The headlines on the July 5, 2006, edition of USA Today reported that we are now a nation of 300 million people.  By 2025 the U.S. population is projected to reach 350 million; 400 million by 2040. With the population growth, why is it becoming more difficult to prospect cost effectively and why aren’t universe counts increasing? This month, I want to discuss effective prospecting techniques and ways to expand your prospecting universe even when the print catalog market size does not seem to be growing.

According to Abacus, catalog households are declining as overall households are increasing. As more buyers use the Internet as their channel of purchase (not necessarily the driving media), the count of catalog households had declined. This means that 12-month buyer counts, the heart and sole of all prospecting selects, are not increasing. In fact, many 12-month buyer counts have been declining. What does this mean? It means that catalogers are exhausting the files and re-mailing the same names again and again. Fatigue sets in and response rates decline. This is causing a shift towards the use of more prospect names selected from one of the cooperative databases like Abacus.

The quantity of names available from the coops is not increasing either. However, the co-ops can help expand the prospecting universe though statistical modeling which identifies more targeted models worth testing. Cooperative databases account for at least 60% (up from my estimate just two years ago) of all consumer prospecting.  Names selected from a co-op are super multi-buyers who respond well to any number of different offers. These catalog buyers have been modeled from a cataloger’s actual buyer file therefore they are highly qualified names. Again, the coops are able to identify pockets that help expand the prospecting universe. What’s more, they represent a good value for the money renting for $70 per thousand or less.

There is more on-line shopping today which is obviously affecting 12-month buyer counts. While the catalog is still the largest driver, more people are electing to order on the web. Therefore, there is a shift taking place that affects our universe counts.

So, how do catalogers continue to grow their business? Here are proven ways to expand your prospecting universe (at a time when prospecting universes are not expanding):

1. Don’t block competitors when using the co-ops – It is never good to “block” a competitor in a co-op from getting access to your names through the modeling. If you set-up a block on a competitor, the co-op will automatically block you from any access to their buyers. This will shrink (not expand) your prospect universe.
2. Always take full universes from proven models – Once you have tested and established the fact that a particular model is working, be sure to take the full universe of names within the top tiers (at least tier 1 and 2). Maximize your results by mailing all available as opposed to diluting your results by mailing smaller quantities to more model selects.
3. Test deeper into the proven models as a way to expand your prospecting universe – If you know a model works and you have only mailed tier 1, test tier 2 and perhaps tier 3 of the same model. Once you find a model that works for your offer, it makes perfect sense to mail deeper then apply point #2 above.  Again, rollout the universe for that tier once you know it is working.
4. Always allow room in your circulation plan to test new models.  It is important to test new models in order to expand your prospecting universe. Plant those seeds!  It is never good to rely 100% on proven models without testing new ones if you want to grow your business and find other “pockets” that work for your offer. Test 10,000 names from a new model segment (or two). Have the co-op build new models off the continuation models you know are working for your offer.
5. Use ALL of the co-ops – Yes, there will be overlap from one cooperative database to another. However, the coops use different methodology in their modeling therefore, each one will identify “good” prospect names to mail another one might not. This will obviously expand your prospecting universe as well.
6. Take full advantage of outside list optimization – Try to expand your prospecting universe by using subscriber and/or compiled lists. But, be sure to optimize these lists before you mail. The process of outside list optimization identifies the mail order catalog buyers on the subscriber and/or complied file and selects the “best” prospect names to be mailed. Adding this step will increase results while minimizing the risk of mailing to non catalog buyers. If you optimize 100,000 names you should find at least 25,000 prospects worth mailing. Optimizing subscriber or compiled lists can only be cost justified if you can arrange a “net” deal whereby you are paying only for the names you mail. Here is a brief description of subscriber and compiled lists:

Subscriber Lists

These are magazine or newsletter subscribers. People who appear on this type of list are readers of consumer or business-to-business publications. They can represent a source of new names in order to help you expand your prospecting universe. If you are advertising in a magazine, try to negotiate a deal with the magazine’s advertising department to get the names for free or only pay for names selected for optimization.

Compiled Lists

These lists are “compiled” based on type of interest. Businesses, for example, are classified by SIC (Standard Industrial Classification). Dun & Bradstreet is a large compiler of businesses by SIC through their credit service. There are many different types of consumer compiled lists too. But here again, using compiled lists is a good way to expand the universe of names available to you.

1. Be sure to rollout proven segments/lists – Should you test new lists or continue to use the proven winners? Of course you will want to use proven winners. However, it is important to test new lists as well. Out of ten “new” test lists, two or three lists will be worthy of continuation. It is really a matter of when to test, not necessarily what to test. I recommend testing new lists during your “best” season. If holiday, for example, represents 100% of the results you will achieve, test during holiday. If you test new lists during the off season, chances are you will never rollout a single list because the results will not justify doing so. If response rates and the revenue per catalog mailed are maximized in October then test new lists in October. This becomes a true test and will yield results you can read and rollout with confidence.
2. Test the Hispanic Market – Don’t overlook the importance of testing into the Hispanic market, (Hispanics accounted for about half the population increase the past four years). Nationally, Hispanic households tend to be younger. What’s more, they have money to spend and they enjoy receiving catalogs. There are several Hispanic lists on the market to test.
3. Go “Deeper” on Proven Lists – Go deeper, i.e., 13-18 or 19-24 months, on lists that work (use a multi select or zip model on older rentals to boost results). There is a tendency to mail only the more current 0 – 12 month buyers. Using an older recency can work. This is another way of finding additional prospect names to mail.
4. Make a “Send-A-Friend” Offer on Incoming Calls – This used to really work for mailers that used the back of their envelope to get referrals.  But, with so many moving to a printed order form, the number of referrals has really declined. Use your call center to obtain the names of friends who might like a catalog. Catalog referrals typically convert at a good rate and can represent a source for additional prospect names not always found on another list.

Always be focused on expanding your prospecting universe. There is not an unlimited supply of prospect names to mail for any offer.  You can find additional pockets to mail. It takes work and non-traditional techniques to find the diamonds in the rough. Being able to expand your prospecting universe will enable you to continue to grow your business.