Database Marketing Six Basic Assumptions  Past is best predictor of future  Life Time Value (LTV) more important than any single transaction  Customers more important than non- customers  All customers are not created equal  Customers can be grouped (segmented) based on their characteristics  Good prospects are like good current customers

Database Design and Maintenance There are two main types with different objectives and purposes.

Hierarchical vs Relational Single record contains ALL info Excellent for high volume processing Limitations on data detail and revision Best used for operations data Mulitiple records in “Linked” tables Improved analyt- ical capabilities “Infinite” detail data accumulation Best used for marketing data See Exhibit 3-2, page 52

Match Codes Allow Merge/Purge Purpose: Faster processing to ID duplicates on two or more LARGE files Example Address: James E. Coleman 1840 Wentworth Drive Montgomery, AL Match Code: AL6106CLE1840J75 Explanation: AL: state 6106: last 4 zip code CLE: 1, 3 & 4 positions from last name 1840: first 4 street num. J: first initial 7: character count of last name 5: character count of first name

What To Do With Duplicates? Eliminate from new lists so you don’t pay for names you already have Eliminate from existing lists to prevent duplicate mailings ID “multi-buyers”: people who buy from numerous DM companies are more likely to be good prospects

Database Maintenance Duties Nixie removal  Undeliverable or “no forwarding address” NCOA file comparison  National Change of Address from USPS Routine updating of record status  Old data is expensive and misleading Security  Would your competitors like to have this info?

Database Maintenance Duties DMA mail & telephone preference list  DM companies should always drop these names from their lists.  Telephone Preference Service, or Direct Mail Preference Service Direct Marketing Association P.O. Box 9014 Farmingdale, NY  Preference Service:  FTC ‘Do Not Call’ list.

Customer Profiling The better you ID current good customers, the better your prospecting will be. Beware of the “equal effort over time dilemma”  Certain types of customers appear better because your efforts concentrated on them in the past.

Customer Profiling Internal: if you already have RFM, demographic & psychographic data External: SMRB reports & profiles Enhancements: running your file against external demo/psycho DB’s Environmental: census based ZipCode info for consumers or SIC code data for businesses