Posts filed under ‘Mailing Lists and Data’

Entering the Data/List Business

Your question: Hi. We are a consulting group and want to start reselling direct mail data in Canada.  Could you please tell us about reselling pros and cons of information and what license/permissions would we have to get to resell such data.

Our answer: We at RRW Consulting have been resellers of data here in the US since the inception of our business (2004). Prior to that we’ve worked for and represented some of the leading data compilers, selling data to high-volume direct marketers. So, this is an area where we have quite a bit of expertise. And, it’s one that is near and dear to our hearts.

As you requested, following are some of the pros and cons of being a data reseller (typically called a ‘list broker’).

Pros:

  • It’s a lucrative business–we’ve estimated list sales to be at $2.5 billion–yes, that’s billion with a b…  Check out this post where we’ve attempted to quantify the industry:
  • Data is fun! There is so much of it out there and so many tools that you can employ to make your targeting even more on-target. Each time I tackle a targeting challenge for one of my clients, I’m simply amazed at the depth and breadth of data available to marketers. Finding the right list and then using some other intelligent tools (i.e.: statistical modeling or segmentation) is like finding the key to the castle. The old (but I’ll assume true) saying is that 40% of a direct marketing program’s success can be attributed to the list. It’s so very important to purchase the right data so that your client can reach their ideal prospect, and achieve a successful marketing campaign.
  • List research can be pretty easy to do. With tools such as Nextmark’s list finder, you have immediate access to the more than 60,000 databases that are on the market today. Of course, the Internet has made searching for non-published data simple, too. As a data broker, you have the tools at your fingertips to identify the most appropriate data sources for each client.

Cons:

  • It’s a complicated business. You can’t simply rely on the info on the datacards to make your data decisions. There is a great amount of duplication and cannibalization in the list industry. People are reselling others databases, slapping a new name on the file and marketing it as their own. Without experience, you may be purchasing the exact same data from two separate firms. That’s where asking a lot of questions is helpful. Make sure at a minimum you’re clear about data sources and updating procedures.
  • There’s quite a bit of competition. From advertising agencies, to traditional list brokerage firms, to consulting firms, to database companies, it seems that everyone wants to get in on this business. So, you’ll need to separate yourself from the competition by bringing that extra value. We’ve found our niche to be in applying advanced analytics to data in order to maximize data performance. Therefore, we typically bundle in modeling, profiling and segmentation solutions with a large data sale. This niche has been a good one for RRW. Think about what you can do to differentiate your services from other data brokers.

Hopefully, these pros and cons will give you some good food for thought.

You also asked about which licenses are required to get into the business of selling data. I can’t speak for the Canadian marketplace, but I can speak for what’s required in the US. Essentially, most data owners will recognize a direct marketing consulting firm as a list broker (and therefore extend the 20% broker discount) if you can show that you are reselling the data. No special license is required, although if you can get listed in SRDS as a list broker, that might help your case. However, if the list owner you’re working refuses to recognize you as a list broker, at a minimum, they’ll definitely extend the 15% agency discount, usually with no questions asked.

Of course, you’ll need your normal business license that allows you to do business in your area. Note that data is not a taxable item (in the US at least…), so you shouldn’t have to worry about paying/charging taxes on the data you purchase on behalf of your clients.

For more specific info on requirements in your area, you may want to visit www.dmn.ca which is an excellent resource for direct marketing news in Canada. There may also be good info to be found on the Canadian Marketing Association’s site: www.the-cma.org.

Finally, I just today found this article from DM News.  Some interesting data on the state of the list business!

Good luck to you as you start this new venture. Of course, if you have additional questions, please just let me know.

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September 2, 2008 at 5:53 pm 2 comments

How to Buy a Mailing List

My Question: It seems like there are so many mailing lists available on the market.  I’m not sure what questions to ask when I’m searching for a list (either postal or email).

Our Answer: It can be tough to navigate the sometimes complicated world of marketing lists.  So many of the lists on the marketplace turn out to be identical duplicates of another list.  You definitely don’t want to buy the exact data from two different vendors… Many data firms simply repackage data differently so that it appears different from other vendors of the exact same list.

So, how do you get a solid understanding so that you can be sure (or as sure as you can be) that the list will reach your specific target?

