Full Article: ABC's of How to Compile, Maintain & Sell "Red Hot" Name Lists
NAME LISTS AND THEIR USE
Virtually every inquiry or buyer's name ultimately ends up on a
mailing list. Some are small lists, while others contain
millions of names. Some are meticulously maintained, while
others are carelessly handled.
For those interest in mail order advertising, mailing lists can
prove to be very valuable as well as a saleable commodity. If
you wish to increase your sales, it is often a good idea to go
into direct mail. To do this you would begin by renting another
firm's mailing lists. Or, you would rent your list of
customers' names to another firm. Either way, mailing lists
can, and do play an important part in the every day world of
mail order.
Basically, there are three types of lists. They are:
- house lists
- mail response lists
- compiled lists.
Let's examine each more closely.
HOUSE LISTS
A house list simply put is a list of your own customers. They
may be active, or inactive. They may be inquiries or buyers.
They may have made ten purchases or just one, or in the case of
inquiries, none. They may have placed an order in the last four
months, or in the last four years. They may have spent a great
deal of money or a small amount. They may be credit card buyers
or cash buyers.
Your house list contains your most valuable asset . . . the
names of your own customers. These are the people who have
purchased from you in the past and are very likely to purchase
from you in the future. You can spend a great deal of money to
rent outside lists, but none will bring you the financial
rewards you will reap from your own customer list. These people
know and trust you, and will order on a continuing basis.
MAIL RESPONSE LISTS
Second in importance are mail response lists. These are people
who have responded to another firm's direct mail offer. The
idea is to pick out a list of customers who have ordered
products similar to those sold by your firm. Since it is a
well-known fact that these people have previously responded to
an offer similar to yours, there is an excellent chance that
they will also respond favorably to your offer.
COMPILED LISTS
Although the people on compiled lists do not usually respond as
well as the people on house lists or mail response lists, these
lists can still be helpful if properly used. These lists are
not generally used by small or medium sized business firms
because they are too general in nature. But large firms, such
as oil companies and insurance firms find them useful and even
profitable. I have never used a compiled list and do not
recommend their use for anyone but the largest mailers.
While there are no set rules which can be applied to mailing
lists, here are few "rules of thumb" that can be regarded as
reliable in most cases. They may not apply to your list
situation, but they will give you food for thought.
The average list will change at least 15%-20% each year. Some
mailing lists will change only 10%, while others have as high as
a 100% rate of turnover. (Lists of high school seniors), etc.
A direct response list (people who have already purchased goods
through the mail) will out-pull a compiled list.
A customer list will out-pull all other outside lists. By
outside list I mean direct response or compiled lists.
Allocate 10% or more of your direct mail budget to list
development and maintenance. The 10% figure is the minimum
amount you should spend. Most successful businesses find the
more they spend the more they prosper.
People over 35 years of age as a group, respond to mail order
offers at a much higher rate than do people under 35 years of
age.
People living in rural areas respond to mail order offers at a
higher rate than do people who live in urban areas.
People who have ordered through the mail within the last 3 - 6
months ("hot-line" buyers) are the most productive names you can
get.
Multiple buyers (people who have made two or more separate
purchases through the mail within a season) will always outpull
buyers who have purchased only once within a season.
The results you can expect will vary by season and/or months of
the year, and by regional areas and states.
Every list should be checked and cleaned at least twice a year
or more. It is a good idea to review and update your list at
least every six months whenever possible.
Responsibility for maintaining and updating of your list should
be delegated to a single individual whenever possible. We've
heard the expression "too many cooks spoil the broth", well,
when it comes to mailing lists it is a good idea to limit the
number of individuals who handle the list to as few as is
possible. The fewer the better.
Use outside consultants and service organizations to help you
with your list decision. These people have made it their
business to study and understand lists.
SHOULD YOU USE LISTS
The first thing to consider when trying to make a decision about
a particular list is whether or not the people on that list
would be interested in your product. You want a list of people
who have purchased something similar to your product, or at
least something in the same general category. People who have
already purchased cheese products are perfect for you if you are
selling cheese products. But, if you are selling fishing
supplies you would never want to rent a list of buyers
interested in cheese products. Instead, you would want to rent
a list of people interested in fishing. You might consider
renting a list of names from a publisher who publishes a fishing
magazine. Or maybe, a list of people who have recently applied
for a fishing license. When renting lists it is imperative to
find a list that parallels as closely as possible your own list
of customers. The right list can and usually does make a
tremendous difference in the results you can expect.
