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Database - The Secrets Of Success
A database is more than a simple list of names and addresses. What
turns a list into a database is the additional information, coupled with your ability to
select names from or report on the list using any combination of data elements.
In this report, you'll see some examples of the benefits of developing
and maintaining a database. Then, the specific information that a database can contain
will be detailed.
BENEFITS OF A DATABASE
By maintaining your list as a database, you can segment in many ways
for targeting. Targeting improves the productivity of your offers. You can use a database
to isolate the segment of your list most likely to respond to a particular offer. With a
good database, you're not "mass-mailing" your offer to parts of your list that
may have no interest in it (based on their characteristics). Because the number you're
mailing is smaller, your response rate (number responding/number mailed) - one measure of
productivity - should be higher. (And, of course, you'll save on printing and postage
costs.)
Here are two simple examples of targeting using database information:
1. You're the owner of a neighborhood beauty salon.
For each customer, you keep a record (with dates) of all the services you've provided to
that customer. You're planning a special pre-summer promotion on permanent waves for the
month of May.
Instead of mailing an announcement of the sale to your entire customer
list (many of whom don't have their hair permed), you select only those customers who had
a permanent at least three months ago. In this way, you're targeting those customers who
are most likely to take advantage of your upcoming sale.
2. You're the dinner chairperson of a local
fund-raising organization. Your mailing list is made up of a wide range of contributors,
from those who've donated only a few dollars to those who give annual gifts of thousands
of dollars. For each contributor, you maintain a record of all past donations and
functions he/she has attended, in addition to basic mailing information.
This year, you're asking for donations of $100 a plate for the annual
dinner dance. To get the best response to your invitation, you first target those
contributors who were at last year's dinner dance. Then you target those who weren't at
the dance, but who donated more than $100 in the past year. Depending on the response you
expect from these first two groups, you may next want to target those names on your list
that didn't attend the last dance, but contributed $50 in the last year. You may even want
to have a phone follow-up to the first two groups but use the mailing only for the third
group.
A properly set up database can provide many benefits for your business
or organization. But the usefulness of a database depends entirely on what elements you
include in it.
WHAT TO INCLUDE IN THE DATABASE
Depending on your type of business or organization, you will want to
include different fields in your database. Later in this report you will see some examples
of the fields that are appropriate in specific instances. For all businesses or
organizations, though, certain basic information is always necessary.
By including basic information in your database, you ensure that the
people or companies on your list are deliverable. That is, the mailings you produce using
your list will get where you want them to go - into the hands of the individual who is
most likely to respond to your offer.
1. Basic information for Business Audiences
If your audience is made up of businesses, you
will need to include the following fields for each name on your list:
a. A unique account number.
This number should not
be tied into any other information about the customer, for example, phone number or
address, since this sort of information may change over time. The account number should
never change throughout the life of the customer. A sequential numbering system is simple
and effective.
b. Company name.
c. Street Address.
d. Suite number, is necessary
e. P.O. Box, if necessary.
f. City
g. State
h. Zip Code, five or nine
digit.
i. Phone number (with area
code).
j. Job title or name of
contact.
Some business mailers
maintain the name of the individual within the customer's business or organization. Others
simply use the appropriate job title. The alternative you choose will depend on the nature
of your business and the amount of turnover associated with the position that is your
contact.
2. Basic Information for Individual (Non-Business)
Audiences
If your audience is made up of individuals, you
will need to include the following data for each name on the list:
a. A unique account number.
b. Individual's name.
c. Street address or P.O.
Box.
d. Apartment number, is
necessary.
e. City.
f. State.
g. Zip Code, five or nine
digit.
h. Phone number (with area
code).
The basic information listed above is necessary
to make sure that the names on your mailing list are mailable. But how do you decide which
names are more productive?
