Focus On: Lists: Get Serious About Your ROI

Renting lists for your mailing campaigns is a necessary — but inherently risky — expense. You’re spending money for an uncertain outcome because you can’t gauge exactly how names on a given list will respond at any particular moment.

So your priority in any list-rental situation should be to maximize return on investment. Here are five strategies for getting the most value out of your list-rental dollars:

1. Identify and mail the very best lists.
2. Uncover hidden list sources that might not have been tapped by everyone else.
3. Use selections, modeling and other tools to make those lists work optimally.
4. Demand the best pricing and deals from the lists’ owners/managers.
5. Avoid mailing at undesirable times.

Fundraising agency Craver, Mathews, Smith and Co., in Arlington, VA, works with major nonprofits, such as Habitat for Humanity International, and uses these strategies for all of its clients. Ellen Cobb Church, fundraising group director, explains how the list-selection and optimization process works for her nonprofit mailers.

“The first thing we do is look at historical data for each list and category. [Once the winning lists are chosen], we pursue other lists in those categories,” she explains.

Church works closely with her list broker, using a competitive analysis report to determine which lists similar-minded organizations are mailing as continuations.

“We also look at who is successfully mailing our clients’ files,” she adds.

Mail your ‘A’ lists first
The North Shore Animal League Association in Port Washington, NY, also first turns to donor lists that come from organizations that are as close to its mission as possible. These are the nonprofit’s “A” lists, or those prospect files that it tests and rolls out to most often because they have the greatest chance for success in bringing in new donors.

Lisa Wilson, director of development at NSALA, says she uses back-end analysis to identify the best lists to test.

“As we make decisions for list selection in subsequent acquisition campaigns, we look at results from the last 12 months (sometimes longer), not just the prior campaign,” Wilson explains.

Kevin J. Price, director of fundraising at list-management firm Mokrynski & Associates, Rich-mond, VA, says the keys to finding the best lists for his clients include:

• understanding the mission of the nonprofit mailer;

• knowing the donor base and the demographics and psychographics of the donors; and

• working closely with creative on program strategy.

“Some nonprofits raise donations through only straight appeals and others through premium-based appeals. These attract different types of donors and gifts,” he explains.

Next, match the above with the list(s) you’re thinking of renting and see how well they mirror one another, Price recommends, adding that “similar files with like-minded donors will donate to your nonprofit.”

To that end, reviewing a sample control package and the continuation usage of the test lists can be helpful.

“If those nonprofits that are closely aligned to your mission appear on the usage, there’s a strong likelihood that the file will work for you,” he adds.

Heather Maylander, senior vice president at American List Counsel, a list brokerage and management firm in Princeton, NJ, agrees: “Usage is important to examine, including the creative of mailers who continue to use a particular list.”

In fact, Brian Manning, vice president of Connecticut-based Direct Media’s Nonprofit List Management Services, says that usage is perhaps the most important element to review when selecting lists to mail.

“Mailers should look for other similar organizations that are continuing on this file, as well as considering some of the recent test mailers,” he says.

Tap new test ideas
When it comes time to expand beyond your core lists, where should you look for ideas? To the experts, says Wilson, regarding NSALA’s mail strategy.

“We work very closely with our list brokers and consultants to continue to test new markets,” she says. “We have tested catalog and subscription lists that come from organizations that are related to our mission (i.e., dog and cat product catalogs). Some have worked very well for us.”

In addition, the organization also has tested lists that Wilson says, “appear to have a high density of folks that are likely to contribute to our mission.”

“Victoria’s Secret is a key example,” she says. “Although this list does not perform as well as our key lists, it does work well enough when selected in conjunction with specific geographies.”

In addition to listening to brokers and list consultants, Maylander says, “successful usage by competitors is very important to track.” For additional insights, she recommends reading trade publications, as well as publications outside the industry such as Advertising Age, AdWeek and The Wall Street Journal.

“For example, since ‘nesting’ has continued to be a strong trend, we are looking at non-core lists of home buyers/subscribers where universe growth is happening, and we tried to tap into this secondary market successfully for our fundraising clients,” she says.

To avoid file fatigue, Maylander believes, “Mailers need to challenge themselves and test outside the box.”

“Those who are aggressive eventually reap the benefits of breaking into new markets, especially since we are seeing an overall universe decline in many markets,” she says.

Price suggests that the more a mailer understands the characteristics of its donors, the more likely it is to unearth hidden list nuggets. For instance, mail-order buyers of upscale travel-related products or subscribers of travel publications could be successful prospects for organizations whose file is comprised of affluent, older donors who travel frequently overseas.

