From:
WAY West of Jewfish Creek

Dear Friend & Subscriber,

You are about to read eight pages of information that can save you and/or your direct-marketing clients from financial disaster.

Please pay careful attention. What you are about to read is deceptively simple. In fact, I'm going to have to ask for a bit of patience from some of you. Especially those of you who are "old pros." You see, the first pages of this letter are going to reveal some stuff that most of you already know. Please bear with me. Some of my readers don't know this stuff and besides, it never hurts any of us to take a little "refresher course" once in a while.

And anyway, it's all a "setup" to pave the way for me to explain a financial "life or death" concept that will be revealed near the end of this letter.

Onward. No more messing around. Let's dive right in. Listen: As you may or may not know, every once in a while I give a class on copywriting and/or selling by mail. During these classes, one of the questions I like to ask my students is: "If you and I both owned a hamburger stand and we were in a contest to see who could sell the most hamburgers, what advantages would you most like to have on your side to help you win?"

The answers vary. Some of the students say they would like to have the advantage of having superior meat from which to make their burgers. Others say they want sesame seed buns. Others mention location. Someone usually wants to be able to offer the lowest prices.

And so on.

Whatever. In any case, after my students are finished telling me what advantages they would most like to have, I usually say to them something like this: "O.K., I'll give you every single advantage you have asked for. I, myself, only want one advantage and, if you will give it to me, I will (when it comes to selling burgers) whip the pants off all of you!"

"What advantage do you want?" they ask.

"The only advantage I want," I reply...

"Is...
A Starving Crowd!"

Think about it. When it comes to direct marketing, the most profitable habit you can cultivate is the habit of constantly being on the lookout for groups of people (markets) who have demonstrated that they are starving (or, at least hungry) for some particular product or service.

How do you measure this hunger? Well, for us direct marketers, thanks to the mailing list industry, it is rather easy. Let's brainstorm a little. Let's suppose you and I are new to DM and we want to sell a book titled "How to Invest Money In the Stock Market" and we have created a direct mail promotion designed to sell this book. Who do we mail our promotion to? Here are some possibilities:

Possibility #1: We could mail it to people whose names and addresses we get right out of a telephone book.

Comments: This is a terrible idea. Except for offers (like my coat-of-arms promotion) that have an extremely broad appeal, there are far too many non-prospects in this "hodge podge" group of people. In fact, the only thing these people have in common is that they all have a phone. Some of these people won't have any money to invest. Some of them (more than you would ever guess) never purchase anything by mail for the simple reason that they don't know how to read! Some of them can read but they can't read English. Some of them are old enough to remember 1929 and would never think of putting their money into stocks. Some of them are too stupid to invest in stocks. Some are too smart. Some are too paranoid.

And so on.

In short, there is way too much waste circulation in a list made up of names taken from a telephone book. Using a list like this is like shooting with a shotgun instead of a rifle.

Onward.

Possibility #2: We could mail our promotion to people whose names and addresses we get from a phone book, but only to those people who live in high income areas.

Comments: This is a little better, but not nearly good enough. High income areas are, incidentally, easy to identify because several companies have compiled statistics on every zip code in the United States and they can tell you, with great accuracy, the average income per person in each zip code. They (these companies) can also, by the way, tell you the average education level, average age, how much is spent (per capita) on automobiles and a bunch of other stuff.

However, as I said, this still isn't nearly good enough. For one thing, not everybody who lives in a high-income area has a high income. Some of these people might be live-in maids or gardeners or some other type of domestic servant. (Come to think of it, with the prices they charge, California gardeners at least ought to be wealthy!) Some of these people may have money but are not interested in investing. Some of them may buy investment books from a bookstore but never by mail. Some of them may have money they are inclined to invest but will only invest in areas other than the stock market where they already have expertise.

Whatever. Once again we are shooting with a shotgun instead of a rifle. Once again, too much dead wood.

Let's see if we can do a little better.

Possibility #3: We could mail our piece to a group of people of whom we are relatively sure that all of them have above average incomes. Like doctors. Lawyers. Architects. Top executives. CPA's. Owners of expensive homes. Owners of Rolls Royce automobiles. Subscribers to The Gary Halbert Letter.

And so on.

Comments: Not bad. We are now getting into areas where we at least have an outside chance. Whether they are interested in the stock market or not, we can't know, but, in any case, if they are interested, they probably have the financial ability to do something about it. There's no doubt about it. This group of people is certainly more likely to respond to our pitch than the first two groups but, as you should soon see, we can do a hell of a lot better.

Possibility #4: We could mail our promotion to a list of upper income people who are proven mail order buyers. Buyers of what, you ask? Actually, for the purposes of selling by mail, it is generally true that mail order buyers of anything are better than almost any group of non-mail order buyers. And, in this case, we have added the extra qualification that they must be wealthy mail order buyers.

