Buying data to append to your housefile can seem like a risk. How can you be sure that your investment will pay off? And perhaps more importantly, how can you be sure you’re not squandering your IT department’s limited time in uploading the appended data?
Your answers to these questions will depend on how you plan to use the data you buy. Some data purchases, such as National Change of Address, have a clear and measurable return on investment (ROI). You can directly account for the expense of the data purchase and upload, then compare that expense to the new or additional revenue received.
Other data purchases are for strategic research and development. You likely won’t be able to rationalize the expense with a clearly defined ROI target, but that doesn’t mean the expense isn’t justified. You just want to have clearly defined reasons for buying the data and an action plan for using them.
Your Best Data Investment: NCOA
Regardless of whether you’re a consumer or a b-to-b cataloger, one of the smartest data purchases is National Change of Address (NCOA), because it’s one of the easiest purchases to cost-justify. Standard metrics indicate that a 3 percent hit rate pays for NCOA’s expense. (A hit rate is the percentage of address changes that result from the NCOA list-cleansing process.) Your file’s increased deliverability may boost your mailing’s revenue to cover the cost of the NCOA processing. Once you have a hit rate of more than 3 percent, you start making additional revenue that you otherwise would’ve left on the table.
But to maximize your investment in NCOA, you have to do more than just mail the new addresses: You have to upload the address changes to your housefile. Otherwise you won’t reap the full benefit of your data purchase. You would have to repeat the NCOA process (and its accompanying expense) the next time you pull your housefile.
A columnist for Retail Online Integration, George founded HAGUEdirect, a marketing agency. Previously he was a member of the Shawnee Mission, Kan.-based consulting and creative agency J. Schmid & Assoc. He has more than 10 years of experience in circulation, advertising, consulting and financial strategy in the catalog/retail industry. George's expertise includes circulation strategy, mailing execution, response analysis and financial planning. Before joining J. Schmid, George worked as catalog marketing director at Dynamic Resource Group, where he was responsible for marketing and merchandising for the Annie's Attic Needlecraft catalog, the Clotilde Sewing Notions catalog, the House of White Birches Quilter's catalog and three book clubs. George also worked on corporate acquisitions.