Often the best place to solve a current conundrum is to look to the past. If your challenge today is to up-sell current customers as well acquire new, yet similar customers, the answer is the historically proven and constantly progressing medium of direct mail. Recently, the U.S. Postal Service announced that Standard mail, the class most used for marketing, enjoyed nearly four percent growth over a six-month period, and the trend doesn't appear to changing anytime soon.
A common axiom in direct mail is the 40/40/20 rule. While the percentages are often debated, the basic premise is that the success of your direct mail campaign is determined this way:
Regardless of the percentages listed, many direct marketing experts are convinced that the list is the most important component in a direct mail campaign. The best offer, the most persuasive copy and an intriguing mailpiece design mean little if sent to the wrong list.
The most immediate results come from existing clients. Every book on customer service written in the last 20 years has made it clear that the cost of new customer acquisition is far more than up-selling existing customers. Purchasing a list from a reputable list broker can instantly create a list of potential clients; however, this option comes with a cost and a level of uncertainty. Let's look at what resources you already have before going out and paying for more.
We will break the list sources down into two broad categories: 1) Known purchasing behavior, and 2) Suspected purchasing behavior. Those names with known purchasing behavior are more valuable and will yield a better response. Suspected purchasing behavior represents those prospects that have many of the same attributes, interests and needs as known purchasers, yet their actual behavior is unknown. The goal of the direct mail campaign is to convert suspects to prospects, and then ultimately to purchasers.
Known Purchasing Behavior
Current Customer List Does every one of your customers already own everything that you sell? If not, start here. You could spend time delineating your customer list into segments, such that you don't market apples to clients who already have apples. You try to sell them oranges and vice versa. Any decent mailing list management program will allow you to code each individual client. You simply extract the orange people and send them the apple offer.
On the other hand, if your mailpiece lists most of your products, it may be simpler to mail every current client. Even if there is a bit of waste, your customers know you are out there fighting the good fight and some degree of top-of-mind awareness will be achieved.
Inactive Customer List What can we do to get these customers back? Current and inactive are defined differently by different industries, yet every organization has an inactive customer list. Here, segmentation is recommended. Your offer may have to be extremely aggressive to revive a fallen customer. If it is your goal to bring inactive customers back and if you're willing to sacrifice some profit to do so, it's best not to make the same offer to current customers who believe your normal pricing is perfectly acceptable.
Suspected Purchasing Behavior
Referrals If you are not asking for referrals from satisfied customers, you are missing out on perhaps the most lucrative marketing opportunity ever known. It's free, and someone (your existing customer) has already qualified a prospect for your product.
Suppliers Companies you buy from might buy from you. Did you ever ask? Include them on your in-house prospect list. You have some obvious leverage when selling to your suppliers. If they need to buy what you sell from somebody, it might as well be you.
Sales Call Reports If your organization utilizes inside or outside salespeople, you hope they submit a call report every Friday. If we assume that your sales representatives have been trained to call on those individuals or organizations that have a proven need for your product, you've got a wealth of information. Anyone can buy a list of hospitals for example, but a far more effective list is one that features the name of the decision maker responsible for buying your product at the hospital in question.
Web site Leads Your Web site probably features a customer contact or information request form. A visitor to the site has the opportunity to request more information or download some premium. In exchange, the visitor submits name, address and qualifying information.
Downloading this information from your Web site should not be fully automated, meaning that human intervention is needed to separate the wheat from the chaff. As much as we would like to believe the opposite, Santa Claus, Mickey Mouse and the Tooth Fairy didn't visit your Web site.
Trade Shows A bit of care needs to be taken so as not to contaminate your list with a bunch of "trick-or-treaters." These are that collection of well-meaning trade show attendees that wander up to your booth with a vacant look, open their bag and inquire; "What do you have free?"
The key here is qualification. Telephone your leads within two weeks of the show to find out who is player and who is not. That doesn't mean that if a trade show lead doesn't covert immediately to a sale, it should be dismissed. Most trade show leads result in the sales process initiating six months or more from the date of the show.
Swapping Do you know a company that sells a complementary, yet non-competitive product? See if they would be interested in "swapping" customer lists. If, for example, you sell nails and you have a friend that sells hammers, this would be an excellent list that you could get nowhere else.
To provide some level of protection, send your list to a "bonded" mail house, ask your friend to send his mailpieces to the same and vice versa. A bonded mail house has a fiduciary responsibility not to disclose list information.
In-House List Maintenance
List Cleaning The biggest challenge with your new, compiled in-house mailing list is keeping it updated and clean. The Postal Service changes or "splits" hundreds of ZIP Codes every year, not to mention carrier route and ZIP+4 Codes. In some cases, city names are even altered. If your customer is in an area, and the Postal Service has changed delivery information, you've got a problem.
This challenge is easily countered by a subscription to address validation software. This software is delivered either monthly or bi-monthly and includes the Postal Service's address changes. Simply "run" your customer list against the Postal Service database to update the addresses in your valuable mailing list.
Move Updating Individuals, families or businesses that move to another address are a different story. Figuring out who moved where and what the new addresses are is a different, but equally simple process. Most mailing software products now offer a direct link to the Postal Service's NCOAlink address database. Exporting, then importing your list is not required. Anyone on your in-house mailing list that has filed a Change of Address (COA) card will be represented in the Postal Service's database. When you "run" the list using your mailing software's link to the Postal Service's COA database, anyone who has moved will now be updated with their new addresses.
Michael Maguire holds an MBA from Michigan State University and is the director of sales and marketing for Datatech SmartSoft, Inc, Santa Barbara, California. For more information, visit http://www.smartsoftusa.com.