WHAT TO SPEND
Today, there are thousands of mailing lists available in
thousands of categories. Almost any offer, no matter how
unusual, can be matched to an appropriate list. The price of a
mailing list can start from as low as $15 per thousand to as
high as $75 per thousand and more. A few of the factors that
determine the price of a mailing list are:
- Freshness of list.
- Buyer or inquiry.
- Amount of purchase.
- Multiple or one time buyer.
- "Hot-line" buyers.
- Credit card buyers.
- Frequency of purchase.
- Brokers recommend it's use.
As you can see, many factors come into play when pricing a
mailing list. The more desirable the list, the more you can
expect to pay.
LIST BROKERS AND COMPILERS
It is almost impossible to succeed in direct marketing without
the help and guidance of competent list brokers and compilers.
It is the list broker's job to bring together the owner of a
list and the firm who wishes to rent that particular list. The
fee for this service is usually a flat 20% on each rental. You
can rent names through a list broker for the same price you
would pay on your own. So, it is to your benefit to take
advantage of this service. It is to the broker's advantage to
help you choose the best list available for your needs, so that
if your initial test proves successful, there is a good chance
you will wish to rent the whole list in the future.
After a list broker arranges the rental, he next bills the firm
renting the list and forwards the proper payment to the owner of
the lists. These services are all included in his fees.
A list compiler represents those lists owned and maintained by
the company that employs him. They are specialists for the
compiled list they represent. Basically, the compiler offers
the same services as a broker.
NAME LISTS - A PROFITS CENTER FOR YOU
Many companies with as few as a few thousand names are earning a
substantial income from the rental of their list. Larger firms
who have lists in excess of 50,000 names are reaping huge
rewards. If you will simply bear in mind the fact that these
small companies with small lists are able to gross $40,000 a
year and more in rental income fees alone, you begin to grasp a
measure of the significance of just how profitable the buying
and selling of names can be for you. It is truly a profit
center without parallel in the mail order industry.
List prices depend on the time and money you spent compiling
them. Some lists are easily accessible and you cannot charge a
great deal for them. Other lists require a great deal of time
and money to compile. These lists are usually very expensive.
NOTE: You have probably seen many dealers advertising their
lists at cut-rate prices. In most cases these lists are
worthless or so out-of-date that they are no longer of any use
to anyone, except to sell to unsuspecting mail order buyers.
Try to stay away from these dealers. Most of them are selling
garbage.
YOUR OWN LIST
Once you have gotten your mail order business off the ground and
have acquired a large enough list of inquiries or buyers, or
both, it is a good idea to put your customer list up for rental
with as many brokers as possible.
While it is true that the primary purpose of compiling your own
list of customers is to generate sales of your own products; an
important secondary source of income can be generated through
the rental of your list to non-competing firms. Profits from
the rental of house lists can be enormous. It is not uncommon
for many mail order businesses to make more money from the
rental of their lists than they earn form the rest of their
business. Indeed, if it were not for the monies received from
list rentals, many a mail order firm would soon be forced to go
out-of-business.
For example, let us assume taut you have a customer list of
50,000 names. This list is considered small by most experts,
but it will still account for hefty revenues. If you charge $40
per thousand names, you will receive $2,000 each time you rent
your list. Of course, you will have to allow for the brokers
commission of 20% or $400. That still leaves you with $1,600,
assuming there are no other costs involved. If you rent your
list ten times during the course of a year you should net
approximately $16,000.
Another benefit of renting your list to non-competing firms is
that you will be able to get new ideas and insights about what
your customers' likes and dislikes are. In addition, one of the
firms that rents your list may try an approach that you might
want to imitate.
Many firms rightly or wrongly, refuse to rent their house list
to another firm. They feel that the results of their future
mailings will be diluted if their customers are deluged with
offers from other companies. Other firms feel just the opposite
is true. They state that as long as they rent their list to a
non-competing firm no harm will be done. In fact, many feel
that by renting their list to other companies, they are helping
to insure that their customers continue to be mail order buyers.