Comments: Now we are getting down to business. This is the first group I have described that gives us a reasonable shot at success. Not bad. Not bad at all. But now, let's stop messing around. Let's go for the kill.

Possibility #5: We could mail our promotion to a group of wealthy people who are not only mail order buyers but also, people who have ordered some other investment book by mail.

Comments: Bingo! Now we're cooking. These are upper income people who have purchased by mail a product similar to ours. What could be better? This is just about as "hot" of a list as we can get! Or is it? Actually, it is not. Let's keep trying.

Possibility #6: We could mail our promotion to a list of wealthy people who have purchased (by mail) a product similar to ours... several times!

Comments: Yeah! These people are "naturals." They're MO buyers. They've purchased (by mail) a product similar to ours. And, they are repeat buyers of this type of product. How sweet it is! Can it get any sweeter? Yes, dear reader, it can! Read on.

Possibility #7: We would mail our promotion to a list of wealthy people who have purchased (by mail) a product similar to ours several times AND WHO HAVE PAID BIG MONEY FOR WHAT THEY BOUGHT!

Comments: Goody. These people are very close to the "creme de la creme" of lists we can mail to. But wait! Why do I say they are only "very close" to the best? Good Lord, what more could we ask for? Hold on! We're not done yet.

Possibility #8: We could mail our promotion to a list of wealthy people who have purchased (by mail) a product similar to ours and, who have done so repeatedly and, who have paid big money for what they purchased and, who have VERY RECENTLY made such a purchase!

Comments: This is almost as good a list as we can get. It is certainly the best list we are likely to be able to rent.

But not quite. Just keep reading.

Possibility #9: We could mail our promotion to a list of people who have all the characteristics of possibility #8 AND WHO OUR FRIENDLY LIST BROKER TELLS US IS WORKING LIKE CRAZY FOR OTHER MAILERS WITH PROMOTIONS SIMILAR TO OURS.

Comments: For a variety of reasons, many lists that should work, don't. Who knows why? Actually when it comes to the bottom-line, it really doesn't matter "why". What does matter is simply that a given list is or is not responsive. And the best way to know what lists are "hot" is to have a good relationship with a good honest list broker. In fact, if you have a good relationship with a good broker, one of the things he will do for you (because it is to his financial advantage) is to keep an eye out for hot lists that are likely to work for your offers. And now with this last list, we have finally and truly identified the best list you can mail to.

Almost.

Yep. We can still do better!

Possibility #10: There is, however, one group of people that will respond far better than any of the other nine I have described. What is it? I'm sure you already know.

Your Own Customer List!

Comments: All other things being equal, your own customers should respond stratostrophically (is that a word?) better than any other list you can get. Of course, there is one caveat: THEY MUST BE SATISFIED CUSTOMERS!

So there.

Let us press on. What you have just read was designed to give you (and me) a "refresher course" on those factors that make some lists more responsive than others. With those factors in mind, we can safely come to the conclusion that there are three main guidelines we can rely on when we are picking lists to test. These three guidelines are recency, frequency, and unit-of-sale. A brief explanation follows:

Recency: As we now know, the more recently a person has purchased (by mail) something similar to what we are selling, the more receptive he will be to our offer. Get 'em while they're hot! In fact, always check to see if the list you are interested in has "hotline buyers" and see if you can rent those hotline names before anybody else. Hotline buyers are the most recent buyers of all. Sometimes they will be quarterly hotline buyers, sometimes 90-day hotline buyers or even 30-day hotline buyers. These names are extremely good prospects!

Frequency: The more often a person buys a particular type of item, the higher his desire for that type of product or service. It just makes sense. If you are selling a book on "How to Invest in the Stock Market" and you find a list of people (multi-buyers) who have purchased several other books on stock investing, then you know that the people on the list are uncommonly interested in that particular subject.

Unit-of-Sale: Once again, we have a guideline that just plain makes sense. After all, a person who recently paid $100.00 for a bottle of diet pills is probably a hotter prospect for diet type products than a person who has only paid $10.00 for a bottle of diet pills. You know, people don't always put their money where their mouths are, but they do nearly always put their money where their real desires are.

Recency, frequency and unit-of-sale: All good guidelines for evaluating a mail order list. And, in my opinion, of the three guidelines, recency is, by far, the most important of all.

End of kindergarten.

Now let's get down to it. All you have read so far is just preamble to what I really want to teach you in this month's letter which is the real way to test a mailing list and...

How To Make Sure You
Get The Same Results
When You Roll Out
That You Got When
You Tested!

Listen: I am about to describe a very common scenario. It happens all the time. It starts when someone discovers a likely new list to mail his DM package to and decides to give the new list a test. Let's say the list has 500,000 names. O.K., so anyway, our happy little DM guy gives his broker a call and says, "Hey, I just heard about a new list that looks great for my offer. I want you to order a random sample of 5,000 to be selected on a ninth name basis so I can test the list."