Here’s the biggest tip I can share:  Ask a ton of questions… Some sample questions follow:

  • What is the source of your data?  Make them be specific. Keep asking for clarification until you have an absolute solid understanding of exactly where and how they are collecting data.
  • Are you reselling the list, or are you the original compiler?
  • If you compile the data, how, exactly do you collect it?  Describe exactly what you do to compile the information.
  • If you are reselling the list, are you the only reseller, or can I purchase the same data elsewhere?  Can I buy it from the list compiler directly?
  • What do you do in the way of updating? Ask for a detailed description of the processes they follow to keep the list current.
  • How is your coverage, both in terms of overall universe and in data available?  Many datacards list lots of selections that seem interesting.  Yet, when you actually try to use these attributes to hone in on your best target, you find that your universe diminishes, sometimes almost to where you end up with 0 count.  This situation could be due to limited coverage of some of the offered selections.  The way to get an understanding of coverage by data field, is to simply ask for a percentage of each (i.e.: how many records have phone numbers?).  You should definitely not be afraid to ask the list vendor to count their data in any way you think you’d be interested in ordering it.
  • Do you quote a deliverability guarantee?  If it’s email, make sure that you’re not charged for names not delivered (industry norm). If it’s postal, many firms offer 95%+ deliverability guarantees.
  • Do you offer net name arrangements?  In other words, if you will be suppressing customers, Do Not Mail or other files from the rented list, are you able to pay only for records that you end up using?
  • Do you have experience in my specific industry?  In other words, has this list worked for other firms who market similar offerings?

If a list vendor starts to balk at answering any of the above questions, that would throw up a red flag, immediately.  You are investing a lot in the printing, production and postage to send out your mailings.  Make sure that you have done your best to target the names you’re mailing.  The right list vendor will welcome your quest for knowledge and is used to answering these types of questions.

Good luck!

August 13, 2008 at 9:57 pm Leave a comment

Direct Marketing for Luxury Brands

Q:  How can luxury retail brands evolve marketing strategy to more targeted direct marketing instead of broadbased above the line advertising?

A: While it does appear that many luxury retail brands ignore targeted direct marketing, many (shall we call them the ‘smart brands?) don’t.

Think about luxury auto-makers.  They typically have sophisticated direct/database marketing strategies in-place.  They spend a large amount of marketing dollars maintaining a direct relationship with buyers of their vehicles.  They send, for example, elaborate direct mail packages featuring their new cars to their current customers.  Why?  Because especially with automobiles, loyalty is so very important.  They know that owners of luxury autos will usually buy a new car pretty quickly and they’re quite loyal, IF they appreciate the car they own.  So, manufacturer from Lexus to Cadillac to Rolls Royce all employ direct marketing as a way to retain customers and build loyalty.

Other luxury retailers are also heavy users of direct response.  Think of Tiffany’s catalog (and I don’t think you can get more high-end than Tiffany, can you?).  Or, the excellent efforts by Sur La Table, the up-scale cooking supplies retailer that actually evolved from the catalog industry. Nordstroms (arguably the most broad-based high-end department store) has a long history in using direct marketing–from its catalog to its consumer credit card direct mail efforts.

So, I guess my point is–high end retail brands can, and do, use direct marketing as part of their strategic marketing mix.

As a direct marketing advocate, I see the luxury market as ripe for direct response tactics.

  • This group (while, sadly, typically unresponsive…) is easy to target, using both compiled and vertical mailing lists. For example, you can easily select consumers with high net worth or people who own expensive homes from the leading compiled lists (think Acxiom or Experian’s consumer files).  You can also rent lists of people who’ve purchased high-end products or who subscribe to the right magazines, using vertical lists. If you’re a financial marketer, you can even delve into rich people’s credit history to target the exact buyer who can actually affort your service.  Hence, prospecting opportunities are wide open.
  • If you can capture buyers’ name, address and email (and you really should start thinking about tactics to allow this), you have the ability, then, to build your own database and start your own dialogue with your customers.  As a side benefit, you can use data mining, modeling and profiling tactics to really understand your customers.  This knowledge, by the way, can be translated to prospecting efforts, too.

In summary, it’s my firm belief that any business can benefit from incorporating direct marketing tactics into their marketing mix. Whether it’s a social marketing campaign created to boost sales of a high-end, luxury liquor line, or a sophisticated direct mail package designed to retain and up-sell current customers, the opportunities are endless to incorporate measurable direct marketing tactics into your overall marketing mix.

And, at the end of the campaign, won’t it be nice to show your CEO how much profits their marketing dollars have generated?  Now, that’s the real beauty of direct marketing, especially in this tough economy.

July 24, 2008 at 10:30 pm 1 comment

Is Telemarketing a Valid Channel for Pest Control?

Q: I’ve been working for a pest control company for two months now as a telemarketer. Now, my concern is, I haven’t gotten very good responses. I call Tampa and Orlando and Tampa is generally more difficult, because almost everybody who answers just yells and hangs up. I’d like to know if telemarketing is the right path for this type of business, or if there is a better way to get to customers about pest control.

