The Essence of Direct Mail

Your mailing list is more important than anything else in direct marketing. You can write the best direct mail letter in the world, but if it doesn’t go to the right people, you’re going to lose money. The list is absolutely crucial to your success. So in this article, let’s take a look at the best mailing lists you can use, starting with the very best: your existing best customers.

These are the people you can mail to and count on getting a response. Now, if you mail a new offer to your best customers and get a poor response, you definitely don’t want to mail that offer to anybody else without making some significant changes — because it won’t work. The people who have done business with you for the longest period of time and have spent the most money with you will tell you quickly whether a new service or product is what they want. These things determine how seriously people consider what you’re selling.

Your best customers always want new and interesting things from you. They trust you and feel strongly about your company — but if something doesn’t work with them, then it’s not going to work with anybody else. Even if it does work with them, you have to note the degree to which it worked, because there’s going to be a decline in response as you move to on to other lists. The response must be strong enough to bother continuing.

The next best list consists of occasional customers and past customers who haven’t done much business with you recently. At the very least, they’ve bought from you once. These occasional people are still a prime list to mail to, though nowhere near as good as your best customers.

The next best list would be referrals from happy customers. These people will probably pay attention to your direct mail when they receive it. They’ve shown some interest in the past, but have never become customers. They may have contacted you and asked for information about your services or your products, even if they never bought anything. While nowhere near as good as the previous lists, these are often people you can make a nice profit with.

Beyond that, the next best list to use would be a response list — people who have bought a product or service similar to yours, though not from you. A good response list from a reputable mailing house can make you a lot of money. In some ways, that response list could be as good as or better than the occasional or past customer, or the people who just inquired with you — although, for the most part, anyone who has contacted you will usually give you a better response.

At the very bottom would be a compiled list — a list of people who not only haven’t spent money with you, but for whom you have no information concerning how much they’ve spent with others. They’ve obviously done some business with other companies, but otherwise there’s little information on them. Realtors, insurance salesman, senior citizens in a given area, homeowners — these are all compiled lists. There are thousands of them. Now, don’t misunderstand me here, because a good compiled list can work very well for some things.

For example, the owner of a shop that sold surfboards in Pacific Beach, whom a colleague of mine got to know many years ago, simply mailed to people who lived on or near the ocean in San Diego. He got all kinds of business from mailing to Ocean Beach, Pacific Beach, and La Jolla. He didn’t design surfboards, but had a friend who did, so he sold both commercial boards and these very special boards from a real artist. He made a ton of money just by mailing to that compiled list.

Recently, my colleague also spoke with a gentleman who was selling a newsletter on making money with blue-chip stocks. He tried the same approach as the surfboard dealer, but began with a list of people who lived in rich areas like Palm Beach, Beverly Hills, Rancho Santa Fe in La Jolla, and some very exclusive areas in Boston and New York City. He broke even with this approach. Now, if you break even with a newsletter, you’ve done pretty well — because when it’s time for them to re-subscribe, that’s when you start making money. So he was willing to lose money on the front end in an attempt to acquire customers, since he makes all his money on renewals. That’s a hard thing to do, but it works with wealthy customers.

Here’s another example where this approach worked: my colleague worked with a man who wrote a book and later turned it into a cassette tape program up in Seattle, Washington, based on how to make money by becoming a real estate agent. His topics included how agents can make the most money, and things you’re not told in school. He was able to get the names of new real estate agents who had passed their tests in the states of Washington, Oregon, and California. Every month there were tens of thousands of names coming in from those three states, with California leading the way.

He originally sold the program for $99.95, before raising the price a little later on. This gentleman became a multi-millionaire — just by selling information to new real estate agents, showing them a few selling tips and then helping them invest their income in real estate for themselves. That worked very well.

The bottom line is that compiled lists are the bottom of the barrel for most of us in direct response marketing. While they usually don’t work well, for certain types of services and products, they can work very well indeed.

What I’ve discussed here is the blueprint for how to run an entire business model with direct mail. It all starts with your preferred list of best customers. Whenever you create a new promotion, the first thing to do is let all your very best customers know about it. These are people who have done business with you recently and have spent a certain threshold amount with you; say, at least $100.

If they get excited about it and you get a good response, make that offer available to your next best list: people who have spent less with you, or who might have not bought anything within the last year. You have a relationship with them, but don’t consider them preferred customers. If those people respond well, you can move on to your next best list and make an offer available to the marketplace in general, people you have no relationships with. If it works there, you can use it for new customer acquisition.

The key is to always test this way. It would be a mistake to take a brand new offer straight to people you have no relationship with, though you may have to try that if you don’t already have a customer list. You have to start somewhere. You may want to start by joint venturing with someone. Find someone who has a list and can endorse your offer for a split of the proceeds. You can also do this if you’re already established and want to tap a list you have no relationship with. It’s much better than just renting a list in your marketplace with which you have no connection to at all. A third-party endorsement can sometimes make all the difference in the world.

Before I wrap this up, let me re-emphasize that most small business people are NOT doing enough to resell to their current customers. Start doing so now, and you can easily double your profits very quickly. It’s a simple, reasonable step. That’s what my mentor taught me when I started working with him to add direct mail to my business in 1988, and the $2,500 a weekend I paid him — which would be worth about $10,000 dollars now — was worth every penny. Following his advice, my company generated millions of dollars in five years, just from offering new products and services to existing customers, items that were related to what they’d bought before. It was so simple! He wrote the sales copy, we had it typed and sent out, and we raked in the money.

Spend more time with your existing customers. That is the most powerful thing you can do with direct mail. Your house mailing list is everything. You’ve got to keep testing and trying different things with them, and direct mail is the ultimate way to do that. None of your direct mail strategies are worth anything if you’re mailing your offers to the wrong lists — no matter how perfect everything may be.