The B-to-B Mailer’s Rules of the Road

“Compared to the business-to-business arena, consumer direct marketing is a no-brainer.”

—Lee Kroll, Kroll Direct Marketing

Many will disagree with Lee Kroll’s statement. But I, for one, think he’s dead on. Read on, consider all of the challenges the b-to-b marketer faces when it comes to lists, and decide for yourself.

Consumer Direct Marketing

The universe has roughly 110 million households. Most receive mail in a box or through a slot in the front door. They answer their own telephones. True, in the words of Chicago freelancer Lea Pierce, “All mail is opened over the wastebasket.” But, chances are pretty good that if you want to reach consumers, your messages will either get into their hands or their ears. All of these households need basic consumables: food, cleaning supplies, light bulbs, toilet paper—all of which are to be found in the local supermarket. Further, these households are made up of individual consumers, who are profiled in vast electronic dossiers that describe every facet of their lifestyles, affinities, ability to pay and their propensity for being manipulated from a distance (i.e., mail order buyers).

The late economist Herbert Stein (father of Ben Stein as in “Win Ben Stein’s Money”) wrote in The Wall Street Journal: “I forgot what my old professor Frank Knight said: ‘People don’t want their wants satisfied; they want better wants.’” For direct marketers, creating consumer wants is relatively straightforward.

Take golf. You can reach golf enthusiasts via an ad in a golf magazine, by renting the subscription list of that magazine as well as lists of golf catalogs and golf equipment buyers or by advertising your product on television during a Professional Golf Association (PGA) event. Since the universe of golfers is known and accessible, the real challenge for the marketer of golfing products and services is offer and presentation.

The Business Arena

This universe has roughly 13.6 million businesses of which 71 percent have fewer than 10 employees and 67 percent have revenues of under $1 million. What are their needs? Paper, writing implements, light bulbs, a bank account and a telephone. Beyond that, their needs and wants are all over the lot. Ah, you say, ABC Co. also needs cleaning supplies, a vacuum cleaner and toilet paper. Yes, but ABC Co. contracts an outside firm to come in and clean the offices at night. This means the cleaning company will purchase these supplies, not the end user.

Out-of-Date Business Lists

True, dozens of electronic dossiers exist on each business—its size, number of employees, employee titles, annual sales, square footage and whether it rents or owns its space, SIC, number of years in business and, of course, the address and phone number.

But in direct marketing, businesses are not the customers. People are. And while the names of many of the employees are known, consider this:

If you go to a business conference and ask for a show of hands of everybody that has a different business card today than one year ago, half the hands in the room will go up. Guaranteed. Either the person has a new job in the same company, a new mailing address, a new telephone number, has left the company or has become a consultant.

Quite simply, while the company itself may be at that address and phone number over the years, employee turnover can be as high as 1 percent a week. Thus, after two years with no updates, a business list is basically toast. For example, let’s say a list has been compiled from a directory, and that was updated over a six-month period; further, it took three months to print and distribute the directory. Already, the names are nine months old. Buy that list nine months after it comes to the market, and the names are 18 months old.

Thus, if a mailer goes to all the expense and trouble of creating a personalized letter and someone else is now sitting at that desk, was that expensive personalized format the most efficient use of marketing dollars?

The answer, of course: you test.

Many years ago, the late Dick Benson wrote in “Secrets of Successful Direct Mail”: “Contrary to popular opinion, we found no difference in results in addressing by title as compared to addressing by name.”

True today? It’s worth a test.

Other Challenges

When a new person replaces your long-time customer in a job, you may be starting from scratch. If you market Day-Timers and the new person is a U.S. Diary or a Franklin Covey customer—or hooked on the Palm Pilot—you are back to square one. What’s more, that Palm Pilot might make such an impression on the new person’s colleagues that they all switch from Day-Timers to the electronic device. You’ve lost a passel of renewal business that must be made up with some acrobatic b-to-b acquisition strategy.

Nor do you have any guarantees that the new person even reads mail or takes phone calls, let alone buys sight unseen.

In addition, it’s not easy to get your message through the mail room and into the hands of a prospect. First Bank Systems of Minneapolis and Kodak have given orders to their mail rooms to deliver First Class mail only; bulk mail or books and magazines must be sent to the home address. According to Mark Amtower of Amtower & Co., Ashton, MD, if 20 or more identical pieces of mail arrive at the Department of Defense, the mail room is empowered to trash it.

And don’t forget about Whitefang—that busybody secretary, executive assistant or door keeper—who screens all the mail and phone calls of the person you want to reach with your message. Your mailing must have perceived value to get through to the inner office. (And perceived value is not a letter personally addressed to someone no longer there). Thus, maybe you test a wrapped box or a lumpy envelope that Whitefang won’t dare throw away but rather will put on top of the pile.

