Database Marketing’s “Playground Problem”

Relying on an incomplete view of your customers is a sure way to doom your database marketing efforts to failure, says Jeff Hassemer, director of product strategy at the data management solutions division of marketing solutions provider Abacus.

“I like to call this the playground problem,” Hassemer said during a Webinar hosted by MULTICHANNEL MERCHANT and “Direct” magazines. It’s a particular problem in organizations that have separate groups handling online and offline marketing or that use multiple systems to support separate channels. “All the cliques go to their part of the playground, and no one can play with [the other groups’] toys.”

Hassemer detailed why relying on an incomplete view of your customer can be deadly:

  • Customers are moving through the buying cycle across multiple channels. For instance, a buyer may become aware of you via a search, browse your Website, request a catalog, buy via the contact center, and exchange merchandise at your store It happens and at an ever increasing rate.
  • When only a single source is used, the marketer is making decisions based on one channel of interaction only. There is no way to determine who the customer is with that view.

Fortunately, Hassemer continued, there are several ways of avoiding this situation:

  • Get data from all sources.
  • Make sure that you collect at least zip code and name from store buyers, and preferably phone number as well.
  • Develop a solid match-and-consolidate strategy based on name and address matching.
  • Do not rely on the source systems to assign customer ID; it is generally always wrong.

    For the rest of Hassemer’s Webinar, “The Seven Deadly Sins of Database Marketing,” log on to http://multichannelmerchant.com/events/webinars/seven_sins/ for a free replay. And if you have questions for Hassemer, you can send them to him directly at the “Ask the Experts” section of MULTICHANNEL MERCHANT’s Website: http://expert.multichannelmerchant.com/database_marketing/

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DATABASE MARKETING

BEYOND ABACUS Fledgling co-ops go up against the database giant The Abacus Alliance has long dominated the consumer co-op database marketplace. In fact, president/chief operating officer Chris Dice says it has added another 250-plus clients over the past year, bringing its list of consumer catalog members to 1,300.

But lately some members have been complaining about overmailings and a stagnant pool of names. Moreover, several upstarts have entered the co-op database field, aiming to provide mailers with additional options.

Launched in 1991 by Broomfield, CO-based Abacus Direct, the Abacus Alliance claims to have roughly 99% of all direct marketing consumer customers in its database. (Abacus also has co-ops with 100 business-to-business catalog members, 150 retailers, and 150 publishers.) But while Abacus’s comprehensiveness is undoubtedly its strongest selling point, some members say it’s also a cause of diminishing returns: With virtually the entire consumer mail order universe accessible to its members, new members are unlikely to add names not already available. What’s more, the names in the co-op are in danger of being overmailed.

“We gave up on Abacus earlier this year,” says one cataloger, speaking on the condition of anonymity, “because response from the names generated kept decreasing.” Adds another mailer who also abandoned the co-op about a year ago: “The quality of the names we were getting wasn’t getting any better.”

Dice contends that most members continue to be pleased with their results. Fleetwood, PA-based men’s apparel cataloger Paul Fredrick, for one, remains satisfied. “I don’t think we’ve seen any degradation in response,” says vice president of marketing Allen Abbott.

But while Shawn Mielke, vice president of marketing for Maitland, FL-based home office accessories mailer T. Shipley, says that the co-op “has performed very steadily for us,” he also notes that “Abacus is at a point in which additional catalogers aren’t bringing a lot to the database. We haven’t seen any major increase in its performance” from the addition of new members.

Abacus’s Dice counters such criticism by noting that the co-op is concentrating on improving its service so that members can conduct better modeling with the available names. The account executive team was recently segmented into two groups, one for smaller mailers and the other for larger members.

New challengers For certain, Abacus has long had a stranglehold on the co-op database market. Publisher’s List Exchange (PLX), launched in 1994 by Publisher Inquiry Services, lasted only about a year. And SmartBase, launched by Direct Media in 1995, was bought by Abacus and subsequently dissolved more than a year ago.

Co-ops still in service include Z-24, launched by DirectTech in 1992 (now under Experian), and RFM Plus, a three-year old revolving database offered by Paymentech, Experian, and Mokrynski & Associates, which features nearly 2 million names on a 60-day basis and more than 900,000 names on a 30-day basis.

And this year, two more co-ops have hit the market: Prefer.com Network, a New York-based co-op launching this fall, and Harrison, NY-based I-Behavior, founded in March by direct marketing ad agency veteran Lester Wunderman. Not surprisingly, each professes to offer an unique edge over the competition.

Whereas Abacus focuses primarily on print catalogers, at Prefer.com “we’re taking the online and offline transactions and creating a completely Web-enabled database” that member catalogers can access and model on their own, says president Doug Platt. He also notes that while Abacus follows a “bigger is better” philosophy, “we’re trying to develop a smaller, more demographically focused target [mid-size upscale niche books] to get deeper in data.” Platt says that the smaller focus should enable Prefer members to find names more appropriate for their markets. J. Jill, Real Goods Trading Co., and Design Toscano are among the catalogers that have already joined Prefer.

As for I-Behavior, a June deal with Greenwich, CT-based list firm Direct Media enables the co-op, which has data from 25 catalogers and about a half-dozen each magazine publishers and pure-play e-commerce marketers, to offer members the modeling services once provided by SmartBase.

I-Behavior also offers catalog members extensive overlaying of magazine subscribers, a category that most catalogers traditionally have failed to convert to mail order shoppers through traditional list rentals, says Rosemarie Montroy, executive vice president for Direct Media. By running those publishing names through models, Montroy contends, the co-op will come up with promising prospects. “If catalogers can come up with, say, a list of 100,000 publishing names a year from sources they couldn’t get to work otherwise, that’s pretty significant.”

So far, catalogers don’t see the new co-ops as taking market share away from Abacus. “I like that others, such as Prefer.com, are getting involved,” says Paul Fredrick’s Abbott. “But Abacus has a big head start; the others will be on a long learning curve.”

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