A: It’s interesting. There are two sides to telemarketing, in my opinion. On the positive side, recent Direct Marketing Association research reports that telemarketing now has the highest response rates of any direct marketing channel (average at about 5%, if you can believe it!). On the negative side, there is the growing customer attitude that you’re experiencing. People hate telemarketers…The growth of the National Do Not Call list is perfect evidence of this.

With that said, and probably because I have a fair amount of experience using outbound telemarketing successfully, my personal opinion is that it is a valid channel for pest control, or really any consumer service. I’m assuming that you’re following the rules and are only calling people who are not on state and national do not call lists. That’s a given. Here are a few other tips to increase your success.

  1. Make sure that you have done the work and are targeting your prospects correctly. I’ve experienced optimum success when I’ve employed a statistical approach for list selections. Perhaps you can build a model that clones current customers sourced through telemarketing. Try to find people that look exactly like those who’ve purchased through this channel before. If you do this, make sure that your data source contains lots of insight about the home the prospect lives in–I’ll bet that things like age of the dwelling and size of the home are key predictors of the types of prospects who might be most needing your services.
  2. Be clever in your calling tactics. For example, have you thought about the best time to call each prospect? Think about this: professionals typically are not home in the daytime and retired folks are. Make sure that you’re segmenting your list and calling people when they’re most likely to actually be there. Seems like a no-brainer, but most telemarketers don’t have the insight into their prospect lists to understand this key characteristic. Of course, the more people you can actually reach, the more efficient your outbound campaign will be. And, this type of segmentation works. I once had a client who sold services to consumers. When they employed a Best Time to Call strategy, results were boosted by 20%. 20%!
  3. Get a handle on actual results. I know it can be extremely frustrating when you’re making calls and getting negative responses. No fun, at all. However, be sure to quantify your results. If possible get an understanding of how much a customer costs to acquire via your telemarketing channel verses other channels. You may be surprised that telemarketing remains a low-cost acquisition channel. And, if it’s not, then it definitely is time to move your marketing dollars elsewhere.

    Which brings us to the final part of your question, which is: Is there a better way to get customers? My recommendation here is to test all sorts of channels. Perhaps you can advertise on appropriate websites that cater to homeowners/home improvement. Consider inserts (either in newspapers or in local direct mail coupon mailings). Test standalone direct mail. Take a look at where your competitors are advertising. Look into social marketing–perhaps you should start a blog to build awareness of your brand, build credibility and increase website traffic. In a nutshell, be creative and test, test, test!

    July 11, 2008 at 5:10 pm 7 comments

    Direct Marketing List Research — Just How Big are List Sales?

    Q: I am doing some research for a large financial institution and am trying to determine the size of the consumer list market in the US (in terms of dollar volume, or number of list brokers, or any other sizing approach). Any help you can provide is appreciated.

    PS: You have a great website and service offering

    A:  Hey — thank you for the wonderful compliment. It is much appreciated!  : )

    And, you are right — this is quite the daunting task. Here’s some information that we found to help you with your research project. We hope that this will fill in some of the holes and provide a more complete picture of the list industry and it’s size.

    To start at the macro level, within the direct marketing industry there are over 14,000 individual contacts, and approximately 9,000 direct marketers, service firms and suppliers. These folks break down into the following categories:

    • 19 categories of direct marketers
    • 15 categories of service firms and suppliers
    • 5 categories of creative services

    When looking specifically at the mailing list business, there are 2,333 list companies as identified by InfoUSA. And, our research found that there are more than 60,000 mailing lists available in the direct marketing marketplace.

    Now, according to the USPS’ Annual Report, they mailed 103.5 billion pieces of standard mail — which consists primarily of direct mail. The USPS reports that they made $20.8 billion for this standard mail in postage! Wow!

    So, here is where we pull out our calculators and make some assumptions — so please take these as just that. Based on findings from the Direct Marketing Association, this mailing volume (as reported by the USPS above) normally equates to about half prospect mailings and half customer mailings. Therefore, we project this to mean approximately 50 billion prospect mailings (approximately half of the 103 billion pieces mailed). You could then argue that at $50 per thousand (on average) mailing list costs, this would equate to approximately $2.5 billion in list sales revenues. Again, this is an estimation on what we know to be true combined with industry averages.  However, it is as close as we can estimate based upon the available information out there.

    Here is some additional data to consider.  This comes from the Direct Marketing Association’s 2007 Direct Marketing Report (available for sale in their bookstore):

    • $173.2 billion were projected to be spent on direct marketing in 2007 (this projection was made in October — so it’s probably very accurate)
    • This equates to a 4.4 percent increase over the $166 billion actually spent in 2006.
    • The slowing economy has been taken into consideration in these numbers and adjusted for accordingly.
    • The growth rate in direct marketing expenditure for 2008 is expected to bounce back to 5.7 percent, or $183.1 billion in direct marketing advertising expenditures. Above-average spending growth is expected in commercial e-mail, Internet marketing, DRTV, and direct mail (including catalog).

