Private List Databases Flop in This RecessionFor many individuals in direct marketing, the current economy has created the most turbulent time of their careers. For those direct marketers who have eight to 10 years under their belt, a slowing, recessive economy was out of the realm of their experience, and yet many of them are in critical roles within their organizations today.
What works now probably was not what worked three years ago. What works now certainly was not what worked five years ago. In direct mail marketing, and especially BTB direct mail marketing, the tool most widely used for ongoing campaigns has been the private list database. The private list database, while not a new tool, proved to have wide acceptance during the go-go years of the 1990s.
I'm not taking a position for or against the economic benefits to either the list owner or the list renter in a private database transaction. That debate has been thrashed out for many years, and there are good arguments on both sides. The true winner for these private databases probably always has been the service bureau that runs them. However, this is not the focus of this article.
I don't think a private database for BTB mailers can work properly in a recessive economy. In fact, private databases only can hurt the marketing effort and results.
Inherent in databases is history that is built over time. In the case of private database builds where rented lists are used, upfront economic savings are key factors in increasing the return on investment. Lists are put into the base, then are passed against other lists, tagged against their house files, then used based on experience and history. New names are added periodically on a quarterly, semi-annual and an annual basis. Elimination from the base comes through an overall list hygiene of the base itself.
We are in a new economic time, and the environment has created new challenges that these databases, created in a growth economy, had not foreseen and do not allow for.
We are in a full-blown recession. Businesses have consolidated their staff and different departments have gained purchasing power. Employees have been cut; budgets have been sliced. New employees in different positions have new buying power. The private database cannot reflect this new twist.
In the old equation of RFM, recency is probably the most expensive and least adhered to of the three parts when it comes to private database builds.
In a growth economy, the database had to be more stagnant than the typical merge-purged mailing. The cost savings upfront and the lack of turnover in the growing business community allowed these databases to yield strong results, which is no longer the case. The person responsible for buying product services today is not the person who was responsible two years ago, six months ago and probably not even three months ago.
Even taking hotlines into a base cannot keep up with a regular monthly list rental schedule. Database builds take a longer "upfront." By the time names come in they are no longer recent.
Names in a "hotline select," most recent 30 days, are already several months old when they come to market. Databases function as a snapshot in time and cannot compete correctly in an economic environment of downward change.
The proof of this statement is found not only on the nightly news, but in the shrinking quantities of hotline names and fresh subscribers to various business publications. Savvy BTB marketers must by necessity alter their program. The toughest challenge is to find the new buyer in a downsized office with a tighter budget. The target marketplace also has become smaller, even in the macro sense. Companies with 100 to 500 employees, which always have been a prime target for the BTB mailer, have shrunk in size, and the functions of purchasing have moved up the ladder as cutbacks have appeared. A private database does not catch this critical move within an organization.
The builders of the private database will argue that many of the overlays, tagged suppresses, proportional split payments and linkages to house files make the private list database a necessity. That may have been true at one time, but the speed, power and delivery systems available today make those arguments obsolete.
Maybe this is revisionism or return to traditional list rental and merge purge, but in the uncharted waters of an economy that is still turbulent, the private database cannot be the panacea for survival for the direct marketer who wants to see the next upturn.