Targeting Institutional Names in a Consumer Prospect Universe

By Oct 27, 2009

Most business-to-consumer direct marketers do their prospect merge/purges at the family level; that is, both the physical location and Surname must be the same for a duplicate situation to exist. This is because the cost-effective strategy for most of them is to send just one piece into a household at a time.

Most business-to-institution (b-to-i) direct marketers – companies that target some permutation of businesses, nonprofit organizations and governmental entities – do their prospect merge/purges at the individual level: the surname can be the same, but not the given name. This is because it is common for unrelated individuals with the same surnames to work at the same location.

When b-to-c merge/purge logic is applied to b-to-i records, the results are not pretty.

The typical b-to-i direct marketer would want to send a mail piece to each of these individuals. Hence, to eliminate one of the names would be an example of overkill.

Things get complicated when some prospect names are b-to-c and others are b-to-i. Then, the appropriate strategy is to run the merge/purge at the family-level for b-to-c records, and at the individual-level for b-to-1 records.

It is common for b-to-c direct marketers to not realize that a small percentage of their prospect names are b-to-i. When this is the case, b-to-c merge/purge logic often wipes out a big chunk of b-to-i names; that is, generates lots of overkill. The problem is exacerbated when B-TO-I customers have a lifetime value that is significantly higher than their b-to-c counterparts.

Case Study – Taking it to the Next Level

One b-to-c direct marketing company learned that a small portion of its prospects were b-to-i, and then leveraged this finding to great financial advantage. The discovery was made during a lifetime value analysis that it had commissioned. The study uncovered that b-to-i prospects, once they become customers, generate lifetime value that is much higher than for b-to-c. The hypothesis, later confirmed by secondary research, was that these were sales people who were purchasing gifts for their own customers.

As a result of the lifetime value analysis, the company focused for the first time on the B-TO-I market. Accordingly, a separate marketing strategy was developed to take full advantage of the significantly-higher lifetime values. For example:

*Sophisticated merge/purge techniques were employed to handle b-to-i prospects differently.

*Many new prospect sources were identified, because the high b-to-i lifetime value was able to support a much higher per-customer acquisition cost.

*A special catalog of merchandise suitable for corporate gifts was developed.

*Outbound telemarketing was implemented.

*Special initiatives were instituted to track b-to-i customers; including outbound calls, and direct mail incentives to mailroom personnel to provide updated customer information.

*Additional money was invested in the resolution of service problems involving these high-value b-to-i customers.

Within several years, b-to-i represented a significant percentage of the company’s sales, and overall revenues had increased accordingly.

Jim Wheaton is a Principal and Co-Founder at Wheaton Group (http://www.wheatongroup.com)