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The Direct Mail Solution — Chapter-06: Mailing Lists and Segmentation

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Mailing Lists
and Segmentation ITH YOUR SALES LETTER IN HAND, IT’S TIME TO FIND YOUR BEST prospects to mail it to. Suppose your product is a bicycle tire repair kit that enables cyclists to change a flat tire in half the time. Competitive cyclists everywhere will be eager to snatch up these new repair kits. All you have to do is reach the right audience to tell them about your amazing product. You would like to reach a group that’s primarily made up of bicycle enthusiasts who ride frequently and may even compete in races, or bike shop owners who change tires all day long. You don’t want to reach the guy who has a bike in the garage that he hasn’t looked at in a year and not ridden in five years. You want to be as targeted as possible when selecting your direct-mailing list. In W CHAPTER 6

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THE DIRECT-MAIL SOLUTION CHAPTER 6 / MAILING LISTS AND SEGMENTATION this example, you don’t want to contact everyone who owns a bike . . . you want those who are actively riding their bikes and may need to change a tire quickly. Here’s another example. Let’s say your product is a new kind of dog leash that makes walking and running with your dog easier. If you want to do a mailing to promote your new leash that gets the highest response rate, you wouldn’t want to mail to everyone who owns a dog. Instead, you will want to mail dog owners who have bought items for their dogs through the mail in the past, more than one time, and recently. If your prospects have a proven buying history, then you have a better chance that they will purchase your product or service. If you mail to people who have dogs, but none of the other characteristics, you’re most likely wasting your money because the list would be too broad and wouldn’t target your best prospects. In this chapter, we’ll examine the different kinds of mailing lists that are available and the simple steps you can take to get your hands on one that’s targeted to your audience. Use the right mailing list to send the right sales piece, and you will be on your way to a successful mail campaign. Types of Mailing Lists When planning a direct-mail campaign, you obviously need a group of prospects—along with their names and addresses—to offer your product or service to. These names, which represent people with similar characteristics, are rented or sold as a mailing list. If you rent these names, you’ll be able to mail to them at least once, and maybe up to three times, depending on the agreement you set up with the list owner. Sometimes, you are given the option to purchase the mail list. If you do, you’ll have to pay more for the list, but you’ll have unlimited usage. One of the toughest and most critical tasks in putting together a successful direct-mail campaign is making sure you select the right lists

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79 CHAPTER 6 / MAILING LISTS AND SEGMENTATION to mail to. If you mail to a list of people who have no interest in your product, even the greatest copy will not work. With thousands of mailing lists to choose from, you may not be sure where to start. And the stakes are high because selecting the wrong list will surely destroy your opportunity for success. So let’s start making sense out of all the possibilities. There are many different types of lists available. Some direct-mail marketers break them up into many different categories. I like to break lists up into two main categories: house file and rented lists. House File Your house file, also referred to as your customer file, is the list of individuals you already have in your database. They are either your own current buyers, past buyers, or people who have made inquiries about your product. Talk about a targeted list! These people absolutely fit the definition of your target audience, and they will normally be the most responsive to your offer. Also, because these names are in your own database, you don’t have to pay a rental fee to use them. So you want to make the best use possible of this great resource. You should be keeping good records of everyone who ever buys anything from you or contacts you for any reason at all. Many companies fail in this area. I’ll ask my clients how many people have purchased a specific product from them within the last three months. They’ll have no clue and no way of accessing their database to find out. This is just poor business practice. You must have an organized, user- friendly, up-to-date database. And every time a prospect or customer contacts you, you should be sure to get her name and address and add it into your database. If you do have a useable database, you should start organizing it right away. Depending on the number of products or services you offer, your house file should be segmented (that is, broken into significant categories) based on the relationship each person on the list has with your company.

