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The Name Game. “How to buy the right direct marketing list”
By Maura Gallagher Ardis

A direct marketing campaign can help your company acquire new customers, keep your current customers, and convince customers to upgrade the products and services they buy from you.

According to the Direct Marketing Association, a dollar spent on direct marketing typically yields a return of $8.69. Already you may be pulling out envelopes and gearing up for a full-service direct marketing campaign.

Stop. Before you do anything, make sure you'll be using the right direct marketing list. "If you use the wrong list, everything else is futile. Market-savvy timing, distinctive mailing pieces, catchy headline, creative copy, irresistible offer — none of it matters if the mailing pieces go to people who aren't good prospects," says the Sales Marketing Network.

In fact, mailing your offer or information to the right people can improve your response rate by up to 60%, according to Ray Jutkins, author of Power Direct Marketing, How to Make it Work for You.

Take advantage of house lists

The good news is you may not have to look any further than your own front door for a quality list of names. The Sales Marketing Network says, "your own list of customers and prospects is obviously your most valuable list, because its effectiveness has already been demonstrated." These people have purchased from you in the past.

Size doesn't always matter.
Targeted lists can often generate a better response rate than a blanket, mass mailing. House lists can also help you buy the right compilation of names from list management companies, aggregators of prospect lists you can buy or rent. Experts recommend you examine the key characteristics of your current clientele and look for a list of people with similar lifestyles and buying habits. People most like your current customers are the ones most likely to buy from you in the future.

What kind of information do you need to collect to understand your customers' buying habits better? If you sell directly to consumers, try gathering as much information as possible about your customers' geographical location, household income, age, gender, number of children, hobbies, and special interests, recommends the Sales Marketing Network. For businesses, you might consider information like industry, annual sales, number of employees, job titles, or company size.

Understand your offer
Then, before buying a list, ask yourself what exactly are you selling and who specifically will want to buy your products or service? Again, drilling down to the smallest of details about the audience you are trying to reach will help you buy very targeted lists. Don't go for broad, stresses Jutkins. Target your direct marketing campaign to fast food restaurants not all restaurants. Market to dermatologists, not all doctors.

Targeting specific groups is easier than it sounds as list management companies typically allow customers to select lists based upon geographic or demographic information like gender, income, job function, zip code, or Standard Industrial Classifications (SIC).

When selecting your criteria, keep in mind location...location...location. As small business owners, you may have what is called a limited trading range — people will only travel so far to purchase your products or services. Specialty items will tend to have a larger trading area than businesses that sell commodities like pizza, toys, auto repair work, or basic legal consultation. If your business offers widely available merchandise and services, your trading range may be contained to just a few miles around your business; the people in this area are the ones to whom you want to market your offering.

List assessment standards
Purchasing a list from an online list manager may be one of the best ways to insure that the list you buy is accurate and up to date. Once you purchase a list don't sit on it, a list can grow old rapidly.

Next keep in mind these three letters, RFM, advises the Sales Marketing Network. "These initials stand for the most important criteria for evaluating names on a mailing list: Recency (when a person last made a purchase in this or a related category); Frequency (how often the person makes purchases); and Monetary value (how much the person spends on purchases)." People who haven't purchased in the past are often a harder sell, says Jutkins.

Be sure you have a list that has been updated recently, but stay away from lists that only have prospects who have been added lately. Names that "have been on a list for a long time could very well be steady buyers, and the broker should be able to document this," says the Sales Marketing Network.

If you are buying a standard list that has not been computer generated based upon criteria that you supplied, also ask how often other companies have used the list; a frequently used list may suggest a strong response rate.

Finally, remember that size doesn't always matter. Experts agree targeted lists can often generate a better response rate than a blanket, mass mailing.
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