viking Office Products, which has annual revenues of more than $1.8 billion, has built a large customer base of small companies by using a tried-and-true marketing tool: compiled lists.
The Los Angeles-based firm mails over 10 million Experian names a year – anywhere from 30% to 50% of some entire mailings.
Response rates have been about average, but that’s no small thing, says Amit Mitra, vice president of direct response for Viking.
“Certainly response lists do better than compiled on response, but compiled lists cost you significantly less,” Mitra says. “We manage our mailings to make sure that the cost-to-acquire ratio is on target.”
Viking chooses prospects based on Standard Industrial Classification (SIC) codes, which indicate the industry the firm is in – a key variable.
It also looks at factors like “how new you are, how long you’ve been in business and whether you’ve moved in the last 18 months,” Mitra says. Other variables: The number of employees and annual revenue.
Viking does particularly well with “the white-collar component” – lawyers, doctors and accountants, with staffs of 20 people or less. They typically buy office supplies from Viking about four times a year, and spend an average of about $130.
“Really large companies that have their own supply chains won’t work for us,” Mitra notes. “The smaller the company, the more likely you are to reach the correct person.”
Mitra stresses that the Viking catalog is not aimed at the much-ballyhooed small office/ home office market. The principal reason: These outfits tend not to generate a great deal of repeat business.
These aren’t the only Experian services that Viking uses. Its credit department taps into Experian’s information for credit screening, and Mitra also finds its bankruptcy “risk reducer” file effective as a suppression device.
“It flags companies that are most likely to fail in whatever months,” he explains. “That would incline us not to mail the catalog to that person at all.”
And why?
“The key is in getting three to four repeat orders in a year,” says Mitra. “If the company is likely to fail, we’re not likely to acquire them in the first place.”
Viking also overlays its house file with Experian data for internal modeling and analysis. Which variables is it looking for? “Mostly the SIC code and employee size,” says Mitra.
It also plans to do one or two prospect models next year so it can do a better job of mining the Experian database.
“The trouble with mining credit files is that our guys are not likely to have such a great credit rating in the first place,” he says. “But Experian has done a ton of work enhancing its database with noncredit information and names, and it might be time to make it work for us.”
In addition, Viking has relied on compiled lists in many of its ventures in Europe and elsewhere; in many countries, response lists are not available for rental.
Any advice for start-ups that are making their first use of compiled data?
“It’s garbage in, garbage out,” he says. “Data quality is your biggest issue. We would never use lists if they didn’t have data quality.”
Similarly, Mitra advises newcomers to be careful when modeling. “Modeling is very fancy and sounds good, but you have to look at each variable and ask, `Does this apply to my business?’ If it doesn’t, don’t waste your time.”
He also urges mailers to “always test different segments. Don’t just test once and draw a conclusion. Test all your premises and assumptions. Watch your merge-purge reports to look out for cleanliness and duplication issues.”
It must be working for Viking. The firm’s performance was strong enough to interest office supplies retailer Office Depot, which acquired Viking in May of 1998.
But Viking isn’t the only business-to-business direct marketer relying on compiled lists.
Cataloger ATD American, headquartered outside Philadelphia, finds them “critically important.”
The firm, which sells a wide range of equipment for governmental agencies and private institutions, such as hospitals, hotels, churches and schools, uses compiled lists to send catalogs and other mailings.
It targets specific titles rather than individuals within an organization, and usually sends out more than one catalog per prospect because the correct person in each organization is not always apparent.
“We try to hit everybody,” says Arnie Zaslow, executive vice president of ATD American, “from directors of nursing, purchasing managers, and everybody who may be a purchase-influencer.”
Nevertheless, ATD often overlays these files with geographic and income data, particularly when targeting organizations like storefront churches.
“Compiled files,” says Zaslow, “are still the most economical lists.”
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