Essential Guide to Lists & Databases by Michelle Zitz

guide

2009

ESSENTIAL

Lists, Database Marketing and Data Services A Supplement to DMNews

ÂŠ2009 Gordon Studer theispot.com

Feature: The year of integration by Pamela Oldham Case study: Data Control by Bryan Yurcan Ten tips: How to get squeakyclean lists by Bryan Yurcan Problem solver: How can a list marketer beat the recession? by Brian Manning

Effective lists: Model behavior for greater list efficiency by John Keenan Database quality: Go beyond the basics by Pam Corbeille-Lepel List processing: Driving the highter costs out by Brian Euclide Optimize your lists: Building a lean, green list marketing machine by Chris DeMartine

DMNews • Lists, Database Marketing and Data Services Guide 2009

Table of Contents Features 4 The year of integration, by Pamela Oldham

7 Case study: Data control, by Bryan Yurcan 11 Ten tips for squeaky-clean lists, by Bryan Yurcan

12 Problem solver: How can a list marketer beat the recession? by Brian Manning

14 Lists and databases 101, by Jonathan Mack Tactics and strategies 16 Model behavior for greater list efficiency, by John Keenan

17 Go beyond the basics to improve

database quality, by Pam Corbeille-Lepel

18 Driving the higher costs out of list processing, by Brian Euclide

18 Building a lean, green list marketing machine, by Chris Demartine

19 The cold hard facts: The real ROI of ACS, by Raymond Chin

20 When it comes to e-mail lists, more

marketing is better, by Robert Vanselow

20 It’s time to get back to the basics of data, by Joel Curry

22 New movers: A recession-proof category, by Donald Hinman

EDITORIAL: Editor-in-Chief Cara Wood Executive Editor Sharon Goldman Editorial Director Julia Hood ART AND PRODUCTION: Design Director Sandra DiPasqua Production Manager Michelle Chizmadia ADVERTISING: Advertising Director Emma Halliwell District Managers Craig Bailey, Sammy Patel Assistant Display Advertising Mgr Deborah Hartley HAYMARKET MEDIA: President/Publishing Director Lisa Kirk Chairman/CEO William Pecover SUBSCRIPTIONS: (845) 268-3156 DMNews (ISSN 0194-3588), incorporating iMarketing News 114 West 26th St., New York, NY 10001 Telephone (646) 638-6000 © 2008 Haymarket Media DMNews is published weekly on Monday (48 times a year), except for the following: July 6, November 30, December 21 and December 28. Publisher: Haymarket Media Inc., 114 West 26th St., New York, NY 10001. Periodicals postage paid at New York and additional points of entry. Reproduction of any part of DMNews or its trademarked or copyrighted supplements without express permission of the publisher is prohibited. Annual subscripton rate $49 US, $99 Canada & Mexico, $149 other international. Single copy $10 US, $16 international. Postmaster: Send address changes to DMNews, Subscription Department, PO Box 316, Congers, NY 10920-0316 USPS 496530

Editor’s Note

ith no end in sight for the struggling economy, marketers need to work smart and stay focused – which means understanding customers, targeting the right segments and measuring results. Simply put, no marketer can truly accomplish those three goals without the proper use of lists and databases. That’s because successful data management is at the heart of every marketing initiative, from the Sharon Goldman smallest targeted e-mail campaign to a highly comExecutive Editor plex, national direct mail effort. The sheer importance of these areas means companies need to fully commit to supporting the development of database infrastructure and the use of data analytics. For example, on page 7, you’ll read about Savings Bank Life Insurance (SBLI)’s investment in a database solution to create a comprehensive, segmented customer database to coordinate its e-mail and direct mail efforts. It has paid off handsomely – the company knows far more about its customers and can do more targeted campaigns. Throughout the rest of the 2009 Essential Guide to Lists, Database Marketing & Data Services, you will find out more about the trends and tactics you need to know and understand in order to move forward with your own database marketing strategies. Experts in the lists and database business — from top vendors and agencies to service providers and in-house marketers — share their thought leadership, best practices and case studies in a wide range of staff-written editorial features and contributed articles. The stories run from basic “101” information to more advanced segmentation and analytics initiatives. With constantly evolving strategies and technology, lists and databases can certainly be a confusing universe. I hope this guide serves as a valuable resource, whether you’re looking to invest in database technology, grow your e-mail list, work with a list rental broker or find out the state of these industry sectors.

—Sharon Goldman, Executive Editor

04 FEATURE DMNews • Lists, Database Marketing and Data Services Guide 2009

The year of integration Growth opportunities in lists and databases give marketers in these sectors a sense of optimism, Pamela Oldham reports

Database firms move to integrate services When Merkle CEO David Williams looks back at 2008, he sees something positive among all the relatively dismal economic news: the acceleration of database marketing’s evolution. “The wind was at many [database marketers’] backs for a decade,” he says. “Now, they’re saying to themselves, ‘If the economic climate or the consumer climate is going to get difficult, I’m going to have to be more innovative, I’m going to have to be more effective.’” Integration, Williams believes, is the key concept surrounding all of these ongoing efforts. Generally, integration has long been the goal of direct market-

“The consolidation of services and knowledge is moving fast” Elana Anderson, VP of product marketing and strategy, Unica ESSENTIAL GUIDE

iven the unprecedented state of the economy and the pressing need to aggressively pursue every sale, the often unsung heroes that make up the backbone of database marketing — lists, database management and data services — may play a more crucial role than ever before in delivering results. After all, the effectiveness of every direct marketing campaign, whether deployed online or offline, is predicated upon the skillful use of these tools. Despite a rocky 2008, list and data management executives say the coming year offers many opportunities for growth. “We believe there will be a flight to quality,” says Geoffrey Battrouney, EVP at New Rochelle, NY-based Estee Marketing Group. He and other experts say 2009 will be a watershed year for both sectors, and an exciting period during which innovation, consolidation, and integration will separate the strongest firms from the weak.

