Custom Prospect Databases: A Revolution, Not an Evolution

Jul 17, 2006 8:49 PM  By

Consumer prospect databases have the potential to profoundly change the direct marketing industry in ways we might never have imagined or perhaps thought possible. In this, the first of a four-part series for MULTICHANNEL MERCHANT’S LIST & DATA STRATEGIES, we’ll look at what prospect databases are and how they differ from traditional customer acquisition approaches.

In recent years, an increasing number of direct marketers are turning to private prospect databases as a means to combat the external forces that spoil their customer acquisition efforts. For marketers who use direct mail to acquire customers, challenges include declining response rates, list fatigue, lack of new names, shortened campaign times, and the need for timely postcampaign metrics. Not too long in our past, we could have dialed up our modeling efforts, but even sophisticated modeling techniques have their limitations against these industry forces.

So let’s explore the evolution in prospecting approaches or solutions—at a high level—that gets us to the consumer prospect database:

  • Campaign-centric processing. Ninety percent of the direct marketing industry still operates in this mode, leveraging list processing and merge/purge tools. For each marketing campaign we develop prospect circulation plans with a mix of rental lists—response/vertical lists, compiled files, cooperative data, publications/media lists, inactive house names—to meet the defined business objectives. This can be a weekly, monthly, or quarterly, time-consuming exercise where one event is completely independent of another (except for multis—but that’s another story for another time).
  • Prospect fatigue suppression. Using traditional tools, marketers and their service providers incorporate previous campaign mail files into the merge/purge to determine how many times the new rental names have been mailed in previous campaigns. Using “times mailed” as an inclusion or exclusion criterion, marketers opt to “rest” (i.e., suppress) new rental names that have not yet converted or responded.
  • Promotion history suppression master file. Marketers and their list processing providers create a prospect-centric (not campaign-centric) campaign history master file without consumer name and address information. They do this via customer data integration (CDI) technology and a persistent, unique individual ID. Marketers use subsets of the prospect promotion history file as suppression files in a new campaign circulation merge/purge process, or they incorporate “times mailed” and other variables into their prospect models.
  • Prospect database. Marketers (who are list owners themselves) license select segments of response lists, compiled lists, specialty files, and cooperative files to maintain their customized, proprietary marketing database. These multisourced, agreed-use prospect solutions permit marketers to accumulate nonproprietary purchase information over time, to access meaningful information to support circulation planning, to develop richer and more powerful models for targeting and circulation planning, and to more easily measure sales results. When integrated with their customer database, marketers using a prospect database are empowered and enabled to decide who, what, when, and how much they will target specific customers and prospect segments.

You may not be aware of prospect solutions beyond the first one, the campaign-centric processing. Even if you’re not, we highlight that data rentals, business processes, and technical services are elements of the first three solutions. That is, marketers and their service partners creatively leverage tools, data agreements, and technology in today’s business environment to responsibly combat customer acquisition challenges. With the risk of oversimplifying the prospecting solution sequence, we could cite these as a natural evolution.

We cannot, however, include the last prospecting solution, the prospect database, in this assessment. Why does the prospect database represent a revolutionary change? In our next three articles, we will explore the changes that list owners, list management firms, marketers, service providers, and brokers have to make to truly design, develop, and implement consumer prospect databases.

Caryn L. Gray is a senior marketing consultant for marketing services provider Experian’s Business Strategies Group.