How to Audit Your Service Bureau

Your service bureau plays an important role in your company’s operations. But dealing with it effectively requires a great deal of trust.

No doubt you wonder, for example, if your service bureau selected appropriate names, or if a high percentage of duplicate names were found. Files sent from a catalog company to a service bureau never are completely clean. For instance, there may be duplicates, NCOA changes may not have been applied back to the housefile, or some records may contain invalid addresses.

One of the main reasons catalogers use service bureaus is to identify and fix such problems, and to get their files in good condition for mailing.

You face many challenges when auditing your service bureau. Let’s say the size of your buyer file in July was 480,000 compared with a file size of 400,000 a year ago. Is this correct? Would you know if you were missing 10,000 or 15,000 buyers?

There are many factors to consider when estimating file size, making it difficult to identify small variances. That’s when you rely on a service bureau to run the necessary processing to provide accurate counts. But if it says your current housefile is within 5 percent of your estimate, do you accept it as correct? How do you know if you’re missing buyers, or if your segmentation, hygiene, selection and suppressions are being processed correctly?

With auditing, you can get to a level of satisfaction. Following are some steps to take to ensure your housefile is being processed accurately and to your written specifications (note that all instructions and specs for your service bureau must be in writing).

Six Steps to Take

1. Require your service bureau to give you record samples with counts by drop type (e.g., NCOA drops, invalid state/ZIP code, foreign records), as well as input/output counts for every step of the process. Do this only when and where it’s possible for the service bureau to drop records for one reason or another. Typical steps to audit include:

- Determine if the input counts match the record counts from the data you pulled from your mainframe and sent.

- Identify and edit the invalid records to be dropped from the file.

- Update duplicate rollups and/or drops.

- Make NCOA changes and/or drops.

- Determine suppression drops.

- Merge/duplicate drops.

2. Pull sample records off your internal system, and ask your service bureau to do a search to make sure the right customers are on the output file. At the same time, be certain there aren’t customer records on the output file that shouldn’t be there.

3. Look up every customer in your system from your ink-jet samples to be sure each record falls into its proper recency, frequency and monetary (RFM) cell.

4. Be sure names on the do-not-mail file aren’t being mailed. This isn’t always easy, because there will be exceptions where the service bureau has rolled up transactional data on duplicates. This will cause the record to have a higher RFM status than what you show on your system for that same record.

5. Match the RFM counts to last year’s to ensure they’re in the same ballpark. If, for example, your new-to-file count increased by 20,000 vs. last year, and your housefile response rates are about the same as last year, expect your zero-to-12-month file to increase by roughly the same 20,000 records. Note: If you have a very high unknown rate, it’ll be tougher to estimate your new-to-file count. So you may have to rely more on logic and estimates to verify counts.

6. Create decoys in your housefile. Enter a unique name (i.e., a fictitious name) as a buyer, and upgrade that buyer’s status on occasion by showing repeat purchases for it. Such decoys can be checked against the service bureau’s output to ensure its RFM matches the RFM you’ve created for the fictitious name. Monitoring the decoy, you’ll also know when/if a catalog mailed.

What You Can’t Do

Because you can’t read the logic and/or algorithms — that is, the code — in your service bureau’s programming to ensure it’s correct, you must rely on its programmers to do the job correctly.

You can’t match your record count to your service bureau’s final output, because the service bureau has rolled up duplicate records, improved your file’s hygiene, suppressed your do-not-mail file and taken other actions.

You can’t run your processing to mirror that of your service bureau’s to validate its output. It would be nice if you could go through the same steps to get approximately the same end result, but that isn’t realistic or practical.

You can’t ever be 100 percent sure you have the cleanest, most accurate housefile. But you can come close. Service bureaus perform an important function, and they do a great job giving you a good file for mailing efficiencies.

Conclusion

Several of these audit steps require access to your mainframe and should be done by someone in your company. Other steps (e.g., verifying buyer counts) can be done by a circulation consultant.

Getting catalogs to the right people is critical to your success. By auditing your file and the merge/purge process, you’ll be able to help prevent buyers from slipping through the cracks.

Stephen R. Lett is president of Lett Direct, a catalog consulting firm specializing in circulation planning, forecasting and analysis. He can be reached at (302) 537-0375, or by e-mail via his Web site: www.lettdirect.com.