Co-Ops Create New Business Data Source

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Business-to-business mailers are narrowing the customer information gap with their consumer counterparts as the concept of cooperative membership business databases is put into practice.


Acxiom/Direct Media introduced its co-op idea, Business SmartBase, at its annual business mailers conference last month while consumer catalog co-op manager Abacus Direct has offered a BTB co-op since last fall. American List Counsel has joined the Abacus effort this summer as a broker partner.


Janie Smith, vice president of Business and Technology Services for Abacus Direct, Westminster, CO, said the challenge isn't finding business data but getting the more than 3,000 business mailers in the United States to contribute their house files.


Mark Joyce, a BTB broker at Direct Media, agreed.


"We went in thinking if five or 10 people say yes now, then maybe in a couple of months we'll get five or 10 more," Joyce said. "A lot more people showed up than any of us expected. We're pretty sure it will fly."


Co-op membership databases require members to contribute their house files in exchange for the right to pull data out for mailing purposes. Companies may be restricted access to the files of direct competitors. While Abacus restricts its database to contributors, mailers can submit their house files to SmartBase for analysis without sharing. A membership co-op, like a list rental property, is simply a source of names and differs from business co-ops like Direct Media's DME and DPA that are designed to handle a company's entire mail plan.


By pooling names and transactional data from contributing members, a co-op database has the depth of information to run models and other statistical analysis that can help businesses better target mailings at a lower cost than renting individual lists -- Abacus charges $70 per thousand names for prospecting while Acxiom/Direct Media, Greenwich, CT, will charge $65 per thousand. A co-op can also help mailers reactivate past customers who show up as recent buyers on lists of other contributors.


Acxiom/Direct Media is seeking a minimum of 10 million 24-month transactional buyer records from 30 to 50 contributors. It plans a test build later this month and an initial build available by February. Abacus has between 40 and 50 business and technology titles and already is developing business models for clients but is still in the test phase as it builds up to a critical mass of data.


Smith said the Abacus business product has experienced "tremendous receptivity'' in the marketplace. Business mailers at the Acxiom/Direct Media conference were also upbeat about gaining a new source of prospect names. Of the 26 surveys returned at the Business SmartBase introduction, three mailers wanted to sign up immediately and all but one requested more information.


"It's a good deal for small mailers,'' said Don Buck, National Business Furniture. "The real issue in business-to-business is turnover of individuals in buying positions. The turnover in buying positions makes it difficult to prospect.''


Mailers with a large pool of names can augment their prospecting efforts by constructing predictive models that identify the most and least responsive segments of their house files. Models require a significant amount of customer data, however, that small mailers can rarely generate.


"This is a no-brainer for the little guys,'' said Dwight Morris, president of flag and patriotic product cataloger Carrot Top Industries, Hillsborough, NC. "The collection of data just doesn't work with small numbers. This is a chance to take advantage of tools and techniques you can't on a small level.''


While consumer modeling has been around for more than 20 years, BTB is a recent development. Direct Media constructed its first business model in 1996 and currently builds models for about 20 clients. John Carter, head of Direct Media's analytical services team, said BTB modeling is slowly catching on and would be aided by tapping into the data of a co-op.


The Abacus business co-op grew out of models built for SOHO and hybrid marketers that worked well for both BTB and consumer offers. Abacus started with business contacts from its consumer alliance and constructed the database to develop house file and modeling products for BTB mailers, technology organizations and the Internet community.


Both Abacus and Acxiom/Direct Media predict that as their business co-ops develop, the effectiveness of models more than depth of data will make them successful.


"There are many cooperative databases out there,'' Smith said, "but it's really a company's ability to model and get that modeling process down to where it's productive that will differentiate Abacus from any other product on the market.''

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