Cooperative Databases

How the co-ops can improve your revenue per catalog mailed

By Stephen R. Lett

Are you a stock picker or a mutual fund investor? If you can select specific stocks that always yield a good return, you're among the few. Most of us feel safer buying mutual funds to minimize risk while still yielding a good return.

You're probably wondering what this has to do with using cooperative databases. Well, buying mutual funds is a lot like prospecting using co-op databases. While it's always a good idea to continue to prospect via rented or exchanged lists, it sometimes can be safer to mail to prospect names selected from a co-op.

This month, I'll cover how to best use the co-ops, and why it's also important to prospect to specific lists.

Should You Use a Co-op?

For most small- and medium-sized catalog companies today, about 50 percent of prospecting is to names selected from a co-op database. Prospect names selected from one of the five co-ops I've compared this month are a good value for the money. First, the names are selected from a model, which means they're best targeted to match your own customer database.

Secondly, these names rent for only $60/M to $70/M, which is less than the per-thousand rate for most outside lists (excluding exchanges). Note, however, there are some limitations to relying too heavily on co-ops, which I'll discuss later.

Should you prospect using more than one of the co-ops? Absolutely, as long as they perform for your particular offer. Each one of the co-ops designs its database and builds its models using slightly different methodology. While there's a significant overlap of names from one co-op to another, the modeling techniques they use will yield different names. That is, one co-op will identify good prospect names the other co-ops may not.

Some mailers fear joining too many co-ops and exposing their buyers to too many offers. It's a real concern for a lot of list owners who feel their housefiles would suffer if they were to give up their buyer files any more than necessary. The truth is the overwhelming majority of buyers aren't exclusive; therefore, these names are being rented anyway. If the co-ops work for you, it makes sense to join them. Testing is the key.

Typically when you do a merge that includes names selected from more than one of the co-ops, you'll find the overlap to be 30 percent to 50 percent or more for the incremental models (all but Abacus). Since Abacus is the largest circulation of the group, it retains the most because it hits against less records. So the other co-ops are the ones that suffer from the lowest retention.

If the quantity going into the merge was the same, most likely you'd net a lot lower on Abacus as well. But still, you're picking up good prospect names that you can mail at an incremental breakeven or better each time.

When mailing to names selected from a co-op, the priority in the merge is important. Some catalogers prefer to level the playing field by giving the co-ops equal priority with all other outside rented names. This enables you to compare list results more fairly. I prefer to give priority in the merge to the co-ops, however. Since the co-op's names rent for less, I want more of these names to survive the merge.

In a typical merge/purge, I give the highest priority to the housefile, of course. Next in priority are the inquiries, then the multi-buyers from a previous merge. This is followed by the co-op lists being used. After the co-ops come the outside rental names. A random priority is given to all co-op supplied lists, just as random priority is given across all outside list rentals.

Following are a few comments about each one of these co-ops (whose databases are compared in a chart in our print edition of this article).