Strong databases are among the most essential of marketing tools, but obtaining accuracy sometimes can be hit-or-miss. In today's demanding economy, the use of cooperative databases—an amalgamation of ideal customer profiles gleaned from real transactions—is gaining favor among b-to-b companies because of its tendency to deliver more than its share of hits.
With a data co-op, a member company typically assembles various criteria and past purchases of its existing customers, and the database company then combs the databases of its other member companies for names that most closely match those criteria and buying patterns.
“Fundamentally, companies that are members of a data co-op contribute their own transaction data. If they don't contribute, they don't get [anything back],” said Suresh Vittal, principal analyst at Forrester Research.
“And the resultant database of prospects benefits from diversity,” Vittal added. “The data set is that much richer, with much more information that people can mine.”
The value of cooperative databases lies in the relative precision of identifying likely buyers, not merely prospects.
“The process of data co-ops is simple: When you build a profile of your current buyers, you can say, "Let's find people who look like our buyers but who aren't yet,' ” said Rich Frey, VP-new markets at cooperative database company I-Behavior. “Instead of selecting just by certain criteria, we let the transactions do the selections.”
Assuring data hygiene—in particular accurate addresses and suite numbers—is a major challenge for marketers using b-to-b databases, Frey said.
“With data co-ops, however, the transactions tell you who the customer is,” Frey said. “If someone has just spent money to have something sent to his address, we figure that's a pretty live address.”
One of I-Behavior's customers has found that data co-ops fit the bill well.
“Where names can be run through models, they most often can produce a better quality individual name or company that matches our existing customer base,” said John Neuhauser, marketing and circulation manager at Trainers Warehouse, a supplier of materials for corporate trainers, HR professionals and schools.
In addition to using cooperative databases, Neuhauser continues to rent lists of members of training and educational associations. Trainers Warehouse uses both types of lists when mailing its catalog 13 times a year, and promotional pieces another dozen times.
“The beauty of it is, it's a never-ending cycle,” Neuhauser said. “We get the data; then it gets put back into the cooperative and they spit it out again. It refines and refines itself and, over time, you'd expect it to improve. And yes, that's the case with us.”
A pioneer in the cooperative database field is Abacus, whose Site Level Data Overlay product, in true data co-op style, overlays all the transactional data of the Abacus co-op on an individual marketer's house file to identify prospects making similar purchases.
The value of the technique lies in the details, said Jeannie Green, VP-b-to-b group at Abacus, a division of Epsilon Data Management.
“Say you're looking at two brand-new prospects who both bought in July and each spent the same,” Green said. “At the contact level they look the same, but at the site level you can see that one company had many more people buying in categories that are important to you.”
Abacus, generally credited with creating b-to-b cooperative databases, has 400 participating companies in its cooperative, representing 1.5 billion transactions, Green said.
This month, database company MeritDirect and data quality and services company Experian announced the launch of ProspectPlus, a file of b-to-b buyers sourced from its b2bBase. ProspectPlus, searchable by multiple criteria, is open to companies that are not necessarily members of the b2bBase cooperative.
“This is becoming more popular among b-to-b marketers because money is tight and response rates are going down,” said Ed Larkin, VP-business development at MeritDirect, and head of its b2bBase data co-op product.
“Mailers need better performance from their lists,” Larkin said. “B-to-b marketers have traditionally been less comfortable with the concept of sharing buyer data, but in today's economy that's changing.” M