Prospect databases: a new direction
In traditional direct mail, a mailer may rent names from 300 or more different lists. He has a service bureau conduct a merge/purge to come up with a clean unduplicated mailing file. After the promotion, he checks to see which list performed best. He will rent names from those lists again. Next month, he will start the process all over again.
How a prospect database works
Instead of renting names for a single use, the mailer, or his service bureau, makes an offer to the list owners to permit him to rent their names for a full year, paying them for each use.
Once the names are in a prospect database, he can afford to append data to each household. He will know the income, age, family composition, house type, lifestyle, length of residence and mail responsiveness. He may be able to know how much they spend in his category. He may have credit data. Each name in the prospect database has previous promotion history appended to it. Using the data, he builds models that provide a purchase prediction for each consumer in the database. He mails only the most likely ones.
A prospect database permits:
ò Better selectivity and segmentation based on better information
ò Faster time to market. Since the merge purge is eliminated, hot line names can be mailed in a week instead of four or five weeks.
ò Management of names by contact frequency
ò Ongoing use of modeling and analytics
ò Significant cost efficiencies
In one case study, a major mailer had 35 campaigns per year selling six related products. The mailer asked KnowledgeBase Marketing to create a prospect database of about 90 percent of the 277 million adult consumers in the United States.
After a year of operation, the mailer's list rental costs had dropped by more than 70 percent, overall mailing cost decreased by $1 million, and overall response rates increased by 34 percent.
If you have not looked into the creation of a prospect database, now might be a good time to do so. You might save a lot of money, and improve your bottom line.