The Pitfalls of Marketing Enhanced Lists

It's been clear to those in the brokerage and management business for some time now that appending demographic and lifestyle data to established lists, once thought to be a terrific way of getting new rental markets, has had only limited success. Some rentals have taken place, some continuations have ensued, but the income that most list managers originally thought would come their way as a result of adding this information to a managed list simply has not been realized. As Yogi Berra once said, “The future ain't what it used to be.” And there are a variety of reasons for this.

It's no secret that, as a rule, successful list rental depends on the confluence of three marketing factors:

• The recency option (hotlines).

• A demographic affinity between the respondent to the list and the package.

• A lifestyle affinity between the respondent to the list and the package.

In practice, the broker and mailer initially will look for the demographic and lifestyle affinities within a list, and then — once establishing in their own minds that they're there — add recency to the rental. This makes for the classic test, the one that's utilized most often: Last-three-month hotline, one-month hotline, etc. If the list is gender-mixed, and the package is directed to one gender or another, the mix will be adjusted to add a gender select.

If the test fails miserably, the mailer and broker walk away. However, tests that come close to break-even form a considerable problem for mailer and broker. Who better to help them than the list manager?

For the list manager who really cares about making the most of rented names, a series of alternatives present themselves when a test finishes just below the break-even point. In my experience, most hard-working brokers will share with the manager the results of the test in general terms: “We almost won; what can you suggest?”

The manager often will turn to a demographic segment if it's part of the list's components: “We offer an income select; why not overlay the over-$50,000 segment onto the hotline selection?” That sometimes works; it limits the universe for continuation quantities, but it's better than what the mailer had before. But if it doesn't work, the broker and mailer are faced with the same predicament: finding something that will energize the results, bring it over the break-even mark. At that point, the manager almost always runs out of gas. And if the manager does, so does the broker — and the mailer. Finis.

Every manager has experienced the frustration I've just described: the knowledge that his list has almost worked. Now if only he could come up with a great idea that would make a retest palatable…

As we know, most mailers don't ask for age or income on their return coupons; it would almost certainly inhibit response. It's natural that the desirability of appending to the list became intense once the direct mail community found, a couple of decades ago, that the speed of computer matching (of the name and address to age, for example) had increased to the point that the mailer didn't have to wait a month before the job was finished. It could be done in a couple of days — and today, in a couple of hours! The sense was, and is, that the appending of the appropriate demographics to the list's name would enhance results to bring it over the break-even mark. Voilà! The beginning of enhanced list files.

But there were difficulties from the first that still exist today. Two examples follow: recency and the near-miss lifestyle list.

Recency

In order to offer recency on the file — high recency is an element a list order of this type cannot do without — the list manager would have to append demographics to the file at the same time, or close to it, as the list owner adds the name to the file. That is, a one-month hotline on the enhanced Fingerhooter file should contain the same names as a one-month hotline on Fingerhooter's regular list. Of course, it's possible to do this, but list owners are reluctant to pay the costs for high-speed computer matching, and at a 10% commission, the list manager surely is not going to do it.

Remember, the primary marketing purpose of using an enhanced file is to intensify response by adding a demographic element to the original test. But without the same hotline as in the initial test, the renter is simply trading test elements — in the case described, he's adding a demographic but losing some recency. That usually won't work.

The description of recency on data cards involving enhanced files is also a tricky business. The broker must ask whether the “three-month hotline” on the card means that the buyer, in fact, purchased three months ago, or whether the buyer bought within three months of the date of appending demographic data to the list!

Strange to say, these things have been known to happen — and when they do, nobody benefits. The list owner and manager lose because the test has virtually no chance of working under these circumstances. Is getting test income that important when one knows the chances of getting continuation income are remote? And of course, the mailer and broker lose because they've wasted a test — and the money that went into it.

The Near-Miss Lifestyle List

What is that, anyway? Well, many magazine and merchandise files are heterogeneous: general interest gift catalogs, women's magazines, and the like. Every list skews in age and income, but the general interest lists also skew in lifestyle. If a chachka buyer also happens to be a stamp collector…well, we don't know it.

Some offers thrive on general interest lists that are undefined demographically or by lifestyle; the packages from magazine agencies such as Publishers Clearing House, and general interest gift catalogs, often depend on diversity for success, because of the variety of magazine and merchandise lifestyles inherent in the products being sold. Ninety-six magazine subscriptions offered, 57 different lifestyles. And if there are 1,000 products in a catalog, an infinite number of lifestyles. The problem becomes intense when the rental offer targets a particular lifestyle such as cooking or gardening.

If the general interest list being considered has a product select, a clear direction is apparent for mailers: the product may very well indicate a lifestyle preference. In that instance, take the appropriate lifestyle, take the recency, and swing for the fence. It must be understood before you come to bat, though, that the selection by the buyer of a set of steak knives does not indicate his or her consuming interest in cooking. But in this world, nothing is certain anyway. It might very well be worth a try.

But what if the general interest list has no product select? It was this consideration that led list managers to make deals with various questionnaire lists and companies such as The Lifestyle Selector or Experian to append their files. It was thought that tacking on these lifestyles might provide a logical solution.

And now the problem becomes apparent. For without recency, the lists lose much chance of working. It is possible, of course, that the lifestyle itself, plus additional demographics such as age and income, might draw the package into the black. But it's a difficult task.

So here's the dilemma:

• If the list manager creates a lifestyle-enhanced Fingerhooter file, it enables the mailer to choose the lifestyle but give up the recency.

• On the other hand, if the list manager adds lifestyle to its list's master file, the mailer will almost certainly choose the master file with the lifestyle select. That will give the mailer what he wants but he most likely will take recency plus lifestyle as his first test, rather than a simple three-month hotline trial of the entire list. However, if he does that, the continuation universe will be sharply limited! Result: a theoretical loss of income to the list owner.

In the light of these difficult alternatives, the manager and list owner generally have opted to create two lists instead of appending to one. I am a businessman — although there seems to be some difference of opinion about that one — and I don't think this is a cut-and-dried decision. It depends on who the manager considers his primary customer — the broker/mailer or the list owner. Most managers would choose the latter. I can hardly blame them.

I am certain technology will solve these problems. In the meantime, we're doomed to live with the limitations of our own trade.

Bob Castle is a New York-based marketing consultant.

list news

• ClientLogic Specialists Marketing Services has been designated list manager of BMG Music Service's file of 8.4 million active members. The Weehawken, NJ-based firm will also oversee the Jazz club, Encore classical music club, Sound & Spirit Christian music club, Ritmo y Pasion Latin music club and the master file. Singer Direct continues to manage BMG's alternative media programs.

• MeritDirect has been named manager of the Office Max direct buyers file and master file. Direct buyers contains a universe of more than 1.9 million with one-, three-, six- and 12-month recency selections available. The master file names over 4.7 million buyers with selections including type of business, number of employees and sales volume.

• Direct Media Inc. appointed Karen Mayhew executive vice president of its consumer list and insert media management division. She has been with DMI for 18 years, working on consumer list marketing with an emphasis on catalog, continuity and mass market files.

• Paul Thau, who started Singer Direct Inc.'s Internet division five years ago, has been promoted to senior vice president for online media. As part of his new duties, he will attempt to integrate the firm's online and offline units.