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How Much Should You Pay for Direct Marketing Lists?


Most people would like to get their direct marketing list for free.

And many do.

With today's information technology it's possible to obtain direct marketing lists of people in almost any geography.

Lots of folks think that a free list is best.

Unfortunately, this is almost always not the case. A free list is usually the most expensive part of a direct marketing program.

Now, before you stop reading because you think someone's trying to sell you something, follow along just a little further. It'll be well worth your while.

Here's the key questions for you to answer:

  • What was the cost of each direct mail piece you sent out?
  • What was the cost of every telemarketing call you placed?
  • How many leads did you generate?
  • How many of those leads became buyers?

Direct Marketing Costs

When you tally up the checks that you wrote for that last direct mail or telemarketing program, where were most of the cost components?

If it was a direct mail initiative, the biggest costs were postage, paper, ink and handling. If it was a telemarketing campaign, the biggest costs were time and line charges.

The list was probably one of the smaller cost items. Yet the list is the hinge on which your cost per lead (and ultimately, your cost per sale) swings.

Let's do a cost per sale comparison.

We'll use a 10,000 piece direct mailing as an example. That way you can add or remove zeros to draw a comparison to your own marketing program.

Experience shows that most direct mail or telemarketing programs will spend between 35¢ and $1.00 per contact. Sometimes, even more (especially for telemarketing). For our comparison we'll assume you have a cost per household contact of 60¢.

That means that you'll spend $6,000 for the 10,000 piece mailing.

The Secret of Direct Marketing Response Rate

Most people focus on their response rate alone.

They count the leads.

However, your response rate is more like a coin; there's two sides to it. With a coin, one side is 'heads', the other 'tails'. Using your response rate as the example, on the 'heads' side of the coin are the 2 respondents who said YES. On the 'tails' side are the 98 people who said NO to your offer.

If you send the best, most powerful message in the world to the wrong people it's tossed into the waste basket along with the rest of their junk mail. However, even if you send a 'less-than-ideal' message to the right people, it stands a chance of getting a response.

How to Increase Your Response Rate

The first thing to do is to find out what makes your customers unique. What if you could make a list of questions to ask your best customers.

Questions like,

  • What's your age?
  • Household income?
  • Home ownership?
  • Family status?
  • Spending habits?
  • etc. . .

Then you could combine their answers to learn what demographic factors they have in common. And boil that information down to the 5 most important characteristics identifying your customers.

The Payoff

If you could call (and reach!) all 10,000 people in our direct marketing example, and ask each of them questions about their own demographics, you'd discover that the majority of the leads you received are from people with demographics similar to your best customers. In other words, they'll answer YES to most of your questions.

And you'd also find that most of the people that didn't respond to your mailing answered NO to many or all of the same questions.

What that teaches you is, by creating a mailing list consisting of only people with the same characteristics as your best customers (those answering YES to all 5 questions), you'll get a better response.

If you can move just one more person from the 'tails' side of our direct marketing coin (the 98 people that said NO), to the 'heads' side (the 2 that said YES), you'll increase your response rate by 50% (from 2 to 3).

Now, that doesn't seem like a big deal.

But it makes a huge difference in your bottom line.

What IS the Cheapest List?

How much is it worth to you if, by using a highly targeted list, you're able to find just one extra person to say YES to your offer out of each 100 names you mail? Not only will you increase your response rate by 50% (probably more), but:

  • You'll generate an additional 100 leads.
  • Your cost per lead decreases from $30 to $20.
  • Your marketing cost per sale is reduced from $120 to $80.
  • And, by converting the same percentage of those leads into clients, you have 25 more sales.

So, what's it really worth?

How about 25 x your average profit per sale.

THE LESSON: Always use the most highly focused list you possibly can. List cost - while important - isn't nearly as important as the response rate you receive.

In other words, always remember that your goal is to produce highly focused direct marketing lists.

Highly focused lists are never the product of an unfocused goal.

  • Identify the individual client you want.
  • Create that 'individual client model' from your overall customer database.
  • Present your offer to others that are similar to your clients.

Find more buyers and make more sales.

Sure, you'll pay a little more for your direct marketing list to be able to laser guide your message to your best prospects. But, your results will be a dramatically increased response from more qualified prospects.

When you look at your bank account, you'll be glad you did.

The key is to focus, focus, focus

For more information on how to obtain a highly focused, accurate and responsive consumer list, just pick up the phone and give our marketing specialists a call at (800) 711-5478. Or, click the link below to fill out an Information Request Form. We'll respond promptly.

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