Customer profiles drawn up by computers give marketers rifles instead of shotguns
An appliance store customer, receiving a bill for a microwave oven she had purchased, read at the bottom of the computer-generated letter: ''Why don't you come in and see our fine display of microwave ovens?''
This store lost a good opportunity for additional sales, says Robert J. Drummond, vice-president of Epsilon, a supplier of data-base marketing services in Burlington, Mass. What should have been typed at the bottom of the bill, he contends, was ''Come in and see our fine display of microwave cookery.''
People want to be recognized as valued customers, Mr. Drummond says, but this is ''difficult to do if you have 3,000 customers.'' In the past, companies have marketed a product based on surveys, which represent sample information, not specific information. Today, the broad customer categories and mass advertising that worked when consumer life styles were more homogeneous are apt to waste a chunk of the more costly advertising dollar, he observes.
Enter the computer - which can organize, analyze, and select specific customer information to enable businesses to aim promotions directly at small, specific groups of the company's own customers. Market research companies such as Epsilon generate and analyze data bases of buying patterns of a client's current customers. This, then, becomes a powerful marketing tool.
Before using such a data base, says Lyla Mussler, director of marketing planning at New York-based Hertz Corporation, ''we knew if rentals were up or down.'' Now, she says, the company knows ''what's happening to the people that rent our cars,'' who is renting, what specific type of car they rent, and how they respond to promotions.
In most instances 80 percent of a company's sales come from 20 percent of its customers, Drummond says. By using the computer to collect and segment this data and build a demographic profile of its best customers, Hertz can aim its marketing efforts at those who have the highest profit potential. The company can aim promotions directly at their most frequent customers, track the success of such promotions, and alter them to fit their ''core customer's'' life style.
''The account-management approach has always been available to industrial sales,'' says John A. Quelch, associate professor of business administration at Harvard Business School. This was especially true of large direct-mail companies , such as Sears, Roebuck, that could afford to set up their own data-base systems.
Now, Mr. Quelch says, ''reduction in time-sharing cost and the ability of managers to access that lower-priced marketing data via personal computers'' are bringing this tailored marketing option to smaller retail outlets.
Epsilon's Drummond says retail and financial-services industries have not yet taken full advantage of the customer information that streams into the office every day. Out of these industries, he says, will come many of his future customers.