A holdback file is direct mail terminology for what amounts to a “control group”. Sometimes the effect of direct mail promotion is difficult to measure from replies to the promotion alone.
Imagine you are a temp agency mailing a promotion to a wide range of businesses, but you think there might be a larger response rate than just the prospects that get in touch with you immediately. Your direct mail promotion might really resonate with those prospects that are looking for temporary employees right now, but certainly there are going to be companies who unexpectedly might need your services over the next few months, and because of your promotion remember your name.
This is the perfect situation to create a hold back file. A holdback file is when a database is separated into two groups – the group that receives the direct mail piece, and the holdback control group that receives no marketing material. The holdback control group is typically 5%-10% of your database but can really be as high or low as you want.
The holdback file here can be used to measure the residual effect of your marketing efforts. Continuing the same example, let’s say you notice an immediate response to your promotion of 2%, but you continue to track new customers over the following 3 months.
At the end of those 3 months when you compare all the new customers you have acquired to the group of names you mailed, you discover an additional 3% of them were in the file you mailed, great!
But how many of those responses were due to your direct marketing? That’s where the holdback file comes in. When you compare your new customers to the hold back file you discover 2% of new customers are present in your holdback file (remember they received no marketing).
Simple math (Mailed file response, minus the holdback file response) then shows that 2% of your response is likely organic replies which you have not influenced, but 1% of the replies you received must have seen your direct mail piece and remembered you when they needed the service you offer.
That’s the advantage of a holdback file, it helps you measure the more difficult to measure results of your advertising efforts.
Multi-channel marketing plans with larger mailings often use a holdback for a similar purpose. The holdback file is used to measure the response of your postal mailing, opposed to the response brought in by your other marketing efforts such as radio, television or space ads. The holdback here shows the natural response without the influence of direct mail
For large mailings, a holdback can be a great indicator of which marketing channel is working the best for your product. As responses come in from your marketing efforts, they are matched back to either the mailed file or the holdback file.