Still other firms take a middle-of-the-road approach to the
renting of their list. These firms make sure they rent only
their old subscribers list or inactive customer list. They do
not rent their current subscribers list or the names of their
active customers.
Finally, there are the firms who like to exchange lists with
both their competitors and non-competitors. Usually, only
inquiries of inactive customers names are swapped. The best
party of list swapping is the cost. If you would normally have
to pay $40 per thousand names for a list, you can get it for
only $8 per thousand names when you swap lists. (You pay only
the brokers fee, or 20% of $40.)
FUNCTIONS OF LIST BROKERS
The DMAA research report lists the most important services
performed by list brokers.
FINDS NEW LISTS - The broker is constantly seeking new lists and
selecting for your consideration ones which will be of
particular interest. In fact, brokers spend a great deal of
their time encouraging list owners to enter the list rental
field.
ACTS AS A CLEARING HOUSE FOR DATA - The broker saves you
valuable time because you can go to one source for a
considerable amount of information, rather than to many sources
which may or may not be readily available.
SCREENS INFORMATION - The broker carefully screens the list
information provided by the list owner. Where possible he or
one of his representatives personally verifies the information
provided by the list owner. In addition, brokers in the
National Council of Mailing List Brokers have available to them
a wealth of information resulting from the combined efforts of
the members.
REPORTS ON PERFORMANCE - The broker knows the past history of
many lists and usually knows the performance of ones which have
previously been used by other mailers.
ADVISES ON TESTING - The broker's knowledge of the makeup of a
list is often valuable in determining what will constitute a
representative cross section of the list. Obviously, an error
in selecting a cross section will invalidate the results of the
test and possibly eliminate from your schedule a group of names
that could be responsive.
CHECKS INSTRUCTIONS - When you place an order with a list owner
through a broker, he and his staff double check the accuracy and
completeness of your instructions, thus often avoiding
unnecessary misunderstandings and loss of time.
CLEARS OFFER - The broker clears for you in advance the mailing
you wish to make. He supplies the list owner either with a
sample of your piece or a description of it, and by getting
prior approval minimizes the chance of any later disappointments.
CHECKS MECHANICS - The broker clears with the list owner the
particular type of envelope, order card, or other material which
is to be addressed.
CLEARS MAILING DATE - When contacting the list owner, the broker
checks on the mailing date which you have requested and asks
that it be held open as a protected time for you.
WORKS OUT TIMING - The broker arranges either for material to be
addressed or labels to be sent to you at a specified time, thus
enabling you to maintain you schedule of inserting and mailing.
LIST OWNER-BROKER RELATIONS
GET LIST MAINTENANCE ADVICE - Consult with the list broker when
deciding how to maintain your list so you may set it up the most
practical, economical and rentable way.
DISCUSS RATES - Discuss with your broker the price you will
charge for rentals and decide on a price schedule that will
bring you the greatest volume of profitable business.
SUPPLY ACCURATE DATA - Be sure the list information you furnish
is accurate. If the addresses in a list have not been corrected
within a reasonable period of time, tell the broker.
If a list contains a percentage of names of people who bought on
open account and failed to pay, give this information to the
broker.
If you represent your list as made up entirely of buyers, be
sure it does not include any inquiry or prospect names.
If you have bought out a competitor and have included some of
his names in your customer list, be sure to state this fact.
Aside from obvious aspects of misrepresentation, you will be the
one who suffers when you mislead a broker.
ADDRESS ON SCHEDULE - Establish a reputation for addressing on
time as promised. If you accept orders and fail to fulfil them
on schedule, brokers become aware of this and find they can not
conscientiously suggest your list to potential users. If, for
some reason, you foresee a delay, advise the broker immediately,
so he can advise the mailer.
FURNISH LATEST COUNTS - Keep the broker posted on current list
counts, rates, changes in the sources of the names and the like.
When the composition of a list changes, it may very well become
more interest to a user who had previously felt that it was not
suitable for his purpose. In addition, when current information
is offered to a potential user through the broker, it is more
likely to develop activity than is an out-dated description.
CHOOSE BROKERS WISELY - Consider carefully whether to make your
list available to a number of list brokers or just to one
broker. There are many things to be said in favor or working
with several brokers. And at times there are also some good
reasons for working exclusively with one broker. While the
decision is yours, you should keep in mind the fact that brokers
are people and each has his own particular personality,
following, and sphere of influence. Therefore, as a list owner,
you will be well advised not to narrow the field unless your
facilities for addressing are so limited that the orders one
broker can develop for you will be more than sufficient to take
up all the available addressing time.
