The Next Step in Database Marketing

Citation

Sachs, W.S. (1998), "The Next Step in Database Marketing", Journal of Consumer Marketing, Vol. 15 No. 1, pp. 198-199. https://doi.org/10.1108/jcm.1998.15.1.198.1

Dick Shaver’s The Next Step in Database Marketing weaves together diverse strands of thinking and doing with respect to direct marketing. First, the author analyzes current segmentation practices. Concluding that these are grossly inefficient, he proposes a new system which he calls “Consumer guided marketing.” Second, he then outlines how to implement this system by direct mail.

The book is divided into two parts. Part I traces the evolution of direct marketing from its mail order beginnings to modern, computer‐based segmentation. Shaver correctly puts his finger on the greatest weakness of this system ‐ muddied clusters which fail to differentiate would‐be buyers from non‐buyers. This, together with more frequent solicitations, effectively thwart marketers from realizing the once rose colored promises of the computer age. Typical prospect mailings yield a meager response of only two percent!

Low response is a gnawing problem widely recognized by the direct marketing industry. But what can be done about it? The conventional response is to narrow cluster size, hopefully to segments of one. In this way, potential non‐buyers will not be mixed with buyers.

So far, this remedy has been more theoretical than practical. Despite the ability of research firms to supply more data about individuals, unwanted solicitations, known as junk mail, give no evidence of decreasing. Third class mail, still heading upward, has already topped 40 million pieces, while response rates have not budged from their 2 percent average.

Shaver lays the failure to improve results on the very door of market research itself. Companies generally use third‐party data, and such information, he maintains, is inherently inferential.

Shaver proposes to go directly to the source of purchasing ‐ the customer. Ask individuals about their “wants and needs.” Knowing each person’s predilection, he argues, will minimize mailings. Databases will tell what to say to each different customer, enable marketers to make more effective offers, and raise response rates “to all‐time highs” (pp. 73‐8). This technique, we are told, will:

1. 1.

   produce a “quantum leap” in customer benefits and corporate profits;

2. 2.

   end all junk mail “as list segmentation and statistical modeling become obsolete”;

3. 3.

   permit companies “to realize reduced mailing costs, higher response rates, and extended customer life‐cycles; and

4. 4.

   allow a company to carry on personal mailing dialogs with each customer.

Actually, “needs and wants” research has been around for close of half a century, with mixed results at best. At any rate, one has hardbored such sanguine expectations for mail surveys, nor proposed marrying them to databases.

Shaver seems well aware of the negatives that many in the industry ascribe to his proposal. He answers his critics in Chapter 5, entitled: “Why hasn’t this solution been tried before”? (p. 85).

A major objection to the use of mail surveys is low returns. To overcome this shortcoming, Shaver advocates two follow‐up mailings to those who do not answer. He asserts marketers can obtain a 90 percent plus return from “any random segment of the consumer market” (p. 85). He reasons that if researchers get a 30 percent response to the first mailing, two more will yield 90 percent. As evidence, he cites political solicitations.

But political fund‐raising does not represent returns from a random population segment. In addition, each follow‐up yields a lower response than the mailout preceding, usually by at least 50 percent.

A second problem of mail surveys relates to cost. Depending on the size of the universe, mail questionnaires are costly and can eat deeply into profits. The author’s answer to this criticism is MCI’s “Friends and family” program, which by all accounts was highly successful in attracting new customers.

Understandably, profit information is proprietary, and companies keep it to themselves. So hard statistics on incremental costs and profits fail to support the “quantum lean.” But this raises another issue: is “Custom‐guided marketing” the only way to success? Surely, similar claims of successful promotions can be made for mass media campaigns in television, such as AT&T’s counter attack to MCI and Sprint’s “10‐cents‐a‐minute” campaign.

Part II of the book deals with implementation of Shaver’s system with direct mail. This section, however, goes far beyond the application of mail to “Custom‐guided marketing.” It should, indeed, be of interest to all mailers, irrespective of strategies they employ.

The author, a direct mail specialist with wide experience, elaborates on the best practices of his craft. Topics cover the main aspects of the direct mail package: the envelope, the letter and the brochure. The mechanics of each element are handled in great detail, such as formats, mailing labels, stamps, copy length, graphics, and typefaces. Numerous well chosen illustrations accompany the discussion. Practitioners can learn a great deal from Shaver’s direct mail principles. If these were observed, perhaps fewer unsolicited mailings might avoid being consigned to the wastebasket without being read.

All in all, the book is well worth a read. Whether you agree or disagree with the author’s prescription of “Customer‐guided marketing,” his analysis and criticism of segmentation practices are thoughtful and well taken. It would do well for direct marketers to heed Shaver’s disapprobation of current practices if they are ever to break out of their 2 percent response rut, and yet realize the glowing promises of communication technology.