Strategy: 15 Best Practices When Using Cooperative Databases

Since the founding of cooperative database Abacus by Tony White in 1990, consumer prospecting has changed considerably. While results may have fallen off (mailing the same names too often), co-ops remain an important source of prospect names for catalogers.

When deciding whether to participate in a co-op, know that at least 95 percent of your customers already reside in one of the myriad co-op database files. What’s more, buyers on your housefile who haven’t made a purchase from another catalog aren’t retained by the co-op. (These are your unique buyers, and they’re not used for modeling or rental by the co-op.)

This month, I’ll look at 15 of the best practices to follow when using co-ops. Follow these basic principles and practices to enhance your results.

1. Don’t block competitors. It’s never good to block access to your customer names through the modeling process. If you block a competitor, the co-op automatically will block you from any access to the competitor’s buyers. If its file is larger than yours, you stand to lose more than you gain.

Base your decision to block on sound business judgment, not personal emotions. Remember, other mailers aren’t getting your list per se; they’re receiving customer names from a database based on statistical modeling. Yes, some of your customer names will be identified by the model, along with buyers from other catalog companies that are members of the co-op, but not your entire housefile.

2. Always take full universes from proven models. Once you’ve tested and established that a particular model works, take the full universe of names in the top tiers (at least tier one and two). Maximize your results by mailing all available names, as opposed to diluting your results mailing smaller quantities to more model selects. Roll out with confidence to maximize your revenue per catalog mailed within these top-performing tiers.

3. Test deeper into the proven models. If you know a model works and you’ve mailed only tier one, test tier two and perhaps tier three of the same model. Once you find a model that works for your offer, it makes sense to mail deeper, then apply point No. 2 above. Again, roll out the universe for that tier once you know it’s working.

4. Always establish and maintain a stable control. Why change a good thing? Don’t alter or change the models you know work, just to gain a bit of variety. Test new models, but do it in addition to mailing proven models — not in place of them.

5. Always allow room in your circulation plan to test new models. Just as it’s important to test outside lists, it’s imperative to plant seeds by testing new models. Don’t rely solely on proven models without testing — that is, if you want to grow your business. Test 10,000 names from a new model segment (or two). Have the co-op build new models off the continuation models that are working for your offer.

6. Use prospecting models pre-merge and post-merge. While it’s common to select names from a co-op pre-merge, you also should take prospecting models post-merge.

Prospecting models taken post-merge help you hit the desired quantity to be mailed. Often, they perform as well as pre-merge models. This guards against scrambling at the end of a merge to find additional names if you net-out less than you expected and need more to hit the desired quantity to be mailed.

7. Include a buyer reactivation model with every merge — an excellent way to reactivate previous buyers. Here’s how it works: Select all of the housefile recency, frequency, monetary (RFM) and inquiry segments you want to mail. Have the co-op run a reactivation model on the names you don’t select by RFM. The co-op will identify additional buyers and inquirers who successfully can be mailed.

Reactivation models identify previous buyers who still are actively buying — oftentimes from your competitors. Reactivation models identify names in your housefile that you wouldn’t have mailed. What’s more, the use of these models eliminates the need to make a promotional offer (e.g., free shipping) to previous buyers for reactivation purposes.

8. Suppress rental singles in order to increase your revenue per catalog. Co-ops identify prospects to mail. They also can identify who not to mail, by finding the catalog buyers from outside rented lists who’ve purchased infrequently and don’t match your customer profile. You can expect up to 20 percent lift by suppressing rental singles.

9. Take advantage of unselected segments of strong models to build an add-a-name pool. Use unselected segments from your strongest models to build the add-a-name pool as fill-in names on the back end. These names already are qualified catalog buyers who match your customer profile. This technique performs better than a random add-a-name pool supplied by your service bureau, since a co-op pulls the names from your models.

10. Make certain the co-op uses your entire buyer file when pulling selects. Doing this will help you avoid paying the co-ops for names you already have on your housefile. Most co-ops model on your 24-month buyer file. However, most catalogers mail deeper to their housefiles. If the co-op doesn’t include your full housefile, in all likelihood it will identify prospects who already appear on your housefile as buyers to rent back to you.

11. Identify unique names, and expand your prospect universe. Through a strategic partnership with Yankelovich MindBase, co-op database I-Behavior can provide even more targeted attitudinal segmentation models. In addition to delivering higher net names, attitudinal insights have proven to be strong predictors in optimizing multibuyer names for catalogers. This technique will help your prospecting universe expand by identifying names your standard models could be missing.

12. Take advantage of SKU-level modeling. I-Behavior is a co-op database that models off of SKU-level data in addition to purchase history. This helps customize targets, which can be an advantage for certain catalogers — particularly those who’ve altered their merchandising mix.

13. Communicate with the co-op. Let it know of any merchandising, creative or offer changes to your catalog. Databases use responders from past mailings to predict future responses. They need to use responder groups most representative of likely future responders to build the best models for you. This may be new-to-file hotline buyers vs. responders from the same time last year.

14. Use all of the co-ops. Yes, there will be overlap. But all co-ops model differently, so each will identify good prospect names to mail that another may not.

15. Use random allocation. When running your merge, don’t give priority to one co-op. Tell your service bureau to use random allocation to give equal weighting to all the co-ops. Try putting the names supplied by a co-op in the merge as a group, and then outside rentals as another group.

Conclusion

Cooperative databases like Abacus, I-Behavior Prefer Network and others, provide a valuable source of prospect names. Let them know which models are performing or not working, so they can tweak the models and/or recommend new models to test. Co-ops have stood the test of time, and you’re well advised to maximize them. They don’t provide an unlimited source of good prospect names, but they do identify the best names for your offer, modeled from your customer file. Apply these tips when selecting prospect names from a cooperative database and your results will improve.

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) 537-0375, or by e-mail via his Web site: www.lettdirect.com.