3. Data Elements to Evaluate - Recency, Frequency and
Monetary Value
Regardless of whether you're mailing to
businesses or individuals, there are three factors - recency, frequency and monetary value
- that are commonly used to measure the value of a name.
a. Recency: Recency refers to
the last time that the customer ordered or responded to an offer.
b. Frequency: Frequency is
the number of orders or responses that the customer has made since becoming a customer (or
during the last year or other specified time period).
c. Monetary Value: The
monetary value is the amount of money the customer has spent since becoming a customer (or
during the last year or other specified time period).
How do these three factors determine the value
of a customer (the likelihood he/she will order again)?
* The more recently a
customer has ordered from you, the more likely he/she will be to respond to your next
offer.
* The more often a customer
orders from you, the more likely he/she will be to respond to your next offer.
* The more money a customer
spends with you, the more likely he/she will be to respond to your next offer.
All three factors - recency, frequency, and
monetary value - are considered to be good indicators of whether or not a customer is
likely to respond to a future offer. But they are not equal. Recency is thought to be the
best indicator, followed by frequency and then monetary value.
In order to use these valuable pieces of
information, here are the specific fields you need to maintain on your database:
* For recency: The date of
the last transaction with the customer - the date of the customer's last order, purchase
or donation.
* For frequency: The dates of
all previous transactions with the customer over a certain period of time.
* For monetary value: The
size (in dollars) of all of the customer's previous purchases or other transactions. (It
is also common to maintain the dollar amount of the customer's most recent order as the
monetary value indicator.)
In addition to evaluating the recency,
frequency, and monetary worth of your audience, you will probably find that there are many
other important ways to analyze the names on your database.
4. Additional Information for Business Audiences
If your audience is made up of businesses,
there is additional descriptive information, some specific to your product or offer, that
could be valuable to have.
You might want to consider storing some of the
following data elements for each of the names on your database:
a. Number of employees in the
business/organization.
b. Type of
business/organization.
The United States
Government four-digit coding system, the Standard Industrial Classification (SIC) system,
is commonly used to identify businesses. For example, the codes 5211 through 5999 identify
"Retailers." Within that category, 5411 is the code for "Grocery
Stores," 5441 the number for "Candy, Nut and Confectionery Stores." The SIC
Manual is available through the Superintendent of Documents, U.S. Government Printing
Office, Washington, DC 20402.
c. Annual sales volume.
d. Credit status code
The credit status code
could be developed by you, based on the customer's payment history or perhaps obtained
from a commercial credit report.
e. Items ordered from you.
With data in this file,
you can select customer for programs designed to get them to reorder an item, or to order
complimentary or supply items.
f. Location.
Is it a headquarters,
subsidiary, branch, division, etc.? If you are making an offer that requires a decision by
someone at the headquarters of a company, you may not want to send it to the branch office
(unless there are employees involved in the decision too).
g. Source of the name.
This field is usually a
code representing where you got the name. Assign a unique code for each referral program,
publication advertisement, list, etc., you use to get a new name. Assigning a source code
to each new customer allows you to evaluate the effectiveness of each technique you use to
get customers or to collect prospect names.
5. Additional Information for Individual Audiences
If your audience is made up of individuals, you
may want to collect information on the household unit, often the most relevant purchasing
unit. Here are some suggestions for demographic information that could be useful to you in
analyzing the names on your mailing list.
a. Household income.
b. Occupations of household
members.
c. Number of people in the
household.
d. Ages of the members of the
household.
e. Genders of members of the
household.
f. Marital status of members
of the household.
g. Information on property
belonging to the household:
*
Type of living quarters.
*
Owned or rented living quarters.
*
Number, make, model, etc. of each automobile.
*
Number, make, model, etc. of each major appliance.
h. Political affiliation.
i. Hobbies and leisure time
activities.
Now you know the secrets of how a database can turn your mailing list
into a valuable asset for your business or organization. You understand what basic fields
to include. And you have had an overview of what additional fields might be added to the
basic ones that make a list mailable. Be sure to carefully analyze your own needs and to
include information that would be of help to you in mailing smarter. In report #3504, we
will start explaining the details of how to go about collecting the names for your mailing
list, starting with your customer list.
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