DMNews • Lists, Database Marketing and Data Services Guide 2009 FEATURE 05

ing, but to improve cost-effectiveness and ensure results, Williams and other experts say database sector firms must also integrate their services to improve cost-effectiveness and ensure continued strong results. To that end, Merkle has organized a team of 21 executives to work on solutions that would integrate such areas as capabilities, direct mail analytics and Web analytics. “We’ve created a leadership organization under the context of integrative customer marketing,” Williams explains. “We’re making changes in the way we’ve organized ourselves. In the same way that our clients are asking their teams to be more integrated and collaborative, we’re asking our teams to be more integrated and collaborative.” Integrating online and offline capabilities is a key to success in 2009, say experts. “We’re clearly at a point [economically] where the only spending increases in marketing are in online channels,” says Elana Anderson, VP of product marketing and strategy at Unica. Among the most interesting developments within the database sector, she says, is that online marketers are now asking themselves how they can more effectively engage customers and use analytics to identify the best message. “All those problems and the data and analytics needed to support the solution are issues that database marketers have been thinking about for 15 to 20 years already,” she says. “All those skill sets need to come together, and consolidation of services and knowledge is moving fast.” The list marketing sector hopes to stay steady Last year, the list sector encountered a bumpy road. Geoffrey Battrouney, whose clients include FAO Schwartz, Reader’s Digest, and top-tier nonprofits such as Salesian Missions, ticks off a chronology of 2008’s economic problems, from the housing market’s collapse and rise of gasoline and diesel prices to the problems on Wall Street, all of which affected consumer spending. “That means house file list universes are going to be smaller now than this time last year,” he says, adding that consumer spending at retail “hit everybody in the pocketbook,” including list management companies: “I saw more and more of our clients aggressively pursuing pricing deals [on lists].” Kayle Plotkin, VP of business development at Danbury, CT-based Statlistics, says 2008 was a challenging year for the list rental community because of postal rate increases, the economy, and political elections. “Every election year impacts list rentals, but this year it was the political mailers who weren’t doing as much postal mail as people expected,” she says. “So, that probably impacted the rental revenues of certain lists that would have been expected to get a much larger usage.” The lists sector has also seen dramatic growth and evolution in online activity in recent years.

As marketers have shifted efforts to the more costeffective online channel, demand for e-mail lists has grown significantly. “I think e-mail became stronger overall [in 2008]; particularly on the b-to-b side, but it also began to develop on the consumer side, in terms of list management and companies utilizing their own in-house databases as well as working towards promotion and acquisition via e-mail,” says Plotkin. Keeping e-mail lists up to date has always been tough, but in today’s economy, it’s even more problematic. “With all the layoffs in the business arena, keeping the lists clean and getting to the right person is a challenge,” she points out. But now that the initial shock of 2008 has worn off, Battrouney says it’s time for the list industry to make bold moves. “The mailer who wants to grow his or her business has to make a few courageous decisions,” he advises. “If you’re looking at a softening economy and your business is under threat from those external factors, what you do is expand. You append and cross-append to build your house file, to gather a larger share of wallet at your competitor’s expense. Now is when you do it — when the tide is going out, not when the tide is coming in.” When asked about what the coming year might hold in store for list brokers and managers, the experts say 2009’s course is impossible to accurately predict. “Well, who’s got the best crystal ball?” Plotkin says, laughing. But, she adds more seriously, “Many of our clients have a plan A, plan B and plan C, and next month’s plan will be based upon what happened in the prior month. It’s important for people to know their business well enough to be able to manipulate [tactical] plans according to changes that may occur on a dime.” Battrouney says expenses for direct mail and catalogs, including expected 2009 increases in paper and postage costs are likely to have an impact on list rentals, but adds these expenses are always a concern. “Nonprofit [organizations] can get a certain [postal rate] increase while catalog-like mail gets another price structure, so we don’t know [the impact] yet,” he says. Still, many list sector companies hope they’ll maintain the status quo, regardless of economic craziness or other unforeseen circumstances that might arise over the next year. “Flat is the new up,” says Battrouney. “If the average number of orders stays the same, which for our company it did in 2008, then that’s a good thing.” While no one can predict what the economy will or won’t do in 2009, both list and database sector experts agree that attitude affects outcome. Williams says, “This kind of market tends to have as much opportunity as it does challenges. I think the great companies will actually make progress in 2009.”

Lists, Database Marketing and Data Services Guide

Four trends to watch for Integration is essential

“Trend No. 1 would be database service companies offering fully integrated house file maintenance and email deployment. Wouldn’t it make sense to have the customer file at the service bureau, and have the service bureau become the deployment service?” - Geoffrey Battrouney, Estee Marketing Group

Fine-tuning becomes key

“I think the whole world is different. List brokers need to accomplish goals that are different based on the economy and [sometimes] based on only testing two lists. The broker will really need to fine-tune everything to ensure those two lists are the very best they can be.” - Kayle Plotkin, Statlistics

DM agency look-alikes

“If you look at the large data houses, they have been adding to their services…investing in online and creative [capabilities]. Traditional database marketing service providers are starting to look a lot more like direct marketing [agencies]. I think in a couple of years it’s going to be really hard to tell [all of them] apart.” - Elana Anderson, Unica

Innovation is crucial going forward

“I think you’re going to see some dramatic changes in database management, data analytics, lists, and database marketing services over the course of the next 12 to 18 months. Yes, spending is going to decline. Yes, we are in a recession, that’s a fact. But the great companies are [those] that innovate and push forward, not retreat back to a place that isn’t productive for their customers.” - David Williams, Merkle

