Some of the largest U.S. marketers maintain databases of 100 million, 200 million or even 300 million individual records. The rest of us are more likely to oversee files that contain only a small fraction of those quantities.
Many of these extra-large databases are actually prospect lists rather than customer files. That is, some marketers manage a consolidated prospect database composed of those prospect lists they regularly mail. All of this is cleared with the list owners, of course, and special charges are assessed for multiple use.
Prospect databases can work when you have either a defined or an undefined market. A defined market might be an equipment manufacturer that sells to radiologists, or on the consumer side, a publisher that promotes to bird watchers. An undefined market could be a credit card issuer with dozens of offerings depending on credit risk, or a provider of long-distance telephone services that markets to the world of households connected by phone lines.
The benefits of a prospect database include:
– Time savings. Prospect databases can provide the ability to act more quickly on marketing opportunities. Rather than renting, merging and prioritizing input on a collection of rental lists for a mailing, the lists in these prospect databases are kept up to date and are readily accessible for mailings.
– Cost savings. If you find yourself continually ordering and using the same lists, there is something to be said for having them in-house and reducing redundant processing costs. A related savings may be in the price you pay for the lists, since you now are in a position to negotiate a multiuse agreement. Prospect databases are often cost-justified on these factors alone.
– Promotion testing and tracking. In a prospect database, you can flag each promotional contact with a prospective customer. Prospect databases lend themselves nicely to those who mail repetitively. Rather than remailing to a complete universe, you can begin to vary your prospective contacts based on testing parameters and, over time, projected prospect profitability. In other words, you can focus on mailing to those who look most like profitable responders and avoid mailing to those who probably won’t respond.
– Improved targeting through modeling. Multiple response, conversion and profitability models can be developed, and scores maintained on the prospect database. This also enables greater selectivity.
All these benefits command a price. Here are a few challenges of a prospect database:
– System costs. It will cost plenty to build, maintain and update a database of the prospect names.
– Update recency. You typically will be making a trade-off between list recency and system costs. If you accept updates from list owners as soon as they’re available, you’ll be paying a hefty fee for them. On the other hand, if you hold off on updates, your data will be less accurate and less recent than what is available on the general market.
– Changing marketing practices. Many organizations find that while a prospect database offers increased selectivity, marketers are still mailing as broadly and as heavily as they did when renting lists. Changing the marketing practices of acquisition mailers can be the biggest challenge to achieving a positive return on a prospect database investment. As one client noted, a prospect database “just allowed us to make more stupid mistakes faster.” This can be the case if the mailer is focused only on the business of acquiring new customers, without any analysis of bottom-line results.
– Gaining list access. You may be wondering, how would list owners ever agree to this? Sometimes they don’t, which suddenly puts you back into the mailing-specific merge/purge business. Or the owners might agree, but with so many stipulations the process becomes unmanageable.
Developing and maintaining the prospect database through a reputable service bureau, which can preserve the rights of list owners and provide usage reports and data audits, is often the key to gaining approval.
Deciding whether a prospect database makes sense is a matter of doing some research, making some assumptions and running the numbers. Weigh costs against benefits. Costs include prospect database development and maintenance, as well as other setup costs. Benefits could be reduced list rental and processing costs, and improved targeting capabilities.
You never will be completely right about where the biggest investments might be and where the biggest savings lie. But you certainly can determine whether the odds are in your favor.
The good news is that you can start with a fairly unsophisticated prospect database that simply tracks promotion history. If that shows promise, you can begin to add such features as direct access for query, reporting and selection, as well as normalization of data elements on the various rental lists.
Some organizations have set up this type of capability for dozens of regional offices around the country. Each office has direct access to targeted names for local promotions, with greatly improved turnaround – often 24 hours or less.
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