Database 

There is an elusive demarcation line between database marketing and invasion of privacy. But where is it? How far can we go before we stumble over the privacy trip-wire and infuriate, rather than motivate, prospects?

The dictates of good sense suggest we not violate the sanctity of the prospect’s bedroom, nor should we reveal ourselves knowledgeable about his economic woes. We would be wise to stay away from matters involving pharmaceutical habits, deeply held religious convictions, medical disabilities, and sundry skeletons in the family closet.

But is it okay for me to know – and reveal my knowledge of — his reading habits? Are his hobbies and recreational pursuits off limits? And dare I suggest that I have deduced his political persuasion by virtue of the number of guns registered in his name? This all gets touchy, but the temptation is great.

Database marketing is a potent by-product of the information revolution. If I apply database overlay techniques effectively, I save money by narrowing my targeting. I make more money from each mailing because my offers and creative propositions are better tailored to the unique characteristics of each target audience, if not each individual within the targeted group.

Yet the privacy debate rages on, and, at the very least, we tread uncertain waters when we overlay database "A" with database "B" to create a penetrating database "C." Pushing the limits of propriety is ultimately an exercise in subjective judgment, but we never know for sure until we try, and taking chances by mixing data and marketing messages is an alchemy that belies simple formulas.

Would you be offended if I, a stranger sending you a piece of mail, suggest I know the name of the chief executive of the company employing you? Upon first thought, this is not an intimidating idea. If you work for IBM, how threatening would it be if I told you that I know Lou Gerstner is the CEO? IBM’s CEO is public information. What if I imply in my letter that Lou believes in quality ... or accuracy? Is making this linkage a threatening proposition? Probably not ... but then, think again...

A software company sought my help to develop a new direct mail approach. The company’s primary product is a software program that works as an add-in to Microsoft Excel, and the program helps executives conduct "What-If" analyses.

To fully understand my conundrum, you first need a simple explanation about the program.

Let’s assume you want to forecast the gross profit of a new business after one year of operation. You "run the numbers" in your Excel spreadsheet and come up with a conclusion. You predict a gross profit of $25,000.00 before state and Federal taxes.

Would you bet your future on this single number?

The most prudent course would be to create a probability distribution of potential levels of gross profit, with each target prediction receiving a probability. There may be an 89.4% chance at the 95% level of confidence that your enterprise will generate $25,000.00 in gross profit. That is a more meaningful and prudent way to present your analysis to management, wouldn't you agree?

Anyway, the prospect for this software product can be found in many industries, from finance to petroleum exploration, but these people are difficult to locate. One list we selected for testing was subscribers to Investment Advisor. Published by Dow Jones & Co., the newsletter targets financial planners, security investment advisors, security analysts, and brokers; the newsletter provides editorial articles, investment advice, and strategic tips.

Once we chose prospect lists, the next task was to overlay the names of corresponding chief executives. We simply asked a computer to match each prospect on the variables of company name and ZIP code with a company president’s list that we obtained from American Business Information; this list also provided company names and the headquarters' ZIP codes for matching purposes.

Now imagine, for a moment, that you are a financial analyst working for Bank of America. Your name is Kim Snow, and the hypothetical president of Bank of America is Jane Jenkins. You return to the office from lunch to find a window envelope in your in-basket bearing the following terse copy message:

"Kim Snow, since Jane Jenkins is as concerned as you are about accurate forecasting and risk analysis decisions ..."

Incredulous, you tear open the letter to read:

Dear Kim:

What would it be worth to Jane Jenkins if you increase the accuracy of your decisions by 10%? How about 25%? What if you double your effectiveness?

Although the future is difficult to foresee, I predict your next "What-If" analysis will result in better insights. Others, such as Jane Jenkins, will place more confidence in your analysis. You’ll make better decisions...

Did we cross the demarcation line into enemy territory? Does juxtaposing your name with the president of the company serve to get your attention, or did this technique offend you? I suggest it depends.

Rob Jackson and Paul Wang, in their book Strategic Database Marketing, put the relative nature of this issue into perspective:

"Consumers seem to be split on this issue of data. If an offer is particularly relevant to them, they are more interested in hearing about it from the marketer. However, they remain concerned about the extent of the information that the marketer keeps about them. We feel that consumers believe database marketers have significantly more information about them in their databases than they actually do."

The results of the software test marketing campaign were inconclusive. Order response was below 1%, but this was not necessarily a deleterious consequence of the novel database overlay technique.

The software has not established credible top-of-mind awareness. The prospect is truly a needle in a haystack. The price point of $395.00 rejects impulse purchasing. The offer of a bonus software program designed to help improve negotiating skills was interesting ... but compelling? Even the "kicker" offer of free overnight shipping had some value, but enough to encourage someone to spend $395.00 on a software product with narrow functionality?

I called a random sample of the original mailing list – those who had not ordered – and found a mixed bag of reactions. Some had set the package aside to peruse later. Some remembered the package and were amused by the association between their name and the name of the company president. Some didn't even recall receiving the package.

The president of my client’s company, the executive whose signature appeared on the direct mail cover letter, received a few flaming telephone calls.

One caller, a bank president in Phoenix, was livid. An underling had received the mail package and innocently asked the bank president if he endorsed the software. The bank president had never heard of my client’s company. This presumption flamed his ire, and so my client received an earful of vehement criticism. The bank president threatened to notify the Better Business Bureau and promised that his bank would never buy software from my client’s company.

We learned that marrying two or more databases is risky, even if creative overlays offer tempting ways to grab attention. Nevertheless, my client concluded that the test was worth the risk in spite of likelihood that "clever mail" invites angry reactions. Many people – probably the majority – will tune out all but the most probing interference with their perceived privacy. And a few, hopefully a better-than-break-even minority, will react by ordering.

    Within the boundaries of propriety, that is what it’s all about.