Five Ways to Make List Selects Work Harder for You

“List universes have shrunk, no doubt about it. And the economic climate is tougher than it has been in years for many catalogers, especially smaller niche titles like Design Toscano,” says Erik Martinez, the catalog’s vice president of marketing and information technology.

So for Design Toscano, a home furnishings cataloger based near Chicago, looking for prospect lists with similar affinities is like looking for a needle in the proverbial haystack. Where have all the good prospect lists gone?

“Some catalogs went under, while others responded to the economic climate by expanding into broader merchandise offerings,” Martinez notes. “That doesn’t help us, because we’ve stayed in our niche. We don’t want to reach the broader markets like apparel buyers.”

One strategy Design Toscano has tried: Target the best names on those remaining lists by using the right mix of selections.

Get Better Response Rates

As a catalog merchant, you have several strategies you can employ to help make the selections you choose on prospecting lists pull better. Catalog Success asked several list brokers and catalog merchants to share some of the current tactics that are working.

1. Make sure the selects you pull are meaningful. Every selection must be weighed against its cost and potential benefit. Donna Belardi, president of list company ALC of New York, says, “When selecting, mailers need to make sure they’re focused on cost per thousand. Very often even a 10 to 15 percent bump up in response can be offset by excessive select charges.” So while you may get excited about the higher response rate you’re getting, it may not be worth all you’re spending to get there.

Cheryl Bagdan, senior account executive at Statlistics, a list brokerage and management company based in Danbury, Conn., suggests: “Ask yourself, is that select really something worth paying for, or is it something inherent in the file’s makeup?” Examples of selects that may be unnecessary are dollar value and gender — if, for instance, most of a particular catalog’s buyers tend to be male or high-dollar value buyers anyway, Bagdan explains.

Recency typically is the No. 1 variable people look to for increasing response. Says Belardi, “But with recency, recognize that a hotline name or three-month buyers are not always necessary. Six-month buyers may be fine.” Therefore, pay only for what you need; that is, don’t over-select — which brings us to the next point.

2 Balance the selection process. Chris Montana, senior vice president at Mokrynskidirect, a Hackensack, N.J.-based list firm, cautions against over- or under-segmenting a list. “Today, more than ever, a list has only one chance, maybe two, to make a good impression on a mailer,” Montana says. “Testing or retesting a list or segment is crucial, as is finding the right select.”

Over-selecting a list may ensure good upfront results, but that will cause problems down the road for future continuations and rollouts. With so many selects, list cost may be prohibitively high, and/or the list universe may become too small.

Lack of segmentation, on the other hand, may give the mailer too broad of a sampling of the list owner’s customers, negatively impacting performance, Montana explains.

3 Pick the right selects to zero in on your prospect target. In mailing to outside prospecting lists, Gooseberry Patch, the Delaware, Ohio-based home accessories and cookbook cataloger, has noticed that one select in particular has been making a difference. “Product category has been of growing importance in making some lists work for Gooseberry Patch,” says Liz Plotnick-Snay, chief operating officer.

And for Lenexa, Kan.-based food cataloger Wolferman’s, it’s the traditional recency, frequency and monetary (RFM) value, along with gender, that tend to work best, according to Laura Brady, general manager.

Speaking of monetary value, ALC of NY’s Belardi explains that it pays to know precisely what you’re getting when it comes to catalog selects. “Dollar selects don’t always have the meaning you may think they’re going to have — especially if they’re based on cumulative purchases,” says Belardi. If you’re considering a dollar value or average order select, have your broker discern what the data really mean, she recommends. Oftentimes list owners maintain a cumulative average dollar select for each buyer, not a per-order dollar value, she says.

Regarding another often-chosen select, the catalog multibuyer, Belardi feels these individuals aren’t always the best choice for prospecting. “A catalog’s best buyers, those who purchase the most from one or two catalogs, may already be so loyal they aren’t looking for other places to shop,” she explains. A better option for customer acquisition may be a catalog’s new-to-file buyers, Belardi points out.

4 Ask specifics when it comes to a list’s source. One significant area to ask about, says Statlistics’ Bagdan, is if more in-depth sourcing specifics are available. For example, how much of the file is Internet-generated? If that information isn’t on the datacard, have your broker ask for it.

“Sometimes, a list [owner] will say only catalog buyers, and won’t break out which sales come in via the Web vs. mail vs. phone. But this can be very useful information that companies are starting to track more carefully.”

Mike Hayden, senior vice president, brokerage, at list company Millard Group, Peterborough N.H., explains why the current sourcing problem with Internet buyers vs. catalog buyers developed: “Because of the responsiveness of the Internet, there’s been a lot of confusion recently in reading results in catalog data. The Internet now accounts for 40 to 50 percent of order placements for many catalogers. And keycode information accuracy has not kept pace in many cases, so mailers have lost track of their matchback information.”

For a while, Hayden says, some catalogers thought incorrectly that these were all new buyers. “Actually, most of the Internet sales were driven from the catalog. But [mailers] weren’t doing a good enough job of tracking those sales. … We’re just starting to regroup and get a better grasp of the data.”

5 Use the new list technology tools available. Today, list owners offer more selects and segmentation possibilities than ever before. Beyond traditional RFM, list enhancements such as demographics and lifestyle have become almost standard on lists with 12-month universes in excess of 150,000 names, according to Mokrynskidirect’s Montana. “The key to list success is utilizing many of the new segmentation tools available from list owners, co-op databases and service bureaus.”

