As catalogers try to get more value out of their mailing lists, there's been a growing interest in data overlays. More specifically, mailers are interested in overlaying demographic data, such as income, ethnicity, and profession, and psychographic data, such as shopping preferences and buying behavior, onto their house files and prospecting lists.
The additional information, acquired from list firms and service bureaus, gives catalogers a fuller description of customers and prospects, one that makes for more-accurate modeling. Such data typically cost $2/M-$10/M for the overlay variable, depending on the type, says Geoff Batrouney, executive vice president for New Rochelle, NY-based list firm Estee Marketing Group. In a few cases, Batrouney adds, data providers might charge a flat fee of $10,000-$25,000, depending on the size of the file and the number of attributes being appended.
Minnetonka, MN-based general merchant Fingerhut finds demographic overlays helpful "when we don't have as much behavioral history with customers," says director of business intelligence Randy Erdahl. Such information is scarce on new customers and buyers who have placed only a few orders.
Some mailers have found that running demographic and psychographic overlays on their databases reveal untapped markets. "We can make sure we know who are customers are and know who we're targeting" says Liz Plotnick-Snay, chief operating officer of Gooseberry Patch, an $18 million gifts cataloger. "We also use parts of these studies to find from what other product categories our customers are buying." Delaware, OH-based Gooseberry then rents lists from marketers in these categories.
Business-to-business mailers are also making overlays work. A b-to-b cataloger can run demographic overlays on customers to determine, among other things, how many computers of a particular type are in a given office, says consultant Mary Ann Kleinfelter. These overlays, or "firm-o-graphics" as Kleinfelter calls them, "can help if you're selling products for a certain type of computer, for instance."
If you rent out your house file, adding overlays to those names could also increase your rental income. In many instances, "we overlay psychographics, such as business and personal vacation data or various hobbies, to a high-tech list," says Theresa Horn, senior vice president of the list brokerage division of Cos Cob, CT-based 21st/AZ Marketing Services. Appending such data then enables her to promote the lists to companies in different product categories.
Adding zip with zip codes
In addition to standard demographic and psychographic overlays, Horn recommends zip code models to enhance response. Whereas demographic and psychographic overlays help match an assortment of buyer characteristics, zip code models can match names based on consumers' likely wealth. "We can narrow down a specific geographic to create deciles of targeted prospects based on various socio-economic factors, such as income, ethnicity, profession, and family status," Horn says.
During the past year, Fingerhut has been using data provider R.L. Polk's lifestyle clustering concept, which breaks down geographic data to the household level. "That's been one of the biggest breakthroughs making this data more useful for us," says Erdahl, who applies demographic overlays on Fingerhut's house file once a year.
Erdahl would like to overlay psychographic data as well, but he hasn't been able to find the information he has in mind. "Anything that would give us a little more psychology behind how customers shop, what motivates them to shop, their attitudes toward the use of credit, and where they do their shopping would drive our business better."
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