How to Maintain Your Housefile

A catalog company’s most valuable asset (other than people, of course) is its housefile. Obviously, a start-up cataloger has difficulty generating a profit during the first few years of operation. It has to start building the business without the benefit of having a mature housefile.

It can take several years for a housefile to reach the critical mass required to help convert red ink to black on the income statement. And it generally requires very deep pockets to fund operations during the start-up phase. This makes it even more important to properly design and maintain a housefile. A housefile is an extremely valuable marketing tool that enables improved target marketing, facilitates various analyses, and generates incremental income from renting and/or exchanging names with other reputable mailers.

When talking about building and maintaining a housefile, two issues must be addressed: collecting data into your order-processing system, and then extracting relevant subsets of this data to build a marketing and production database—your housefile.

Accurate and Consistent Input is Needed

From an order-processing standpoint, one of the most critical steps is to ensure that you have a system in place to input the data accurately and consistently. Automate as much as possible to minimize keystroke errors. One way to do this is to print account numbers on the back of the catalog and on the order form, which you later can use to quickly access the customer record as an alternative to having to enter a full name and address.

Also consider using “finder files” to easily access prospect names. A finder file is the net names from the output of the merge/purge that are loaded on your system at the time of mailing. In other words, you get approval from the list owner to add its names (the net names you’re mailing) in advance of any purchase.

Finder files must be coordinated through your list broker and merge/ purge vendor to get the necessary list owner approvals and generate a physical file that you can import into your order-processing system to facilitate the real-time account lookups. List owners request that you delete from your system the names that don’t convert within a reasonable time period (i.e., six to 12 months). Order-processing systems easily can warrant a series of articles by themselves, so instead, we’ll focus on constructing a housefile that will serve as both a marketing and production database.

Gather Appropriately

The first and most important aspect of building and maintaining a housefile is to ensure that all pertinent information is properly gathered. Your ability to make decisions is only as good as the data you’re collecting and analyzing. Decide which information you want to capture, how you’ll capture it and what you’ll do with it.

Often, I see executives capturing data they’ll never use. Discern how you’re going to use the information before you take the time, trouble and expense to capture it. Your plan should be convenient and scalable. That is, while filling a shoebox with order forms may seem like a good approach during the start-up phase, such a solution is not scalable and wouldn’t be suitable for maintaining larger databases.

To decide which information to capture, retain all customer and associated transactional data during the order-processing step. This data can be incorporated into a large-scale marketing database. To create a simple housefile, however, the basic information required includes name and address, date of purchase, dollar amount of purchase, and the source code related to the purchase. From these few pieces of data, you can discern a customer’s gender, total lifetime dollars spent, original purchase date and most recent purchase date.

Once you have this information, segment your buyers by RFM (recency, frequency and monetary) value, critical data for both simple and large-scale marketing campaigns. After a while, you may want to put more information onto your housefile, such as phone/fax numbers, e-mail addresses, customer’s gender and age, categories of products purchased, and other demographic or purchase information.

Identify Duplicates

Before adding collected data to your housefile, perform CASS Certified Address Standardization, which is the process of comparing your customer records to a U.S. Postal Service (USPS) database containing all deliverable addresses and restructuring them to be in the most accurate and deliverable format possible. This improves your ability to identify duplicates, increases deliverability, and allows you to apply for valuable postage discounts.

All new transaction records being added to your housefile should be CASS-certified. Indeed, your entire housefile should be periodically CASS-certified, too, because ZIP codes and related addressing information constantly are updated by the USPS. Performing address hygiene will help keep your file up-to-date and eligible for continued postal discounts.

Your list also should be processed through change-of-address software several times a year. The most common of these is the USPS National Change of Address (NCOA) program, which is a service that allows you to match your name and address file against a large database compiled by the Post Office. It contains all individuals or families that have moved in the last 36 months. In addition to getting correct addresses for your customers, this prevents maintaining the same customer at two different addresses.

Successful list maintenance initiatives ensure that you have a methodology in place to properly identify duplicate customer records. In many instances, when customers first purchase from a catalog, they’re assigned unique identification or account numbers, which can be used when accessing a customer’s account. When a customer makes a repeat purchase, access the same record. Don’t assign a new customer number to a previous purchaser, as that could result in file duplicates causing several problems, including unintentionally sending multiple mail pieces to a customer and/or being unable to get a true snapshot of a consolidated customer profile.

If you’re using a third-party service bureau to maintain your housefile, have your file updated (duplicate records identified and consolidated) using a match-code, a value that’s calculated based on a combination of each customer’s name and address attributes. Some service bureaus offer flexible matching logic that can be tweaked to your unique requirements.

Accessing the Data

Once your database is constructed, the next challenge is to ensure that your staff has adequate access to the data. To make intelligent marketing decisions, organize the data so it can be reported on quickly and cost effectively. Typically, this begins with a standard set of static reports that provide simple metrics on some common variables, including RFM and gender. Such reports can be produced either as hardcopy or sent electronically.

While static reports are useful for allowing quick access to standard counts, they’re limited for marketers who want a more in-depth snapshot of their customers. These “power marketers” often require a point-and-click marketing database application that allows them to slice and dice their customer database by any combination of variables on their databases.

A few traditional service bureaus offer list owners the option of receiving a free-standing Quick Count System or having online access to their customer databases. Such arrangements are ideal, because bureaus that offer these services often can provide these database tools faster and more cost effectively than third-party providers. Service bureaus most likely have performed much of the up-front pre-processing during the traditional database build process, including data conversion, address standardization, CASS Certification and duplicate account consolidation.

If you find a service bureau that offers online access to a simple flat list rental database, it’s also beneficial to determine if its solution is scalable. For example, what’s the incremental time and cost considerations to maintain more comprehensive relational databases that can perform advanced analysis and provide multi-user access from different physical locations? Additionally, request performance benchmarks on processing speed for databases of similar size to your file, allowing for reasonable growth.

Your housefile is your No. 1 asset and should be treated accordingly. Be certain safeguards are in place for off-site storage (one of the advantages of using a service bureau to maintain and update your housefile). Disaster recovery is important in the event of an unfortunate loss.

Maintain your file properly for your own mailing purposes. And remember the old adage: garbage in, garbage out.

Stephen R. Lett is president of Lett Direct, a catalog consulting firm specializing in circulation planning, forecasting and analysis. He spent the first 25 years of his career with leading catalog companies. He can be reached at (302) 541-0608 or by e-mail at slett@lettdirect.com.