DMNews • Lists, Database Marketing and Data Services Guide 2009 FEATURE 07

Data control Savings Bank Life Insurance (SBLI) creates a comprehensive, segmented customer database to coordinate its e-mail and direct mail efforts, reports Bryan Yurcan

“We know a lot more about our customers than in the past” Rose Cahill, director of marketing, SBLI

hen longtime marketer Rose Cahill joined the Savings Bank Life Insurance (SBLI) Company of Massachusetts two years ago as director of marketing, one of her first priorities was to consolidate the insurance company’s marketing efforts. The life insurance company, which is based in Woburn, MA, has customers in 25 states. Until a year ago, direct mail and e-mail campaigns were delegated to a variety of different vendors. “The marketing was not really done in house,” Cahill says. “We would implement a campaign, have a vendor buy names on our behalf, and then work with a DM house. I wanted more control.” More in-house control over data-driven campaigns The first step toward SBLI coordinating its own e-mail and direct mail efforts began with developing a highly segmented, comprehensive customer database of responders who expressed interest in getting more information about the company’s life insurance plans. To this end, SBLI chose database services provider Acxiom’s MarketEdge-X product, which is designed to offer midsize businesses the kind of customer data insight and customer database information, segmentation and analysis that large companies typically have. MarketEdge-X was released in October, and its beta form currently is used by 15 clients. Cahill says

using the database solution has allowed SBLI to take advantage of its database in new ways. “We have about 8 million prospect records, and we can do a lot of different things,” she notes. “We were able to append a lot of demographic and psychographic data to the files. We know a lot more about our customers than in the past, and as such we can do more targeted campaigns. SBLI now uses a call center to follow up on its direct mail campaigns, she adds. “We have developed campaigns where I can send names to the call center with a script to follow up with,” she explains. “It also allows us to do prospect campaigns. We recently had a million piece mailing that was done through the database — we implemented it all from our desktop in the office.” Steve Merritt, business development executive for MarketEdge-X, says Acxiom developed the product after identifying a need among midsize companies for the kind of database marketing solution the company usually custom-builds for larger companies. “We realized the mid-tier market is underserved,” he notes. “We have always built custom solutions for

Lists, Database Marketing and Data Services Guide

08 FEATURE DMNews • Lists, Database Marketing and Data Services Guide 2009

Fortune 100 companies, and it just wasn’t affordable to build them [for midsize companies] or for those companies to purchase them.” A standardized solution for an underserved market However, Acxiom got around the cost issue by standardizing and automating MarketEdge-X. “Ninety percent of every database solution is the same for all the customers,” Merritt says. “We standardized the process, so it’s less labor-intensive for us.” Merrit identified two reasons why the product requires less work. First, it uses CRM software built by database marketing services company Alterian, which he says allows for a very streamlined and convenient database management process. And, it is Web-based — users can access their tool suite from anywhere they have a Web connection. Cahill says this convenience is important for SBLI, because it and other companies like it constantly monitor and update their databases. “We really like to follow up with people,” she says. “People sometimes need multiple touches before they will respond [to a campaign].” In addition to better segmenting capabilities and targeting, SBLI also uses Acxiom’s analytics tools to better measure response rates and cost per lead. Merritt believes that is the most important part

of taking advantage of a customer database. “We believe the most important things about marketing are analytics and data,” he says. By using analytics tools, Cahill says SBLI can get to the heart of micro-targeting. “We can analyze response rates and see where responses are coming from, and use that information to even geo-target specific parts of states,” she says. “It’s very effective.” As the economy continues to stagnate and business look to get every bang for their marketing buck, the advanced targeting that SBLI can use also allows them to mail smarter and cheaper. “It’s helped decrease our direct mail budget as we are mailing better,” Cahill says. “Just the price of postage alone makes it very expensive. It’s very hard to send a piece for less than 50 cents anymore.” And, SBLI also plans to increase its e-mail efforts in the coming months as a cost-effective way to market. “We are planning to use the database more as we move towards more e-mail efforts,” Cahill says. But right now, Cahill and her team are still fully realizing the marketing potential of having a highly segmented, targeted and responsive database. “Our database is very powerful now,” she says. “We know how to use it at maybe 40% of what it can do — but the more we use it, the better we will be able to target.” l

Database services: What to consider before you buy Bryan Kennedy, COO, Epsilon

Sam Gragg, VP of customer management marketing solutions, Teradata

Q: What should marketers consider before investing in a database solution? A: You need to determine what the key metrics are to measure your value of investment. Before you go out spending money, you need to have a pretty clear goal in mind. It depends on whether you’re looking for a retention/loyalty effort vs. customer acquisition, for example, but one of the overall things to think about is if you had one additional dollar to spend on your marketing effort, which customer would you spend that dollar on?

Q: What do you wish potential clients knew before they came to speak to you about a database solution? A: I’d like them to understand the context of what they mean by customer data – is your scope just a marketing thing? Is it a service thing? Or a more broad customer strategy? I would hope the broader the better. Also, do they understand the benefit of integrated data? Do they understand the value of corporate memory when it comes to customers?

Q: How do you decide if a vendor is right for you? A: We’ll, I think the top of the list is track record, which includes references. It’s a small world from a marketing perspective so with a little due diligence you can get a clear picture. Buying a database is also not like buying manufacturing components where all things look alike. At the end of the day, even though you’re buying technology, you’re also buying a team to help you solve marketing problems.

