Hi-Tech Lists Fraught with Peril

High-tech direct mailers have reason to worry. Several recent trends point to a universe of direct mail generated high-tech prospects declining in both quantity and quality.

As mergers continue, the number of high-tech publishers is shrinking. When one publisher acquires the properties of another, the usual result is for a number of the acquired publisher’s magazines to be folded into the buyer’s titles.

Some of the acquired publisher’s titles may be folded altogether. And the acquiring publisher ends up cannibalizing the subscriber base of the publications it bought to increase the subscriber base of its core publications. The result: fewer lists and databases for high-tech direct mailers to choose from and test against one another.

The increasing usage of telemarketing in acquiring and requalifying subscribers poses another threat to the high-tech direct mail universe.

Publishers like to use telemarketing to acquire and requalify subscribers, since it can result in better initial response rates and eliminate mailing costs. The problem is that a telemarketing qualification doesn’t confirm a valid mailing address; it only confirms a valid phone number.

A mailed qualification card can’t be returned unless it reaches the prospect in the first place, proving that he or she is mailable. But telemarketing qualifications often don’t capture changes in mail stops and other critical address information. The result: Direct mail response rates drop when mailings end up in the "dead letter" portion of corporate mail rooms and get thrown away instead of reaching their target. Print ad response suffers when readers don’t get their magazine for the same reason.

Ironically, this results in a vicious cycle: As more direct mail-generated subscribers become conditioned to respond to telemarketing, publishers are forced to telemarket more to maintain their rate base. Why fill out a lengthy qualification card when someone will take the information from you in a quick conversation over the phone? Experience shows that telemarketing-generated subscribers respond at a much lower rate to direct mail than direct mail-generated subscribers. So what starts out costing less, winds up costing everyone… the publisher, the advertiser, and the mailer … a whole lot more!

Many high-tech publishers are turning to the Internet instead of telemarketing or direct mail to acquire and requalify subscribers. And many high-tech catalogers are now generating as many orders on their Web sites as they are with their paper catalogs.

Preliminary results indicate that Internet respondents reply to Internet offers, not direct mail. This should not come as a surprise to seasoned direct marketers who know the importance of renting lists with a history of responding by mail. Look for more of these names on high-tech subscriber and customer lists.

High-tech publishers are increasingly using the Internet to qualify subscribers. Techies seem more willing to answer qualification questions by clicking on choices in an e-mail then filling out paper qualification cards. Sending the qualification forms via e-mail is cheaper than paper mail. And, Internet-captured responses eliminate the considerable expense publishers incur keying in response data from paper qualification cards manually.

BPA rules sometimes work to compromise direct mail list quality. Most people are aware that controlled circulation publications are required under BPA rules to renew or drop subscribers every 3 years. However, few mailers know that the publisher may send a "short form" with a quick yes/no check off box to requalify a subscriber as a 1 year name, and still use their previously supplied demographics for up to three years. In the high-tech world, 3 years is an eternity! Prospects change job functions and titles. Operating systems and technology platforms become obsolete. If you are selecting a list based on demographics, make certain the demographics, not just the subscribers, were qualified within the past 12 months.

For example, let’s say the XYZ Company wishes to send a mailing to computer executives that are still using Novell NetWare; the objective is to entice them to move their networks to Windows NT. XYZ’s list broker selects a list of information systems professionals who responded to a publication within the past 3 months, and makes a further selection of only those who use Novell Netware. The executive will most likely receive your mailing, because the name and address are all very recent.

The problem is that the publisher collected the demographics (Novell NetWare installed) 36 months ago and the company has long since migrated to Windows NT. Naturally, mailings based on products that run on platforms the prospect no longer uses pull poorly.

What can high-tech direct marketers do to combat these declines in the quality and quantity of high-tech lists?

• Take a look at the publication’s BPA or ABC statement. It shows how many names are 1, 2 or 3 years old, and how many names were direct mail or telemarketing generated. When renting controlled circulation lists, request that your broker selects 100% from "1 year personal written request"names only. When using paid publication or mail order responder lists, request "100% 1 year paid direct-mail generated" names only. If you are using a demographic select, omit any "short form" respondents, regardless of how recently they’ve replied. The more telemarketing-acquired names on the list, the lower your direct mail response rates are likely to be.

• Conversely, if you are planning a telemarketing campaign, be sure to request "100% telemarketing respondents". The phone numbers on a list generated via telemarketing will be much more accurate than those generated through direct mail.

• Use best-customer models, mailed models, data mining, and other modeling techniques to select segments of files most likely to generate maximum response. Avoid mailing to prospects that don’t match your customer profile or respond to your type of offer.

• Explore alternatives to paper-based ads and direct mail. The majority of high-tech prospects are Web-enabled. Many high-tech files now contain "opt in" e-mail addresses, allowing you to do highly targeted mailings over the Internet. Potential buyers can respond by e-mail or even go to your Web site to make an inquiry, review product information, or place an order. Why not encourage them to do so?