Increasing DM Accuracy and ROIIn terms of cost-effectiveness, no other promotional medium rivals direct marketing. But as we all know, few marketing campaigns operate under optimal conditions. And one particular problem -- the lack of accurate, reliable contact data, such as name and address information -- has plagued direct marketers for years.
The principal culprit is movement. Americans are a very fluid population. Every year, approximately 20 percent of us move and change our addresses. Birth, death, marriage and divorce also affect the accuracy of contact data.
As a result, a certain percentage of addresses in any direct mail campaign will inevitably be inaccurate. But it is the degree of inaccuracy of the addresses that can mean the difference between a successful, cost-effective direct mail campaign and an expensive failure.
Why traditional verification processes aren't enough. In an effort to reduce this margin of error as much as possible, direct marketers have routinely sent their address files to third-party data service providers for verification and correction before conducting their campaigns. However, this approach has been slow and relatively expensive.
The problem lies in the methods used by data service providers to verify addresses. All use mathematical procedures called algorithms to separate the name and address data into individual components, a process known as parsing. These components are then sequentially compared with similar components in a current U.S. Postal Service master file. When a match occurs, the item is "verified."
At first glance, that doesn't seem too bad. But with closer inspection, there are some fundamental problems with this approach.
First, traditional address verification is a classic example of reinventing the wheel. Each time an address file is subjected to the algorithmic process, its components are separated and compared just as they were the first time the file was verified. There is no threshold of knowledge maintained from the earlier processing.
This problem is exacerbated by the many companies that maintain multiple customer data files. Different departments such as sales, accounting and marketing may maintain their own customer data files. When the addresses in each of these files need to be verified, each file is processed separately.
Second, algorithms make the verification process fairly slow. Because the entire address file has to be reverified each time, the process is essentially inflexible. With very large files, for example, verification often takes days or even weeks to complete.
And last, traditional algorithmic verification methods are easily deceived by small but significant variations in the name and address components. For example, if Sarah Wood moves from Towson, MD, to San Antonio and now identifies herself as Sarah Ellen Wood or S.E. Wood at her new address, the old algorithmic verification process would have a problem identifying her as the same person.
The result is that even though your address file has been verified, you may still end up sending multiple pieces of direct mail to the same individual. If you do this many times in a large address file, these expenses may significantly affect your profits.
Fortunately, in recent months a new technology has been developed that solves most of the problems inherent in the algorithmic process and, in many important respects, renders that process obsolete.
Customer data integration technology significantly improves address verification. In basic terms, the new technology has two principal components: a large historical reference file, or knowledge base, of consumer and business names and addresses and a data-linking technology that recognizes and links related data quickly and accurately. Together, they deliver a quantum leap in both speed and accuracy compared with existing address verification processes.
The data-linking technology can provide an accurate chronology of Sarah Wood's occupancies over time. Because of this data trail, S.E. Wood in San Antonio is known as the same Sarah Wood who formerly lived in Towson. And that means only one piece of promotional material is sent instead of two or three.
In the new process, the knowledge base provides the accuracy, and the data-linking technology creates the speed. Assuming that your records are accurate and in standard format to begin with, your address file can be enabled with data-linking technology quickly -- currently at 40 million records per hour and soon at 100 million records per hour.
Once the data-linking technology is applied, verifying addresses and eliminating duplications are a piece of cake. Instead of parsing components mathematically -- with all the attendant problems of entry errors, the new technology provides a much simpler, faster and more accurate process. Data-linking technology verifies an occupancy in split seconds, and duplicate records are recognized immediately for quick elimination.
This new approach offers some substantial benefits for direct marketers. The two most obvious are:
* Greatly increased accuracy. Individuals and businesses are recognized and remembered. For the first time, you're able to "see through" name permutations to identify the person with whom you want to communicate.
* Significantly reduced costs through faster processing. Linking technology needs to be used only once. When you add customers and prospects to your file, only those new names need to be data-link enabled. From that time on, your entire name and address file can be verified in literally a fraction of the time it took using traditional processes.
The new address verification method makes previous algorithmic processes obsolete. It gives you a reliable level of accuracy that simply could not be achieved with algorithms. And processing time is now cut to a fraction of its former length.
This new technology reduces costs and increases profits by getting your direct mail campaign into the hands of the right people -- and only those people -- as quickly as possible.
And in direct marketing, you can't ask for much more than that.