PROTECT BROKERS - It takes a lot of time and effort on the part
of a broker to interest a mailer in testing your list.
Therefore, continuation runs should be scheduled through the
original broker so long as he continues to render satisfactory
service to his client. The broker is a member of your sales
force, and he can only continue to do an effective job so long
as you protect him on the accounts he develops for you.
Recently there has been a trend toward list management as
opposed to list brokers. A list manager takes over complete
management of your list for rental purposes. Under this form of
contract, the list manager is responsible for the following
functions:
- He solicits his own brokerage customers directly.
- Makes all contacts with list brokers and is responsible for
processing their orders.
- Should at his own expense advertise the list.
- Analyzes the results of each mailing and offer suggestions and
advice.
- Keeps all records and is responsible for all billings.
- Provides the list owner with a detailed list of activity, along
with commissions earned, etc.
For this extra service he usually earns an additional 10%.
Today, however, many list managers are asking for and getting
even more. In my opinion, they are well worth the extra money.
A good list manager will do his utmost to promote your list. In
return, he will earn a substantial sum of money. But, not as
much as the list owner. It is not unusual for a good list
manager to double or even triple your previous rental income.
Naturally, some list mangers will do a better job than others.
If you decide to use a list manger instead of a broker, make
sure you select the best one available. It will take some time,
but it will be time well spent.
I strongly suggest you subscribe to Direct Marketing Magazine,
224 Seventh St., Garden City, NY 11530. This magazine will
keep you abreast of the latest information available dealing
with direct marketing and list selection.
HOW TO TEST A LIST
Today the minimum number of names you are allowed to test is
usually around 5,000. However, many brokers will waive this
rule. They do not want to lose a potentially good customer just
because he or she wants to test 3,000 names instead of 5,000.
When testing a list always request Nth selection. This will
insure that you will be testing the effectiveness of the entire
list, and not just one small segment. Nth selection simply
means that the computer randomly picks a few names from the
entire list. The reason you should always use Nth selection is
simple, besides the obvious reason already mentioned. It stops
the broker or list owner from giving you his loaded names. Many
a shrewd broker or list owner will rent you only their best
names when you test a list. This will insure that you will get
the best results possible. Later, when you return for
additional names, you will get the shock of your life.
In order for a beginner to get a trustworthy list it might be a
good idea to rent your first nm large, reputable firm. Later,
as you grow, tests can be made with lists from smaller firms.
Another reason for selecting larger lists is, that should the
results be rewarding, you will have a larger selection of names
for your future use.
Always try to rent a list consisting of buyers names only. The
more recent the better. If you cannot get a list of buyers
names only, go for a mixed list. This particular list will
consist of both buyers and inquiries names. Once again, it is
advisable to get the freshest names possible.
Note: Always make certain that any list you decide to rent has
been cleaned within the last 6-12 months. Otherwise, you may be
throwing your time and money away. Lists that have not been
kept up-to-date deteriorate rapidly. Many lists are totally
worthless unless they are constantly cleaned.
WHO BUYS MAILING LISTS
All mail order experts agree that there is no less expensive
way to increase their sales than by using the medium of direct
mail. The problem all direct mail users face is where can they
obtain the lists they need to continue their mailing campaigns.
That is where the "mailing list dealer" come in. By being able
to supply these firms with names of authentic mail order
prospects he or she is able to build a very successful business.
Once a firm has faith in you and the list you furnish, you can
be assured that they will continue to use your service as long
as you give them the same excellent service and results as in
the beginning. Remember, the compiling and selling names is a
very competitive business, and yet many aspirants, most with
little or no knowledge of the business, strike it rich in this
field. However, you must at all times offer your clients
top-notch service and order-pulling lists.
HOW TO GET STARTED
To be frank and candid, your chances of success are almost
non-existent unless you have primary knowledge of mail order
selling in general. So, it would be prudent to start out in
another phase of mail order selling if you are a mail order
neophyte.
The starting supplies needed to operate a mailing list business
are moderate and inexpensive. You'll definitely need a
typewriter (the best one you can possibly afford).
