Even the most reclusive of hermits gets junk mail.
Chances are, it is addressed "Dear Resident." Or it misspells his name while rhapsodizing that he may already be a winner. Or, better yet, it changes his gender with one misplaced honorific: "Dear Mrs. John Brown ... "
It's true -- some companies are too cheap or too busy to get your name right.
But many more these days are getting it right and going much further. They're using high-tech computer programs to reach out and really touch their target audience with an advertising message tailored to them.
With a sophisticated computer data base, any company can find out who you are, what you earn and how likely you are to buy their product or service. Data base marketing is a fast-growing and powerful tool businesses use to get to know their customers or potential customers better.
"It's been one of the biggest changes to hit direct marketing," said Donna Kramps, a spokeswoman at the Direct Marketing Association in New York. "You use a data base to enable direct marketers to figure out who their core markets are and to cut down on mass mailings."
Tampa-based Okra Marketing Corp. is one of a few national companies that concentrate on providing businesses with the computer services, software and hardware to manipulate data bases for sophisticated marketing.
Okra clients use their personal computers and/or mainframes, or they can use Okra's equipment. In nine years, Okra has grown from a four-man partnership to a $20-million company with 123 employees. (The name came from the first letters of the four original partners' last names.)
John P. Kelly, a co-founder and president, attributes the growth to the power of crunching numbers.
"Data base marketing is beyond target marketing," said Kelly. "It's really understanding who the prospect is and what products and services they should buy and building a very targeted, personalized message around all that information and presenting it to them in a very intelligent way. It can be simple things or very complex."
The "A' list
For instance, Kelly recalled how targeted marketing and Okra's assistance helped launch a premier golf course called the Governors Club in Chapel Hill, N.C.
The developers had 1,800 home sites to sell, he said, and needed to find people who are "wealthy, retiring, who like golf and the Carolinas."
Okra and the developers first bought subscriber lists from magazines likeI Golf DigestP. Then a company called Lifestyle Selector sold them a list of people who had bought golf-related items, with the buyers' age, income and other information.
(Lifestyle Selector gets that data straight from consumers, who provide the information on warranty cards whenever they purchase a big-ticket item. Lifestyle Selector is a clearinghouse for the cards.)
Okra took the information and created a profile of the potential golf-course home buyer. And it ran that model customer through the lists it had on hand, coming up with 300,000 candidates for mailings.
But that many mailings would be too much to pack a real marketing punch into a direct-mail campaign, Kelly said, so Okra split the list into three kinds of home-buying prospects.
"A" prospects got a piece of turf with a golf ball, a tee and an invitation for a free round of golf. "B" prospects received a brochure offering a free round of golf. And "C" prospects got a letter inviting them to send in a response card to get a complete brochure.
"They couldn't afford to send an "A' package to everybody," Kelly said.
Until recently, banks, not real estate developers, have been Okra's bread and butter. NationsBank is Okra's largest client, but Okra also has reeled in major banks overseas, including the Royal Bank of Scotland, Absa Bank in South Africa and banks in the Netherlands, Belgium and France.
In the past three years, though, the company has tried to grow closer to home. Its newest marketing clients include hospitals, telecommunications companies, stock brokerages, insurance companies, retailers, newspapers and catalog companies. Its client base now exceeds 300, with financial institutions accounting for about 85 percent of Okra's business.
Not just number crunching
Ironically, banks were one of the slowest industries to plunge into direct marketing, but now that they're doing it, they are among the most advanced users of data base marketing.
In the 1970s, banks were "crunching numbers" on their customers, but purely for marketing research purposes, Kelly said. They were trying to divine the answer to such mysteries as where to put branches or ATMs. The only times they consistently talked to their customers were through surveys of the "how-are-we-doing?" variety.
By the mid-1970s, banks got into "geocoding," appending census tract numbers to their customer records to make some assumptions about their customers based on which census tracts they lived in. Later, companies like Claritas Inc. in Arlington, Va., began generating "lifestyle coding systems" that described people based on their census tracts.
Lifestyle coding separates neighborhoods into catchy categories: "Books and beer" might describe a college town, while "furs and station wagons" may describe a bedroom community like Greenwich, Conn., for male white-collar workers and their stay-at-home wives.
The phrases are catchy, and the designations are many. There are about 62 lifestyle codes, and this data base marketing tells banks whom to target for additional financial services.
"They're not going to advertise a $100,000 CD offer to somebody who has an average checking account balance of $18," Kelly said.
Banks identify their wealthier customers with a technique called modeling.
Modeling means drawing a picture of a potential client using information that didn't come from the person himself. For instance, most people's income is hard to obtain, but their home value and auto registration data can tell something about their income range, Kelly said.
Banks also may use information customers supply about themselves, but that information comes in many formats -- checking and savings account files, CD purchases, mortgage loan applications and credit card data, he said.
Privacy-minded people can take comfort in knowing that credit card data is usually summarized for marketing purposes, keeping within the framework of privacy laws, he said.
Even more powerful for data base marketers is an emerging form of computer modeling with "neuronetwork" capabilities.
A neuronetwork is like a data base that keeps learning as you feed it information.
For instance, if a catalog publisher sends out an estimated 50-million catalogs a month but through data base marketing eliminates the 5 percent who are least likely to buy, it could save postage on 2.5-million catalogs.
Data base marketing programs can show a company its most profitable and least profitable customers and explain why.
"In reality, sometimes the most affluent customers are not the most profitable, while so-called modest accounts may actually produce a better return," said Mark Schultz, Okra's assistant vice president of client relations.
Traditional direct marketing is considered successful if 1 percent to 2 percent of a group responds positively to a direct mail pitch. Now, with data base marketing, companies should expect at least a 4 percent or 5 percent response, Okra's Kelly said.
A broadening base
Data base marketing is finding wide acceptance in many industries besides banking. For instance:
Hospitals can contact heart attack patients who may benefit from _ and afford _ their wellness programs.
Okra does a big business for phone companies proposing second phone lines or ancillary phone services to existing customers.
Newspapers want more subscribers, and they want to describe those subscribers to potential advertisers.
The Winston-Salem (N.C.) Journal wanted to target segments of circulation for several specialty publications. In one instance, the paper merged its subscriber list with a list of county pet registrations and published a quarterly called Paws, delivered free to targeted pet owners along with a free sample of pet food.
The publication was filled with advertisers who normally don't buy newspaper ads, including veterinarians, pet stores and groomers, said Martha Parent, data base marketing manager for Paws' publisher, Piedmont Publishing.
"Readers enjoy the piece so much," she said, "many have offered a voluntary payment of $5 to defray the cost of publishing."