Saving Profit by Using Advanced List Hygiene

Catalogers can save significant dollars through advanced list hygiene. There are two parts to the conversation about advanced list hygiene:

• here's what list hygiene provides and here are areas identified that you need to decide whether to mail these people; and
• what are the tactics and testing that lead to the business rules to actually capture these savings?

It's the second part that catalogers don't understand. They often ask themselves the following questions (along with my answers):

• Should I mail all the new addresses? Not if they're old housefile names that aren't profitable. Some of the address changes shouldn't get mailed.
• Should I suppress all the old addresses? Yes. Some mailers don't understand this! A proprietary change of address (PCOA) database identifies significantly more names not to mail than a national change of address (NCOA).
• Should I suppress DMA Pander, prisons, APO/FPO (i.e., military mail), etc? Test and see, but usually the answer is yes because these addresses don't respond.
• Why fill in carrier routes? Doesn't co-mail do this? Yes, but you pay based on your carrier route penetration vs. pool penetration, so it works to your benefit to fill those eight and nine carrier routes. The mailability scores are huge. Just mail these bad scores (they're undeliverable) and you'll see really low response, helping you to realize that the mailability scores alone pay for the whole program.

I'm always coming up with tactics and business rules for how to use advanced list hygiene. Many mailers simply don't understand how to implement the beautiful data that comes out of advanced list hygiene. Here are some tactics:

• Set up tests for new and old NCOA and PCOA addresses (zero to 12 months NCOA; zero to 12 months PCOA; 13 months to 24 months NCOA; 13 months to 24 months PCOA; 25 months-plus NCOA; 25 months-plus PCOA; rental NCOA; rental PCOA; catalog request NCOA; catalog request PCOA) to see whether these new address changes prove profitable.
• Test mailing old NCOA addresses to your recent buyers. For some categories like home décor the old addresses prove profitable.
• Don't mail undeliverable addresses (duh), but also don't mail addresses with low mailability scores determined by list hygiene services. Your mail file could have 1.5 percent to 2 percent of addresses with low scores; these low scores are undeliverable.
• Don't mail DMA's pander file, but do mail your own housefile names that show up as DMA pander file hits.
• Check out the suppression file details and set business rules whether to mail deceased names, college ZIP codes, prisons, trailer parks, nursing homes, etc.
• Determine whether you should mail two catalogs to different names if they live at the same address and it's not an apartment building.
• Fill out your carrier routes with more catalogs when you have either eight or nine catalogs already in that carrier route. It's actually free circulation.

Work closely with your merge/purge service bureau to understand your advanced list hygiene. Plan on saving 2 percent to 5 percent each mailing by simply scrubbing out unprofitable names that are identified by list hygiene. The profit impact of cutting out 2 percent to 5 percent of your catalog circulation is a huge boost to your bottom line.

For example, if your catalog cost represents 30 percent of your total sales, then cutting out 5 percent of undeliverable mail drops an additional 1.5 percent in profit to your bottom line. Does all list hygiene provide the same benefits? Not even close. Advanced list hygiene gives significant benefits, however:

• PCOA as well as NCOA services (and the rules for testing NCOA and PCOA to determine when to mail a new address);
• mailability scores, which allow you to cut out undeliverable circulation;
• suppression categories, which allow you to identify some pure waste in your circulation; and
• visibility into all the nitty gritty details of your list hygiene, enabling you to develop business rules to test and save.

The advantage of PCOA is it finds many more old addresses than NCOA that should be suppressed. Here are some examples of dollars and cents savings:

• On a mailing of 500,000 catalogs, you suppress addresses with a mailability score of four or five. This comes to 15,000 undeliverable addresses. With a per catalog cost of 65 cents, this yields bottom-line cost savings of $9,750.
• With the same mailing of 500,000, you have 22,000 old PCOA addresses not identified by NCOA. Suppressing those catalogs at 65 cents per catalog saves you $14,300.
• Within that mailing of 500,000 catalogs, you have 9,000 rental PCOA and NCOA changes, so not mailing to these old addresses saves you $5,850.
• By suppressing DMA's pander list, deceased names, prisons, trailer parks, college dorms and nursing homes, you eliminate 800 names or $520.
• Using the PCOA scores to stay in touch with 3,000 buyers in your 0 to 24 month buyer segment proves profitable at $2.00/catalog, so you get $6,000 in fresh revenue and cut out 3,000 books at 65 cents in waste, a savings of $1,950.
• Identify 20,000 business addresses among the 500,000 addresses and send them a special ink-jet message tailored to their business needs.
• Use the demographic scores of household income to suppress those households with an income from $1,000 to $20,000, saving the cost of mailing these low-income households your high-ticket offer.

Digging into your list hygiene will prove profitable and will cut waste out of your printing and postage costs.

Jim Coogan is the founder and president of Catalog Marketing Economics, a consulting firm focused on catalog circulation planning. Jim can be reached at jcoogan@earthlink.com.