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Best Practices for Using Cooperative Databases

By Dec 01, 2011

Cooperative databases account for at least 80% of all consumer prospecting. Names selected from a co-op are super multiple buyers who respond well to any number of different offers. These buyers have been modeled from actual buyer files and are therefore they are highly qualified names. What’s more, they represent a good value for the money renting for $70 per thousand or less.

When participating (or choosing not to participate) in co-ops, realize that at least 95% of your customers already reside in a cooperative database file. What’s more, buyers on your housefile who have not made at least one purchase from another catalog are not retained by the co-op. (These are your unique buyers and they are not used for modeling or rental by the co-op.) Following these basic principals or practices should enhance your results
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1. Don’t block competitors. It is never good to block a competitor in a co-op from getting access to your names through modeling. If you set-up a block on a competitor, the co-op will automatically block you from any access to their buyers. You have just as much or more to gain than the competitive company you block (assuming their file is larger than yours).

2. Always take full universes from proven models. Once you have tested and established the fact that a particular model is working, be sure to take the full universe of names within the top tiers (at least tier 1 and 2). You will want to maximize your results by mailing all available as opposed to diluting your results by mailing smaller quantities to more model selects. Rollout with confidence in order to maximize your revenue per catalog mailed within these top-performing tiers.

3. Test deeper into the proven models. If you know a model works and you have only mailed tier 1, test tier 2 and perhaps tier 3 of the same model. Once you find a model that works for your offer, it makes perfect sense to mail deeper then apply point number 2 above. Again, rollout the universe for that tier once you know it is working.

4. Always establish and maintain a stable control. Why change a good thing? Be sure not to alter or change the models you know work for the sake of variety. You are well advised to test new models but do this in addition to mailing the proven models and not in place of. Allow room for testing new models in your circulation plans but not at the expense of mailing to proven models.

5. Always allow room in your circulation plan to test new models. Just like it is important to test outside lists, it is important to continue to plant seeds by testing new models. It is never good to rely 100% on proven models without testing new ones if you want to grow your business. Test 10,000 names from a new model segment (or two). Have the co-op build new models off the continuation models you know are working for your offer.

6. Use prospecting models both pre-merge and post-merge. It is common to select names from a co-operative database pre-merge. However, consider taking prospecting models post-merge. Prospecting models taken post-merge help you “hit” the desired quantity to be mailed and they often perform as well as pre-merge models. This guards against scrambling at the end of a merge to find additional names if you “net-out” less than you expected and need to make-up quantity in order to hit the desired quantity to be mailed.

7. Include a buyer reactivation model with every merge. This is an excellent way to reactive “old” buyers. Here is how it works. Select all of the housefile RFM and inquiry segments you want to mail. Have the co-operative database run a reactivation model on all of the names you do not select by RFM. The co-op will identify additional buyers and inquiries that can successfully be mailed. Reactivation models identify older buyers who are still actively buying, many times buying from a competitor.
Reactivation models identify additional names within your housefile that you would not have mailed.

8. Suppress rental singles in order to increase the RPC (revenue per catalog). Cooperative databases identify prospects to mail. Co-ops can also identify whom not to mail. Identifying those catalog buyers from outside rented lists that have purchased infrequently and do not match your customer profile does this. You can expect a lift up to 20% by suppressing rental singles.

9. Make certain the co-op uses your entire buyer file when pulling selects. Doing this will help avoid paying the co-ops for names you already have on your housefile. Most co-ops model on your 24-month buyer file. However, most catalogers mail deeper to their housefile. If the co-op does not include your full house file, in all likelihood they will identify prospects that already appear on your housefile as buyers to rent back to you.

10. Take advantage of stock keeping unit-level modeling. Some co-ops model off of SKU level data in addition to purchase history. This helps to customize targets which can be an advantage for certain catalogs particularly for those who have altered their merchandising mix over time.

11. Communicate with the co-op. Let them know of any merchandising, creative, or offer changes to your catalog. Databases use responders from past mailings to predict the future responses. They need to be using responder groups most representative of the likely future responders to build the best models. This may be new to file “hotline” buyers vs. responders from the same time last year.

12. Use all of the co-ops – Yes, there will be overlap from one co-operative database to another. However, all co-ops model differently therefore, each one will identify “good” prospect names to mail another one might not.

13. Use random allocation – When running your merge, do not give priority to one co-op over another. Tell your service bureau to use random allocation in order to give equal weighting to the co-ops you are using. We like putting the names supplied by a co-operative database in the merge as a group and outside rentals as another group.

Co-operative databases provide a valuable source of prospect names. Let them know which models are performing (and not working) so they can tweak the models and/or recommend new models to test. Both of the co-operative databases have stood the test of time and catalogers are well advised to maximize usage. Co-ops do not provide an unlimited source of “good” prospect names but they do identify the “best” names for your offer modeled from your own customer file. Apply these tips when using selecting prospect names from a co-operative database and your results should improve.

Stephen R. Lett is the president of Lett Direct Inc.

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