With increased postal and paper costs to combat and an eye on the bottom line, direct marketers are looking to maximize their house file mailings and prospecting activities with the help of cooperative databases.
“In these kinds of times, you see marketers doing everything from more hygiene work on their house files for increased deliverability and response rates, to doing more analytical work and modeling, to trying lighter paper stock,” said Lynn Wunderman, CEO of co-op database marketing firm I-Behavior, Harrison, NY.
While traditional direct mailers have always been a cautious bunch eager to make the most of each marketing effort, they tend to scrutinize their mailing plans and practices even more when mailing costs go up.
“We're being more selective with what we're going to prospect this year,” said Steve Schofield, marketing director at Old Glory Distributing Co., Westbrook, CT, a cataloger that sells rock T-shirts and novelty items targeted at the 16- to 25-year-old market. “We are also going to be limiting the mailing we do to some of our older customers who haven't bought in a while.”
While prospecting is often the first area that mailers cut back when faced with rising costs, increasing numbers of mailers may have to become more discriminating with their house files as well.
“I think that for many, many years mailers approached their house files as an obligation — mailing the names regardless of performance,” said Steve Tinlin, vice president of merchandising services at Abacus Direct, a division of DoubleClick. “The postage increase and paper prices are eating away at profitability, making it necessary to re-evaluate the house file.”
Eliminating unprofitable house file segments from mailings can open up circulation for additional prospecting, he said.
Modeling and optimization services offered by cooperative databases such as the Abacus Alliance and I-Behavior are one way in which mailers are trying to gain the most information possible about their existing customers to market to them more efficiently.
“Historically, cooperative databases have been the next best thing to your house file,” Wunderman said.
The transactional data that make up such databases give marketers access to known buyers who resemble their own customers, she said. The transactional data allow co-op databases to lead mailers to the most profitable names, Tinlin added.
Although both the Abacus Alliance and I-Behavior are anonymous databases, each claims to have gained many clients recently. One such company is Multimedia Tutorial Services Inc., a marketer of educational products, which declined anonymity and announced its entrance into the Abacus Alliance on Jan. 11.
“After reviewing what Abacus has to offer in terms of the information base they have and the data modeling schemes they employ, we felt that Abacus can enhance the picture that we already have of our customers,” said Hershel K. Waldner, chief operating officer at Multimedia, Brooklyn, NY.
Old Glory also uses cooperative databases, Schofield said. Using a model based on Old Glory's typical customer profile, it can identify the best possible matches for prospecting purposes.
Even though Schofield is approaching 2001 cautiously, he said that through the use of co-op databases and some corner-cutting on the production end of the catalog, Old Glory will try to keep its circulation in the range of the 3 million to 4 million books it mailed last year.
Meanwhile, e-mail, which until now has been a better customer retention tool than a prospecting tool, may help marketers keep costs down and circulation up.
“E-mail will be a bigger factor when better e-mail files are available to marketers,” Wunderman said.
Though not many traditional direct marketers have put their e-mail names on the market yet, both Abacus and I-Behavior have online branches to their co-operative databases. Abacus launched the Abacus Online Alliance late last year and claims that it has grown steadily, while I-Behavior plans to launch its online co-op this quarter.
“There is an incredible amount of pent-up demand to gain the targeting efficiencies online that exist offline,” Wunderman said.
Even so, she does not expect e-mail to replace traditional direct mail but said it has potential as a supplemental prospecting vehicle. At this point, mailers have to experiment more to make e-mail names work, she said.