Q: What should customers consider in terms of expectations about their database investment? A: Start small and grow. Pick a project that will give you the first step in a bigger picture, but don’t try to implement the bigger picture all at once. A natural reaction when a small implementation shows success is to say, ‘let’s do it everywhere.’ But we’re talking about a lot of moving parts and a lot of change. So it’s about being able to prioritize and pick the next step. Essential guide

“The most important things about marketing are analytics and data” Steve Merritt, business development executive, MarketEdge-X, Acxiom

DMNews • Lists, Database Marketing and Data Services Guide 2009 FEATURE 11

Ten Tips

for squeaky-clean lists 8

By Bryan Yurcan

ore than ever, list hygiene is critically important to direct marketers’ mailing success. After all, there are the USPS’ modified Move Update requirements to consider, as well as public concerns about the environmental effects of direct mail. But most importantly, reaching your best potential customers is key, experts say, so making sure your lists are clean is essential. Here are 10 ways to make sure your lists are as tidy as they can be:

Understand your responsibility The mailer is the one responsible for making sure Move Update requirements are complied with, says Jerry Ceresale, SVP of government affairs at the DMA, so it’s important to take action. “Make sure you know your vendors well,” he says, “and that they are properly scrubbing the lists using the NCOA directory.”

Consider Address Change Service (ACS) ACS is a process for mailers to receive address changes electronically from the Postal Service to update their next mailings. Elizabeth Lombard, national postal carrier manager at Pitney Bowes, says that the address correction fees are significantly cheaper with this method, and the address change information is accessible to the mailer more quickly. “More timely information is helpful, especially when mailings are frequent,” she explains.

Use the DMA’s Mail Preference service This free service from the Direct Marketing Association allows consumers to go online to opt out of the mailing lists of individual brands, for free. “This offers win-win opportunities for

direct marketers to practice environmental stewardship and reduce waste, while improving the deliverability of their mail,” notes Jim Wilson, manager of address technology at the USPS.

Mail to the addresses that meet your needs It sounds obvious, but targeting properly is something that all mailers need to pay close attention to, Wilson points out. “For example, have business delivery addresses been removed if your mailing is directed at homeowners?” he asks.

Use the National Change of Address Linkage system This system leverages the most current USPS address information, including standardized and delivery point coded addresses, for matches made to the NCOALink file for individual, family, and business moves. “Use NCOALink solutions that provide 48-months of change of address history to increase your opportunity to correct addresses,” Lombard advises.

Take advantage of ancillary service endorsements These allow mailers to obtain, on request, a forwarding address if a recipient has filed a change-ofaddress order with the Postal Service or for non-delivery. Approved endorsements a mailer can receive include Address Service Requested, Return Service Requested, temporary Return Service Requested and Change Service Requested, says Lombard.

Confirm address with CASS (Coding Accuracy Support System) software CASS enables the Postal Service to evaluate the accuracy of addressmatching software programs. Make sure addresses confirmed by CASS software are valid at both the primary and secondary address levels, says Wilson.

Lists, Database Marketing and Data Services Guide

Mail at the last possible moment Running each of your mailings through the national change of address system closer to the mailing date might save money in the long run. “If you perform an NCOA update at the last possible moment before a mailing, you will meet the Move Update requirements and may in fact save money on having most up-to-date addresses,” says Cerasale.

Keep accurate records If a mailer faces an assessment against them for Move Update noncompliance, it really helps to keep good records, advises Cerasale. “You can’t just say to the Postal Service, ‘Oh, we actually did do this in compliance with Move Update,’” he says. “You need to have to have records to show them you did everything the right way.”

Always test This is good advice most good direct marketers know, but it bears repeating. “Test a sample of a list before mailing to the entire list,” says Wilson. “Also consider testing different versions of catalogs.”

More on Move Update The USPS’ revised Move Update requirements officially took effect at the end of November – though mailers have a transition period of six months to become compliant before facing fines. The new requirements, which became effective November 23 and apply to both First-Class and Standard Mail, require businesses to update their bulk-mailing lists every 95 days. For more information, check out www.usps. com and search for “Move Update.”

12 FEATURE DMNews • Lists, Database Marketing and Data Services Guide 2009

Problem Solver: How can a list marketer beat the recession? Brian Manning, VP of sales, Statlistics

he list rental market today provides more challenges than at any point in the past. List owners are confronted with the loss of major mailers, as mail plans change or are restricted by budget cutbacks. This has brought about an even stronger focus on test development from new mailers, in both primary and secondary categories, to offset some of these losses and help grow to the program.

There are many strategies you and your list manager can discuss to help combat these economic conditions, and to drive more testing. In addition to pricing initiatives, the progressive list owners also need to develop opportunities within their database. This will raise the visibility of your file in the market, and provide opportunities for related and secondary mailers to test your file. Let’s look at three major ideas that you can use to evaluate your own list rental program, along with the benefits of each strategy: Pricing – Consider whether you are offering base price discounts for out-of-market mailers. An example would be a fundraising rate, or a catalog rate on a consumer publication. This also extends to businessto-business subs or buyers, provided the record is home address. You should also review your base pricing rates on an annual basis with your list manager to keep current with industry averages. Further pricing incentives might include selection pricing caps, and also being flexible with minimum orders. You should also evaluate the many public and private database opportunities, as they also require special pricing. This will bring your files into play for more types of direct mailers, and will help increase the usage on your file from secondary and related categories. Data – Are you making the best use of the available data overlays, both on b-to-b and consumer files? Adding company size, SIC, and sales volume to a b-to-b file will help drive testing — small businesses are a growing segment of this market, for example. On the consumer side, try to offer age, income, and presence of children on your files. Both b-to-b and consumer list owners Lists, Database Marketing and Data Services Guide

also need to consider releasing their e-mail names for rental, and b-to-b lists should also offer phones when possible. With the rapid developments in the overlay area, you need to be as market-specific as possible. This will make your file more targeted, to the benefit of both your continuation and test mailers. Promotions – It’s important to make a careful analysis of how your files are being promoted, and to work closely with your list manager on their marketing plans. Your promotions should include a combination of space advertising, e-mail promotions, e-newsletter sponsorships, and proper management of the various list directories. Ask your list manager about their telemarketing efforts, as well as broker meetings and trade shows. Promote multichannel opportunities, when they exist within your files, to help drive testing on your postal program, your e-mail names, or your coregistration program. The bottom line benefit to these promotions is the positioning of your subscriber or customer not only in their primary category, but also on the basis of their general profile. This will benefit you in developing new sources of revenue from related markets. No matter how you tackle your list program, the key strategy is to be involved, and to be a partner with your list manager. Today’s economic challenges also provide unique opportunities for marketers to be more aggressive, to help offset some of the losses we’re all seeing by category. The development of pricing strategies, combined with a careful analysis of the entire list portfolio, will benefit you by making your file more appealing to more test mailers. You can reach Brian Manning at b.manning@ statlistics.com.