    We hope that this gives you some additional food for thought for your research! Best of luck! And, if any of our readers has more food for thought or hard numbers on this question, please add your comments. Thanks!

    May 22, 2008 at 5:38 pm 7 comments

    What is the Cost to Effectively Target Market?

    Q: What is the cost associated with effective targeting?

    A: That is a pretty open-ended question! We’ll address the cost issues first with a comparison of the costs of a variety of mailing lists. Let’s assume that a list that is only targeted by geography (which just might work well for some retailers) is our baseline for costs–the lowest cost mailing list available. I’m referring to those mailing lists that are addressed to “Occupant”; essentially a marketer ‘saturates’ a specific neighborhood by mailing to every household in a specific geography. The cost for this type of list ranges (depending on volume) from $5-$10 per thousand records. A good source for this type of list is Melissa Data.

    The next level of targeting is to use demographics such as age, income and presence of children to target a named compiled list. Large compilers (such as Acxiom or Equifax) offer literally hundreds of data selections that you can use to target your list. Depending on selects and quantities ordered, the list will cost you $30-75 per thousand records. If your market is B2B, a business file ranges from $50-$75 per thousand, and can be purchased from companies such as InfoUSA and Dun & Bradstreet.

    Another category of targeted lists are vertical files which include lists of product buyers, association members and magazine subscribers, to name a few categories. These types of targeted lists typically run from $50-$100 per thousand.

    Finally, perhaps the ultimate in targeting mailing lists is to build a statistical model that predicts the performance you’re looking for (how likely is this prospect to respond?”, is the classic example), and then score your prospecting universe with this model to allow for the most targeted data selections. In this case, data costs can run you $65-$85 per thousand.

    The above examples focus on targeting mailing lists. If you are targeting your customer base, or your outbound email, the general rule of thumb is that the more data you purchase externally, the more analytics you apply to the targeting effort and the more niche your specific market is, the more expensive the targeting will be.

    With that said, you should more than make up your targeting costs in the following two areas:

    – You’ll reach more qualified prospects, so your response and conversion rates should be higher.
    – You may choose to market to fewer people, so your marketing costs will be lower.

    April 29, 2008 at 8:00 pm 1 comment

    Definition of “Vertical” Mailing Lists

    Q: I’ve heard direct marketing types refer to “Vertical” Lists. Do you know what they mean by this term?

    A: Yes, indeed, we do! Vertical lists refer simply to lists that target a vertical, or very specific, and highly specialized market. Did you know that there are literally tens of thousands of lists available on the marketplace?

    Some of the types of companies that make their data available as mailing lists include:

    • Magazine publishers
    • Cataloguers
    • Organizations
    • Fundraisers/Non-Profits
    • Professional Associations
    • On-line merchants

    Think about it, you can rent (yes, that’s the term here) lists of people who’ve recently purchased a high-ticket item from Williams Sonoma. Or, you can market to people who subscribe to Field and Stream. Or, how about reaching those folks who donated to the Sierra Club?

    Are you getting the feeling for how you can target your audience by the types of activities that they participate in? Think about the possibilities. We guarantee that there is a vertical list that covers just about any imaginable market.

    Buying vertical lists is a bit different than purchasing compiled or occupant files. When you purchase compiled lists, you’ll contact a handful of large companies who are the original compilers of the data. Conversely, for vertical lists, you typically don’t go directly to the list owner for the data. Think about it, if you’re a cataloguer, your business is to sell your products. You don’t have time to also sell your customer list. Therefore, list owners hire list managers who represent their data to the marketplace.

    Some of the responsibilities of list managers:

    • Advertising the data to the direct marketing industry.
    • Fielding requests for counts and other list information.
    • Obtaining approval from the list owner that a specific mailer can use their data. Note that typically list owners will not let their direct competitors market to their customer list (duh!).
    • Producing the data (they either do this in-house or use a chosen data processing firm).
    • Invoicing and collecting the list revenue.

    So, when should you use a vertical file?

    • When your market is highly specialized, and hard to target with more basic selects.
    • When you need the highest response rate possible. Since most of these vertical files were generated from other mailing cam-paigns, they typically include people who like to shop via the mail. Vertical files tend to be more mail responsive than compiled lists.

    On the negative side, these types of lists can be pricy and the ordering process can be arduous. Quantities can be small, so if you’re planning a high-volume campaign, you may need to use several vertical files. Just know that many of the large cataloguers actually rent hundreds of vertical files, for each campaign.

    Plus, it can often be hard to find the list manager for the data you’re interested in. But, if you get all the components right, vertical lists can be a key component to winning campaign.

    April 11, 2008 at 7:42 pm 10 comments

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