Build Your House File

As the online market matures and acquisition costs increase, online marketers should seriously consider building their house files. A strong house file, especially one that includes email and postal addresses, helps build revenue.

Building a strong house list doesn’t mean getting someone’s email address, then bombarding her with information requests and marketing email until she clicks “Unsubscribe!” Like any marketing strategy, developing your house file is ultimately about building your relationship with your customers.

At registration, collect the minimum amount of information. Engage registrants as soon as possible and only then ask for additional details. Building a house file often involves investing marketing dollars, so have a well thought-out strategy for collecting information and a plan to derive the maximum benefit from it.

To build your file, follow these steps:

  1. Decide which information is most important for your database. Every piece of data should help you build your list and better tailor offers to meet customer needs. Each has an acquisition, analysis, and storage cost. How will you use each piece? For example, pharmaceutical companies qualify users by ailment, while music retailers qualify prospects by music style.

  2. Collect critical, initial information, including email addresses. There is a tradeoff between the information asked for and the number of customers who will respond. Since marketers want unlimited data, consider product category, purpose, and question wording carefully. Prospectiv uses surveys and polls to acquire customers. CEO Jere Doyle says, “Statistics show it’s better to ask questions upfront to acquire customers and modify results based on behavior over time.” He recommends using no more than five questions.

    To gather this data:

    • Optimize your site to drive acquisitions. Ask visitors to register on every page, and include an email preferences center link in the footer.

    • Ask readers to sign up in your newsletters, as recipients may receive them from colleagues.
    • Provide a link for registration in all outgoing correspondence, including email-a-friend, customer service, and order confirmation items.
    • Use third-party methods, such as co-registration, surveys, and email lists, to augment in-house methods.
    • Coordinate offline information, such as retail sales, phone, fax, and mail.

  3. Send email confirmations quickly. Ensure your newest users chose to be on your list. Because this is often one of your most-read communications, utilize it to start building customer relationships. Consider offering a promotion, a survey to find out more about your users, or other email newsletters. Remember to add this information to your house file! Bear in mind that your initial few communications are critical to engage users. “If the requested information isn’t relevant to your offering, users will unsubscribe,” reminds Stephanie Miller, vice president of strategic services at Return Path. This is critical or you will rapidly lose new registrants.

  4. Augment initial information by offering incentives. Often customers want incentives for providing personal information. Use additional content, discounts, or gifts to encourage customers.
  5. Collect postal address. Maintain contact with users who change email addresses. Online marketers often overlook the value of a postal address because of its higher cost. Over 30 percent of users change email addresses annually, as compared to the less than 10 percent who change terrestrial addresses. If you’re an e-commerce destination, make sure your sales database communicates with your house file. Having sent product, you can confirm the physical address. For other sites, if this information isn’t part of the customer interaction process, give customers a reason to share it with you. This may mean mailing users a bonus. Alternatively, use contests or sweepstakes, since users will often give real, usable addresses in hope of being mailed a prize.

Once you’ve created your list, utilize it to create revenue streams:

  • Add co-registration for related products. These can be exchanged for links on the counterpart site or to generate fees.

  • Rent or exchange your email and postal lists to/with third parties. Again, these arrangements may be compensated for by fees or as an exchange for access to your counterpart’s list. (Be sure your practices in this area are disclosed in your privacy policy!)
  • Add third-party package inserts to your shipments if you’re an e-commerce site. This can also be used to generate fees or as part of a business development deal.
  • Market existing names related products and offers. Use your house file to test adding new products and determine what your customers really want.
  • Use your postal list to reconnect with former customers.

As a marketer, know how much to invest to acquire new names for your house list. Among the metrics to monitor:

  • Site metrics. This includes visitors, registrations, and unsubscribes/cancellations. Track customer behavior to ensure it’s consistent with the data supplied.

  • Acquisition costs. Users acquired by different methods may perform differently. Know which perform best over time.
  • Conversion rates. Track rates at which registrants turn into customers. Note the characteristics of registrant groups that convert at higher or lower rates and their relative profitability.
  • Revenue per customer based on different behaviors or attributes. For example, one-time purchasers, multiple purchase customers, and email offer recipients all contribute to your bottom line. Know how much and at what margins to determine promotion ROI (define) on your promotions as well as the strategic value of the assets you’re building.
  • Develop a lifetime value analysis. Combine revenues and costs in the context of the time value of money to determine how much to spend to acquire new customers.

Online lists are usually developed over time. The data you collect should reveal the depth of your customer relationships. Customers must trust you before they willingly give you personal information. They often view this exchange as transactional, meaning they need to perceive some benefit, either in relevant information, a discount, or a gift.

The value of knowing your customer should increase your ROI, as you should be able to extend revenues with targeted, new offerings and cross marketing. Investing in your house list yields returns in direct sales and ad revenue, as well as in indirect sources, such as opportunities for co-registration, list rentals, and package inserts.

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