Can Joining a Co-op Database Actually Hurt Response and Loyalty?

As direct marketers, most of us are familiar with the “best-customer” protection policy at co-operative databases such as Abacus and NextAction. In short, any buyers on your file who are unique to you and only you will not be included in any prospect universe rented by competitors—or anyone else in the co-op, for that matter. Combined with the favorable cost structure and acceptable performance verified through testing, this policy is usually enough to convince catalog companies to join and contribute their data, thereby adding more names and data to the co-op. So it is that the co-ops grow in size, produce stronger models, and on it goes.

Occasionally here at my company, Lenser, we see clients who are reluctant to join despite this policy. “I don’t want to give away my customers,” is the reason we most often hear. This isolationist approach limits growth strategies, and raises marketing costs by leaving individual list rentals as the only avenue for marketing to prospective customers. But for all the qualitative arguments in favor of joining a co-op, what evidence is there that your buyer file productivity is not diminished by exposing your customers to other catalog offers? Well, we’ve got some for you.

We recently set out to quantify the impact on one of our client’s buyer file of joining a co-op database. The client was reluctant to join, so we designed a test and settled on taking a random Nth of the buyer file and contributing just those as a compromise. The goal was to test a few co-op prospect models while verifying that the cost of accessing these prospects didn’t come at the expense of buyer response.

Of the buyers who were contributed, we isolated those who matched to the co-op database as active mail order buyers from multiple titles, and tracked their response value during the life of our catalog offer, approximately a six-month period. The measurements were orders and sales per customer.

The chart (link) shows that over the 6-month period during which these buyers were receiving our offer (and presumably our competition’s), those who had been contributed to the co-op were approximately 15% more responsive than an average customer. Sales per customer were 16% higher than average, which tells us that in addition to ordering more frequently, they were spending more per order, as well, if only by a little bit.

Since the prospect models we tested performed at or above acceptable levels, the test confirmed that we can target responsive universes for growth while sacrificing nothing in buyer file performance by joining a co-op.

Quantitatively, it tells us that while contributing your buyer data to a co-op as a condition for renting models is necessary, it is not a necessary evil. You may consider a customer unique to you worthy of special treatment by virtue of their perceived fidelity to your brand, but as a marketer you do so at your own peril by protecting those who do not reciprocate the “loyalty.” These data sets also show that exposing customers to more offers results in more buying activity, not less.

Finally, this study reminds us that at the end of the day, it’s not the uniqueness of your buyers that increases response rates, it’s the uniqueness of your offer. By setting yourself apart from your competition, you can leverage the benefits of the competitive marketplace. When the tide rises, so do all the boats. The challenge is setting your offer apart from the others.

Jude Hoffner is director of circulation, business-to-consumer markets for San Rafael, CA-based catalog consultancy Lenser.

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