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THE DIRECT-MAIL SOLUTION CHAPTER 6 / MAILING LISTS AND SEGMENTATION There are many ways to segment your house file. How you do so will depend on the number of names you have in your house file and the kind of information you have on each person. Here’s a simple segmentation option that has the house file split into three groups:

1. Buyer File. Purchased just one product/service
2. Multibuyer File. Purchased more than one product/service
3. Inquiry File. Interested prospects who have contacted you in some way—maybe by calling your company after seeing an ad, making an inquiry on a website, etc. If you have the information on your list, you can break these groups down into smaller segments based on how the prospects were generated—internet, radio/TV, space ads, direct mail, etc. This could help you in planning future promotions: Buyer File: Purchased just one product/service a. Internet-generated buyers b. Radio/TV-generated buyers c. Direct-mail–generated buyers d. Space ad/classified ad–generated buyers Multibuyer File: Purchased more than one product/service a. Internet-generated multibuyers b. Radio/TV-generated multibuyers c. Direct-mail–generated multibuyers d. Space ad/classified ad–generated multibuyers Inquiry File: Interested prospects who haven’t made a purchase yet a. Internet-generated inquires b. Radio/tv-generated inquires c. Direct-mail–generated inquires d. Space ad/classified ad–generated inquires But it doesn’t stop there. There’s additional important information you can glean from your list.

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81 CHAPTER 6 / MAILING LISTS AND SEGMENTATION The best way to further segment your house file is to use an RFM Score. RFM Scoring is: R = Recency. Customers who purchased recently are more likely to buy again vs. customers who have not purchased in a while. F = Frequency. Customers who purchased frequently are more likely to buy again vs. customers who have made just one or two pur- chases. M = Monetary/Money. Customers who have spent the most money in total on previous orders are more likely to buy again. Customers can be ranked based on their R, F, and M characteristics and assigned a “score” representing this rank. Assuming the behavior being ranked using RFM has economic value, the higher the RFM score, the more profitable the customer is to the business now and in the future. High RFM customers are most likely to continue to purchase, and they are most likely to respond to your marketing promotions. Whenever I analyze a house file, I like to use an RFM score to determine how strong the file is. In order to rank the customers for an RFM score, you need to assign a score for each characteristic. Here’s one example of how you might score your customers: Recency All customers who have purchased in the last 6 months receive a score of 3. All customers who have purchased in the last 7 to 16 months receive a score of 2. All customers who have purchased in the last 17 to 24 months receive a score of 1. All customers who have not purchased for the past 25 months receive a score of 0. Frequency All customers who have purchased 4 or more products receive a score of 3.

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THE DIRECT-MAIL SOLUTION CHAPTER 6 / MAILING LISTS AND SEGMENTATION All customers who have purchased 2 or 3 products receive a score of 2. All customers who have purchased 1 product receive a score of 1. Trial subscriptions/free offers receive a score of 0. Monetary Customers who have spent over $700 receive a score of 3. Customers who have spent between $200 and $699 receive a score of 2. Customers who have spent between $51 and $199 receive a score of 1. Customers who have spent less than $50 receive a score of 0. Of course, depending on your product, its cost, etc., you would adjust how you assign the scores. Once all the scores have been assigned to each customer, add up each customer’s score and then break the file into ranks: Rank 1 = 9 Score Rank 2 = 8 Score Rank 3 = 7 Score Rank 4 = 6 Score Rank 5 = 5 Score Rank 6 = 4 Score Rank 7 = 3 Score Rank 8 = 2 Score Rank 9 = 1 Score Rank 10 = 0 Score The lowest rank (Rank 1) will be made up of customers who have the highest score and are your best customers. The higher the rank (8, 9, 10), the lower the score and the weaker the customer. Again, this is just one example of how to segment a list. There are numerous ways to segment your house file, and it’s up to you to choose what will be the most usable structure for your business model.