No problem. The list broker contacts the list owner, gives him the order and, quick as a flash, our little DM hero has his 5,000 names to test and he does so using his trusty control package.

And guess what? The results are spectacular! Greed glands begin to secrete and a continuation mailing is scheduled.

Now look, our DM guy is no dummy. He knows better than to order all the rest of the 500,000 names without making another test. What he does instead is he orders 50,000 more of the names and he tells his broker to make sure these names are also a random ninth name sample. He also tells his broker to make sure the list owner keeps a record of which names he is mailing so those 50,000 can be deleted if he decides later to mail the entire file.

So far, so good. He gets his 50,000 names, puts his letters in the mail and sits back to wait for the results. And those results, when they come in, are not bad. Not so good maybe as the spectacular results he got from the initial 5,000, but still, quite respectable.

And so, he orders all the rest of the names (445,000 of them) and he spends something like $160,000.00 to mail his DM letters to them.

And wham! It's like a sucker punch to the gut! His results are terrible. His business nose-dives right into the toilet. He calls his list broker and he calls the list owner and screams bloody murder. "How could this happen?" he says. "You must have cheated me! You gave me one list when I tested and another when I rolled out!"

"Not so," says the owner. "You must have changed something in your mailing. Or maybe the time-factor made the difference. After all, it was 60-days from your first test to your rollout and, as you know, time changes everything."

Whatever. What's important is that our gutsy little DM guy followed what he thought was a good, well-thought out testing procedure and he got crucified! What happened? Did our guy really and truly get an honest-to-God ninth name random sample when he ordered those first 5,000 names?

You bet he did! He got a random sample of...

The Most Recent, High-Ticket, Multi-Buyers
That List Owner Had To Offer!

And what about that 50,000 name continuation? What did our guy get then? Quite simple: he got the rest of the best of the names on that list.

And what did he get when he rolled out the remaining 445,000 names? Well, it was the same list. Only those were the older (less recent) buyers, the ordinary buyers on the list, the people who only made one purchase instead of several, the people who bought the cheaper items the list owner had to offer. It happens every day. Day in and day out. You see, many people in direct marketing make more money renting their list than they do selling their products and therefore they do everything they can to maximize rentals.

You know, in a way, these sleazebags are like drug dealers; they give you the pure stuff first in order to get you hooked and then, when you go back for more, you end up snorting talcum powder.

Forgive me. That was a poor analogy. (It works for today though, doesn't it?)

So anyway, the big question is, "What can we do to make sure this never happens again? Is there any practical way we can protect ourselves?"

Yes there is. Here's all you have to do:

Step 1: If you are testing a new package, go ahead and order a ninth name random sample of 5,000 names just like our DM hero did in the above illustration. Then, mail your mailing and keep track of the results.

Now, if your results are poor, forget the list. Trust me, you have just mailed the best names that list owner has to offer. However, if your results are good (or if you are using an already proven control package), you then go to step 2.

Step 2: You now mail a continuation of 50,000 more pieces but, this time you do not ask for a ninth name random sample. NO! This time you choose three or four or five or six states and you tell the list owner you want all of his customers in those states. Incidentally, as you probably already know, there is usually a "state count" on the back of the list card so, what you do is, you look at those state counts and pick a few states that will yield a total number of names that is somewhere near the 50,000 you need for a sensible continuation.

What will happen when you order names this way? Well, most likely, your broker (out of ignorance) and the list owner (out of greed) will warn you about getting skewed results because of a geographic bias.

And, they are right. You will get a geographic bias. But, most likely it will be a "manageable" bias and it won't be:

Anything Like The
Bias You Get From
Dealing With A
Dishonest List Owner!

Listen: I know that testing this way doesn't sound as mysterious and complicated as some folks (folks who don't have to meet a payroll) would like it to be. These people can talk merge-purge, regression analysis, demographic overlays, and all the rest of it for as long as they want but, I don't care: If you do it precisely like I just said, at least you or your client are less likely to get crucified when you first roll out to a new list.

Note: I said "less likely." I didn't say this procedure is bullet-proof. You see, there are some other nifty little scumbag tricks you better watch out for and I'll tell you about those in a future issue.

O.K., now that that's out of my system, before I sign off, I'm wondering, did any of you figure out why some names (as described in last month's letter) worked so much better than others?

Don't feel bad if you didn't figure it out because I didn't either. I got the solution from my ex-wife Nancy. It happened one day when I was sitting with a mess of result figures from the individual surname mailings when Nancy said,

"Look, dummy, it's easy to figure out. 
You're mailing a personalized promotion 
that has to do with the history of someone's name 
and the rarer their name, the higher the results will be. 
In other words the Millers and the Jones won't work too well 
but the Mergatroids will respond like crazy."

She was right. But don't worry, I took the credit anyway.

	Sincerely,
	Gary C. Halbert In-Print Salesman

Copyright © 2003 Gary C. Halbert.  All Rights Reserved.