Deal...or no deal? How to make a case for database participation

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As I write this article, I am contemplating the benefits for list owners my firm represents to participate in prospect databases. A new wave is sweeping across consumer list acquisition that begs the question: Do we, as list professionals, advise our clients to "Deal...or No Deal"?

For many years, businesses have used database-marketing techniques to create centralized repositories of customer information to effectively drive their business-to-business marketing efforts. The creation of a prospect database allows companies to effectively gather and analyze data about customers and their buying history. The information that is retained in a database can be used on tactical and strategic levels to drive a company's targeted direct marketing efforts.

In the last seven years, catalogers and financial service companies have started to adopt these practices for their consumer acquisition efforts. With shrinking list universes, the absence of new files being brought to market, and the erosion of response rates, prospect databases allow these mailers to create sophisticated segmentation techniques and tools to accurately profile current and prospective customers.

The cutting-edge technology behind prospect databases also yields a robust information environment where nothing should be left to chance. Unlike the game show "Deal...or No Deal," we as marketers are not forced to make blind choices in advising our clients and list owners to participate in modern prospect databases. There should be little room for doubt.

Using databases can challenge the conventional wisdom of tried-and-true direct marketing principles. But I think it is important to replace the "why's" with the "wise." If the processes are implemented correctly in a prospecting database, usage on core files should increase and the ability to drill deeper into more granular segmentation should occur. This benefits both the contributing list owner and the mailer.

If the processes are not carefully monitored, problems can arise.

For example, it was recently discovered that compiled files were being accidentally omitted from the allocation reporting in a prospecting database, which affected several of our list owners.

As a result, all usage was being incorrectly attributed to the direct response files only. This skewed allocation led to a gross overstatement (and understatement) of shared revenue over a period of nearly two years.

Factors that influence the effectiveness of a prospecting database include list cost; unique name contribution; use of either priority or random merge/purge logic; the number of direct response files versus compiled files in the merge; a secure processing environment; and the accurate reporting of database usage.

All these factors affect the amount of revenue a participating list owner will receive. Potential revenue and ultimate control of a list owner's data are the deciding factors in how a list owner should answer the question: "Deal...or No Deal?"

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