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83 CHAPTER 6 / MAILING LISTS AND SEGMENTATION With your house file organized, you have a great start on developing your customer profile. After all, your best guide to future prospects is who your existing customers are now. So start making a list of characteristics of your best current buyers. Do they come from a certain geographic area? Do they tend toward male or female? How old are they? What is their income level? What are their interests and hobbies? If you’re not sure about these things, ask your customers. Put together a customer survey. Or just ask some questions when they call your customer service line or come into your store. All this information is critical for properly using your next source of names to mail to: rented lists. With knowledge of your existing customers, you can effectively narrow down your mailing list selec tion. You want the mail ing lists that you rent to be made up of people who look just like your existing customers. You want them to have the same buying habits, be the same gender and age, have a similar income and net worth, etc. Rented Lists Rented lists are mailing lists that you must pay to use. Normally you would rent them for a one-time use. There are two categories I break the rented lists into: Compiled Lists and Response Lists. Out of the 200-million-plus names that I’ve mailed over the years, over 95 percent of them have been to response-based lists. This section will teach you the difference between a compiled list and a response list and how to effectively pick the right list for your campaign. Compiled lists are made up of people who generally have a similar interest or relatable characteristic. It could be a group of coin collectors or home improvement enthusiasts or real estate agents or construction workers. These groups have not responded or purchased anything that would normally associate them with one another. Instead, these compiled lists have been assembled using multiple sources, such as warranty cards, government records, corporate reports, telephone directories, Yellow Pages, credit bureaus, etc.

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THE DIRECT-MAIL SOLUTION CHAPTER 6 / MAILING LISTS AND SEGMENTATION By contrast, the individuals on a response list have made the effort to reply/inquire/order from some offer (they have responded to an offer), unlike the compiled list individuals who have not taken any action and rarely even know they are on such a list. Compiled lists normally generate a much lower response rate than a response list. Response lists are broken up into five sublist categories: inquiry, controlled circulation, paid circulation, buyers, and attendee. Inquiry List: a group of individuals who have inquired about a specific offer. There are many different ways for an inquiry list to be generated. Perhaps they have called after seeing an info- mercial on TV and asked for more information. Or the prospect may have mailed in a request for more information from a space ad in a publication. Or the inquiry may have been made online requesting more information about a specific product. Inquiry lists are generally more responsive than compiled lists because these individuals took some action to respond to a marketing campaign; but they are not as responsive as a list of individuals who have actually paid for a subscription or product. Controlled Circulation List: a group of individuals who receive a free subscription to a publication—a magazine, newspaper, or newsletter. These individuals have responded and requested to receive the publication but have not paid anything for it. But they are prequalified by the publication, or they never would have received the free subscription in the first place. Normally, the subscriber has filled out a questionnaire in order to receive a subscription. It asks pointed questions to ensure the potential subscriber is interested in the specific category or has a job func- tion related to the publication. Paid Circulation List: individuals who have paid for a subscription to a publication. Lists of names from Time magazine, Newsweek, and the Wall Street Journal are all examples of paid circulation lists. Unlike the controlled circulation lists, these subscribers do

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85 CHAPTER 6 / MAILING LISTS AND SEGMENTATION not have to be qualified in order to subscribe, but they do have to pay for the subscription. So that makes them a very promising group of prospects. Benefits of Targeted List Testing Targeted list testing can be very helpful in allowing you to narrow down a huge universe of names into a more targeted list that will lower your mailing costs while increasing your results. For example, if you are opening a medical clinic for elderly patients and want to let people in your community know about it, you could do one of two things:

1. Send a large mailing to everyone in your community. This would let everyone know, but it could end up being very expensive because your list would be large. And it would not be an efficient way to reach just your target prospects. With a community-wide mailing you would reach a large number of people who would have no interest in coming to your clinic. —or—
2. Narrow down your mailing list so that you reach only the types of prospects who are likely to use the clinic’s services. Since you specialize in adults over the age of 50, those are the people you want to reach. And since your treatments can be expensive and are not neces- sarily covered by insurance, you’d prefer your patients to be affluent. So, instead of mailing everyone in your community, it would be well worth it to target your list to adults, aged 60-plus, who own their home. This will greatly increase the efficiency of your campaign.

