Outline for Network Marketing Success

A database is more than a simple list of names andaddresses. What turns a list into a database is the additionalinformation, coupled with your ability to select names from orreport on the list using any combination of data elements.

In this report, you'll see some examples of the benefitsof developing and maintaining a database. Then, the specificinformation that a database can contain will be detailed.

BENEFITS OF A DATABASE

By maintaining your list as a database, you can segment inmany ways for targeting. Targeting improves the productivity ofyour offers. You can use a database to isolate the segment of yourlist most likely to respond to a particular offer. With a gooddatabase, you're not "mass-mailing" your offer to parts of yourlist that may have no interest in it (based on theircharacteristics). Because the number you're mailing is smaller,your response rate (number responding/number mailed) - onemeasure of productivity - should be higher. (And, of course,you'll save on printing and postage costs.)

Here are two simple examples of targeting using databaseinformation:

1. You're the owner of a neighborhood beauty salon. For eachcustomer, you keep a record (with dates) of all the servicesyou've provided to that customer. You're planning a specialpre-summer promotion on permanent waves for the month of May.
   
   Instead of mailing an announcement of the sale to yourentire customer list (many of whom don't have their hair permed),you select only those customers who had a permanent at leastthree months ago. In this way, you're targeting those customerswho are most likely to take advantage of your upcoming sale.
   
   
2. You're the dinner chairperson of a local fund-raisingorganization. Your mailing list is made up of a wide range ofcontributors, from those who've donated only a few dollars tothose who give annual gifts of thousands of dollars. For eachcontributor, you maintain a record of all past donations andfunctions he/she has attended, in addition to basic mailinginformation.
   
   

This year, you're asking for donations of $100 a plate forthe annual dinner dance. To get the best response to yourinvitation, you first target those contributors who were at lastyear's dinner dance. Then you target those who weren't at thedance, but who donated more than $100 in the past year.Depending on the response you expect from these first two groups,you may next want to target those names on your list that didn'tattend the last dance, but contributed $50 in the last year. Youmay even want to have a phone follow-up to the first two groupsbut use the mailing only for the third group.

A properly set up database can provide many benefits foryour business or organization. But the usefulness of a databasedepends entirely on what elements you include in it.

WHAT TO INCLUDE IN THE DATABASE

Depending on your type of business or organization, youwill want to include different fields in your database. Later inthis report you will see some examples of the fields that areappropriate in specific instances. For all businesses ororganizations, though, certain basic information is alwaysnecessary.

By including basic information in your database, you ensurethat the people or companies on your list are deliverable. Thatis, the mailings you produce using your list will get where youwant them to go - into the hands of the individual who is mostlikely to respond to your offer.

1. Basic information for Business Audiences
   
   If your audience is made up of businesses, you will needto include the following fields for each name on your list:
   
   
   1. A unique account number.
      
      This number should not be tied into any other informationabout the customer, for example, phone number or address, sincethis sort of information may change over time. The account numbershould never change throughout the life of the customer. Asequential numbering system is simple and effective.
      
      
   2. Company name.
      
      
   3. Street Address.
      
      
   4. Suite number, is necessary
      
      
   5. P.O. Box, if necessary.
      
      
   6. City
      
      
   7. State
      
      
   8. Zip Code, five or nine digit.
      
      
   9. Phone number (with area code).
      
      
   10. Job title or name of contact.
       
       Some business mailers maintain the name of the individualwithin the customer's business or organization. Others simplyuse the appropriate job title. The alternative you choose willdepend on the nature of your business and the amount of turnoverassociated with the position that is your contact.
       
       
2. Basic Information for Individual (Non-Business) Audiences
   
   If your audience is made up of individuals, you will needto include the following data for each name on the list:
   
   
   1. A unique account number.
      
      
   2. Individual's name.
      
      
   3. Street address or P.O. Box.
      
      
   4. Apartment number, is necessary.
      
      
   5. City.
      
      
   6. State.
      
      
   7. Zip Code, five or nine digit.
      
      
   8. Phone number (with area code).
      
      
   The basic information listed above is necessary to makesure that the names on your mailing list are mailable. But howdo you decide which names are more productive?
   
   
3. Data Elements to Evaluate - Recency, Frequency andMonetary Value
   
   Regardless of whether you're mailing to businesses orindividuals, there are three factors - recency, frequency andmonetary value - that are commonly used to measure the value ofa name.
   
