NextAction, a provider of cooperative data services, has launched NextOp Mailfile Optimization, in a move to help multichannel retailers better identify key prospects.
NextOp leverages NextAction’s SKU-level database and proprietary analytics engine to identify and suppress unprofitable prospects. The program differs from NextAction’s previous optimization efforts because it uses analytics to suppress all unlikely prospects — up to 50% of a list — rather than trimming the usual bottom 10%. The intended effects include a lift in ROI, lower mailing costs and reductions in mailbox clutter and wasted mailings.
“For retailers, it’s an economic proposition, saying they will make a lot more money by mailing to only the best prospects,” explained Eric Roza, COO of NextAction. “And, the consumer is less annoyed because they have less irrelevant communication in their mailbox and have more that should be cutting through. It’s also a big environmental win and really important to the industry to show people that direct marketing is not about deluging people with communication, and that we’re working as hard as we can to be more targeted.”
Roza added that the market seemed right for the new product, as postal increases and online migration continued to put pressure on direct mailers.
No clients are yet officially using NextOp, but close to 100 have tested the system. Initial test results show that the average response rate index for suppression opportunity was 65%, vs. 120% for remaining names. Tests also reveal average cost and environmental savings of more than 30% and average performance lift of 20%.
Test mailings started going out a couple of months ago. Roza expects that full-blown mailings using NextOp will start to take hold this holiday season, though some challenges to widespread adoption of the system persist, including timing.
“People need to get comfortable testing something in the mail and waiting months for responses and tabulation. The other problem is just a mindset,” he noted. “It serves no purpose to reach out to people that are not interested in my offer, so it generates fewer impressions, which is an interesting mindset shift. It’s about growing business by reducing your outreach to people to whom your offer is not relevant, so it’s not a shrink strategy but a strategy of best deploying your assets so that by mailing smarter and focusing on people who are best prospects you convert at a higher rate and end up with a bigger file.”
NextAction applies modeling, data matching and processing and analysis to its 100 million household relational database. The company works with more than 1,250 multi-channel retailers, including F.A.O. Schwarz, Hickory Farms, Orvis and National Geographic.