Insight: Evaluating third-party mailing databases

A Guide to Identifying, Evaluating and Selecting High-Response Mailing Lists – originally published as “Mailing Lists under the microscope” in IT@Work, The Sun, Mon, 1 Oct 2001

It will come a time when your business will have to seek out new customers. Whether you are introducing a new product or expanding your market, new customers will be key to your growth and expansion. One of the ways to do just that is by using direct marketing to target key markets who are more likely to be interested in your product, service or brand.

In direct marketing terms, choosing the best media or mailing list is the key to reaching the right target group – audiences that are most likely to respond to your offer. This is true whether you are mailing to a physical address, using television, radio or print and last but not least, if you’re using e-mail.

Many firms offer mailing lists that have been compiled from offline sources or from the Internet. These lists represent opportunities for your business to reach new customers who may not have purchased from you before. Third-party mailing lists are not sold but rented, typically for a onetime use.

However, before you use such lists, it is advisable to do a background check on the mailing lists and gain an understanding of how the lists were compiled. In many ways, evaluating a mailing list is no different from evaluating advertising rate cards (media kits) for media sites. There are additional factors that you will need to examine.

1. List Size
2. Description
3. List Source
4. Available Selection Criteria
5. Frequency of Updates
6. Active versus Inactive users
7. List Usage
8. Costs

Evaluation Check-list

1) List size: Many marketers would rather rent a large mailing list rather than a small one. A large mailing list gives the option to invest a small portion of the budget to test the success rate of the list. By testing a sample percentage of the list, we will then be able to determine whether to improve on the offer, the creative or whether to continue using the rest of the list for the campaign.

2) Description: Who is on the list? Are they current customers of the list owner, contests participants or subscribers of magazines? Determine an accurate profile of the type of people on the mailing list. It is important to know the description of those on the list so you may be able to accurately match the offer to the target group. For example, if the mailing list belongs to a magazine publisher, examine the editorial content of the magazine. If you’re selling music CDs for instance, you may find a more willing buyer among list members who reads music magazines.

3) List source: I cannot emphasize this more: thoroughly check the origin of the names on the mailing list. You would have to ask the list owner how the list was generated, including any policies and procedures they may have to generate those list. Are they their customers? Subscribers to a particular publication or attendee at a seminar? Were they part of a pool of contest entrants? Are they opt-in or opt-out?

There are two reasons why this is important. Firstly, it is to ensure that you do not rent a list from a spammer. The list you are renting may not exactly be what you were told they were and you may end up spamming the people on that list. Secondly, it is to determine the relative quality of the list. For example, a mailing list of customers of an online store is more valuable than a mailing list of people who entered a contest. The real difference? Customers of an online store have already shown their willingness to purchase something, while the motive of customers who are bent on getting free stuff may not necessary generate the results you want.

4) Available Selection Criteria: One of the main benefits of direct marketing is the ability to accurately target the audience that are more likely to be interested in your product, service or brand. The list owner should indicate to you the selection criteria by which the list can be segmented. The more selection criteria a mailing list has, the more they know about the people on that mailing list. Therefore, the better you will be able to select the segments of customers closest to your target audience.

5) Frequency of updates: Find out how often the list is cleaned. Over time, a mailing list can have bad addresses, duplicate entries and so on. A frequently updated and clean mailing list could ensure that you do not waste your marketing dollars on errors or sending out the same message to the same people twice. Although many email list owners will not charge for e-mails that cannot be delivered, you should find out right at the start to ensure that bad addresses are kept to a minimum and duplicates are weeded out.

6) Active versus inactive: List owners may not like you to know this but not all their list members are created equal. Some of the people on their list are more active than the rest, and by that, I meant they are more active according to the nature of the list. For example, if the list belongs to an e-commerce merchant, active users would be those that buy often from the merchant. Active users are also those who either spend more time on the website, read a newsletter more often or use more functions on a website. A lot of list owners will hype up the huge list they own. The number of people on the list would be totally worthless if none of them are active users.

7) List usage: It will be worth your while to determine the number of times the list is used. Lists that are rented more often usually suggest that the list could be bringing in desired results. A word of caution, the number of times the list is used could also spell trouble. This is especially true if the list owners continually sent email messages week in week out to the mailing list. High frequency of advertising messages could cause email fatigue among the people on the mailing lists.

Cost: Mailing list prices are usually charged per thousand names. In traditional direct marketing, the typical price you might pay for a mailing list ranges between RM200-RM500, sometimes more if the list is valuable. The more responsive the list, the more valuable it is and more likely to be rented often. At present, email lists cost around RM800 to RM1200 per thousand, a price point that is way too high to pay for in my opinion. Certain list will be able to justify that level of pricing, however the quality of the list would have to be proven in order to warrant such a premium price.

There are more factors that can be further scrutinized to ensure the most optimum use of mailing lists. I have highlighted only the basic elements that you should be wary of. Truth is, the number of variables that you can examine is limitless. The best way to extract the best results from your marketing dollars is to continually test the variables of each campaign and adjust your strategy accordingly.

At the end of the day, the most valuable list you can tap into is your own house list. Thus, for every campaign that you run, remember to add on to your house list. Any responses you get from your rented list should be added to your house list. Over time, you will be able to balance your marketing budget between new customer acquisition and customer retention, knowing full well that keeping existing customers loyal will be far more rewarding than getting new ones.

[Written by Jui Hong Teoh, Managing Director, BRANDTHINK Malaysia. Originally published as "Mailing Lists under the microscope" in IT@Work, The Sun, Mon, 1 Oct 2001]