14 FEATURE DMNews • Lists, Database Marketing and Data Services Guide 2009

Lists and Databases

101

With a language all its own, the world of database marketing can be a jargon-filled journey. But if you don’t know a compiled list from a custom select, don’t worry — Jonathan Mack presents the lowdown on lists- and database-speak right here cost $100 to obtain 1,000 units from a given list universe.

Co-op databases — When two or more owners share and combine their lists so that each participant can access the combined list information.

CAN-SPAM Act – Made law in late 2003, the Act created guidelines for commercial e-mail senders requiring the use of appropriate subject lines, the option for recipients to opt-out, the inclusion of an address from the sender and the use of obvious labels for pornography and other adult material. CPM List Pricing — Cost per thousand records from a list universe. For example, a list price of $100/M means that it would

Co-op mailing — When a mail piece includes an offer from two or more mailers, instead of just one. Co-palletization — The consolidation of actual bundles of mail. Addressed and presorted mail is put on pallets in an effort to cut down on the sheer volume of stacked mail. Co-registration — The process through which opt-ins are gained for several organizations or products at once. Individuals fill out a registration form on a Web site, which they can then choose to send to different companies through the use of check boxes. Compiled list — A list of information such as names and addresses

that is gathered from different sources including databases, Web site registrations, directories, public records and subscriptions. Custom selects — Selects defined or created by a list user based on the list information. These are usually very specific and help make lists more cost-effective because they focus scope and produce the most relevant information for a list marketer’s needs. Data mining — The process through which hidden patterns are pulled out from large databases. Data warehouse — A combination of a single organizations many different databases and electronically stored data. Data warehouses allow organizations analyze customer information and demographics to help create targeted and segmented lists. Hotline – Typically priced at a premium, this is the most current mailing list update.

Lists, Database Marketing and Data Services Guide

House list — A file that is made up of a company or organization’s customers, clients, donors or prospects. Marketers will use this list to market new products and/or services to prospects and can sell the list to list brokers or list managers to generate a profit. List cleaning— Simply, the process of improving a list by updating the information and keeping data current and well-maintained. List owner/list manager/list broker — List owners are the people in possession of a list. A list owner can obtain a list of their company’s prospects or buy a list to become the owner of it. List managers maintain and updates lists for list owners. List brokers are responsible for the sale and rental of a list from a list owner to a potential buyer. List select — These are repeated and notable categories contained within a list. Common selects

DMNews • Lists, Database Marketing and Data Services Guide 2009 FEATURE 15

include state, age, profession and gender, although there may be many more specific selects possible based on a particular list’s prospects. List selects allow mailing list users to better target and segment their offers. List universe — The total number of prospects on a list. Merge/purge — The process of combining two or more lists or databases and then getting rid of duplicates in the created masterfile, reducing printing and mailing costs. NCOA — The National Change of Address (NCOA) database is maintained by the US Postal Service and useful to mailers for several reasons. Running a NCOA process

on a mailing list updates addresses and maintains accuracy, lowers mailing costs and reduces the possibility of useless prospects, also known as “nixies.” NCOALink is the software provided by the USPS to help mailers with this process. Opt in/out — When a person opts in, he/she has agreed to accept mail and other communications from an organization. Opting out is just the opposite — a person is able to decline to receive any information and communications from a sender. Psychographics — Like demographics, these are used to further segment a list. Psychographics break prospects into categories based on per-

sonality, values, interests and lifestyle. Also referred to as IAO (interests, attitudes and opinions) variables. Response rate — Usually represented as a percentage, a response rate is the ratio of the number of people who responded to an offer divided by the number of people who were sent that offer. A response rate is a great way to judge an offer’s effectiveness. RFM models — Short for recency, frequency, and monetary value measurements; these are used in predictive modeling, especially consumer mailers and offers. Segmentation — This process groups prospects into corresponding, appropriate subsets

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based on certain criteria, also known as a list select. Suppression — This is the process through which addresses are taken off of a mailing list. Senders of commercial e-mails must provide an opt-out option to comply with the CAN-SPAM Act. People who opt out are placed on a suppressed list to avoid future e-mail contact. Software-as-a-service (SaaS) — This is a method of software deployment through which a program is hosted on a Web site and can be used as a service for many users. This is growing in popularity, because it allows workers in many locations access to the same data without needing to install applications.

16 Tactics & strategies DMNews • Lists, Database Marketing and Data Services Guide 2009

Tactics and strategies LISTS AND DATABASES Page 16

Model behavior for greater list efficiency, by John Keenan

Page 17

Go beyond the basics to improve database quality, by Pam Corbielle-Lepel

Page 18

Driving the higher costs out of list processing, by Bryan Euclide Building a lean, green list marketing machine, by Chris DeMartine

Page 19

The cold hard facts: The real ROI of ACS, by Raymond Chin

Page 20

When it comes to e-mail lists, more marketing is better, by Robert Vanselow

Page 22

It’s time to get back to the basics of data, by Joel Curry New movers: A recessionproof consumer category, by Donald Hinman

arketing budgets may ebb and flow, but one area of investment is always essential: lists and data. Database marketing is a key part of any successful campaign, whether through direct mail, e-mail or an integrated effort. The following expert articles focus on issues such as list efficiency, database quality and processing costs.

