Making Sure Your Database Stays Clean
The problem grows in scope and complexity because customers and prospects added to the file often provide different company names for the same enterprise. Abbreviations and company name permutations create duplicate records on virtually every file. This is exacerbated because people who change jobs or companies rarely file a change of address with the U.S. Postal Service and so are not identified in the National Change of Address database.
The issue has grown even more critical in the past few years as customer relationship management has become the hot idea in business marketing. Accurately combining prospect and customer files is virtually impossible. Appending purchase and response information as well as demographic data is frustrating.
Business marketers have always lived with this problem because there was no realistic approach to cleaning and maintaining their databases. The savings to a company that can solve this problem are substantial: better customer service, more targeted sales efforts by the field sales force, reduced mailing costs, complete sales and product histories for all customers, etc.
In the past few years I've used a series of steps that produce remarkable results.
Begin by sending all of the house files to a service bureau and have them combined into one database. Historically, this produces 50 percent to 60 percent match rates. We have a service that typically produces more than 80 percent matches. The service also will process your house files and produce a summary report free. You pay only if you buy the resulting data from the process. As part of the merging, you should acquire basic demographic information like size, industry and even the parent company's identity.
Once you've built a merged, consolidated database, process the file through NCOA. As you identify incorrect names, build a suppression file of names that shouldn't be mailed. This file will grow in size and value. When you rent names from outside lists or merge additional files with your house file, you can bounce the records against the suppression file and eliminate bad names before they cost you money.
From the merging, you should be able to identify business locations that have multiple contacts. I suggest you take any location with three or more people and mail a letter, along with a list of contacts, to the mailroom manager. The letter can be title-addressed, and you can use a plain envelope mailed First Class. It is not unusual to get 40 percent to 50 percent response from the mailroom manager.
If the letter is created carefully, the mailroom manager not only will delete inappropriate names and change names to current contacts but often will add names. Add any non-deliverable name to your suppression file. I suggest you code the source of each name on the suppression file so you can evaluate the success of the various steps in the cleaning process.
Because the response rate is often very high, you should mail non-responding mailroom managers a second time about three to four weeks after the initial mailing. This second mailing often produces about the same response rate as the initial one. Again, add non-deliverable names to the suppression file.
Mail a postcard to all remaining names that haven't been verified. Eliminate the names that have been verified by the mailroom manager and mail a postcard to everyone else. A postcard is mailed First Class, and non-deliverables will be returned to you. Some will have a change of address but most probably will be beyond the forwarding time and simply be non-deliverable.
The non-deliverable rate from the postcard is typically 15 percent to 20 percent. We also have used First-Class letters, especially a customer opinion survey, to accomplish the same task. Make sure you add the non-deliverables to your now-growing suppression file. You can use a double postcard to accomplish the same mission and actually test offers, generate sales leads and sell products while still cleaning your house file.
Even while you're in the process of cleaning the database, it is being corrupted with daily transactions. Develop a plan to subscribe to any updates to the records you have acquired and matched through the service bureau. Periodically send another copy of entire files you originally provided, updated with current transactions, to the service bureau to ensure new records are being handled correctly. Plan to mail the mailroom manager at least once each year. Mail everyone who hasn't purchased or responded in the past year a First-Class mailing to verify their address. Once you sell an individual or they respond to a campaign, plan to include them in a First-Class mailing one year later.
These efforts typically pay huge rewards. If you're using direct marketing, the savings in promotion costs usually pay for the process in a few months. The problem, when fixed, permits businesses to increase new sales, strengthen customer retention and improve sales and marketing margins.
Here are a few examples of its use:
· Organizing customers and prospects into segments provides the ability to calibrate service levels and target sales based on segment and individual customer profitability. In the consumer world, the success of airline frequent-flier programs is an example of database segmentation. A consolidated database with basic demographic information allows segmentation.
· Many cost-reduction opportunities exist. With the costs of mail and catalogs escalating, eliminating redundant mailings caused by improper targeting and duplicate records provides immediate savings. Many businesses cannot ensure a salesperson's territory is properly assigned, causing multiple salespeople to handle the same company. With the cost of each face-to-face sales call approaching $500, eliminating one or two sales calls per salesperson per year could quickly justify any costs associated with name standardization and database maintenance.
· In this age of consolidation, mergers and acquisitions, it is impossible to build a unified, homogenous customer file. A similar problem exists if a company has multiple divisions, product lines or distribution channels. Many businesses use computer service bureaus to fix the problem on a one-time basis to capitalize on marketing and relationship opportunities but are forced to give up on maintaining a dynamic solution.
· CRM may be the most important new computer and marketing application today. As companies upgrade computer systems and incorporate customer and prospect information, the inconsistencies of their house file become even more apparent. Combining existing files and integrating sales and customer service information are virtually impossible without a defined process for merging and cleaning.
Examine the size and scope of your database and all of the files that are necessary to build a clean, consolidated house file. Contact service bureaus and have them produce a report of the potential information you can expect when you combine the various files. You'll probably be surprised by how much money you can save and the additional sales opportunities available from your in-house files.