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THE DIRECT-MAIL SOLUTION CHAPTER 6 / MAILING LISTS AND SEGMENTATION Buyers List: individuals who have taken the step of paying for a product or service. They have responded to a marketing cam- paign (direct mail, radio/TV, online, space ad, etc.) and were willing to purchase the offer. Buyers lists usually bring the best response rates of all the response list types. Attendee List: a group of individuals who have attended a trade show, conference, seminar, etc. Attendee lists can be made up of paid attendees and no-pay attendees. Obviously, the paid attend- ees usually respond better than the no-pay. Note: When you rent or buy a list for your direct-mail campaign, you will want physical addresses. But keep in mind that you can also rent lists with other kinds of contact information that may be suitable to your needs. For example, you can also buy lists with email addresses and phone numbers. How to Find the Right Mailing List Right now you may be thinking, “Where will I be able to find all these names, let alone names that are so precisely targeted?” It’s actually pretty easy to get exactly what you need. There are two sources I like to use to help me narrow down my list selection: SRDS, and even better, a great list broker who will do all the researching and negotiating for you. The Standard Rate and Data (SRDS) Direct Marketing List Source will provide you with an easy and organized way to review many different lists. SRDS will give you complete list rental information (sources, selects, counts, costs, list managers, etc.). It boasts information on more than 100,000 lists. You can use SRDS to search by category, market classification, list title, and just about any other way you want to search for a list. You can reach them by going to its website, SRDS.com. The most helpful and convenient source for finding the right mailing list is to simply use the services of a great list broker.

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87 CHAPTER 6 / MAILING LISTS AND SEGMENTATION A list broker is a direct-marketing professional who can provide you with list recommendations (“List Reco”). A list reco is a group of lists the broker has carefully selected for you to pick from. For example, let’s say you are selling ski equipment through the mail, and you want to reach people who have bought ski equipment in the past. You can request a “list reco” from a list broker who will do the research and then give you an assortment of direct-mail lists that you can choose from, all of them within your niche. In this case, it would be a list of available mailing lists containing the names of people who have purchased ski equipment through the mail. List Brokers/Managers/Compilers List brokers have a wealth of knowledge about mailing lists that can make the task of selecting the right list much easier. They can also help you negotiate lower list-rental rates, which is a real benefit since renting lists can be expensive. List brokers offer one-stop shopping for mailing lists, and they will save you time and money. For example, you can go through a list broker to rent 20 lists or 1,000 lists. Imagine trying to rent 20 lists from 20 different list owners yourself! It would take a lot of time and energy to negotiate with each list owner and make the arrangements for each list to be delivered to the proper location (data processor, printer, mailing facility, etc.). Using a list broker will eliminate the hassle of dealing with numerous list owners. List brokers can also help set up Net Name Arrangements, which can save you thousands of dollars. A net name arrangement is where the list owner agrees to accept a lower payment based on either a percentage or the actual number of names mailed. For example: Your “net name arrangement” with the list owner could be 85 percent of the names shipped. This means if you ordered 50,000 names, you’d only have to pay for 42,500. Or, sometimes the list owner will allow you to pay for just the actual number of names you sent mail to. If you ordered 50,000 and mailed 41,855, the list owner would charge you only for the 41,855 names mailed.

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THE DIRECT-MAIL SOLUTION CHAPTER 6 / MAILING LISTS AND SEGMENTATION There are numerous list brokers and managers to choose from, and finding the right one can be crucial to your success. Look for a broker who specializes in your target market. If you have a retail pet shop, find the best broker in that category. If you’re selling a health supplement, get the best broker in that category. Also, ask other colleagues in your industry for their recommendation for a great list broker. Be aware that the world of list brokers itself is broken up into different levels. Altogether, there are four main sources you can go to in order to rent lists: list brokers, list managers, list compilers, and list broker/managers.