Additionally, you'll need the following supplies . . .
letterheads and envelopes, business cards, record books, some
sort of filing cabinet, sheets of perforated gummed labels,
(available at most stationery stores), carbon paper, shipping
envelopes or containers, pens and pencils and a few other
supplies as you start to grow.
There are two ways for beginners to compile name lists: (1) On
standard gummed labels, (available from your local stationery
store) (2) Computer labels, from a home computer or a large
main frame computer, (available from firms who specialize in
this field). Since this book is primarily for beginners we will
first discuss the gummed labels. Later in this book there is a
section devoted to computer lists.
Mailing lists are usually typed on sheets of perforated gummed
labels ready to affix to envelopes. These standard sheets of
perforated gummed labels come in 33 up sheets. Their cost is
usually around $25 per thousand sheets. You can also offer the
customer name lists on plain bond paper, usually there are from
35-60 names typed on a plain piece of paper. I do not generally
recommend this method of name selling since it usually indicates
the seller is a rank amateur. It is usually a good idea to sell
your list on either gummed or pressure sensitive labels only.
Later, as you expand, you will want to use a method of list
compiling that will allow you to put the names in exact zip code
order. This is a very important factor when it comes to selling
your list of names. But in the beginning, you will not have the
experience or money needed to properly zip code your list.
When buying gummed, perforated labels, you should always get the
ones with the carbon already inserted between each sheet of
paper. In this manner, you will be able to type the name once
on the original and have as many as 5 additional copies of each
for sale.
Another method of reproduction of your mailing list is a copy
machine. You simply insert your master copy into the machine
and copy as many sheets as you need. You can do this for
pressure sensitive labels as well as gummed labels. If you can
afford to rent, lease or buy your own copy machine it will
greatly increase your volume and also your profit potential.
There are many, many people using the above methods to reproduce
and sell their name lists. Many are making a small fortune.
But, the real big money cannot be made until you computerize
your list.
HOW TO COMPUTERIZE AND MAINTAIN YOUR MAILING LIST FOR GREATER
PROFITS
Probably the one question most frequently asked by mail order
list compilers is, should I or shouldn't I computerize my list?
The answer is, "that depends". There are many factors to be
considered before you make up your mind one way or the other.
But, one thing is for sure, if computerizing your list is right
for you, it will improve your profit potential in 2 ways . . .
(1) By a more efficient marketing of your list (2) By
increasing your income from the rental of your list.
Until recently, it was not a good idea to computerize your list
if it contained fewer than 15,000-20,000 names. Today, however,
with the aid of small office and home computers, anyone can
easily store and print out a large amount of names.
So, if you plan on increasing the size and profitability of your
list, computerizing your list isn't only desirable, it's
virtually indispensable.
HOW TO CLEAN YOUR LIST
You clean your list by putting the caption "address correction
requested" in the upper left hand corner of your outer envelope
when you mail to your own list. Or, you can offer your
customers 10 new names for every 1 old name they return to you.
This way you would not have to send out any mailings yourself.
Your customers would be cleaning the list for you. Remember,
computerized lists are like children. You have to maintain them
after you've brought them into the world.
List maintenance is principally a matter of adding new names,
deleting "nixies" (undeliverable mail) and entering changes of
address as customers move. None of these tasks are difficult,
but without the proper care and dedication a good list can soon
become worthless.
WHERE TO OBTAIN NAMES FOR YOUR LIST
Naturally, you can rent out your own list of customers if you
have such a list. This is the way most beginners start. We
have previously discussed this aspect of name rentals. You can
also compile other types of name lists. Examples . . . doctors,
lawyers, drug stores, high school students, etc. Several books
and directories have been published that specifically deal with
these types of lists. Two of the best are "Mailing List
Sources", and "Mailing List Directory". These books are not
cheap, so if you do not wish to buy them, they are available at
most large public libraries. Another valuable sources for these
types of lists is "Guide to American Directories for Compiling
Mailing Lists".
