How to Evaluate a Service Bureau

Evaluating a service bureau is a tough task. Comparing one service bureau to another is even more challenging. Do you compare pricing, services or products? I say compare everything.

Just as keeping a check on processing costs is important, postage discounts equally will affect your bottom line. Choose a stable company, as well as one that takes some risks to improve its product line — a service bureau must have the technology necessary to assist its clients.

Following is a basic checklist of what to look for when choosing a service bureau.

Check prices. Look not only at actual costs but also factor in the postage discounts and response rates for getting your mailings to your intended recipients.

At Lett Direct when we get price quotes for clients, we first ask the service bureaus to submit quotes in our format. This enables us to compare prices fairly and consistently from one bureau to another. For this purpose, we’ve developed a pricing template. For this purpose, we’ve developed a pricing template.We ask every service bureau to follow this template. This helps us understand additional pricing that may arise that the bureau currently is not including or if a particular line item has been excluded from the price comparison.

By using this template, we price an actual project and prepare a pro forma invoice on a line-item basis. The template provides the detail necessary to compare service bureau pricing.

One thing to remember: Most service bureaus quote pricing based on the volume you’ll be processing with them. Typically, any mailing fewer than 500,000 records per month will be considered on the smaller end. If you’re one of those businesses, consider a smaller service bureau, one that might be more willing to negotiate pricing to close the deal.

Run tests. Once you’ve narrowed your list of prospective service bureaus to one or two (based on processing cost), run an exact test using actual files — not to be mailed, only tested.

Back-end costs are just as important as the processing costs. Depending on the bureau’s convert process, hygiene packages and merge logic, the results from one service bureau to another can vary.

CASS certification is important for the postal discounts. The more records coded, the better your postage discounts.

Also, run NCOA as often as possible. If your best customers move frequently, you still want to be able to get your mailings to them. Although NCOA has strict match logic, you’ll be able to improve your response rate, provided at least 5 percent of your file is corrected by NCOA.

Other hygiene products, such as LACS, DSF(2) and proprietary hygiene products, also should be used. They differ from one service bureau to another. Since many bureaus will charge these products per hit, you’ll get the greatest benefits if you can make the corrections to your own housefile. This lowers the probability of paying for the same changes on the same records. When running the test, ask for the same data (such as the ZIP+4 corrections or NCOA changes) so you easily can compare which provider is correcting more records.

With respect to pricing, the merge/purge logic also is critical. If the bureau doesn’t catch enough duplicates, you’ll be paying to put extra catalogs in the mail. If the service bureau is over-combining records, then you’re not mailing either to existing or rented customers, and therefore losing out on potential revenue.

Additionally, review your business rules and know to whom you’d like to mail. When running the test, ask to see “dupe galleys” from each service bureau after the merge. Do the dupes provided look like they fit your business rules of duplication? If not, ask to see options to tweak the merge logic. What other logic can be incorporated into the merge to match your business rules?

Ask about services. What other products are available at each service bureau you’re considering? A bureau should be dedicated to updating its technology and offering advanced services and products to set your mailings apart from your competitors.

If you mail overseas, ask about the provider’s international products. If you send e-mail promotions, be sure the company can assist you, if desired. Other perks to look for may include data-enhancement, analytical services and consulting.

Ask about the company. Look for a stable company with stable employees. If your contacts frequently get switched, not only does this require more of your time to explain your mailing to another person, he or she also won’t be in a position to consult you on your processing and suggest new ideas until they’re finished learning exactly what it is you do.

Find out what quality-control procedures the company enforces. Does it give you reports that are easily understood so you also can check the processing? Are the customer service reps required to use checklists while evaluating the processing? A single error can cause your company thousands of dollars. What will the service bureau do for you if there’s an error?

If the correct quality-control procedures aren’t in place, stay away from that service bureau.

Conclusion

To find the right provider for you, ask the right questions. I’ve developed a checklist you can use when evaluating service bureaus. (See below.) Although this covers some of the more important areas of concern, determine which aspects are most important to you and focus on those.

Selecting a service bureau is a critical decision. Consider all of the factors I’ve mentioned. Most importantly, be sure you like and trust the people. After all, they hold your company’s jewels: your housefile.

Checklist for Selecting a Service Bureau

PROCESSING

Pricing
How does the pricing compare among various service bureaus? As a guideline, use the template “Direct Mail Cost Estimate” (see Check prices, above)

Software
How well does the company code records and catch dupes? Does it outsource any services to other vendors? How do these processes affect timing, postage discounts and response rates?

Flexibility of the Merge
Can the bureau suppress using various levels of matching logic? Can it change list priorities without having to rework the input into the merge? Can the service bureau retain records with contact names over those without, regardless of their priority in the merge (that is, in a business-to-business merge)?

Can additional logic be added into the merge? Can you choose how strict or loose you want the merge to match? Can it “family group” lists to prevent false multis?

Customer Service
Is there a person assigned specifically to the account? And can that person discuss opportunities and complaints when needed? How willing is the service bureau to change that dedicated person at your request?

Do your contacts at the company provide you with updates on new products and suggestions on how to improve your processing? Do they show an interest in learning your business and partnering with you rather than just processing your account?

What’s the average number of years an employee works for the firm? That is, how often will your customer service rep change?

Quality Control
What quality-control checks does the company have in place? How will it handle errors? What data does it provide so you can check the accuracy of the work?

Schedules

How long will it take to complete a project? Is there any flexibility with schedules? Are there any fees charged due to a tight schedule?

Other Services Offered
Does it also offer e-mail, data analytics, international processing or consulting, for example?

Databases
On what platform will it be built? What are the costs of development and maintenance? How long will it take to build your database (i.e., flat or relational)? Will there be easy access to data? How often can it be updated?

List-rental Fulfillment
Are there limitations on the number of fields that can be maintained on a list-rental file?

Is the turnaround time more than one business day? Are there Web-enabled database tools that allow you to remotely submit change of addresses, do-not-mail records, do-not-rent records and related requests?

Reports
Does the service bureau offer standard and easy-to-understand reports? Can they be obtained electronically? For business-to-business processing, can the bureau create penetration reports to show unique and total penetration in any one company?

Testing
Did you run duplicate tests among several service bureaus? If so, how did the pricing compare to the overall savings?

THE COMPANY

Stability
How many years has the bureau been in business? Is it stable and financially solid? Does it have a nice balance of large and small accounts? (Not only does this determine stability, but it ensures that the service bureau is a good fit for you.)

Disaster Recovery (a must!)
What are the provider’s plans and procedures if a disaster occurs? Will you be able to recover your data if the service bureau maintains your database? Will your mailings still be processed and sent?

Clients
How long have its clients been with the company? (Look for low turnover). Will it provide references?

Stephen R. Lett is president of Lett Direct Inc., a catalog consulting firm specializing in circulation planning, forecasting and analysis. He can be reached at (302) 541-0608 or visit his Web site: www.lettdirect.com.