Increase Direct Mail Response Rates (And Revenue) By Segmenting Your List.

If you want to increase revenue using direct mail, you have two options: sell more to the customers you have, or find new customers and sell to them. The tricky part is knowing how to do that.

I recommend that you start by segmenting your house list. Dividing your customers into groups that share a common interest helps you understand your customers better. Let me illustrate.

Assume you are a business that manufactures and markets a line of polo and golf shirts that businesses issue to their staff as casual uniforms. You examine your house list to find out who buys what, and when and how. You are looking for patterns, trends and opportunities.

Gender

You discover that 75% of your customers buy shirts for male staff only, even though you carry a line of women's shirts. There may be an opportunity here. You may be able to find customers in similar industries as your customers, but in businesses that are operated by women and that have female staff.

Industry

Looking at the SIC codes in your house file, you learn that a large percentage of your clients are retailers. This means you can look for other retailers in other industry segments that may also be interested in your product line.

Buying cycle

Another piece of data that you uncover is that a sizeable segment of your customer base prefers to have their shirts embroidered with their company logo or slogan. What do these customers have in common besides that? Are they in similar industries? Are they all involved in the hospitality industry? You may spot a new market for your products. Or find a way to upsell existing customers when they renew their orders.

Trends

You discover that one shirt is more popular this year than it was last year. Is this a fad? A trend? Look carefully and find out. Maybe you can capitalize on this new development to grow your business with existing and new customers.

Frequency

You also learn that many of your customers order their shirts in the Spring. Is this because the weather is growing warmer, because your Spring prices are always lower, or because your clients must hire all new staff each Spring? Each of these three reasons presents a different opportunity.

Payment method

Your customer database also tells you that the most popular payment method is cheque, followed by credit card and cash. The most popular medium is your catalog, followed by your website (although your website is growing in popularity). Are there opportunities here for reducing your promotional costs by moving your entire catalog online? Or for sending promotions by email instead of postal mail?

As you can see, the advantages of segmenting your customer database are great.

you get to understand your customers better

you uncover opportunities for creating special offers for unique segments of your list

you discover trends that help you modify your product line

you gather the knowledge you need to make intelligent decisions about which prospect lists to rent

you discover potential markets that you had not even considered before

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