Outsource Solutions: Database Marketing
What You Need to Know Before You Append
Alone, the transactional data in your customer database only will tell you how recently a customer made a purchase, how frequently he or she buys from you, and his or her dollar value to your company.
Appending psycho-demographic data to your house file gives you a more robust database. With a more complete representation of who your customers are, you can better tailor your offers and increase response.
When appending general data elements, such as age, income, home ownership or presence of children, contact a minimum of three data providers, recommends Bernice Grossman, president of DMRS Group, a New York-based database marketing consulting firm.
If you are looking for more niche data, where there may be only two or three providers, contact all sources, advises Jim Wheaton, a principal at direct marketing and data mining consultancy Wheaton Group and a co-founder of Data University.
Ask for a Trial Overlay
Most companies will tell you they have the best data. To determine what “best” means, ask each vendor to run a free test. Provide each vendor the same segment of your file to enhance, say 10,000 records, for a trial overlay. Then, compare the results.
If you are serious about improving your house file and have the budget for the project, vendors should be willing to run the test for free. “You are not looking for free data,” says Grossman, who advises you assure participating vendors that you will throw out the data provided by those companies who aren’t awarded the work.
To do an apples to apples comparison, Grossman suggests writing a set of specifications for the trial that is as complete as possible, and inform vendors that to be considered they must adhere to all rules. Tell all participants, for example, if you want them to clean your names or run the file against NCOA before data is overlaid. Specify which pieces of information you are interested in appending, or if you would prefer all the information vendors have on each customer record. Make sure you give all vendors the same number of days to do the test.
Next, analyze the appended data files. For each vendor’s file, determine:
• What is the overall match rate? How many of your names and addresses was the provider able to match at the individual level?
For each variable or data element appended, ask:
• What is its coverage? Of all the records the provider was able to find, how many pieces of information or what portion of the data elements you specified was it able to append? All things being equal, the higher the coverage the better, says Wheaton. However, he suggests marketers dig deeper to understand what lies behind the coverage rate. “High coverage based on overly aggressive matching criteria will inflate coverage at the expense of quality,” he cautions.
• What is its precision? If you are appending age, for example, is it a range or an exact date of birth? The exact date of birth, notes Wheaton, can be critical for some campaigns, such as an insurance company marketing Medicare supplemental insurance.
• What type of data is it? Is it self-reported, actual or modeled? Data providers may model several data characteristics to provide an inferred result. Income is a classic example, says Wheaton, who explains that characteristics such as age, home value, vehicle ownership and neighborhood census data can be used to generate an income estimate.
• What is the breadth of coverage? How many of your desired data elements was the vendor able to match? Well-known providers of general data usually have a large overlap between their databases. However, there are some differences. For example, says Grossman, one vendor may only achieve a 12-percent match rate on golf, which may be an important psychographic, whereas another vendor achieves a 47-percent match rate with the same names.
Check for Accuracy
Include a number of decoy files with the names and addresses of friends and family in your sample data file. When you get the overlay results or data back, ask them to verify the accuracy of the information appended to their files.
Wheaton also suggests that if, because of the nature of your business, your customers provide certain demographic information about themselves, you use it as a “reference file” to compare and contrast overlay data sources.
The selection of a data provider isn’t about who has the best file, says Grossman, it’s about “your customer data and the ability of an enhancement firm to find those names.”