Traditionally, organizations running ticket raffles and home lotteries have not developed relationships with their buyers. Of course they create mailing lists, and send brochures to them, but few track information about individual buyers. The reason is fairly simple: in the past, it was usually sufficient to create a great prize board, and advertise like crazy. However, this is no longer the case.

It is no longer sufficient to just have a great prize board and throw a bunch of money at advertising. Recent regulations that impose minimum returns are also making it more difficult. Where in the past a great deal of money could be spent on advertising, we are now seeing the industry players closely watching their pocketbooks.

Given the rapid recent development of increasingly sophisticated data base management systems and techniques, it is now becoming much more important to maintain detailed buyer history information, and to use it not only to decrease the cost of your direct mail advertising, but also to give you the information you need to start building more productive relationships with your buyers.

Direct mail the basic marketing engine

When it comes to immediate response, of all the forms of advertising, direct mail is the most effective. Addressed or unaddressed, direct mail almost always produces more than 70% of the total orders in a typical lottery. Other advertising sources, such as radio, TV, newspapers and the like, make up the remainder, but are mainly useful in supporting the direct mail campaign by keeping the lottery in the minds of the buyers.

To make effective use of your mailing list, you need more information: a buyer history. Every fund raising organization keeps track of its donors’ pledges and giving history. Why not do the same thing with lotteries?

Conventional wisdom is that only 20%-30% of new buyers purchase again in the next lottery. If you turn this around, however, it means that 70%-80% of first-time buyers do not purchase again. After a few years, a substantial portion your mailing list may be made up of people with little or no chance of buying a ticket again. There are several ways organizations cope with this.

Aggressively. Some organizations keep their mailing costs down by only mailing to buyers from the previous lottery. This is certainly effective at reducing direct mail costs, but at the same time, no relationships are created. There is never any possibility of acknowledging long-term buyers, for example.

Passively. Other organizations keep every buyer on the mailing list, but have no idea of their purchase history. The list is rarely, if ever, checked to remove old names. As a result, their mailing costs keep increasing steadily, with little increase in sales.

Wisely. Finally, to manage costs, some organizations are taking a more standard fund raising approach; they are collecting purchase history, analyzing their mailing lists, and creating relationships with their buyers.

Creating a buyer history

Most organizations use some sort of software program to manage their ticket database. But usually, that’s the end of it. They take the orders, print the tickets, and then at the end of the lottery, send the data to the mail house to deal with merging/purging/removing duplicates from their mailing list. This does nothing for creating a buyer history. To create the history, you need to first match up every order from your previous lottery data files. You need to assign ID codes to be able to link the mailing list and your purchase history data. You need to track when the tickets were purchased; how many tickets; and what advertising source prompted the purchase.

Ideally, the history should extend back to the first lottery you ran, even if it was 10 years ago.

Maintaining your buyer history

Keeping your buyer history up-to-date requires work. You can keep the manual labour costs down, and at the same time provide a benefit to your buyers by printing the ID number on all the letters you send. When the orders arrive in the mail, use the ID number to pull up the person’s name, address, and any other particulars you want. For telephone orders, ask the buyers if they know their ID numbers. Most call centres are capable of doing this as well. In this way, when you update your buyer history, matching up the orders is simple. Not everyone will know their ID number, but for those that do, it makes order entry much faster, and allows easy maintenance of the buyer information.

On an ongoing basis, you should run reports that find potential duplicates or other discrepancies, and update the database as necessary. Having an accurate history is very important for analyzing your data. Remember: your buyer history is the single most valuable set of data you have. It makes good sense to maintain it as completely and accurately as possible.

Richard Vandenberg is President of Vandenberg Systems Inc, a company that develops administration and ticket processing software for lotteries across Canada. His company also performs a variety of data analysis and processing, including creating buyer histories, RFM analysis and experience rating. He can be reached at (888) 228-1187, or by e-mail to Richard@vansys.com.