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:
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.
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.
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 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.
Company name.
Street Address.
Suite number, is necessary
P.O. Box, if necessary.
City
State
Zip Code, five or nine digit.
Phone number (with area code).
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.
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 unique account number.
Individual's name.
Street address or P.O. Box.
Apartment number, is necessary.
City.
State.
Zip Code, five or nine digit.
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?
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.
Recency: Recency refers to the last time that
the customer ordered or responded to an offer.
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).
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.
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:
Number of employees in the business/organization.
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
Congectionery Stores." The SIC Manual is available through the
Superintendent of Documents, U.S. Government Printing Office,
Washington, DC 20402.
Annual sales volume.
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.
Items ordered from you.
With data in this field, you can select
customers for programs designed to get them to reorder an item,
or to order complementary or supply items.
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).
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.
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.
Household income.
Occupations of household members.
Number of people in the household.
Ages of the members of the household.
Genders of members of the household.
Marital status of members of the household.
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.
Political affiliation.
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 a future report,
we will explain the details of how to go about collecting the
names for your mailing list, starting with your customer list.
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