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How to find unregistered users.

Software companies typically capture the names of only about 25% of their users, says direct marketing expert Howard Berg. These unregistered users have become increasingly important as a source of upgrade and follow-on sales, Berg argues, and they often play a key role in the battle for market share. "With the advent of the competitive upgrade, even a competitor's customers are upgrade prospects."

Berg (who recently left Lotus to run IBM's U.S. telesales and direct marketing operations) recently offered the following advice about how to build a larger database of customers and prospects:

* Co-promote with dealers: "Channel names are a gold mine," says Berg, who estimates that dealers usually control the names of about 15% of total users--and these names are usually those of buyers with "remarkably little overlap" with the publisher's own database. Dealers won't be eager to share' these names, Berg adds, but they may be persuaded to mail upgrade offers and catalogs if the orders come back to the reseller for fulfillment.

* Be generous with tech support: By extending phone support to unregistered users (including those who own pirated copies), a company may collect the names of "thousands" of users who are likely to feel positively about the company. "Believe me, when someone calls in for tech support, they're dying to tell you who they are."

* Make the registration card more inviting: "The purpose of a registration card is to get it mailed back--it's not a lawyer's contract," says Berg. Simple, friendly cards will generate many more names, he notes. Another way to capture more names is to offer a premium: Lotus found that premium offers boosted registration rates by 50%-75%, at a cost of $6-$8 a name. "Premiums aren't cheap," Berg concedes, "but you can often get the same results by offering something fun."

* Keep testing outside lists: Third-party mailing lists--of mail order buyers, users of vertical market and add-on products, magazine subscribers, and the like--can be a worthwhile source of unregistered user names, Berg says, but the cost of acquiring these names tends to be high. "I don't know anyone who mails to outside lists and makes money the first time." To know if there's a reasonable long-term payback on these acquisition costs, Berg adds, it's important to measure the "lifetime value" of a customer "to know what the name is worth over time."

* Don't lose touch with old customers: If a company hasn't had contact with its customers in more than two years, the names are probably almost worthless, says Berg. "People move, they quit, and they die." To keep old users from fading away, he recommends sending newsletters, .making occasional telemarketing calls, and sending survey questionnaires. "And always mail first class with address correction," he says. "It's getting harder and harder to get third-class bulk mail delivered in big companies."

Howard Berg, director of national telesales & direct marketing, IBM Corp., 1133 Westchester Ave., MD356, White Plains, N.Y. 10604; 914/642-5465.
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Date:Oct 20, 1992
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