Everything has a cost. And to run a business you have to spend money to make money. Even doing nothing has a cost. Marketing the business or organization is one area where many owners are loath to part with their cash and rife with misconceptions about the cost-to-benefit ratio for marketing. This post examines mailing lists in direct mail marketing and how to manage the list to spend those dollars wisely.
Whether this is a full blown campaign or a small mailing job, the following are steps to keep in mind before launching.
1. Define your objective and expectations
What are you about to spend your money on and why? The business objective for a mailing needs to be as crystal clear as any other business expense. If the business is in acquisition mode, the cost to acquire new customers or donors will be quite a bit more to get those results than if the objective is retention or maintenance mode.
Also, examine if expectations for the mailing are realistic or not. A one postcard mailing will only start to build awareness of the brand but can’t be expected to deliver increased sales or instant donations.
And keep in mind message vs audience. The mailing list may be perfect in terms of addresses or customer demographics but if the message isn’t right, the response rate won’t be either. On the flip side, the postcard can be beautiful, the photography pristine and the message perfect, but if it’s going to the wrong audience, it’s still going in the trash can. Think through what the business is really good at and then determine when to pull in experts to do it instead.
What data? Is there any? Many clients are unsure what their marketing partner means when they ask for their data. Is it the last hundred people who bought a pedicure? Last year’s list of names who came to their performances? A friends and family mailing list? All of these are good answers and all can be transformed into people who respond to your message whether the data is messy or pristine and updated regularly or not.
But keeping up with the data internally has a cost. “Mail, oh sure, we’ve got admins or volunteers to do that. Just stick a stamp on it and we’re good.” How good is that employee with Excel? Do Fred and Sue abbreviate things the same way? Even though the list is one of an organization’s most valuable resources, is this what the business or nonprofit is really good at? And if not, thousands of dollars in undelivered mail will go down the drain. Keep in mind that companies like InfoVine process mail data all day, every day.
Even if the organization has a perfect understanding of its customers or donors, a mailing list is still a work in progress. The US Census Bureau reported that the national move rate was around 10% (9.8%) in 2018-2019 which was down for the first time, dropping from 13-14% in the early 2000’s. Why does this matter? If the list were pristine and nothing was updated, in three years that list would be about 30% wrong. In addition, the effect of the pandemic has compounded this calculation with the number of temporary moves i.e. from large cities to the suburbs or people moving in with family members to care for relatives. Those numbers will change again as soon as the impetus for the move is resolved.
The US Postal Service’s biggest initiative is to drive down the number of non-deliverable mail pieces to save time and money and ensure that its scarce resources are used effectively. Part of this initiative resulted in the National Change of Address (NCOA) database. The database was “developed with secure data store technology to increase security of postal customer data and protect the privacy of this information” and “enables mailers to process mailing lists and update lists with new addresses prior to mailing. The NCOALink data is provided on a regular basis to companies that have been licensed by the Postal Service.”
All of the big mailers, including InfoVine, get it and use it. In order to get the cheaper bulk postage rate, the mailing has to go through NCOA every few days. When InfoVine processes a project, it runs the client’s mailing list through NCOA for every job before posting.
So what’s the problem? Pre-sort mail pieces can’t be mailed without a few abbreviations in order to go faster, so the machines can read them and they can be delivered. Lists where “Street” is abbreviated multiple ways or where “Street” is spelled out have a cost and NCOA is part of the price. Data doesn’t have to be clean when it comes in. The direct mail company has many ways to clean it up and help turn it into a mail list. InfoVine always sends a new list back to the customer after a job. And it’s tested with a few records to make sure nothing went wrong in the data clean-up process and the records weren’t out of sync.
3. Data Analysis
Once the initial list is cleaned, it’s worthwhile to have it analyzed to see what the data reveals. Who’s really on this list? Does the list reflect the hoped for targets? It is extremely important to validate the list to determine what unites the potential donors or buyers and identify their common traits. Analyzing the data that makes up the list creates data certainty and helps put standards around an organization’s donors or clients. Analysis allows a company or nonprofit to develop a profile and infer who is donating to you or buying from you.
List analysis is inexpensive. The more markers, the greater the cost but the going rate is around $25-45 per 1000 records. A 2000 record list analysis might cost $50-90 or so. Is it worth it? The more you know, the more you know, however even the top five markers will return a wealth of information.
The top 5 are:
· Household income
Data analysis takes about one week. Direct mail companies frequently use outside service providers to do the analysis and can slice and dice the list into multiple demographic markers (up to thirty.) The categories or “match elements” are what one would like to see in an ideal list. Are these the customers that were expected? If not, supplementing the data may help.
4. Supplementing your data
Once the data is analyzed for its primary characteristics, the next step is deciding whether or not to supplement it. Lists can be rented, bought or traded. Lists that are targeted to particular lifestyle clusters like “empty nesters” or “EZ Street” can be very beneficial if the goal is to build the size of the list. List trading is particularly prevalent among nonprofit organizations in the same area that have similar activities, say operas or symphonies or groups supporting child welfare. Some lists are very expensive, like those of luxury car buyers. And some, like voter data or property tax data, are quite inexpensive. Once the decision to supplement is made, the whole process of adding the data can be turned around in a day.
There are lots of ways to supplement depending on the objective; remember Point 1? But however it’s done, the resulting list will be far larger than the number of mail pieces initially targeted for mailing. To get to “the number” requires some of the same science that was used in the initial data analysis. Lopping off the top and bottom of the list doesn’t cut it. In a process called “nth sorting” a certain number of addresses is deleted from the original list and . . . the list is born. The resulting list doesn’t have to be a large one. Numbers alone will not necessarily get the hoped for results. Casting a wide net is appropriate if the aim is to build brand awareness or introduce the company to a new community, but follow-up mailings are imperative if the goal is sales or donations.
Getting the perfect list isn’t the whole story. As the results roll in, make sure expectations haven’t changed from the initial objective. Follow-up mailings, multiple touches, get increasingly better results than a single mailing. A minimum number of three touches is a good rule of thumb to get any uptake other than brand awareness. Promises to get to a certain response percentage are very tricky. The additional benefit to follow-up mailings is the opportunity to test the list. Direct mail offers an excellent, and inexpensive, testing environment. Remembering that analysis is cheap, it may be worthwhile to mail to a greater percentage of a different demographic than the original mix based on response rates to the first list.
And remember that getting the perfect audience, as represented in the mailing list, is only part of the testing equation. The organization’s message - how it’s presented and how it’s perceived and received - matters as well.