Another method of compiling names for a name list is to purchase
the names from a mail order dealer. Many small mail order firms
have no use for their names after they answer the original
inquiry. They are only too glad to sell these names to the
highest bidder. The price you offer for these names is usually
just a fraction of what they would have cost you if you had paid
for the advertisements yourself. I know of one list compiler
who has become a very rich man using this method. He sends out
a form letter to mail order dealers who advertise in the
classified sections of magazines. He offers to buy their
current names and all their names in the future for a fair
price. After he acquires these names, he has them put on a
computer listing and sells them to some of the biggest mail
order firms in the country. He has been doing this for a long
time and he probably is the king of the opportunity-seekers name
list market.
WHAT PRICES TO CHARGE
The price you charge for your list can vary greatly. Basically,
lists, like any other commodity, have different values.
Always remember to keep your prices in line with what the other
list sellers are charging. If you charge too little, most
people will shy away, figuring that your list is not that good.
On the other hand, if you set your price too high, most
prospects will be financially unable or unwilling to spend too
great a sum of money. Always try to be moderate in your price
structure. If you are having good results renting your list,
you might try raising the price slowly and see what happens.
Never jump your price too rapidly if at all possible. This
tends to scare away many good prospects and old customers.
HOW TO ADVERTISE
There are many and varied methods of reaching prospective buyers
of your lists. We will try to discuss a few in this chapter.
Please remember, that there are literally dozens of other ways
to reach customers. We cannot and will not cover all the
methods, but we will attempt to cover some of the most widely
used methods.
Advertise in various trade and business publications. There are
magazines like Zip Magazine and Direct Marketing Magazine that
list dozens of mailing lists in each issue. These ads are
usually placed by the list broker, list manager or the list
owner. This is probably the best method to use if you are going
after big results. It costs a little, but it is well worth the
price. You can also advertise your list in business opportunity
magazines and periodicals. There are hundreds of these
publications available for you to choose from. You will have to
make test to see which one works the best for you.
You can place classified ads in magazines. Many advertisers use
this method because it is cheap and yet reaches a very large
audience. Never ask for money directly from a classified ad.
These ads should be used only to solicit inquiries. When you
receive the prospective buyer's inquiry, you send them all the
relative information about your list. Price, names, zip code.
Another very profitable method used by list sellers is to rent a
list of prospective buyers from another seller. Once you attain
this list, you mail out your list information to this list.
EXAMPLE . . . If you are selling a list containing the names of
people who have inquired about a book on weight-watching, you
might try to rent a list of names from another dealer who is
selling a book dealing with the same subject.
You would ask the other dealer to send you a list of all the
people who have rented his list. Since they rented his list of
people interested in weight-watching, there is a good chance
they would be interested in renting a similar list from you.
As previously stated, there are many more ways for you to reach
prospective buyers. The list of inventive ways is almost
endless. It is up to you to find out which method works best
for you. There is no short-cut - the only way to accomplish
this is by constantly testing all the methods until you hit the
right one for you and for your list.
HOW TO PROTECT YOUR LISTS
If a mailer rents your list and is not specifically given
permission to mail to it more than one time, and does so, then
he is guilty of fraud. The Postal Service frowns on anyone who
does this through the mail and the offender can be sued for
damages as well. The best way to catch anyone doing this is to
seed your list. Put the names and addresses of about a dozen
people in the list and alert them to inform you if they receive
more than one mail offer from the same person or firm. The fact
that they do so does not automatically mean that you have been
defrauded. As you learned from the information presented, it is
highly probable that the name is on more that one list. It is
worth investigating though and I would investigate before filing
any formal charges.
The best way to prevent multiple mailings is to include a letter
with the name list informing the renter that the list is seeded
and threaten prosecution for misuse. No mailer in his right
mind wants problems with Uncle Sam or his Postal Service, and
such a letter will cause an unscrupulous person to have second
thoughts about taking liberties with your list.
HOW TO GET HELP FROM THE EXPERTS
It is a fact of life that no one will want to help you if he
thinks you are trying to take the food out of their family's
mouth. It is no different in the list selling and compiling
field. If you need to, I would call some of the biggest names
in the mailing list business and tell them that I was interested
in having my list of names managed by them. I would tell them
that my list contained 50,000 buyers of mail order books. As we
discussed my list, I would ask a few off-the-cuff questions that
I needed answered. Since they were interested in managing my
list, they would only be too glad to answer any and all of my
questions. You might say that my methods were sneaky and not
above board. I would say that I did what I had to do to
increase my knowledge of the mailing list business.
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