How to Build Profitable Private Prospecting Databases

A private prospecting database contains names and addresses of as many people as you can identify who would be potential customers for your products and services. The prospecting database is created by identifying appropriate lists, merging these lists, eliminating duplicate names, and organizing the remaining names in a relational database management system with query capability.

The advantage of a private prospecting database is that it contains a complete record of the actions taken by a firm’s customers and prospects over time. Here are some tips for building and using private prospecting databases to improve direct marketing results:

Base list selection on “nonresponse” history. When you rent mailing lists for one-time usage, you have records only of those names who respond. When you own a private prospecting database, you maintain a complete record of the actions — and non-actions — taken by everyone on the database. So not only can you target those most likely to respond, but you can save money by not mailing to those who are least likely to respond.

For instance, if you are doing a sweepstakes mailing to your prospecting database, you can suppress the names of all prospects who did not respond to your previous six sweepstakes mailings. You can also suppress the names of your competitors so they don’t get your mailings.

*Test a list before incorporating it into your permanent database. A large number of the names used in private databases are taken from mailing lists. But before you incorporate names from a list into your private prospecting database, test those names in a mailing outside your database. Only those lists that test well should be added to your database, assuming they meet your other criteria.

*Use database analysis to enhance mail plans. A software marketer, for example, mailed mostly to IS managers, thinking this was their primary audience. Database analysis confirmed that IS managers were the largest portion of the customer base, accounting for 43 percent of all sales. Other senior executives, such as CFO and CEO, were mailed to only infrequently.

But even though the company didn’t target financial executives, further analysis of the database showed that CFOs were the second largest portion of the customer base, accounting for 21 percent of sales. The software marketer was able to virtually double its prospect universe by adding many more qualified CFOs to its prospecting database, and increase its sales by mailing to these CFOs more frequently.

Analyze your database results by job title, industry, platform, size of company, state or region, and other demographics. Identify large audiences that buy your product but aren’t a priority in your current marketing plan, and mail them more frequently.

*Use demographic overlays to add information to your private database. A database or list company can take your private database, run it against large public databases, match names between your database and the public data sources, extract additional information from the public databases on each customer, and add it to your private database. You gain instant added intelligence on your buyers to enhance your database marketing efforts.

Insight Direct, for example, added SIC code, number of employees, gender, household income, age, and presence and age of children, socioeconomic status, whether the customer has a credit card, types of donations made in response to fundraising solicitations, and other types of mail order products purchased from other firms to its database of 934,000 computer products buyers using overlays.

Database enhancement via demographic overlay can directly translate into higher response rates. For instance, if Insight was to test a mini-catalog of children’s software, mailing only to current buyers with children can prevent waste and maximize response.

*Make logical connections between records. Data found in one record can be propagated onto related records, enhancing database information.

For instance, let’s say you market business software to companies running Windows NT. But most of the records in your private prospecting database don’t indicate computing platform. A few do.

You find that Joe Jones at XYZ Company is running Windows NT. Chances are, then, that his company has standardized on NT. You can cross-propagate this information, adding it to all records of people working at XYZ Company. Now these names will show up when you run the NT selection on your database.

*Think “out of the box.” Usually we search and manipulate the database to implement an idea we’ve already thought of, such as a special offer to customers who recently dropped their maintenance contracts or ordered $100 or more worth of goods within the last 3 months.

This is fine, but you should also spend time analyzing and looking at your database without a specific campaign or plan in mind. Often the data will suggest new marketing ideas. One high-tech marketer found that its control mailing was actually under performing its test mailing in certain geographic regions. In those zip codes, the test became the new control.

Another direct marketer was getting much lower response from Fortune 1000 companies than other companies to which it mailed its safety product catalog. The feeling was that the promotional-looking catalog was screened in the mail room and by secretaries in larger organizations.

The solution: The database was split into Fortune 1000 and non-Fortune 1000 firms. The regular firms received the standard catalog via third-class bulk rate mail, as before. But for the Fortune 1000 firms, the catalogs were placed in a plain envelope and mailed first class. Response rate among this group increased, becoming equivalent to the rest of the prospects.

Author: Stevan Roberts