Unlock the power of analytics to improve your ROI

Posted by Rick Rappe
September 17th, 2012

Your marketing list is basically an invisible aspect of your direct mail program. For new customer acquisition or lead generation your direct mail list and targeting strategy is critically important to your success. Weather you’re targeting businesses or consumers there is a great deal of testing, measurement and analysis that must be done for your lists to truly maximize performance.

A few important basics about list selection.

Start by taking a close look at your current customers. Is your customer base defined by region, distance to a store, age, income level, lifestyle, or other product affinity? If you have a significant pool of current customers to study, you can send the list out and have a profile report created using many demographic, psychographic and other variables. The more information you can learn from your current customer base the better. This all helps you determine what makes your audience tick, and who you should be targeting with your direct mail.

If you’re building a new program and not sure which lists will generate the results you need, it is critical initially to test different list sources. Test different types of files as well as data from different list companies. It is surprising, but two lists that look similar in descriptions on their rate cards often perform completely differently. Testing them head-to-head is the ONLY path to learning what list sources will get you to your goals.

For both Consumer and Business targets consider the following:

  • Compiled list sources, specialized market data aggregators
  • Mail order companies
  • Publications your target audience reads
  • Associations of which your target is a member
  • Other companies and/or organizations from which your customers might be making purchases
  • Trade magazines’ subscriber lists
  • Public record sources

As you evaluate list options look for lists that indicate behavior. Product purchase behavior and responsiveness to other direct mail offers are often far more predictive of DM performance than demographics. For example, all 40 year-olds don’t act alike and may not be a good target, but people who have purchased related products or magazines though direct marketing have shown two specific behaviors that more accurately define your best prospects.

Other important information to consider about list options are the universe size (in your marketing area), other companies using the data regularly, and of course the cost of the list. Consult with a list broker that has experience in your category. It can often save hours or days of frustration and help to avoid re-inventing the wheel.

Go beyond the basics.

Targeting to one big group often leads to ineffective direct marketing, and can leave an enormous amount of money on the table. To really optimize your targeting and your programs performance, you have to go beyond the basics and append key list selection data to your lists which can be used for deeper analysis and market segmentation.

  • For consumer targets, investigate each list source to understand what type of information can be appended to the data. These selection criteria can include demographic variables like: age, estimated income, gender, education, marital status, household composition, marital status, occupation, etc. Psychographic variables are things like: hobbies, reading interests, exercise habits, music preferences, attitudes and beliefs and lifestyle. Also investigate lifestyle or life stage change indicators like: new mover, new marriage, new child, new home purchase, retirement, etc.
  • For business targets, investigate lists with specific industry, company size, job titles, job functions, specific responsibility, and known purchase involvement and/or purchase authority. Remember that more than one person per firm can and sometimes should be tested and targeted.

Ordering and appending the data is one of the critically important step for marketing segmentation and targeting that many companies neglect to utilize. When they make this mistake they are essentially betting that the whole list is going to perform to their expectations.

A much safer assumption is that the whole list may not work, but that there will be some segments within the list that perform well above expectations. Based on the safer assumption your strategy should be putting the tools in place to identify those groups.

When you order your lists, select and append the key data that you suspect may be predictive of response and purchase behavior. For example if you think age and gender may be predictive factors, order and get the age data with your test list.

With key variables appended on your mailing database you will be able to do much more powerful analysis of the results. You will be able to look at each variable and see if it is predictive and then put multiple variables together to create a powerful selection model for your next program.

This level of list and market segmentation can also be used to improve your creative and messaging. Segmenting your program based on key characteristics of the audience allows you to tell your story with greater relevancy. You can address your prospects specific needs and provide them with a specific solution. This makes a bigger impact on the intended target audience and will ultimately give you better results.

Happy hunting!

No Comments

Leave your comment using the form below: