Cash in Your Pocket
Get List Hygiene Right, or You're Outta Business
By Denny Hatch
Half of your success in direct mail hinges on two elements: lists and arithmetic.
Start with the basic U.S. Postal Service (USPS) statistics. Consumer lists go sour at the rate of 2 percent a month—or roughly 25 percent a year. People move, die, marry and divorce.
In the business arena, lists go out of date at the rate of 50 percent a year. A quick way to prove this number is at any business conference. Ask everyone in the room who has a business card today that's different from that of a year ago, and half the hands in the room will go up. Guaranteed.
Lists and Arithmetic
Spend $500/M to send a mailing, and get a 1-percent response (10 orders), the raw cost per order (CPO) is $50. ($500 ÷ 10 orders = $50.)
A raw CPO is before cost of goods sold, fulfillment, shipping, G&A and profit. (And by the way, The Direct Marketing Association is offering a program by Peter Rosenwald that enables marketers to figure out precisely the allowable CPO. In that program, Rosenwald built in profit as an expense.)
However, if the list is dirty—say 25-percent undeliverable—250 mailing pieces out of every 1,000 are wasted. At 50 cents a package, that's $125 down the sewer. Put another way, the true cost of the mailing becomes $750/M, which means the raw cost per order on a 1-percent response is $75.
List hygiene is the business of doing away with waste.
Where to start? Dick Goldsmith of the Horah Group can spout statistics, numbers and mailings. According to Goldsmith, here is how to tidy up lists and put bucks in your pocket.
Rented Lists/National Change of Address
Say you're renting 20 lists of 50,000 names each for a 1-million mailing. When people move, they should fill out a form at the Post Office listing the old address and the new address; however only about 60 percent do this. The information is fed into computers and regularly sent to a group of USPS-authorized NCOA vendors for updating. Virtually every service bureau has an arrangement with one of these vendors.