If you’ve ever rented someone else’s mailing list in order to grow your own database of customers, you know how dicey it can be. To be an effective strategy, the leads need to be qualified, the consumers need to be open to third-party mailings, the email addresses need to be new to you… the list goes on.
But despite the potential pitfalls, list rental can work as long as it’s done right. So this week, we’ll take a look at one company and how it utilizes a third-party database of millions of potential new customers to expand its consumer base and sell its products.
SmarterKids.com is an educational toy, game and book site that is geared toward getting parents involved in their kids’ education. Features include a staff of teachers who review products, shopping in a wide range of categories, ratings by other parents, and more.
SmarterKids.com has teamed up with PostMasterDirect.com (an opt-in email marketing site) to conduct campaigns that yield an average of 5 percent click-through rates (and they have been as high as 15 percent) and conversion rates of anywhere between 5 to 20 percent, depending on the offer. For the past year, SmarterKids.com regularly has been sending mailings to PostMasterDirect.com members.
PostMasterDirect (for those of you who are unfamiliar with the company) is an opt-in email marketing business that gathers addresses of Internet users who have given permission to receive commercial email messages in one of more of 3,000 categories. It works with about 260 partner sites to ask visitors if they’d like to receive mailings on certain topics, and it uses what it calls a “double opt-in” process, whereby those who sign up to be list members are emailed by PostMasterDirect. Recipients must confirm they want to be part of the database before they are added. So far, more than 9.5 million people have signed up for the program.
PostMasterDirect then places these individuals into groups, according to interests and demographic information. For instance, a parent who works from home may opt for parenting lists, computer lists and to receive mailings for someone in his or her zip code. Outside parties, such as SmarterKids.com, can then rent these categories. They never see the email addresses of these list members unless a member responds to a mailing and then decides to hand over contact information voluntarily. And PostMasterDirect handles all the grunt work (for example, the merging and purging of addresses).
So at least twice a month, or more often depending upon the time of year, SmarterKids.com sends mailings out to primarily new names, typically 100,000 or so per month, through PostMasterDirect.com. It usually sends out a new offer that contains some sort of incentive for first time customers, such as free children’s CD-ROMs with a purchase of a certain amount.
SmarterKids.com pays PostMasterDirect.com a per mailing fee, which can range between 10 to 35 cents a name ($100 to $350 CPM), depending on the list. Peggy Kelley, the customer acquisition manager, says the results (the aforementioned click-through and conversion rates) are well worth it.
“It’s valuable because of the immediacy of the results and the quality of the customers,” Kelley says. “You don’t have to get them from the TV or the mailbox to the computer. They’re already right there.”
SmarterKids.com also puts its money where its mouth is. Kelley says about 75 percent of its overall marketing budget is devoted to online marketing, most of which is allotted to email marketing — and the agreement with PostMasterDirect.com is a large part of that email marketing scheme.
SmarterKids.com allows a certain maximum cost per new customer for these programs, so list cost (usually CPM), visit rate, and final rate of conversions to orders are all key metrics.
“PostMasterDirect programs meet our criteria,” Kelley says. And for that reason, she adds, SmarterKids.com will continue using this third-party program to grow its own membership.
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