DM News' Essential Guide to Lists and Database Marketing: Making the Case for Private Use DatabasesWant to cut costs and raise response to your business-to-business direct marketing campaigns? If you mail 1 million pieces or more a year, you can improve results and reduce costs with a private use database.
In a private use database, names are taken from all the lists you want to mail and maintained in one unduplicated database for your company's exclusive use. You pay only for the names actually mailed, not all the names taken from the various lists and placed into the database.
Public databases, built for the use of many mailers, have their place. But because of its ability to store customer transactional information specific to your business, a private use database offers several clear-cut advantages.
Many direct marketers still would argue, correctly, that the list is the most important factor in the success of your campaign. But even within the same list, no two prospects have the same potential. Test after test has proven that you can continually improve your direct mail programs by treating people within that same list differently.
With their private marketing database, practitioners are digging much deeper within the list source to find prospects with a greater propensity to respond. BTB private use databases are usually enriched with demographic overlays that tell you a lot about the records, including Standard Industrial Classification code and number of employees at the location or company.
These private use databases then are linked with the mailer's house file, capturing information such as purchase history. Tag suppresses can be added, allowing records to be selected based on previous use. For instance, you can suppress and not mail to any sites (company locations) that received your past 10 catalogs but purchased nothing.
Database intelligence. When you rent lists through public databases, your knowledge of the prospects on the list is extremely limited. With a private use database, your knowledge of the prospects is extremely deep. Over time, private use databases let you match customer transactions (dollars spent, products purchased, cost of goods) with their prospecting database promotional history (key code, mail date, vehicle, site penetrations, times mailed as well as other database-calculated variables) for each campaign executed, allowing you to identify segments in a list that work best for you.
Larger market universe. Renting lists through a private use database strategy increases the size of your mailing universe. That's because identifying the best segments in a list lets you mail deeper and more often to the individuals and sites in the list that are most responsive. By limiting your selection to the responsive segments, lists that were mediocre become winners and great lists become even greater performers, thus increasing the overall quantity of names you can profitably mail.
For example, one of our private database clients is a large seminar marketer. At times, the company mails brochures for 15 to 20 seminars a week. Mailing 15 to 20 seminar offers to one person in a week is counterproductive. It's an enormous waste of postage and paper. The flood of mailings also is likely to irritate the customer. With a private use database, you can identify overmailed individuals and suppress their names to trim the volume they receive, plus with the expanded universe of available names you have the luxury of choosing the right names to mail to fill the classes.
Tag suppresses. As previously mentioned, you can suppress records by various other parameters. Through linkage with your house files, you can identify which sites in your database are buying your products. The response of prospects at buying sites is two to 10 times better than at non-buying sites. By mailing to buying sites and limiting mailings to non-buying sites with the most productive firmagraphics (SIC, employee size, buying influences, etc.), you can boost response rates and slash wasted postage and printing costs.
Integrated marketing campaigns. In the public database list universe, e-mail lists are largely separate from traditional mailing lists, making it difficult to coordinate a campaign combining direct mail and e-mail. The records in a private use database can contain both e-mail and physical addresses, and you can track who has received postal mail, e-mail or both - and when. You can easily do a campaign combining print and the Internet to improve results and cut costs.
Track mailing and buying activity. A private use database tells you whom you mailed to, how many times you mailed to them, whether they responded, what they bought and what they spent. For instance, if an individual got 15 catalogs without buying anything, you may suppress his name and not mail to him further. Or you may cut frequency to one catalog a year versus the four you send to active buyers.
In a recession, when layoffs are frequent, purchasing authority frequently shifts from one individual to another within a company. By tracking sales, a private use database helps identify who within a site has the real buying authority.
Inexperienced database marketers have asked me whether private use databases are too static and do not capture new information quickly enough. In BTB marketing, the majority of names in these databases don't change frequently, so quarterly or semiannual updates will capture 99 percent of new names added to any file.
Can you duplicate the intelligence you get with a private use database with public use databases? Only if you bring all the old names you mailed previously back into the new merge-purge, link them to your customer files and enhance the data with demographic overlays. If you mail monthly, you would repeat this labor-intensive, costly process 12 times a year. But doing so is the equivalent of creating a private database for one-time use only. With a private database, you do this work two to four times a year instead of 12.
Private databases also facilitate the use of modeling. House file RFM models will identify a contact strategy for your customers. Clone models will use the characteristics identified by the house file RFM model to score and select from your prospect database. And response models will use the matches to responses generated from mailings back to the private use database from which it was originally selected to identify the multiple variables that increase response.
By continually applying the intelligence to each successive campaign, your private use database grows smarter over time. You save money, effort and time. You know more about your customers - who they are, where they are, what you mailed them and what they've bought. You increase response rates to your mailings while lowering postage, printing and list costs. For a marketer who mails 1 million names a year or more, a private use database can make a lot of sense.
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