“After all, your donors are consumers — you just need to understand what type of consumers,” he says.

Choose selects wisely
The right mix of selections can make good lists work even better, so be sure to examine what selects are available on each list you rent.

NSALA always looks to the “tried-and-true selections like recency and [gift] amount,” Wilson says. But the organization also tests some marginal lists by using geography as a select.

“Although NSALA’s brand is becoming much stronger nationally, we still experience a lift across local and regional markets,” Wilson explains.

Price also targets recency and gift amount as key selects.

“In testing another nonprofit list, it is always worthwhile to test panels of recency and gift amounts to find the perfect fit,” he says. “By decreasing a $10-plus select to, say, a $5-plus select, you may see a lift in response rate that offsets the lower average gift that you will likely see.”

When looking at what selects to test, Maylander considers the type of select as well as the variety and size of the overall list.

“We always try to utilize what we have learned from our client’s mail history to target a proven select,” Maylander says. “But we also make decisions on determining the selections based on what type of list it is. For instance, if we are testing a large list (more than 100,000 names), we would want to utilize a customized model or geographic model to help us target the most similar customers to our donors.

“We also look to our client’s house-file demographics and psychographics and see if there is an emphasis on age, income, gender that we can utilize to fine-tune the test selection,” she adds.

Get the deals you deserve
“The adage of ‘if you don’t ask the question, you won’t get the answer’ applies to negotiations,” Price says. “The economy may be picking up, but list managers are willing to wheel and deal, especially when it comes to testing a file.”

So, don’t be afraid to ask for a net-name deal — even on a test, he suggests. Also, he adds that mailers should ask to have that recency or gift select waived. The lower the cost of the list, the more likely the list will become a continuation file for future campaigns, and that’s what all list managers want.

At ALC, Maylander says, “We ask for deals on all test lists. We get all fundraising rates where applicable, and then we look at a customized solution for each list we rent, whether it be a discounted base, waiving of selection fees, capped selection fees, net arrangements based on our CPM report per list per year of usage, or annual volume commitments for reduced nets.”

She suggests that nonprofits look carefully at each list and negotiate the best deal needed, whatever it takes.

CMS’ Church, who works with ALC, confirms that, “Our list broker is very aggressive and creative with negotiating … they work with us to determine what cost we need for a particular list to work and do a great job in getting the cost we need to make a list successful.”

According to Manning, more nonprofit mailers are having success with commercial files — publishing files, catalog lists and even some compiled databases.

As a result, he says, “The nonprofit mailer should also look for base-price discounts from these lists, as there are considerable differences in pricing for publishing and catalog files compared to traditional donor files.”

Manning adds that one other area nonprofits might explore is the role of exchanges in mail planning.

“Although the exchange activity reduces list-rental revenue, it provides returns with list savings on acquisition programs — and it is an issue that especially affects nonprofit mailers.”

Don’t forget about timing
There are some keys to getting the timing right — renting names when they’re most likely to respond — and avoiding “off” times that might waste your money.

“I feel the key is always staying abreast of update cycles on all the lists you are mailing so that you can determine the best strategy for accessing those names,” Maylander says. “If it is a small list that only updates twice a year, you want to create a plan for accessing these names as soon as they are updated.”

In terms of commercial lists, she adds that the holidays are key for catalogers, so those names will be bountiful and fresh in January and February.

As far as “off” times go, NSALA currently is testing specific timing in 2004. As a rule of thumb, Wilson says, “I do very little acquisition during May through July and heavy up in the fall and in the winter.”

In addition, she explains, “We have developed an omit strategy that gets applied to lists that are not considered our top-tier lists. We usually go back three months. We have completed some testing and have found that the response rate of a list will decline by about 10 percent to 20 percent if the list is mailed in two acquisition campaigns in a row. For our best lists, we are willing to absorb this decline because even with the suppressed response rate, those lists still perform better than other marginal lists.”

Price says that the datacard can speak volumes about list timing.

“Look at how many names are being added on a monthly basis or the last three months or six months, as it will coincide with when the mailer is mailing their house file or prospecting,” he explains. If you have doubts about the list, ask the list manager when and how often the mailer is mailing.

“They may have cut back on prospecting and aren’t adding new names to the file,” he adds.

Alicia Orr Suman is the former editor-in-chief of Target Marketing magazine, past editor of Catalog Success magazine and a freelance writer specializing in direct marketing. E-mail her at aorrsuman@aol.com.