- defined and described prospecting solutions, from campaign-specific list processing services to multisourced consumer prospect databases.
- explored and examined how prospect databases change the “face” of consumer list rentals.
- revealed how technology that we use today must be leveraged in new ways to support and sustain databases that consist of nonproprietary data.
Let’s continue our discussion on the most challenging aspect of change that we must address: change in ourselves. We’ll explore how consumer prospect databases require us to change how we think about and execute
- list rental agreements
- the list use approval process
- strategic analyses
- what we learn from the strategic analyses.
Our well-established list rental processes, where Marketer A rents a segment of Marketer B’s customer list for an agreed term and price, are typically short-lived business deals. When, however, Marketer A procures a segment of Marketer B’s list for inclusion in its customized prospect database, it is licensing the data for an agreed term.
This longer-term business engagement necessitates more formal agreements between the data owner and the buyer. Further, we will likely approach pricing response lists differently, moving away from net-name arrangements to fractional payment allocations, in which multiple contributors of the same consumer name will receive partial payment. We will need to create a new standard for industry reporting to accommodate list owner, list buyer, and broker constituencies.
Although the industry’s cooperative databases may offer some precedent, with customized prospect databases, we need to focus and manage the impact on our list rental revenue as more and more shift from net-name to fractional-payment models.
Data pricing becomes even more complex when we think about how the rental name data interact with older house names that are typically unmailed. Because these names were not previously included in campaign-specific merge/purges, they’d had no opportunity to “interact” with outside rental lists. We need to consider what compensation Marketer A owes Marketer B for new-found knowledge about its older house names – in particular, that they are active mail order buyers, but not with their catalog.
Beyond price or payment structure, we must adopt new list use approval processes. Currently Marketer B approves or denies Marketer A’s use of its list based on timing, offer, creative, etc. at the time Marketer A requests it. When Marketer A already holds the data in its prospect database – and it is multisourced – how does it secure approval(s)? And more important, is Marketer A required to seek approvals in this environment?
Industry data compilers offer some insight into how they manage and/or monitor the use of their licensed data assets, but these are post-use reports. Despite this, they provide us with a good starting place to develop “forward usage” reports that give Marketer B what it needs to know while maintaining the confidentiality of Marketer A’s marketing communications calendar.
Also consider that value is a component of price, and we typically set the value of a list price by its performance in our marketing campaigns. With the risk of oversimplifying the discussion, today’s prospecting process generates high-value potential new customers at an investment cost that is less than our earnings.
In this scenario, our list cost plays a key role in assessing customer acquisition performance. But when response lists are mingled and mixed in a prospect database, the question of how to compute cost is more complex. It’s not impossible, but it may vary across the prospect database, especially if no two records have the same assortment of list sourcing or list owner pricing profiles.
Further, we must use a prospect-centric approach to measuring customer acquisition campaign performance. Our current analyses, while meaningful to assess profitability of an acquisition campaign, will fall short of helping us monitor and measure the performance of specific rental lists that we can leverage in future rental (e.g., continuations) negotiations.
Consumer prospect databases are not yet prevalent in our industry, but that is not to say they won’t become prevalent in the not-too-distant future. I have worked with a number of clients and potential clients to discuss the merits of a prospect database in improving customer acquisition efforts both tactically and strategically. Marketers are talking about them, and some are even in the planning stages to implementation. As such, in this four-part series I’ve tried to share some of these experiences with you so that, if you are in a position to endorse, design, or somehow engage in a customized consumer prospect database initiative, you will be more prepared to proactively address the requirements that transcend the technical implementation.
Whether you are a list owner or a list buyer (or both), a broker, a services provider, or a consultant, the key message is that we will all need to work together to redefine and evolve our business processes to align with enabling technology.
Caryn L. Gray is a senior marketing consultant for Experian’s Business Strategies Group.