What’s a Household?
Your marketing department knows what it considers a household, but do you?

Terry Moriarty                
June 1, 1999, Volume 2 -Number 8

In my last column ("Structuring Organizations," May 11), I explored how you can use the business party and relationship patterns to represent an enterprise’s organization chart. The internal units, job positions, and people who fill those positions are all represented as business parties. The assignments of one unit to another, job positions to units, and the people who fill the job positions are all represented as business party relationships. However, these patterns do not apply exclusively to the business world. You can also represent the relationships that exist among individuals through the business party and relationship pattern.

People are organized into a hierarchical structure, known as the family tree. Similar to the organization chart, the family tree identifies the marriage and parentage relationships among the family members. In the dynamic model, each type of family relationship is represented as a business-party relationship category. People assume the roles in these relationships, such as spouse in a marriage and parent and child in the parental relationships. You can derive additional relationships from this knowledge, too, such as sibling relationships.

Most organizations are not interested in your family tree’s intricacies. They are interested in your household, in the belief that for marketing purposes, people who reside in the same house represent a unit of consumption of products and services. Companies that provide consumer products and services want to understand a household’s configuration because all the members can influence the purchasing decision.

As an example of how organizations believe that household relationships influence the decision to buy specific products, consider how many companies use their commercials to influence a household’s children so that their parents will purchase specific products. One regional airline is currently offering free flights for children if their parents purchase the airline’s Disneyland getaway vacation package. The advertisement features a child trying to make reservations for the trip. Likewise, a car manufacturer has made children’s influence the focus of a minivan advertisement. The parents and their children are meeting, each with their own lawyer, to negotiate the features of the minivan that each stakeholder wants. The com-mercial claims that the company’s minivan provides the optimal fit for all the needs of this household.

Defining the Household

When an organization decides to market its consumer products to households, the first challenge is to define exactly what a household is. The question is, how much of the household makeup should you include in a marketing campaign? Depending on the nature of the organization’s industry, product line, and target market, the definition of the term "household" can vary. Within the mass-market customer segment, definition may span from just a residential address to the exact name of the head of household. One company is totally satisfied with mailings to "Occupant" or to "The Moriarty Household," but another is only willing to address the mailing to "Ms. Terry J. Moriarty." Until the company has collected the name of at least one person in the household, it will not include the household in a mail campaign. The same organization may use different business rules within different market segments. For example, a video store may be willing to mail its special offers to "The Moriarty Household" with the hope that anyone in the household will respond. However, the store may decide to exclude its best customers from this mass mailing; instead, it may direct a special promotion to the account holders of those best-customer relationships, referring to each customer by name.

When an organization defines its requirements for campaigning to households, it must determine which people constitute a household. Again, different lines of business may have different definitions for the term "household." One may be interested only in households where all the people living together share the same last name, but another may want to consider anyone living together in a household, even if the last names are different. A third line of business may be interested in households that span different locations, such as a family in which a child is away at college. As business analysts, we may be frustrated with these seemingly different definitions for the same business concept. How can we accommodate them all?

To overcome the dilemma of these seemingly conflicting definitions of a household, offer your subject matter experts (SMEs) a standard definition, such as one from Webster’s New World Dictionary, version 1.0 (Accent Software International and MacMillan Publishing, 1997): "A household is the person or persons who live in one house, apartment, etc.; variously, one person or a group, esp. a family." The SMEs will usually all agree that this definition is a good starting point. As the discussions continue, it usually becomes apparent that the SMEs pretty much agree on what a household is, but that each line of business may be interested in different household configurations. When you get your SMEs to recognize that they have different configura-tions, not different definitions, you can start determining which household configurations are of interest to each line of business.

Using Scenarios to Define the Household

Scenarios provide an excellent technique for discovering the household configurations. For each configuration, a scenario is developed that includes people who match the configuration’s description. The first configuration presented is usually the 1950s version of a nuclear family: same last name living at the same address. The man is considered to be the head of the household. At this point, you should explore what function the address has in determining what constitutes a household. What is most important to your organization: the people who live together, independent of the actual address, or the people living at a specific address? If a household moves as a group to another address, does marketing consider the group to be the same household? If so, you must have tracking techniques to follow a household as it moves from one location to the next. Today, many organizations lose the details of a customer relationship when the household moves because more importance is placed on the geographic location of the household, rather than the people who make up the household. The enterprise may think it has lost a customer and acquired a new one because its corporate knowledge base isn’t able to identify households that have simply moved from one house to another.

Likewise, what happens if a household configuration changes? A daughter can go off to college. A son gets married. An elderly parent moves in. To what degree should information be available about the evolution of a specific household? In all likelihood, the son and his wife represent a new household. But should his household be linked to his parent’s, so your enterprise can understand the depth of customer relationships spanning locations?

You also need to examine other household configurations to ensure that you’re exposing all the subtleties of the household concept. Does your enterprise want to consider people who live together but have different names to be a household, such as roommates at college? A telecommunications company will be interested in this household because these people may share the same telephone, and there is an opportunity to offer additional phone lines to the group. However, a bank is probably more interested in the "extended" household existing between the roommates and their parents because such a configuration represents a potential consumption unit of banking services, such as student loans, student credit cards, and checking accounts.

You can also explore many other aspects of household configurations. Does a household exist if your organization has no knowledge about the people living at the address? Can a household have only one person? Or is two considered the minimum number of occupants in a household? How many households do you count when the same people own two houses? Does the household include home-based businesses? Can the same person be a member of multiple households? Can households be combined into a "related household" hierarchy? For example, in the roommate situation, should each person be considered a member of his or her own household that is incorporated into a larger household that includes all the roommates’ individual households? In this case, marketing has the flexibility to choose at which household level it wants to conduct a campaign: the individual level or the wider, group household. After answering these questions, your SMEs will be able to paint a better picture of what they really mean when they use the term "household."

You can use the business party and relationship pattern in conjunction with other components of the dynamic model to represent the household configuration. Because a household is a group of people who come together for a particular purpose, the household satisfies the criteria necessary to be considered a subtype of the organization business party. Household members are linked through individual business party relationships of "household membership." The household business party assumes the role of "household" in the household membership relationship. You can accommodate an evolving household by adding or deleting household membership business party relationships as people join or leave the household. After you have implemented the business party and relationship pattern in your customer relationship management systems, the challenge shifts to developing techniques for keeping your organization’s knowledge base in sync with your customers’ households as they evolve—but that’s a topic for another article.

Terry Moriarty, president of Inastrol, a San Francisco-based information management consultancy, specializes in customer relationship information and metadata management. She authored Enterprise View (originally the Repository Report and later the Data Architect) column for Database Programming & Design. You can reach her via email at terry@inastrol.com.