“Without Customers there is no business”

LIST SELECTION

List - is a collection of names and addresses of prospects and customers who could be the target of an offer to purchase a product or service.

Lists are the PLACE in the Marketing Mix - Product, Price, Place and Promotion.

The list/lists a firm selects for its direct marketing effort is the single most important factor in determining the success or failure of any direct marketing campaign.

TYPES OF LISTS

1. House List - existing customers - these lists have the highest responsiveness rates to your offers because they have responded to you in the past.

The House List is the most valuable list to the direct marketer.

2. Response List - contains information on consumers or businesses that have product purchase histories from competitors.

Response Lists are available from:

  • List Owners - a firm makes its customer list available to the commercial list rental marketplace
  • List Manager - manage and market the list owners list for a fee
  • List Broker - a third party agent who rents mailing lists - the broker works primarily for the list user - intermediaries.

For Response Lists, three key factors determine usage success: RFM - Recency, Frequency, Monetary

RFM values define a firms best customers, those who are likely to purchase again because they have bought most recently, bought most frequently or have spent the most money.

Things to ask before renting/purchasing a list:

1. Who has used it?

2. Were their offers similar to mine and what was the response?

3. Were their results favorable?

4. How clean is the list?

  • In 12 months as many as 25% of the addresses on a customer list could change.

3.Compiled Lists- are put together from numerous sources such as telephone books, directories, voter lists, subscriber lists, census bureau data, etc. These lists do not necessarily include mail-order buyers.

Business compiled lists - business directories, yellow pages, NAICS codes, etc.

Compiled lists are used to saturate a specific demographic or geographic segment.

The problem with compiled lists is names do not necessarily include mail order responsive customers.

Frequently lists are combined

Merge - Purge - merging lists together then purging duplicate names and addresses.

This saves money on wasted postage.

Also, improves company image - don’t look like and idiot because have mailed to the same person three times.

List Rental Agreements - usually only for an agreed to number of uses. Frequently a firm must get approval for what it is going to mail.

Seeding or Salting is the placement of fictitious names and addresses into the list so mailings can be monitored. This ensures the list is not used more than the agreed to number of times.

List Segmentation - decide to mail to only a portion of the list instead of the whole list.

Segment Criteria:

1. Demographics - age, income, gender, ethnicity, occupation, achieved educational levels

2. Psychographics - lifestyle characteristics

3. Mail - order characteristics - RFM

4. Physical Characteristics - of the list itself, size of names, deliverability, format, etc.

Statistical techniques are used to determine purchase probability and predict segment response rates.

DATABASE MARKETING

Database Marketing - the process of creating information records about individual customer’s orders and inquiries, which are used to analyze patterns for more effective targeting of product and service offerings.

* promote the benefits of brand loyalty to customers at risk from competition

* identify which customers are most likely to buy new products and services

* support low cost alternatives to traditional sales methods

Billions of pieces of information can be processed in minutes to determine which customers should get particular messages in endless, unique sequences of contacts over days, weeks or years.

Uses of Databases

A database can be subdivided into segments

1. Select specific market segments - increases productivity and lowers costs

2. Frequent communication can garner/encourage repeat purchases

3. Cross selling - when a firm owns several businesses that share a common database they can enjoy greater sales and lower costs. Sell current customers something related or unrelated.

4. Competitive superiority - offer better merchandising/service

5. Profile existing customers and target new similar customers

6. Market research allows for the development of new products and services and better targeting because of media preference.

Strengths of Database Marketing

1. It is measurable. Responses are counted

2. It is testable. Different things can be tested, product, brochure, medium, target market, etc.

3. It is selective. Communicate only with specific customers

4. It is personal. Communicate only the details each customer cares about

5. It is flexible. Time the offers for when I think I will get greatest response.

Weaknesses of Database Marketing

1. It is expensive to create and manage a database

2. It is difficult and time-consuming to keep customer and prospect records up to date

PRIVACY ISSUES

Most personal information is obtained from secondary sources, where information is accessible without the individual’s knowledge.

People suffer from a psychological sense of insecurity by violation of a person’s right to choose the time and place of social interaction.