Companies looking to grow their business may want to find new customers using
direct mail and email marketing, but may be unsure about
obtaining the lists they need to reach them. In
Part
1, we looked at some of the primary questions you need to ask yourself
about the objectives of your campaign, and in
Part
2 we looked at some of the alternative sources for your database list.
In this last installment, we will discuss renting vs. buying your database
list and how to control and measure your success.
Communication Plan
Email communication is powerful and inexpensive. But it is only one communication
channel. To move a prospect through your sales pipeline, you may want to
consider multiple communication channels. For example, you may wish
to send a hard copy offer and then follow up some of your communications
with a personal telephone call. How do you integrate direct mail and outbound
telephone calls with email communication? Without complete information
in the contact database, you cannot run a direct mail follow-up to an email
contact, and you certainly cannot do a telephone follow-up call to non-responders
to determine if they got the email, and why they chose not to respond.
Without complete information, you cannot execute an integrated communication
plan.
Renting versus Buying
Renting a list is cheaper, right? As with most of these questions, the answer
is, "It depends." If you believe you can achieve your marketing objective in
a single connection with a prospect, then one-time rental may be appropriate.
However, most companies want to build a long-term relationship with their
prospects and most outbound advertising is more effective with repeated contact.
For one-time usage, renting a list may be cost-effective, but most advertising
campaigns have multiple repetitions, often 6-10 times over a year, so the
appropriate financial comparison is purchase vs. multiple rental. The table
below illustrates this comparison for a database of 10,000 contacts. This
table assumes that the campaign includes a series of five outbound emails.
In this example, the purchase price is $2.00 per contact and the corresponding
rental price is $0.20 per contact per email. Your price may vary considerably
from the prices used in this example.
Cost Comparison Summary
After Five Rounds of Email Messages |
|
| Parameter |
Rental |
Ownership |
| Total Cost for Emails |
$20,000 |
$20,000 |
| Total # of Responses |
750 |
750 |
| Cost Per Response |
$26.67 |
$26.67 |
| Total # Emails Owned |
750 |
10,000 |
| Cost Per Email Owned |
$26.67 |
$2.00 |
| |
|
|
| Future Cost per Email Round |
$400 |
$0.00 |
As the table shows, the total cost for emails is $20,000, either renting the list five times or buying it once. The tremendous leverage is that the cost of the email list for each
subsequent email is $0 for list ownership vs. $400 for rental.
Control and Measurement
A major limitation of renting a list is the lack of transparency in the process.
How many emails were sent? How many bounced? How many recipients opted to unsubscribe? How
many recipients opened the email, and when? Few list owners provide this information and
there is no way to verify any information provided.
Just as important, how did the list owner send the email? How was the sender's
information cloaked, if at all? If the list owner's name was in the title, sender
label, or in the text, you have actually created an additional hurdle for your message. The recipient must have a
good impression of the sender, before ever even getting to your message. For example if you rented a list
from Ziff-Davis and the sender label is "Ziff-Davis Newsletter," the recipient may delete
the message immediately without ever reading your message. Your communication never even got up to bat with the
recipient.
Finally, let's explore customized communication, based on contact information
and the individual's response pattern. You start by segmenting your contacts
based on company and contact demographics. Directors of Research at large
pharmaceutical companies get a different message than CFO's at venture-funded,
biotech companies. But now, let's build separate communications tracks
for each contact, based on which emails the contact opened, and which white
papers the contact read or downloaded. Which contacts get a direct telephone
call? Which ones get an offer to attend the upcoming event at a reduced cost?
This level of customization goes far beyond the simple demographic customization
based on company/contact data. This level of control is only available
if you own the database and have the tools to track the recipient's response
at an individual level.
The decision to purchase or rent a contact database depends on three
basic factors: communication plan, control and measurement, and cost. The
table below summarizes the rent vs. buy considerations for each of these
factors.
| Selection Factor |
Rental |
Ownership |
Communication
Plan |
Limited communication.
Cannot integrate mail,
telephone, and email contact.
|
Full capability to implement
and coordinate multiple
communications, through all
channels.
|
Control and
Measurement
|
Limited control.
Almost no measurement.
Process is "black box."
|
Complete control.
Can create multiple
communication paths
based upon response.
Can measure all aspects of
communication and response. |
| Cost |
Cheaper for one-time use. |
Cheaper for multiple usage. |
As you can see in the table, ownership has many strong benefits in comparison
to rental. In fact, the only situation where rental has an advantage is in the situation of a
one-time communication with no follow-up and no integration with a larger plan for comprehensive communication.
Develop your needs for a contact database on the basis of your objectives,
as defined by the needs of your outbound campaign (see the six questions
in Part 1). Choose your contact database based on these three criteria:
Your list provider should provide a complete list, with full transparency
for list performance and 100% credit for bounces. With these issues in mind, you have all the tools
for targeting your campaign to an interested audience.
If you would like to discuss how you can leverage your accounting and CRM applications
in your own marketing activities, feel free to contact
us. We'd be happy to assist
you.