1. List Brokers. Their basic role is to make arrangements for you, as the list renter, to rent the list from other companies. Normally, a list broker will research lists and segments to identify the ones that will work best for you and what you’re trying to accomplish.
2. List Managers. They supervise the rental of specific mailing lists that they themselves manage. List managers promote the lists they manage themselves in an effort to get list renters to rent and mail their list. The more people who rent the list, the more revenue is generated for the list manager and list owner. They will keep track of all the businesses that have rented the list and what they paid for each usage. They usually ask the prospective list renter to provide a copy of the sales piece they want to mail so that the list manager can determine whether to give approval to rent the list. If the sales piece is too competi- tive with the list owner’s own offer, or if the sales piece might offend the list owner’s customers, the list manager may decline rental of the list.
3. List Compilers. They manage lists that they have “compiled.” As dis- cussed earlier, a compiled list has been assembled using multiple sources, such as warranty cards, government records, corporate reports, telephone directories, Yellow Pages, credit bureaus, etc.

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89 CHAPTER 6 / MAILING LISTS AND SEGMENTATION If you wanted this type of list, you could work directly with a list compiler. 4. List Manager/Broker. Often, the most versatile source for renting lists is someone who is both a list manager and broker—someone who has experience with both managing and brokering lists. However, some people in the direct-mail community think it’s a conflict of interest to provide both services. You can understand why they think so. There could easily be a temptation for the list manager to push his own list over others. If you decide to use someone who is both a list manager and a broker, keep an eye on the lists that are being recommended. If it looks as though most are lists that the broker is also managing, I’d quickly find a new broker. You want someone who is working for you—and not just working for himself or his company. Good list managers/brokers will provide you with list recommenda- tions that will be the best fit for your offer regardless of whether they manage the list. List managers/brokers normally make between 10 percent to 20 percent of the list rental cost and are paid by the list owner. This fee is split between the broker who places the order and the list manager who manages the list. If you are a list renter, it will not cost you a dime to use their services. Finally, when using a list broker, make sure you receive a large number of lists to choose from. For example, if you are mailing an offer for a weight-loss course, your list broker will be providing you with list recommendations from the weight-loss/diet category. If your goal is to rent 10 lists, your broker should not only provide you with 25 or 30 to choose from but also identify which lists he or she thinks will work best. The Data Card—Your Source for List Information Now you’ve got 25 lists, from which you want to select 10. How are you going to know which lists are most likely to be successful? That’s

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THE DIRECT-MAIL SOLUTION CHAPTER 6 / MAILING LISTS AND SEGMENTATION where you can turn to a very helpful source with a wealth of valuable information to help you make your decision: the “data cards.” I can’t count the number of times people have told me about renting a mailing list that completely bombed. They ended up wasting a small fortune on a mailing that was sent to a group of mysterious prospects—who proved by their lack of response that they had no interest in the product and did not want to buy any of it. Most of the time these marketers didn’t even know what the name of the list was. They just found an online list broker and ordered a mailing list through the “Quick and Easy Online Order Form.” They selected a specific characteristic, like age or income, but that was it. They knew very little about the rest of the list details. If you are going to be successful in direct mail, you must learn how to select mailing lists. Your best ally is the “data card,” an information sheet created by the list owner or manager that summarizes a specific mailing list’s significant details. The broker will give you a data card for each list you’re considering using. You should study it well before purchasing any list. Here’s the kind of information you can usually expect to find on a data card: “Last updated” is the date when the list last added new names to the file. If a list is updated every month, then the “last update” would show when the most recent month was added to the file. “Recency” is one of the critical factors in determining the success potential in a list. We live in a mobile world with people moving around the country like never before. Plus, people’s interests change. A young daredevil who buys rock-climbing gear one day could be married six months later, and his rock climbing days are over! You want to make sure you have a list that’s updated frequently and that you have been provided with the most recent update. You don’t want to send your sales pieces to people who are no longer interested in your product.

