What You Should Know About List Rental Data Cards(1,657 words)

By Stepen R. Lett

How do you know if a list you're testing for the first time will work, or if it's even the right list to test? Obviously, there's no way to know for sure prior to mailing. But studying the list data card in advance and really understanding what it tells you can help minimize the risk of testing.

This month, I'll review what a list data card says about a file and how you can better interpret this important information.

Market and demographic profile. The main considerations for list usage are the product category/market and the demographic profile of the list you're considering. For example, are these prospects buying similar products to yours, and are they demographically similar to your customers? Indeed, the more similar the better.

However, I don't advise you to select a list based only on its demographics. Why? The data on demographically enhanced files (i.e., lists that have been enriched with other data on the customers) generally aren't as fresh as non-enhanced lists. (That said, data cards on a non-enhanced file often do include average age, income and marital status.) This means you must choose which is more important to your offer: specific demographics or recency of purchase (i.e., the date of a customer's last purchase).

If a list's demographics match your ideal profile, it may make sense to use the file with the best recency and forgo that list's enhanced version. Keep in mind that most demographic data is based on head of household or total household information. Often this information doesn't reflect the records you're actually selecting.

Is the average unit of sale comparable to yours? Average order size must be considered. But if you have an average order of $100, you don't necessarily have to rent/exchange lists that also have an average order of $100. Consider the relationship to the actual market.

For example, if your business is high-end apparel and your average order is $150, you may be able to use names from a gift mailer with an average order of $100. Both are high average orders for their markets and therefore, are attracting customers willing to spend more than usual.

Take-away tip: Don't pay for a dollar select unless it's necessary. Doing so will only increase the cost of the list you're testing.

Know what other mailers are using the file, especially when you're testing a list for the first time. This information always is available but not automatically included on the data card. Request it from your broker.

If your competitors are using a file, it should be a top consideration for testing. And if the mailer is using lists that currently are working for you, this also is a good indicator the list will work for you.

Take-away tip: Look at who currently and consistently is using the file. It's only meaningful if you know whom the list works for, not who may be testing or has tested it just once. In some cases, seeing the usage on a list can give you other test ideas.

Get a sample. It's hard to judge if a list is viable strictly from the information on the data card. Find the Web site of the catalog list you want to test or look at an actual catalog sample before testing a particular list. You'll get a better feel for whether there's list synergy.

Take-away tip: Don't rent a list blind.

Check the relationship of six-month to 12-month buyers. If the percentage of six-month to 12-month buyers is greater than 50 percent, it usually means the mailer is prospecting and bringing on new and fresh buyers to the file. In other words, they're growing their housefile. It's a good idea to keep track of this for your continuation lists, as well as when you're considering a new test.

Take-away tip: Test outside lists that are adding new names to the file on an ongoing basis.

What's available to select? The selects that impact performance the most (assuming the list you're using is viable to begin with) are recency, dollar and gender. (Recency is the most important consideration.) As mentioned previously, it's unnecessary to request selects you don't really need. Selects will increase your cost per thousand names rented.

Dollar selects can be used to skim the cream off the top of the list or remove the bottom of it. The only way to determine if you need a dollar select is to get detailed counts by dollar break. The chart "Sample File"

indicates that about 86 percent of the $50+ universe are actually $100+. This information can help you determine if the incremental cost of selecting a higher dollar amount is justified.

Sample file: If the list is on exchange, the rate of the dollar select doesn't come into play, but the information can be just as useful. If you have a list that's a top performer, you may want to test a lower dollar select to open up a greater universe of names.

Gender select: Since most offers are preferred by one gender over the other, it's extremely important to be sure you're getting your offer to the right person. Gender selects are available on all lists, but it's not always necessary to order them.

For example, if your offer targets women and you're considering a list that's 95-percent female, you don't need to pay for a gender select. Chances are that many of the remaining 5 percent also are female. These statistics usually are based on first-name tables. Therefore, first initials and names such as Chris and Pat are classified as unidentified. If you have a continuation list that requires a gender select, it's likely you're missing these unidentified records. They may work well for you and certainly are worth a test if the file is large enough.

Recency is another key factor in list selection — perhaps one of the most important considerations. Undoubtedly you know from your own mailings by RFM (recency, frequency and monetary value) that recency is by far the most important criteria. Test the zero-to-12-month buyers first. You'll pay a premium using zero-to-three-month or even zero-to-six-month selects, which might not be necessary. You always can tighten the select if needed.

What's more, the tighter the recency select, the more limited the universe. Part of your mailing strategy should be to expand the prospecting universe for your particular offer.

What will you pay for the list, and how can you control your costs?

Be judicious. Do you really need a specific select, and if so, is there an alternate way to get at the same quality names?

For example, in addition to recency, you can use a dollar select on a list. Test multi-buyers instead of using a dollar select (or in combination with a lower dollar). Generally, a multi-select roughly is $5/M to $10/M, and dollar selects can be in excess of $50/M. Will a three-month, $50+ multi-buyer perform as well as a three-month $100+ buyer? It's worth a test, and it'll save you money.

Negotiate list fees. List fees are becoming excessive — but they're negotiable. Try to get as much as possible on exchange (today, up to 50 percent of all list orders are on exchange). And negotiate list charges by giving your list broker guidelines for what you'll pay for a specific list based, if possible, on past/expected performance. Determine what you can afford to pay for a list. Don't just accept the published rate.

Know the cancellation fees and terms. It's more commonplace today to charge full selection rates on cancelled orders, in addition to a flat cancellation fee and running charges.

Watch e-mail delivery charges. List owners are charging to send you their files via e-mail, and most likely your computer service bureau is charging you to get files via e-mail. Combined for each list you rent, this could cost about $100 versus a magnetic tape or cartridge fee of $15 to $25, plus shipping charges.

Service bureaus prefer e-mail. Many years ago, it was more difficult to handle e-mailed files because it was more of an exception than a rule, so they created a surcharge. Of course, this is no longer the case, but the surcharge remains.

What's the quality of the list you want to test?

Look for frequency and recency of file updates. Check the data card to see when the file last was updated. If it's updated regularly, the file is more likely to be well-maintained, which means it probably will perform better. You also can use this information to discern if there's been an update since last you used the file and therefore, if new names are available.

When was the list last NCOA-processed? This also will tell you if a list is well-maintained. In general, be sure the list has been run through NCOA within the last six months.

Other uses for data card information can include a competitive review. Keep track of your competitors and continuation lists by requesting data cards on a routine basis. Has their 12-month file grown or average order increased? Has there been a shift in the six-month to 12-month ratio? You can learn a great deal about your competitors from their list data cards.

Also do a rate review. By tracking data cards for select lists, you can easily review if your charges are competitive.

A word about list brokers: They can be extremely helpful. Take full advantage of their knowledge and work closely with them to drill down to a particular list you want to test. List brokers perform an important function, and they can help save you money. It's to their advantage to help find you outside lists that work. Consider your list broker an important part of your team.

Stephen R. Lett is president of Lett Direct, a catalog consulting firm specializing in circulation planning, forecasting and analysis. Contact him at (302) 541-0608, or by e-mail at www.lettdirect.com.