Ham for Chanukah: Why You’re Wasting Money on that Rented E-mail List

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Ian Lurie Feb 8 2008

Sliced ham isolated on white background with clipping path.

Rented and purchased e-mail lists seem like a great idea. Lots of addresses, targeted to you, dirt-cheap.
But they rarely work. Why?

  1. Their lists are messy. Chances are they got a lot of the names on their list through something called ‘e-mail append’, where they take existing direct mail lists and scour the web for those folks’ e-mail addresses. Or they bought the e-mails from another, less savory source. Or they obtained the addresses through co-registration systems.
  2. The recipients don’t know you. Even if the list is immaculate, and every person on it opted in, they don’t know you. They know whatever brand or website persuaded them to opt in. They won’t recognize your brand, your name, or your offer. So they’ll delete your message.
  3. The lists aren’t really targeted. The list provider will claim they can target the list to your audience, but they can’t. At best, they’re using 3rd or 4th-hand data that may not even match the real recipients.
  4. Deliverability is awful. Many of the addresses on the list will bounce. They aren’t valid e-mail addresses any more. And the list provider cannot guarantee otherwise. Even if the list was perfect the month before, folks change their addresses all the time, usually to avoid spam. Ironic, huh?
  5. You’re not whitelisted. The recipients don’t have the ‘reply to’ address of your e-mail in their address book. So their spam filter will almost certainly dump you in the trash.

The short version: A rented or purchased list is the internet marketing equivalent of selling ham for Chanukah: You’ll have the wrong product, in front of the wrong audience, at the wrong time.

Has this ever happened to you?

You get a call from a leads and lists company. They’ll sell you thousands of names and e-mail addresses custom-selected to match your ideal customer demographic.
You plunk down $5,000 or so, use a tested, proven e-mail offer and landing page and cross your fingers.
Nothing happens. Maybe you get 5 orders. Maybe 6. But that’s it.
The company calls you to see how things went. You say, “The list sucked”.
The salesperson expresses surprise, and says she feels terrible. She’ll sell you another 40,000 names at 1/2 price to make it up to you. She’s never heard of such poor performance from a list, and she wants to make it up to you.
You give in, pay $2,500, and try again. Same result.
And so on.
Don’t feel bad – it’s happened to me too. It’s hard to turn down what looks like an easy route to sales. E-mail can be a powerful direct marketing tool. You just need a better alternative.

Alternatives to Rented Lists

There are lots of alternatives to rented lists. In my experience, they all work far, far better.

  1. List sponsorship. Find a list for a publication or informational site that talks about your industry or service. Sponsor their newsletter. You’ll get in front of the perfect audience: Interested readers who trust the newsletter source. You’ll end up in fewer spam folders, and more folks will read your message.
  2. List advertising. Place a banner ad in a relevant third-party newsletter. These are the only banners I’ve ever seen work. In once case, we bought ad space in a bridal publication’s e-mail newsletter, saw a 20% clickthru rate and a 40% conversion rate. That’s a great result in any medium.
  3. Target customers. Send an e-mail to everyone who purchased from you in the last 3 months. Ask them how they’re enjoying the product, or if they have any feedback. Then include a small promotion, just for them. By matching service and sales, you’ll get a good result.
  4. Register past customers. Don’t just start sending them e-mail! Contact them all via e-mail. Tell them you’re starting an informational newsletter for special offers and the like. If they’d like to be on the list, they can subscribe. If they don’t want to receive anything, they can do nothing, and you’ll never bother them again. You’ll immediately generate a small, very-targeted list of great customers.
  5. House subscription list. You can build your own list by registering subscribers on your site. The list might be small, but it’ll perform well. Test different offers and enticements to generate subscribers. This is your best list by far. Join it with the past customers list and you’ll build a nice-sized subscriber base.

If You Must Use A Rented or Purchased E-mail List…

If your client or boss is hell-bent on using a rented list and there’s nothing you can do to dissuade them:
Make sure the list provider guarantees all e-mails are strictly opt-in.
Make sure your message adheres to legal requirements: It must include your business’s physical address, for instance, and it has to use a real, functioning ‘reply to’ address.
Measure! Don’t trust the list provider to tell you how well it’s worked. Track open and clickthru rates, as well as conversions.
Test. Divide your list into 4 groups, like this: 10%/10%/10%/70%. Use a different subject line or offer for the first 3 batches. Then send the best performer to the last 70%.

When It Might Make Sense

A purchased or rented list might make sense if:
You’re selling medication for erectile disfunction.
You’re going to be moving to a foreign country soon.
You don’t care if you’re blacklisted by major e-mail providers like Comcast, AOL and Hotmail.
Ahem.
There are a few real times when a purchased or rented e-mail list can work:
If one sale’s worth more than the list, then it could be appropriate to roll the dice.
If you’re just trying to communicate a message, and have no conversion goal.
If you have a list of millions and only need a .5% conversion rate to succeed. However, this gets back to medications and leaving the country, so I don’t recommend it.
If you’re purchasing a list from a publication or company that’s very closely related to your business, and folks will recognize the connection.

The Simplest Test

Overall, acquiring e-mail addresses from a third party requires caution.
Any time someone tries to sell you a list, apply this test:
How would you feel receiving your e-mail? If you have to justify it to yourself, don’t use the list, ’cause you’re probably going to end up selling ham for Chanukah. Best case, they’ll just walk on by and ignore you. Worst case, you’ll end up in one of my blog posts.
Related Posts
E-mail 101: Remember the House List
Building the House E-mail List
Double E-mail Open Rates with this Simple Test
3 Tips to Improve E-mail Delivery Rates

tags : conversation marketing

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7 Comments

  1. Mack

    Great post. Quantity can really help sometimes but it’s no replacement for quality in targeted marketing.

  2. Ian

    Thanks. And trust me – you can’t get further from ‘quality’ than a rented email list, unless you cut-and-paste e-mails from an AOL address book.

  3. I’ve come across many companies who have purchased email lists thinking it’s some kind of magic list of potential customers. And guess what, they didn’t even get one qualified lead let alone a sale.

  4. It almost always costs money to acquire a new customer no matter what marketing methods you use because it takes more than one message to get a consumer to pay attention, let alone part with some money. Whether you’re a profitable business or not often depends greatly on how much future revenue you can generate from you first-time customers. Email is a low-cost way to make future contacts and it gives the highest ROI when you target customers who have already made one or more previous purchases.

  5. Ian

    @John I’d argue that a good quality in-house list can do that. A rented list, though, will accomplish nothing.

  6. @Ian you are right. An in-house list is the only way to go for targeting repeat business.

  7. Totally agree with you Ian. I just did my first podcast on this topic. I exampled a case of ‘list abuse’ where a highly reputable educational organisation sold their list to another business.
    People just don’t think do they? YES, they opted in, NO, they don’t know you. NO they will not buy from you or give you respect. YES you just p*#$$Ed off a potential prospect.

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