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91 CHAPTER 6 / MAILING LISTS AND SEGMENTATION “Date verified” (or date confirmed) is the date when the list was last reviewed. If a list updates only two times per year, the “last update” may be June 2013, but the “date verified” could be September 2013. This would mean that in September of 2013, the company producing the data card reviewed the “last update” and confirmed that it was updated in June 2013. Last updated and date verified are important when determining if you should rent a list. If the last update was 12 to 24 months ago, the names on this file are older. In most cases, mailings sent to a file with recent names will outperform mailings sent to a file with older names, assuming the lists are equal in all the other areas, such as category, unit cost, list source, etc. “Counts” gives the number of names available for each segment. Here’s an example of a list that is updated monthly: Update
Count January 2013
15,596 February 2013
17,955 March 2013
14,877 If you are mailing small quantities and don’t plan to mail that often, the number of names available on the list isn’t an issue. But, if you want to mail often and increase your mail volume, then the count is very important. When picking which lists to rent, make sure to consider what we refer to as the rollout potential. The rollout potential of a list is the number of names you will have available after you’ve used a small number of names in your initial test. Let’s say you test 7,000 names off a list that has 50,000 total names available. Your rollout potential would be: 50,000 – 7,000 = 43,000 (rollout) Most of the time, lists that update monthly have the best roll- out potential because they are constantly adding new names to

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THE DIRECT-MAIL SOLUTION CHAPTER 6 / MAILING LISTS AND SEGMENTATION the file. If you test 7,000 names from a list that updates by add- ing 20,000 names per month, you’ll have 240,000 names avail- able to you in the next 12 months. “List cost” is the cost per thousand-rental charge on the list. The list cost will generally range between $70 per thousand to more than $200 per thousand. It all depends on the type of list. A list that is very targeted to a specific category will generally cost more than a list that is more generalized and could be used for many different categories. The additional cost may be well worth it if it means getting a higher response rate that returns your invest- ment many times over. The initial list cost that’s quoted to you is not necessarily the final price. If the base list price is $125 per thousand, there are still a lot of other charges that could be added or subtracted, so you could end up actually paying more—or even less. For example, publishers and fundraisers often get a lower list cost. If you’re marketing for one of these, make sure to ask for special pricing, even if it is not indicated on the data card. On the other hand, if you have a “lead-generating offer” or “competitive offer,” you will most likely have to pay a higher list cost, and you may be declined by some list owners/managers. A lead-generating offer is a promotion that is used to gener- ate leads by almost giving something away—often for free or up to $20. Most list owners will charge you an extra $50 per thousand names rented for a lead-generating offer. If you rent 10,000 names, you’ll pay an extra $500 ($50 × 10) on top of your normal list rental fee. List owners will charge you more because they know that you will get a high response rate on your mailing because your offer is low-priced or free. A competitive offer is an offer that is directly competitive with the list owner’s own business. For example, if you are promoting a newsletter that gives advice on picking stocks, and you decide to rent a list of names from a stock advisory newsletter, there’s a

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93 CHAPTER 6 / MAILING LISTS AND SEGMENTATION good chance you’ll either be declined (too competitive) or have to pay an additional “competitive offer” fee. This fee is usually around $50 per thousand. List owners will often request a reciprocal rental from everyone who rents their list. A reciprocal rental is when the list renter agrees to rent their list to the list owner at an agreed price. If the list renter does not want to exchange lists, then the list owner can charge a “nonreciprocal” fee, which can range from a flat fee of $50 to $50 per thousand. Another cost to be aware of is “run charges.” This is a fee that may be charged if you make changes once your order has been processed. For example, if you change the list segment you ordered or want to cancel the list altogether, you may have to pay run charges. The list owner/manager has already invested time in you and perhaps has already prepared the file. It’s just good business for him to want to recoup the cost for processing your order. “Unit of sale” is the average amount spent by the individuals on the mailing list (if this list is a “buyers” list). If the mailing list is made up of inquires or is a compiled list, then the unit of sale would be $0.00. The unit of sale is very important to look at when reviewing a list for rental. Try to find lists that have a comparable unit of sale to your own offer. If your offer is for $97 and one of the lists you mail has a unit of sale for $9.95, you will most likely receive a low response rate for that list. These people are not proven to pay as much as you want them to spend. On the other hand, if you mail a list that has a unit of sale for $195, it should perform well, assuming, of course, that the list is in your target category. “List source” or “media” will let you know how the individuals on the mailing list were generated. There are many ways buy- ers and inquires can be generated. Here’s a list of the main list sources:

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THE DIRECT-MAIL SOLUTION CHAPTER 6 / MAILING LISTS AND SEGMENTATION • direct-mail–generated or direct-mail sold • internet-generated • radio-generated • TV-generated • print: classified ad, magazines, newspapers, space ads • controlled circulation • attendee • compiled The list source will often be derived from more than one medium. For example, one list could be 60 percent direct-mail–generated and 40 percent TV-generated. The list source is a key ingredient for finding the right mailing list. If you are choosing between a list that has been generated through direct mail and a list that was generated through the internet, the direct-mail–generated list will most likely bring a better response. The individuals on the list have already respond- ed to an offer sent by direct mail once and therefore are more likely to respond again. You know that they open their mail, read it, and respond to an offer if it’s attractive enough. “List description” gives a brief summary of the individuals on the list. A data card for a financial list may say something like: “Buyers who have spent $77 to learn how to make money from their home and secure financial independence. Easy Option Advantage offers revolutionary trading advice in the Options Market. These buyers signed up for an online service that sends out an email two times per week updating them on the recent trade recommendations. This list will work for all financial and opportunity offers. It will also work for health, catalogs, and senior offers.” Keep in mind that it’s usually the list owner or manager who writes the list description and are trying to sell you on the idea of renting his list. Don’t make your list selection based on just

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95 CHAPTER 6 / MAILING LISTS AND SEGMENTATION the list description. Make sure to ask questions about the list and find out everything you can about it. “Segments/selections” gives you options for narrowing down a list to the group of people who are most likely to respond. There are segments that deal with the timeframe when the individuals on the list responded. Depending on how often the list is updated, a few selections that deal with timeframe would be: hotline, monthly, quarterly, and annually. (Hotline names are the most recently updated— usually within the last 30 to 90 days.) The segment/selections can also be a set of characteristics about the individuals, such as: • Gender: If your offer appeals to women over men, you may want to select “females” on your list order. • Unit of Cost: If the list is made up of Multiple Buyer files, you can specify the dollar amount ($50+ Buyers—Buyers who have spent over $50). • Region: You can narrow your list down to a specific part of the country using SCF (Sectional Center Facility) Code, ZIP code, state, etc. • Address: Some lists have multiple addresses for their file. You can select “at home address” or “business address.” • Demographics and Psychographics: Large lists usually have a lot of information about the names in their file. If they do, they may allow you to select segments based on income, age, hobbies, and interests. • Masterfile: A file that has combined a group of files together. It could be a “health masterfile” that is made of up seven or eight different health offers with different responses (buyers, inquires, subscribers). • Actives: Names that are part of a subscription list, like sub- scribers to Time. When you order actives, the names can

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THE DIRECT-MAIL SOLUTION CHAPTER 6 / MAILING LISTS AND SEGMENTATION represent a broad range of time. You may get some “Actives” who have just purchased a subscription and you may get some “Actives” who have been subscribing for 10 years. • Multiple buyers or Multibuyers: If the list has grouped more than one set of buyers together in a masterfile, then you may be able to select multibuyers. These are individuals who have purchased more than one product. • Enhanced Lists: These lists have added or appended data to their current file to “enhance” it. Companies with large files do this often so they will know more about their customers. Most enhanced files will give you more demographic and psy- chographic information to choose from. When ordering a list for the first time, narrow it down and make it as targeted as possible. Taking extra selections will cost more, but I’ve always found the boost in response outweighed the extra cost. If the list is a success, the next step is to test it again by removing a segment to see if it will still perform well. You’ll want to do this until you find the most efficient segment(s) to take. “Minimum order” is the smallest group of names you can order. Some lists require you to order at least 3,000 names, and others require you to order at least 5,000. “Delivery of the list” is normally very easy, and you have mul- tiple options. You can choose to receive labels with the name and address printed on them, or you can have the file sent via email, CD, or flash drive. You can also ask to have key codes (see below) assigned to the list for you. Each delivery method costs a different fee, and of course, there’s a charge for assigning key codes. “Key codes” are identifying codes that you assign to each list so you can track the results of your mail campaign. If you are mailing seven lists, you’ll want to assign seven different key codes—one for each list. You can use just about any sequence you want. I like to start with a letter and then add four numbers following it. For example:

