique names to that particular
list universe. Don't be alarmed if a particular list test is showing
a very high duplication rate with your house file. This is actually
desirable since it shows a high affinity of those buyers with your
current customers.
In some instances, list
tests which show little to zero duplication are sometimes dropped
from the overall mailing because of the lack of affinity. Even though
you are still responsible for paying a per-thousand running charge
for the generation of the names, it is a small in comparison to
the 'in the mail' cost for mailing a list that will be, most likely,
a poor performer.
Hotlines... individuals
in a buying mode.
A hotline program consists
of lists that are rented on a regular basis, selecting the most
recent monthly or quarterly names. In this scenario, instead of
going deep into a file's universe, we are leveraging the recency
of the names to generate profitable results. Assuming that the source
and offer which generates those names does not go through any dramatic
changes, the hotline names maintain a fairly consistent level of
response.
Some of the good sources
for hotline names come from the magazine lists. New magazine subscribers
are, in many instances, new computer owners who are prime for software
and peripheral purchases. Other excellent sources are the on-line
service memberships, and hotline buyers offered in direct-response
generated databases.
Why can't your direct
mail program live on hotlines alone? Because hotlines won't deliver
the tonnage you may need for a large campaign. A balance of the
impression program and the hotline program will give you the best
of both worlds.
Overall, knowing and
implementing these strategies and tactics at the list level will
help you build and maintain direct mail programs that have longevity
and build market share. Just remember to build in the key coding
and tracking mechanisms that will allow you to closely monitor the
performance of your campaign so you can make smart and accurate
decisions for the refinement of your future activities.
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