Strategy: Prospecting to Selected ‘Pockets’

A headline of the July 5, 2006, edition of USA Today reported that we are now a nation of 300 million people. By 2025 the U.S. population is projected to reach 350 million; 400 million by 2040. With the population growing, why is it more difficult to prospect cost-effectively, and why aren’t universe counts increasing?

This month, I’ll discuss ways to expand your prospecting universe, even when the print catalog market size doesn’t seem to be growing.

According to Abacus, catalog households are declining as overall households are increasing. With more buyers ordering via the Internet (not necessarily the driving media), the count of catalog households has declined. This means that 12-month buyer counts, the heart and soul of all prospecting selects, aren’t increasing.

In fact, many 12-month buyer counts have been decreasing. This means catalogers are exhausting the files and re-mailing the same names again and again. Fatigue sets in and response rates decline. This is causing a shift toward the use of more prospect names selected from cooperative databases.

The quantity of names available from the co-ops isn’t increasing, either. But co-ops can help expand the prospecting universe though statistical modeling, which identifies more targeted models worth testing. Cooperative databases account for at least 60 percent of all consumer prospecting, which is up from my estimate just two years ago.

Names selected from a co-op are super multibuyers who respond well to any number of different offers. These catalog buyers have been modeled from a cataloger’s actual buyer file; therefore, they’re highly qualified names. Again, the co-ops are able to identify pockets that help expand the prospecting universe. What’s more, they represent a good value for the money — renting for $70/M or less.

The steady increase in online shopping today obviously is affecting 12-month buyer universe counts. So how do catalogers continue to grow their businesses? Here are 10 proven ways to expand your prospecting universe at a time when prospecting universes are declining.

Cooperate With Co-ops

1. Don’t block competitors when using the co-ops. It’s never wise to “block” a competitor in a co-op from getting access to your names through the modeling. If you set up a block on a competitor, the co-op automatically will block you from any access to its buyers. This will shrink (not expand) your prospect universe.

2. Always take full universes from proven models. Once you’ve tested and established that a particular model is working, take the full universe of names within the top tiers (at least tiers 1 and 2). Maximize your results by mailing all available, as opposed to diluting your results by mailing smaller quantities to more model selects.

3. Test deeper into the proven models to expand your prospecting universe. You know a model works, despite the fact that you’ve only mailed tier 1, test tier 2 and perhaps tier 3 of the same model. Once you find a model that works for your offer, it makes perfect sense to mail deeper, then apply point No. 2 above. Again, roll out the universe for that tier once you know it’s working.

4. Always allow room in your circ plan to test new models to expand your prospecting universe. Plant those seeds! Never rely on proven models without testing new ones if you want to grow your business and find other “pockets” that work for your offer. Test 10,000 names from a new model segment (or two). Have the co-op build new models off the continuation models you know are working.

5. Use all of the co-ops. Yes, there’ll be overlap from one co-op database to another. But they all use different methodology in their modeling; therefore, one will identify “good” prospect names to mail while another one might not. This obviously will expand your prospecting universe, as well. (See also “State of the Co-ops ’07”.)

6. Take full advantage of outside list optimization. Try to expand your prospecting universe by using subscriber and/or compiled lists. But optimize these lists before you mail. The process of outside list optimization identifies the mail order catalog buyers on the subscriber and/or compiled file and selects the “best” prospect names to be mailed.

Adding this step will increase results while minimizing the risk of mailing to noncatalog buyers. If you optimize 100,000 names, you should find at least 25,000 prospects worth mailing. Optimizing subscriber or compiled lists only can be cost-justified if you can arrange a “net-net” deal in which you pay only for the names you mail. Here is a brief description of subscriber and compiled lists: With subscriber names, if you’re advertising in a magazine, try to negotiate a deal with the magazine’s advertising department to get the names for free or only pay for names selected for optimization.

7. Roll out proven segments/lists. Test new lists as well. Out of 10 “new” test lists, two or three lists will be worthy of continuation. It’s really a matter of when to test, not necessarily what to test. Test new lists during your best, busiest season.

If holiday, for example, represents 100 percent of your sales, test during holiday. If you test new lists during the off-season, chances are you’ll never roll out a single list because the results won’t justify doing so. If response rates and the revenue per catalog mailed are maximized in October, then test new lists in October. This becomes a true test and will yield results you can read and then roll out with confidence.

8. Test the Hispanic market. Depending on the market you serve, don’t overlook the importance of testing into the Hispanic market. Hispanics accounted for about half the population increase over the past four years. Nationally, Hispanic households tend to be younger, well-educated and have money to spend. What’s more, they enjoy receiving catalogs. There are several Hispanic lists on the market to test.

9. Mine proven lists deeper, namely 13 to 18, or 19 to 24 months. Use a multiselect or ZIP model on older rentals to boost results. There’s a tendency to mail only the more current 12-month buyers. Using an older recency can work. This is another way of finding additional prospect names to mail.

10. Make a “send-a-friend” offer on incoming calls. This used to work for mailers who used the back of their envelope to get referrals. But with so many moving to a printed order form, the number of referrals has declined. Use your call center to obtain the names of friends who might like a catalog. Catalog referrals typically convert at a good rate and can represent a source for additional prospect names not always found on another list.

Expanding your prospecting universe should be ongoing. There isn’t an unlimited supply of prospect names to mail for any offer, but you can find additional pockets to mail. It takes work and untraditional techniques to find diamonds in the rough. The ability to expand your prospecting universe will allow you to continue to grow your business.

Stephen R. Lett is president of Lett Direct Inc., a catalog consulting firm specializing in circulation planning, forecasting and analysis, and author of “Strategic Catalog Marketing,” a Catalog Success book published by Target Marketing Group Publications. You can reach him at (302) 537-0375 or via his Web site www.lettdirect.com.