Model behavior for greater list efficiency By John Keenan he first half of 2009 is shaping up to be another challenging period for marketers. Not only are they facing a widely predicted reduction in consumer spending, but internal financial pressures are resulting in cuts in their budgets, making it even harder to attract consumers and encourage increased spend. As bleak as it may appear, this tough environment offers a tremendous opportunity for those marketers who are able to effectively use a smarter approach to developing targeted prospect lists, and who can create a compelling plan to reach those prospects with timely and John Keenan relevant mesAnthem Marketing Solutions saging that will drive traffic. List rental for mail and e-mail prospecting has been and will continue to be one of the key tools that marketers can use to attract new customers. However, low response rates for many prospecting campaigns only serve to highlight the expense of traditional list rental — and increasing pressures on marketing budgets demand a better return. One effective way to reduce a prospecting campaign’s cost per response/acquisition is to reduce the number of non-productive names mailed. An upfront investment in behavioral modeling — not simply response modeling — goes beyond basic list affinities and demographic selection strategies and allows marketers to narrow the target base to only those who resemble

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good, profitable customers. Done properly, this approach allows specific demand generation at a relatively low cost, and results only get better as you build experience – future campaigns benefit from the learnings of past efforts. In recent work with a national restaurant chain, we identified characteristics of consumers who were highly likely to be heavy category users, with a specific propensity for a particular day part. Using a combination of internal research, syndicated data and demographic profiles, our model identified six different target groups, and suggested the specific product offerings with the most appeal for each group. We applied this model to a compiled list and reached out to only those consumers who lived within a three-mile radius of specific restaurant locations and fell into one of our target groups. For our client, this provided a surgical method to reach the highest-value prospects without paying for blanket coverage, and also countered competitive activity without requiring significant mass marketing expenditures. The overwhelming response to the mailing drove growth in both same-stores sales and market share in a down economic environment, providing a good return on investment. Especially with reduced budgets in the near term, marketers will be expected to deliver results exceeding those of past campaigns — in fact, it will be demanded. Achieving substantial returns requires being smarter about who you are targeting and the message you convey. Taking the time to model a path toward a better response prior to launching a campaign is a crucial step, and one that is especially relevant in today’s business environment.

John Keenan is managing partner at Anthem Marketing Solutions. Reach him at jkeenan@anthemedge.com.

DMNews • Lists, Database Marketing and Data Services Guide 2009 Tactics & strategies 17

Go beyond the basics to improve database quality By Pam Corbeille-Lepel ost marketers know the importance of database quality in generating successful direct mail campaigns, and are familiar with the basic services involved in database hygiene – ZIP+4, delivery point validation (DPV), National Change of address software (NCOALink) and duplicate elimination, to name a few. What may not be so familiar, however, is that greater value — in the forms of improved delivery rates and increased ROI — can be realized from these services if you go beyond the basics. Next time you process your database, be sure to take advantage of everything they offer. ZIP+4 and DPV Marketers run their list through ZIP+4 software to standardize addresses, validate ZIP codes and add information, so they Pam Corbeille-Lepel can barcode their mail. But how Lorton Data many actually take the time to

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look at the DPV codes that indicate the accuracy of the delivery address? Because your database is probably used for more than just mailings, you need to consider what to do with addresses flagged as potentially undeliverable. The first instinct would be to remove the name from the list. However, a “drop” solution isn’t a one-size-fits-all remedy. You will probably want to treat prospect records differently from regular customer records and high-value customer records. Where it’s important enough to build a more accurate and complete address, services such as expanded address correction and apartment append are available. NCOALink This offers information about people and businesses that have moved. Sometimes a new address is provided and other times it is not available. Prior to mailing, be sure to drop records where no new address is available. NCOALink processing includes ZIP+4 and DPV. Duplicate elimination When removing duplicates, consider your criteria, because it can be critical to the success of your direct mail campaign. There may be times when it’s appropriate to send one mailpiece per address, and other times each person should receive a mailpiece. Additionally, if there is information such as phone, e-mail, etc. in one record but not another, capture the information into a kept record. Pam Corbeille-Lepel is director of sales and marketing, Lorton Data. Reach her at pamcl@lortondata.com.

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Lists, Database Marketing and Data Services Guide

18 Tactics & strategies DMNews • Lists, Database Marketing and Data Services Guide 2009

Driving the higher costs out of list processing By Brian Euclide imply selecting the correct software, automating the process flow, and enhancing the off the shelf tools, can reduce a company’s total list processing cost by 50% or more. Over the past decade, the basic process of processing mailing lists has been commoditized by software manufacturers and end users alike. Cheaper and simpler “department store” software packages allow end users to perform simple functions that may meet the basic standards of a USPS qualified mailing, but do not possess the capabilities to do much more. More elaborate software packages support modules which provide tools to convert many different types of input Brian Euclide files, CASS, eliminate duplicate TEC Mailing Solutions records, presort to all classes of mail, and provide an output file

Hook the freshest, most qualiﬁed leads with targeted lists from ZoomInfo. Reach your target audience with the most robust B2B lists available. ZoomInfo’s data is updated daily, and lists include unlimited selects and unlimited usage rights. The result? Qualified leads, a happy sales team and more business won.

