Holiday is the season when most business-to-consumer multichannel companies make the most profit. And of course the house file contains the most profitable mailing segments. So it is more important than ever to make sure you are doing everything you can to get the most out of this valuable resource during the coming season.
Most companies cannot mail their entire database during the holiday season. The following are six tools and techniques to leverage this valuable resource to it fullest potential and identify as many responsive and profitable names as possible.
Segmentation: Segment the buyer file by CRFM: channel of origin, recency, frequency, monetary value. This simplistic way of looking at the house file is still one of the most-predictive tools you can use for selecting names. If you cannot determine the channel of origin through your match-back process, you can use channel of order. But seasonal buyers from prior holiday time periods will be more likely to buy than those from other seasons, even if you cut off the Internet buyers from mailings earlier than catalog buyers.
Hygiene hits: Buyers who have been flagged as moving, either through basic NCOA or via advanced tools such as CognitiveData’s IntelliDress are typically more likely to buy in many cases than customers who have not moved recently, especially from merchants selling home decor or kitchen products. By flagging these customers in the merge, you can segment them out and mail them even if they appear in a less recent house file segment.
DMA pander hits: The DMA Mail Preference, or Pander, file should be included in all merges. You should not mail outside names that on the pander file, of course. But by identifying which of its customers appear on the file—which consists of people who requested not to receive unsolicited mail—you can identify active mail order buyers. Consumers in general do not take the time to write to be included on the DMA Pander file unless they are receiving a lot of catalogs, which is indicative of active mail order buying. You have a right to mail house file names that appear on the Pander file unless those customers have contacted your company and requested to be removed from your mailing list. By flagging the DMA Pander customers in the merge, you can segment them out and mail them even if they appear in a less recent house file segment.
Multihits: Multihits from the prospecting cooperative database models and from outside lists also provide a way to identify and reactivate older house file names. Because the co-op database models are based largely on recency and outside lists are ordered based on recency, multihits will identify house file buyers who are not only active in direct buying but are also active in your particular category. These hits should be flagged, segmented out, and mailed even if they appear in an older housefile segment.
Regression modeling: Regression modeling can be very effective in selecting buyers to mail, especially in a very large house file or one that is made up largely of Internet buyers. A company that doesn’t use a regression model is most likely to select hotline buyers and very high CRFM segments for mailing. Regression models can predict which other customers are most likely to purchase. Keep in mind that you should update these models on a regular basis. Also, create different models for different seasons: a spring model vs. a holiday model, for instance.
Cooperative database optimization/reactivation model: Even after you’ve implemented the above tools and techniques, you will still have many customers who will not be identified for mailing. But don’t give up on them, especially in the most responsive and productive season of the year. Take these remaining house file names and send them to one of the co-op databases to have an optimization or reactivation model run. There will be a small number of customers the model will identify that can still be included in the mailing.
By taking advantage of these techniques in this holiday season as well as in future seasons, you will be better able to leverage and mine the gold hidden within your house file. Prospecting within the house file is one of the most cost-effective and successful prospecting initiatives–and is often one of the most overlooked.
Michelle Farabaugh is a partner with San Rafael, CA-based Lenser. She will be presenting “Maximizing Lifetime Value: The Promise of Multichannel Marketing” at MCM Live, a two-day intensive session presented by MULTICHANNEL MERCHANT, Oct. 5-6 in San Francisco. For more information on MCM Live, which explores the multichannel organization from the inside out and from the front end to the back, go to www.MCMLive.com.