Technically, First Class mail should only be opened by the person to whom it is addressed (or an assistant in the outer office). One thing is for sure: all personalized mail—First Class or other—sent into the business arena is almost never forwarded to someone who has left the company. It is either returned to sender or, more likely, trashed. The reason: It would be madness to forward an RFP to a former employee who is now with a competitor.

Who is the decision maker? The person with the title who is the end user, may not, in fact, be the person who OKs a purchase. Thus, the mailing must be considered—or phone call must be taken—by someone else. Frequently, big purchase decisions are made by committee.

The sales cycle in business—especially for higher-end purchases—often requires a far longer selling cycle (and therefore more contacts) than marketing to consumers.

The Old Formula?

The old Ed Mayer formula states that success in direct marketing is dependent on the following ratios: 40 percent lists, 40 percent offer, 20 percent everything else. This may not hold in the business arena. List research is by far the most important element. The right lists may, in fact, be 50 percent or more of the equation, which means your broker is the most important player on the marketing team by far.

In terms of dealing with your list broker, the guiding philosophy should be that of Marty Edelston, proprietor of the Boardroom and Bottom Line empires: “I always pay full commissions to brokers. That way, I can pick up the phone and call anybody for information and advice with absolutely no sense of guilt.”

Put another way, if a mailing costs $500/M, of which the list cost is $100, the broker’s standard commission is $20. Many Young Turks like to show off to their employers that they are on top of the job by squeezing the broker to agree to cut the commission in half—$10/M rather than $20/M. That $10/M represents 2 percent of the total cost of the mailing. Is it smart to screw the most important player on the team for a lousy 2-percent savings?

Know Your Arithmetic

Before marketing anything, it is imperative to know in advance what you can afford to spend. In the seven years I have been associated with Target Marketing, I believe the most important story we ever published (August, 1995) was Bob Hacker’s “Direct Mail Arithmetic the Easy Way: Six Powerful Direct Marketing Calculations You Can Do on a Cocktail Napkin.” Included were the Raw Cost Per Response; Loaded Cost Per Response; Cost Per Sale; Response Rate Cost Per Sale; Required to Hit Breakeven; and Figuring Package Cost at Any Quantity Without Going Back for a New Bid.

These simple calculations, by the way, can be quickly adapted for telemarketing, off-the-page advertising and e-mail efforts. By applying Hacker’s formulas, you will quickly know whether it is cost effective to do an expensive prequalifying telemarketing campaign to confirm your campaign is directed to the right person.

B-to B Response Lists

According to American List Counsel’s Kim Lowenthal, a major shift has occurred in the makeup of business response lists, especially in the area of publishing. Magazines come and go and their circulations go up or down depending on their relevance to the times. For example, the paid subscriber files of Forbes, Fortune, Business Week, Inc., Boardroom/Bottom Line, Kiplinger, Barron’s and The Wall Street Journal are well below their highs of the early 1990s. The reason: Business and financial information is available 24 hours a day on the Internet plus round-the-clock coverage on CNN-FN, Bloomberg and CNBC. What’s more, this information is free and immediate, whereas it’s old news by the time it gets into the pages of a weekly or biweekly magazine.

Is business magazine publishing dying? Hardly. The 1990s gave birth to some hot new business magazines that have struck responsive chords among modern managers, entrepreneurs and digital executives. Business 2.0 boasts more than 750M paid subscribers, of which in excess of 600M receive the magazine at home. (Mail your b-to-b offer to a prospect at home to bypass the mail room and the assistant in the outer office.) And Mort Zuckerman’s Fast Company has a whopping 435M paid subscribers. Beyond magazines, the b-to-b mailer looking for response lists can reach seminar attendees, book buyers, catalog shoppers and a slew of vertical lists and catalogs for specific industries.

Compiled B-to-B Lists

At the same time, the technology of compiling business lists has become an exact science. The main compilers—InfoUSA and Dun & Bradstreet—represent the starting point and the basis of myriad specialized lists that have been enhanced down to a gnat’s eyebrow. Depending on the offer, a good broker can work with you to drill down through myriad selects and come up with the prospects you seek.

• Know your arithmetic—lifetime value of your customer and allowable cost per order—both by source.

• Make your list broker work like hell.

• List rental costs can be negotiable, but brokers’ commissions are inviolable.

• Share results with your broker.

• Get data, more data and still more data.

• Make sure the data are accurate and as up-to-date as possible.

• Test everything. (But, in the words of Ed Mayer, “Don’t test whispers”—e.g., $49.95 vs. $49.99 or blue paper vs. pink paper—tests are expensive.)

• Make sure your tests are large enough to give you results that are statistically reliable on the back end.

• Make sure you can read your test results accurately.

Denny Hatch, consultant and freelance copywriter, founder of Who’s Mailing What! (now Inside Direct Mail) and former editor of Target Marketing, is the author of “Method Marketing” and “2,239 Tested Secrets for Direct Marketing Success.” Reach him at www.methodmarketing.com or dennyhatch@aol.com.