Making Money From Data Processing

By Martin Rides

You might consider data processing to be a necessary evil. An unfortunate and expensive activity you have to undertake to sell direct mail. However as clients continue to search for increased response rates and look to limit the potential for bad press, it is time to start bringing data processing to the front line of your business.

Forward thinking mail producers like Pepper Communications have made Lean DM a key differentiator. Jude Whitford, Managing Director of Pepper was quick to see the potential of Lean DM and it’s having a real impact on his bottom line.

‘We have won 2 sizable new clients recently by focusing on Lean DM and the data services we can offer with Cygnus. Once we started educating our prospects and clients about what was possible, they were blown away.’

Jude Whitford, Managing Director Pepper Communications

For Pepper and other Lean DM adopters, the conversation is no longer focused solely on the price of the job. With 20 million inaccurate mail pieces sent every month direct marketers are more receptive than ever to the identification and removal of waste in their campaigns. After all nobody wants angry mail recipients barking at them over the phone or their campaign blunders published online.

Charging for data services can be difficult to come to terms with for the eager to please mail producer. When you are competing for a job it can be quite tempting to throw in the data processing work free of charge to help close the deal. However the best mail producers don’t give away their highest value service, they have found ways to explain and profit from them. Some of the most common approaches to selling data services are

  • Monthly Retainers – a flat monthly fee to undertake all required data processing and data quality work. This method is most appropriate when maintaining suppression files for clients and running regular complex jobs. Retainers are the safest way even out the peaks and troughs of work and offset your core data processing costs of people and software.
  • Per Job Fees – a data processing charge either as a flat fee or on a sliding scale relevant to the complexity and processing time required. This charging arrangement can suit clients with a variable quantity, complexity and frequency of jobs and for some clients will be more profitable than a retainer.
  • Hourly Rates – for clients eager to ensure they are getting value for money, it can sometimes be necessary to break down data services at an hourly rate. If this is the arrangement you opt for then it is important to ensure your hourly rate incorporates all of the associated data processing costs and is based on a credible level of potential billable hours per month.
  • Royalties – Suppressing and tracing records will likely involve paying royalties to either your software vendor or the file provider. These royalties offer an opportunity to mark up and profit on a transactional level from your data processing work. It is best practice to combine royalty mark ups with one of the other charging methods mentioned above.

Lean DM is already helping mail producers like Pepper win new business, secure client contracts and increase profits. Why not download your free 30 page introduction to Lean DM and get star ted today.

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