Lists & databases

Jul 01, 1998 9:30 PM  By

Judging by the results of the 1998 Catalog Age Benchmark Report on Lists and Databases, catalogers’ comfort level with renting their house file is increasing, as more of this year’s survey respondents-55% of overall respondents vs. 50% of the total last year-report that they make their lists available to others, and 20% indicate that they are renting to both competitors and noncompetitors, up 5 percentage points from 1997. As Ben Perez, president of Peterborough, NH-based list firm Millard Group, says, “Catalogs are becoming a little less concerned about protecting their data.” Perez attributes the change to the growth in cooperative databases. (Oddly, however, participation in co-ops among respondents is down slightly this year: 28% vs. 31% last year.) n There are of course differences among the rental practices of different types of mailers. For instance, while 21% of consumer respondents and 27% of hybrids (those selling to both consumers and businesses) say they rent their lists to both noncompetitors and competitors, none of the business catalogs surveyed say the same. On the other hand, about half of the business catalog respondents rent to noncompetitors-a substantially higher percentage than the 24% of consumer respondents and 37% of hybrids saying the same this year.

Speaking of that 24% of consumer respondents renting to noncompetitors, this number represents a continuing decline in the practice for this segment. Last year, 43% of the consumer respondents said they rented to noncompetitors, down 7 percentage points from 1996. One reason for the lower percentage of consumer mailers renting their files could be the popularity of list exchanges among these catalogers. One-third of consumer respondents (vs. 17% of the business respondents and 20% of hybrids) exchange with noncompetitors; 29% (vs. none of the business catalogs and only 10% of hybrids) exchange with competitors. Moreover, exchanges represent 44% of names mailed by consumer respondents, up from 38% in ’97.

Indeed, many consumer mailers say that exchange is very often the only way to get at the names of a competitor. For instance, Phoenix-based food mailer Fairytale Brownies wanted to rent the names of a well-known food catalog rival. The competitor said no but did agree to an exchange, according to Fairytale president Eileen Spitalny. As she puts it, “The name is already targeted, so trading lists made a lot of sense.”

Of the 45% of the respondents that don’t make their names available, many (31%) are consumer catalogers with annual sales of less than $1 million. Files from these small mailers are not typically attractive in the list rental market, in that they are small in terms of quantity, and they are often so vertical that they have limited appeal to other mailers.

As for selects offered on rental lists, among consumer respondents that rent their lists, 81% offer recency selects, while another 81% offer dollar selects. Among b-to-b respondents, geography (89%), product (78%), and recency (78%) remain the most popular selects, which is unchanged from previous years. Regarding hybrids, geography seems to have replaced recency, 83% vs. 67%, as the number-one select.

Looking at respondents by size, as one would expect, the larger the company’s annual sales, the more likely it is to use rental lists. Just 24% of respondents with sales under $1 million rent lists, compared to 41% of respondents with sales of $1 million-$9.9 million, and 100% of consumer catalogers with sales of $10 million and over.

Overall, 48% of respondents are mailing to more outside names this year than last, down from the 1997 figure of 56%. Two-thirds of hybrids are mailing to more outside names than they did last year, up slightly from the previous year. But only 38% of consumer respondents and 46% of b-to-b respondents plan to mail to more prospects this year than last. By comparison, last year 62% of consumer and 60% of b-to-b respondents intended to mail more to outside names.

More than half of those surveyed, however, say total circulation is up this year. “Most of the mailers are not expecting a great increase regarding postage,” says Millard’s Perez by way of explanation. And others agree. “Regarding the postal hike, none of my mailers seem concerned,” says Fran Golub, vice president/director of list management for Pearl River, NY-based JAMI Marketing Services.

While 68% of overall respondents say they use the National Change of Address (NCOA) service to keep files up to date, only 42% of this year’s b-to-b respondents use NCOA, not surprising since businesses don’t relocate as often as consumers.

Of those respondents that say they use NCOA, 26% of consumer respondents and 21% of hybrids say they run NCOA against the house file on a quarterly basis. But the plurality-24%-of total respondents using NCOA run it against their house files only once a year.

As for the Direct Marketing Association’s Mail Preference Service (MPS) file, only 35% of respondents say they use it. Even more surprising, only 67% of total respondents maintain a “do not mail” file, compared with 76% a year earlier. And this practice is down or flat compared with last year in each of the three broad types of respondents, going from 87% to 68% of consumer respondents; from 85% to 75% of business respondents; and staying even at 59% for hybrids.

Moreover, only 49% of total respondents promote an opt-out mechanism in their catalogs. Just 40% of consumer respondents say they provide an opt-out mechanism; b-to-b and hybrids are a little more proactive, with 50% and 62%, respectively, offering some sort of opt-out mechanism.

In terms of database enhancement, dollar purchase and product purchase histories are still the most popular form of appended data. More than 65% of all the survey respondents say they append dollar purchase data to customer files, while 60% prefer to append product purchase history. (A total of 27% of respondents say that they do not append any data to the customer file.)

More respondents are using modeling this year. Of the total, 49% say they are using some sort of modeling, with RFM (recency-frequency-monetary) being the most popular (38% say they use it). This compares with only 32% that last year said they used some sort of modeling.

Most catalogs still do not calculate lifetime value, however. Only 44% of respondents, including 54% of consumer, 25% of b-to-bers, and 30% of hybrids, conduct lifetime value analysis (LTV). This is down from 1997, when 50% of the total said they did conduct LTV analysis, including 59% of consumer, 35% of b-to-b, and 49% of hybrid respondents.

The fact that this year’s survey group has somewhat more catalog participants with annual sales of less than $10 million-64% of the sample vs. 57% of the sample in 1997-could partially explain the decline in use of lifetime value analysis. Still, the continually low percentages of respondents using LTV is surprising in an industry that has often been considered a leader in the use of database marketing. As Roy Schwedelson, president of Boca Raton, FL-based list company Worldata, says, “Any cataloger worth his salt knows that it’s not the first-time buyers who are of value….You can’t be successful without knowing LTV.”

In February 1998, the Catalog Age subscriber file was electronically sorted on an nth-name basis to extract a representative sample of 1,000 top-level catalog marketing lists and database professionals, including company presidents. These subscribers received a letter of explanation, a 68-question survey, and a postage-paid envelope in which to return the survey to an independent marketing research firm. Of the 1,000 surveys, 107 were completed and returned, resulting in a response rate of approximately 11%.