Catalogers are Turning to the Co-op Databases for Prospecting
I-Behavior and Prefer Network both model on the SKU level, and for niche mailers this has been a critical element to making these databases work, although they have fewer members, says Belardi. The difference with SKU-level data, says Wunderman: If a buyer purchases children's home furnishings from a gift catalog, it will differentiate that purchaser from a typical gift buyer.
Strategies for Success
The first step to effectively using information found in the co-op databases is deciding which co-op(s) to participate in. Examine each co-op's modeling techniques, the recency of their data and the number of members, suggests Belardi.
In addition, the following strategies can give your co-op mailing efforts the best chance for success.
1. Test. "Like all direct marketing, this is as much an art as a science," says Wunderman. "Testing is the only way to prove the science of it."
To test effectively, Experian's O'Neil advises, "Create different cells, and then run them head to head. Take 10,000 names from a half dozen cells, and go with it."
Since co-ops may offer more than one model, look into testing various models. Schmid explains, "Abacus, for example, has a basic Chaid and Synergy model, but there also are other more sophisticated models they're developing."
Also ensure that you have statistical reliability and validity in the size of the models being tested, adds Schmid. "Think of the 'rule of 100,' which states that every test side should have a minimum of 100 responses to be projectable for the future."
2. Consider costs vs. results. Prove the financial viability of mailing co-op names through testing. Says Crutchfield's Michie, "In terms of the additional costs of using the alliance data, it's a question of testing. We're constantly keeping an eye on the costs versus returns we're getting."
He recommends that you look at the costs in terms of the response rates you get. "That's the only way to determine if $80/M is too much to pay."