With the postal increase now in effect, mailers are asking themselves how they can drive increased performance and possibly reduce circulation. One approach is effectively integrating your prospecting strategy with the cooperative databases.
The first question is: How many co-op databases should be used? Some of the co-ops will tell you one, meaning only them. What we at Lenser have seen is that each of the co-ops provides valuable unique names. For example, in a recent merge for one of our clients, three different co-ops were used. Sixty percent of the co-op names did not overlap with either the other co-op names or outside list names. While one might assume that as more models and names are used from each co-op fewer unique names would be produced, the duplication rate actually decreases to as low as 10%.
In other words, as the co-op models have to work harder to find that next qualified prospect, each co-op is going about this process in a different way and finding different prospects. So it is important to use more than one co-op database, even before exhausting the prospecting opportunity a single co-op offers.
How many co-op databases, or even outside lists, should be used is a question of how many unique names are being generated from each source and how those unique names perform compared to breakeven. Do they generate an acceptable response rate? It is important to create separate segments and structure the merge to isolate the unique names from each model as well as the different combinations of multis. If unique names do not perform well, the model or list may need to be dropped from future consideration.
In this example, the unique names are tracked from Abacus, NextAction, and I-Behavior. With an index of 100 representing an acceptable response level, the unique names from all three co-ops performed at an acceptable level in all four seasons. In this case, it makes sense to use all three co-ops in the circulation strategy.
But what to do with all the multi prospects that were created between the co-ops and between the co-ops and outside lists? These multis actually become the cornerstone of your prospect contact strategy. By using one merge/purge for a season, we are able to distribute the mailing of these multis across different mail dates, and multis (the strongest names available) can be mailed at the start of the season with drop one, even though the unique names are not mailed until drop three. Three-time multis can be mailed in three drops and four time multis in all four drops. Not only are all the names paid for used, the interaction has, in effect, identified those names that can sustain multiple contacts and still perform at an acceptable level.
As an aside, when running one merge/purge for the season, it is important to supplement future drops with hotline buyers—those buyers that have purchased since the last buyer file was pulled. Hotline names from the best outside lists can also be added to later drops along with balance models from a co-op database. Weaker names identified in the merge can subsequently be optimized and mailed in one of the three later drops.
It is to your advantage to use multiple co-op databases – not only to expand the universe of available unique prospect names, but to create an abundance of multis whose higher response justifies frequent contact. This will necessitate the careful segmentation of names within a more complex merge/purge that drives multiple mailings within a season. This approach will also allow you to better manage contacts over a season with your house file based on segment strength. You will be rewarded with improved response, higher sales, greater potential growth, and lower costs.
Michelle Farabaugh is a partner with San Rafael, CA-based consultancy Lenser.