   
   1. Recency: Recency refers to the last time thatthe customer ordered or responded to an offer.
      
      
   2. Frequency: Frequency is the number of ordersor responses that the customer has made since becoming acustomer (or during the last year or other specified timeperiod).
      
      
   3. Monetary Value: The monetary value is theamount of money the customer has spent since becoming acustomer (or during the last year or other specified timeperiod).
      
      
   How do these three factors determine the value of acustomer (the likelihood he/she will order again)?
   
   
   • The more recently a customer has ordered from you,the more likely he/she will be to respond to your next offer.
     
     
   • The more often a customer orders from you, the morelikely he/she will be to respond to your next offer.
     
     
   • The more money a customer spends with you, the morelikely he/she will be to respond to your next offer.
     
     
   All three factors - recency, frequency, and monetary value- are considered to be good indicators of whether or not acustomer is likely to respond to a future offer. But they are notequal. Recency is thought to be the best indicator, followed byfrequency and then monetary value.
   
   In order to use these valuable pieces of information, hereare the specific fields you need to maintain on your database:
   
   
   • For recency: The date of the last transaction withthe customer - the date of the customer's last order, purchase ordonation.
     
     
   • For frequency: The dates of all previous transactionswith the customer over a certain period of time.
     
     
   • For monetary value: The size (in dollars) of all ofthe customer's previous purchases or other transactions. (It isalso common to maintain the dollar amount of the customer's mostrecent order as the monetary value indicator.)
     
     
   In addition to evaluating the recency, frequency, andmonetary worth of your audience, you will probably find thatthere are many other important ways to analyze the names on yourdatabase.
   
   
4. Additional Information for Business Audiences
   
   If your audience is made up of businesses, there isadditional descriptive information, some specific to your productor offer, that could be valuable to have.
   
   You might want to consider storing some of the followingdata elements for each of the names on your database:
   
   
   1. Number of employees in the business/organization.
      
      
   2. Type of business/organization.
      
      The United States Government four-digit coding system, theStandard Industrial Classification (SIC) system, is commonly usedto identify businesses. For example, the codes 5211 through 5999identify "Retailers." Within that category, 5411 is the code for"Grocery Stores," 5441 the number for "Candy, Nut andCongectionery Stores." The SIC Manual is available through theSuperintendent of Documents, U.S. Government Printing Office,Washington, DC 20402.
      
      
   3. Annual sales volume.
      
      
   4. Credit status code
      
      The credit status code could be developed byyou, based on the customer's payment history or perhaps obtainedfrom a commercial credit report.
      
      
   5. Items ordered from you.
      
      With data in this field, you can selectcustomers for programs designed to get them to reorder an item,or to order complementary or supply items.
      
      
   6. Location.
      
      Is it a headquarters, subsidiary, branch,division, etc.? If you are making an offer that requires adecision by someone at the headquarters of a company, youmay not want to send it to the branch office (unless there areemployees involved in the decision too).
      
      
   7. Source of the name.
      
      This field is usually a code representing whereyou got the name. Assign a unique code for each referralprogram, publication advertisement, list, etc., you use to get anew name. Assigning a source code to each new customer allowsyou to evaluate the effectiveness of each technique you use to getcustomers or to collect prospect names.
      
      
5. Additional Information for Individual Audiences
   
   If your audience is made up of individuals, you maywant to collect information on the household unit, often the mostrelevant purchasing unit. Here are some suggestions fordemographic information that could be useful to you in analyzingthe names on your mailing list.
   
   
   1. Household income.
      
      
   2. Occupations of household members.
      
      
   3. Number of people in the household.
      
      
   4. Ages of the members of the household.
      
      
   5. Genders of members of the household.
      
      
   6. Marital status of members of the household.
      
      
   7. Information on property belonging to thehousehold:
      
      
      • Type of living quarters.
        
        
      • Owned or rented living quarters.
        
        
      • Number, make, model, etc. of each
        
        automobile.
      • Number, make, model, etc. of each majorappliance.
        
        
   8. Political affiliation.
      
      
   9. Hobbies and leisure time activities.
      
      

Now you know the secrets of how a database can turn yourmailing list into a valuable asset for your business ororganization. You understand what basic fields to include. Andyou have had an overview of what additional fields might beadded to the basic ones that make a list mailable. Be sure tocarefully analyze your own needs and to include information thatwould be of help to you in mailing smarter. In a future report,we will explain the details of how to go about collecting thenames for your mailing list, starting with your customer list.

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