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that will integrate with either a laser printer or an inkjet device. Often each manufacturer has a specific specialty. Therefore, it is essential for a company to understand its specific needs and select the correct software package. Cheaper is not always better. It is critical to automate the process flow. Unfortunately, most of the software products available have each module as a silo and not necessarily integrated with each of the others. A significant time and cost savings can be gained by integrating these products into a single “stringed” series of transactions. Building tools to join processes together has resulted in time and costs savings greater than 60% in many different business environments. Most list processing software packages perform very minimal quality control functionality. The addition of custom quality control testing applications is the second greatest cost savings opportunity for a list processing operation. If a company is processing more than one single list from a single source, there are incredible risks associated with incorrectly identifying data elements required in downstream processes. Ultimately, it is essential for list processing operations to understand the tools which they are using to produce the mailing event. However, more importantly, it is critical to enhance those tools to provide greater efficiencies and quality control. Brian Euclide is president of TEC Mailing Solutions. Reach him at brian@tecmailing.com.

Building a lean, green list marketing machine By Chris DeMartine rillions in unregulated credit default swaps may have undermined the global economy for now, but the future of digital marketing still looks bright. Online channels are exploding to form a paperless playing field for direct marketers, and an increasing number of list managers are joining the game. Here are three steps for building your own lean, green list marketing machine. Technology integration When it comes to efficiency, take advice from the service bureau, whose common rule is “never run the same job twice.” Economic pressures have shifted the demand for operational excellence from an optional desire for competitive advantage to a requirement for survival. The integration of your list marketing functions can free you from redundant tasks related to contact management, measuring results, and data card publishing. If you haven’t done so already, then you’ll need to get those systems integrated or move to an environment that is. Online channel interaction If you’re a list marketer, then the odds are pretty good that you’ve used e-mail broadcasts to reach your market of list brokers and mailers. That’s Chris DeMartine good, but don’t stop there. NextMark Define your online audience, and check Web site traffic com-

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DMNews • Lists, Database Marketing and Data Services Guide 2009 Tactics & strategies 19

parisons when deciding where to invest your advertising dollars. > Alexa has a free tool that compares page views for up to three Web site URLs. Don’t shy away from free services. Today’s Web environment can deliver value for free. YouTube is a great channel for presenting your unique value proposition, and Facebook is not just for teens anymore. Who would have predicted that Visa would have signed up thousands of small businesses on the social network? Every traceable link can also add value to your list marketing network, so keep active on those high profile forums and blogs. Search engine optimization (SEO) This leg is the toughest with the most competition, and for good reason. SEO works for you 24/7 around the globe. Consider this: Search algorithms are extremely complex and a carefully guarded secret, so don’t spend your time trying to figure them out – piggyback instead. The most efficient way to get the job done is to leverage your unique data card content on a platform that is already optimized. Traceable external links will improve your ranking significantly. Begin with the understanding that the page-ranking implications of an off-page link are not only based on the referring site’s popularity, but also on the number of external links on that site. Make sure it’s measurable, track your results and learn from your experience. Chris DeMartine is director of business development at NextMark. Reach him at cdemartine@nextmark.com.

The cold hard facts: The real ROI of ACS By Raymond Chin ere is what you need to know. More than 44 million people change their mailing addresses each year, according to the US Postal Service. The USPS charges as much as 50 cents per address for each change of address notice it sends manually. Sending your mailings to out-of-date addresses increases your mailing costs, and your mail piece may arrive late or not at all. In addition to the extra cost and potential for late delivery, an out-of-date mailing list can prevent you from receiving discounted mail rates. And in the future, the ramifications of a bad list will get even worse. The USPS requires that you update your mailing lists with moves and address changes in order to receive discounts on your First-Class mail rates. Raymond Chin All mailers should perform GrayHair Software aggressive Move Update

Statistical Modelers and Data Miners The GenIQ Model© is a machine learning alternative model to the statistical ordinary least squares and logistic regression models.

GenIQ: 1. Lets the data define the model— automatically 2. Data mines for new variables 3. Performs variable selection, and 4. Specifies the model equation— 5. So as to optimize the decile table To sign-up for a free GenIQ-webcast: www.GenIQModel.com/Webcast.html Call Bruce Ratner to discuss GenIQ (516.791.3554). Lists, Database Marketing and Data Services Guide

20 Tactics & strategies DMNews â&#x20AC;˘ Lists, Database Marketing and Data Services Guide 2009

processing to speed delivery and minimize costly Undeliverableas-Addressed (UAA) mail pieces for any mail class. The USPS provides several address update services, available either directly from the USPS or from licensed, third-party providers such as letter shops and consolidators. These services have different costs, are performed at different phases of mail production and have their own benefits and disadvantages. Services include NCOALink, a pre-processing service that updates a mailing list before the mailpieces are printed, assembled, and mailed; FastForward, an inline processing service, generally provided by a consolidator when the assembled, addressed mailpieces are sorted before they enter the USPS system; and Address Change Service (ACS), a post-processing service that updates an address list after a completed mailing has been processed by the USPS. ACS provides address change updates to the mailer after the USPS has processed the mailing. The major benefit of it is that mailers receive address changes in electronic format to merg back into the original address list. However, the mailer is responsible for merging the data. You do this by purchasing software â&#x20AC;&#x201D; or developng your own, which would take years of experience and effort. But, industry experience indicates that ACS is able to identify about 40% of address changes. Raymond Chin is VP of product development for GrayHair Software. Reach him at rchin@grayhairsoftware.com.

