Interaction between target and mailing characteristics in direct marketing, with an application to health care fund raising

Abstract

The major decision variables for the development of a direct mail campaign are the characteristics of the mailing and the characteristics of the targets receiving the mailing. Traditional direct mail research treats both aspects separately although they are likely to interact. We present a new target selection strategy that simultaneously takes both characteristics into account by using different mailings offereng the same product to different targets. Using data from an experiment conducted by a Dutch health care organization, we show that our selection strategy increases the net returns of a fund raising campaign.