In housefile modeling, however, the story changes. Clients using Zip Code Forensics, a free tool that outlines the most productive zip codes, tell me that they are achieving 80% to 85% of the performance improvement seen via co-op housefile modeling. Here, however, the difference in cost is enough to turn the tables.
|Co-Ops||Zip Code Fr.||Base Perf.|
|Average Order Value||$135.00||$135.00||$135.00|
|Less Book Cost||$13,750||$13,750||$55,000|
|Less Co-Op Expense||$625||$0||$0|
|Profit Per Buyer||$1.25||$1.80||($2.75)|
In this example, Zip Code Forensics only gets us 73% of the improvement (you tell me that average number is about 82%) yielded by the co-op housefile model. However, at $0.025 per housefile name, you don't generate enough business to offset the benefit of the freely available Zip Code Forensics segmentation tool.
Unless your co-op is tossing in a bunch of goodies, you're better off using Zip Code Forensics to overlay against lapsed buyers. You went for the lower cost solution when you abandoned the list industry for the co-ops. Why not use a free tool instead of a low-cost solution?