Other tools include optimization from co-op databases. Service bureaus can offer good customer and response modeling to enhance and improve list productivity, while product selects from the list owner allow you to drill deeper into the list for best results.

Susan Darling, group vice president, brokerage, at list company Mokrynskidirect, agrees, adding, “ZIP modeling has re-emerged as an effective way to boost marginal list results, expand into deeper selects on continuation lists and successfully test into out-of-category lists.”

One strategy that’s helped at Design Toscano catalog: Loosening up the list selects and using tools such as Abacus optimization and CMS ProSelect.

As Martinez explains, “With response lists, the real challenge is we’ve always had to use fairly tight selectivity to make them work. How do you make tight selections even more selective?”

Today’s tools allow a cataloger to essentially lop off the bottom of a list, the poorest names, circulate a bit less but mail only the better names. Says Martinez, “We pay to run lists through this process, but we save on postage and paper by mailing fewer catalogs to people who probably wouldn’t respond anyway.” Design Toscano has found this process to be most effective in stopping the erosion of its quality list universes.

One surprising fact: Martinez originally thought some optimization tools would allow him to go into his “C” lists more, but that hasn’t happened. “We’re still just using these lists on a limited basis,” he notes. “C” lists for Design Toscano consist of book clubs and apparel catalogs, even some home catalogs with a different demographic, say, buyers who tend to be more conservative, whereas Design Toscano’s might be described as more artsy.

Keep It Fresh

To be sure, discovering fresh prospect names to mail won’t get easier. You must find ways to re-work the same files to discern new segments to mail. Wolferman’s catalog, for example, has tested lists that ended up not performing at the company’s standards, says Brady. But instead of dropping the lists the following year and being stuck with fewer lists in its mail plan, Wolferman’s modified its selects. “Simple modification improved the performance of the lists,” says Brady.

Mike Hayden says in his work with Millard Group’s clients that he’s seeing list exchanges becoming an ever-growing part of the industry. “A by-product of this is it means list rentals are down, and so is list income.

“Another trend impacting us,” he continues, “is the saturation of retail, which has stolen some market share from our industry. There hasn’t been a lot said about it in the direct marketing community.”

What does all of this mean for catalogers? “We all have to keep working harder,” Hayden says. All catalogers, he continues, should have a contact strategy for customer acquisition. To avoid over-contacting certain segments, he suggests, make an update schedule for when you want to mail each segment and how often.

When it comes to prospecting, says Hayden, “It pays to have a plan.”

One Money-Saving Tip

When renting prospect lists, request a cap on select charges, suggests Cheryl Bagdan, senior account executive at list brokerage and management firm Statlistics. “If several selects, such as recency, gender, age range and income are all needed to make the list work for my catalog client — and with all those selections the list price becomes too high — we recommend negotiating those select charges down to a reasonable level,” Bagdan says. “So instead of paying a hypothetical $35/M or more for the selects, we suggest paying a max of $25/M for all the selects.”

List selects can help you target the best individuals for your offer. These are the selects available on the datacard for Essentials by Anthony Richards catalog.

Customer-Acquisition Strategies for Newer Catalogers

If you’re new to the catalog business and just getting educated in the complexities and challenges of list rental — or if you’re a veteran cataloger looking for additional ideas — following are sound strategies to employ:

1. Set up good controls for your list testing, advises Donna Belardi, president of ALC of New York, a list brokerage and management firm. “Even mature catalogs make mistakes. Don’t just jump on the first numbers you see that seem statistically valid. Be aware of trends, like seasonality, that could be skewing your numbers. Focus on response, not average order, as you expand and grow your file,” Belardi says, noting this is key in the beginning as you establish your business.

2. Participate in the cooperative databases, recommends Mike Hayden, senior vice president, brokerage, at list company Millard Group. “It doesn’t take a lot to get access to good, quality names, and there’s only a 5,000 to 15,000 minimum to get in.”

Co-ops are where Design Toscano catalog finds its bread-and-butter names these days; the cataloger’s use of co-ops is up from 40 percent of its prospecting a couple of years ago to about 60 percent this year. Erik Martinez, vice president of marketing and information technology at Design Toscano, says he has found success working with Abacus and NextAction, for example.

Millard Group’s Hayden confirms that he, too, sees co-ops picking up market share. “For mid-size mail-order companies, I see an increase in the percentage of their mailings to co-ops — from about 20 to 30 percent of their circulations to 35 or 40 percent.”

That’s because with the co-ops merchants can make the numbers work better. “Take a $120/M response list rental, add in selection charges you need to make it work, and it gets quite expensive. On the other hand, you can mail names from a co-op database for $55/M. If the results are similar, or even slightly less, it’s a no-brainer.”

3. Don’t cut corners on lists. Cheryl Bagdan, senior account executive at Statlistics, a list company, says, “Spending money on things like creative, agencies and fulfillment, then cutting corners on the lists, is a big error. That’s not the place to cut.”

There are more list choices and list segments available

today then ever before, Chris Montana, senior vice president at list company Mokrynskidirect, says. “A good broker can point you in the best direction to achieve your short-term and long-term goals.”

Alicia Orr Suman is a freelance writer specializing in direct and catalog marketing. You can reach her at aorrsuman@aol.com.