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When it comes to e-mail lists, more marketing is better By Robert Vanselow -mail marketers are faced with many challenges â&#x20AC;&#x201D; chief among them is list performance. The easy answer among experts is simply to use the lists less, in the hope that, somehow, they will keep their customer value. However, this well-intentioned strategy may actually result in â&#x20AC;&#x153;deceleratingâ&#x20AC;? both your marketing efforts and your bottom line revenues. When it comes to marketing proprietary in-house lists, advertisers and company promotions obtain phenomenal results, even when not e-mailed often. Here are some ingredients for successful e-mail list marketing: Content is king Many commercial firms create and build an e-mail list to generate revenues, but they donâ&#x20AC;&#x2122;t â&#x20AC;&#x153;feedâ&#x20AC;? the Robert Vanselow list with good content. Imagine Newsmax Media a farmer offering his ground no water or fertilizer. Although we e-mail as many as four or five times a day to these lists, we always offer our readers unique content. We believe they will not only open the e-mails but buy our products, as well as our advertisersâ&#x20AC;&#x2122; products. Size matters The size of a list is very important. When it comes to value, many marketers will argue against large files. We constantly hear that â&#x20AC;&#x153;Quality, not quantity, counts.â&#x20AC;? What is wrong with having both? It is true you can have a small list that really works, but unless the list has critical mass, it may not be worth the time of your marketing team to prepare and implement the campaigns. The key is to use larger lists. If you have your own list, put money and resources into expanding it. If you market to lists, look for larger list files. As a rule, we will never market to any third-party e-mail lists unless they have more than 200,000 names. Your own proprietary list is another matter. If you own the list and market your own products to it, you can see significant results even with a much smaller list. Replenish The key to keeping your list big and growing is your relentless drive to add new e-mail names to it. Remember, you are on a treadmill in the e-mail business. Industry numbers suggest you lose 3%-5% of your house file each month. We keep building our lists through offers of free reports and surveys. People are increasingly wary of giving up their e-mail address, so you have to offer them a benefit. Repeat. Many marketers often space out their e-mail campaigns, again clinging to this notion of not bothering the customer too much. Consider if TV campaigns were placed with such an approach. We encourage our advertisers to place their campaigns consecutively and close together. Some follow-up campaigns can even be sent within 24 hours of the last one. When it comes to e-mail campaigns, push the pedal to the metal.

Robert Vanselow is VP of sales and marketing, Newsmax Media. Reach him at robert.vanselow@newsmax.com. ESSENTIAL GUIDE

22 Tactics & strategies DMNews • Lists, Database Marketing and Data Services Guide 2009

It’s time to get back to the basics of data

New movers: A recessionproof consumer category

By Joel Curry n today’s economy, every business is looking for ways to improve the bottom line. Extreme approaches, such as spending freezes and layoffs, are sometimes necessary, but often simply getting back to business basics can result in significant cost savings. One way to yield tremendous results without straining staff resources is address verification. The US Postal Service estimates that 5% of all mail is undeliverable as addressed, resulting in several billion dollars of wasted postage. The true cost of bad addresses includes not only postage expenses, but also an inability to collect payment, operational inefficiencies and, most importantly, the impact on customer experience. In addition, businesses that ship products rely on correct addresses to ensure products reach their customers on time. As the numbers show, poor data quality is a common problem. Once collected, address information is rarely looked at again. Unless a company has a well defined process to handle returned mail or customers call complaining about their delayed orders, bad data entries go undetected. The most effective way to ensure customer addresses are accurate is to validate them as they are entered, ensuring that data is correct from the get-go and reducing the impact down the road. The result? Customers receive packages and information on time, boosting satisfaction and retention rates. This also reduces calls to customer service centers and decreases returned mail. Take, for example, the case of Fairytale Brownies, an online retailer of gourmet brownies. With more than 200,000 orders annually, it is critical that orders, oftentimes gifts, are delivered accurately and on time. After implementing address verification, Fairytale Brownies saw immediate improvements in order processing, shipments, and customer satisfaction, netting annual savings of $30,000 in address correction fees and $100,000 in unnecessary shipping expenses. Accurate address data also enables more effective and affordable direct marketing campaigns. For example, if out of 20,000 postcards sent, 2,000 are returned and 1,000 are duplicates, the cost of the campaign increases while the number of potential responses is greatly diminished. If data is corrected before the mailing, there are immediate savings in postage and man hours sorting returned mail, as well as Joel Curry increased response rates. Experian QAS Using accurate address data is the first step to keeping your customers coming back. It is a simple way to lower operational costs ensuring your organization’s future while having a dramatic effect on your bottom line. Who thought something as simple as an address could do all that?

By Donald Hinman oving to a new home — whether for work, family or simply more space — is one of the great catalysts of consumer spending. The average new resident spends about $7,300 on everything from window treatments to take-out meals in the three months following a move. This spending sweet spot around a new move is prime time to reach consumers when they are most receptive to trial offers, and actually looking to forge new connections. As a marketing trigger, few lifestyle transitions have this kind of recession-resistant impact on consumer spending. Our analysis of new mover buying patterns has found that new movers are big spenders on everything from home Donald Hinman décor and household goods to Epsilon dining and domestic services to electronics and appliances. On average, during the year of their move, new mover households spend 52% more than non-movers on home décor and furnishings. Among movers who simply moved across town, one in five develop relationships with new cable TV, home phone, Internet and insurance providers. People in this transition phase respond most strongly to a combination of push and pull strategies. When looking for businesses in their new communities, new movers cited referrals from neighbors as the primary driver, followed by the Internet, direct response programs, friends and family, realtors and local newspapers. Fifty-five percent of new movers respond to direct mail and 60% respond to special offers targeted specifically at new movers. Effectively targeting new movers is not quite as simple as buying real estate transfer lists, which do not account for renters and do not provide much granularity on the demographics of the moving family. Neither will list of phone number changes adequately reflect new movers since many households no longer have published phone numbers such as cellular only users and VOIP households. Effectively targeting new movers requires access to many sources of mover information. Marketers will want to think about things like the relevance of their outreach campaigns to the different segments of the new mover market – those who are moving up, those who are downsizing and those who are looking for a fresh start. The move will trigger different types of spending within each of these three groups, and a truly efficient campaign will take those differences into account when modeling target lists.

Joel Curry is COO at Experian QAS. Reach him at joel.curry@qas.com

Donald Hinman is SVP, data services at Epsilon. Reach him at Don.Hinman@epsilon.com.

Lists, Database Marketing and Data Services Guide