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97 CHAPTER 6 / MAILING LISTS AND SEGMENTATION W1234 W1236 W1238 W1240 W1235
W1237
W1239 When the prospect responds to your mailing, you’ll immedi- ately want to capture this key code so you will know which list the responder came from. At the end of the campaign, you’ll be able see which list performed best based on the key codes. You can use that information to run a more efficient campaign the next time around. “Continuation/usage list” is another valuable resource for deter- mining if you should rent a list or not. Most of the time you have to ask for continuation/usage list information. It’s not always on the data card, but it should be. This list will show you which other mailers have used the list. Some list owners will break it up into two groups: those who have tested the list and those who have continued on the list. If you see a mailer that has a similar offer to yours and they have tested but not continued on the list, you may want to stay away from that list. On the other hand, if you see a mailer who has a similar offer to yours and they are on the tested list and the continuation list, chances are that this list is working for them and you should test it yourself. As you can see, a data card offers a lot of information. You just need to know what to look for. You can find a sample of what a data card looks like at: www.TheDirectMailSolution.com. After you’ve selected the lists you want to rent and placed your list orders, you’ll have to sign a “list rental agreement” (LRA). This agreement will specify in writing all the details of the arrangement between the list renter and the list owner/manager. How to Turn a Marginal Mailing List
into a Great One What happens if you mail a list and the results are marginal but not great?

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THE DIRECT-MAIL SOLUTION CHAPTER 6 / MAILING LISTS AND SEGMENTATION In most cases, you can turn a marginal mailing list into a profitable one by enhancing the list or narrowing down the segment so you more highly target the type of individuals who are your best responders. Let’s say that your primary group of prospects or customers is made up of females over the age of 60. The list you mailed is made up of mostly women, but there are some men on it. Maybe it’s 70 percent female and 30 percent male. In order to increase your results, the next time you use the list, you could select only females and narrow down to your best customers. Or let’s say that the list has the option of taking multibuyers, people who have purchased more than one time. The next time you rent the list, you could select the multibuyer segment, so you would mail only to people who have purchased multiple times. These people are more likely to respond, which should help boost your response rate. Or you could narrow down the list of prospects by age. You could simply add an age selection, and just mail those who are over the age of 60, if that fits your target. Or, if you really want to narrow down the list and make a marginal list profitable, you could select females, who have purchased more than one time, and are over the age of 60. That way, you’re mailing only to the best group of people who would most likely respond to your offer. Making a marginal list profitable can be fairly easy if the list you are mailing has lots of segments to select from. Here are a few other examples of factors you could use to target your best prospects: income net worth hobbies or interests geographic location recency—how long ago they purchased dollar amount spent—$50+, or $150+, etc. dwelling type—apartment, house, condo, etc. product type purchased—books, newsletters, or movies

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99 CHAPTER 6 / MAILING LISTS AND SEGMENTATION Whether you can make such a specific selection depends on what the list offers, but you can definitely make a marginal list profitable by narrowing it down or narrowing it down by using selections. Sometimes these special selections are not on the data card, but if you contact the list owner, there may be more information available than has been reported. That means there may be an opportunity for you to capitalize on those other unpublished enhancements to the list that are valuable to you. If the list is marginal, ask the list owner for special selects. I’ve done this many times, which is one of the reasons why I’ve been able to make lists work that do not work for others. Getting the best list really is a kind of art. In Chapter 8 we’ll look at some additional refinements you can use to get a better list with a higher response rate.

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