Assumption 2: Timely and Relevant Offers

The second assumption is wrong for a similar reason. Do you eat because you are hungry, or because you received a timely communication telling you that a particular restaurant was having a special on lobster dinners? Of course, if you are hungry, you enjoy lobster, and you have the time and money to go to that restaurant right now, the offer would be a delightful blessing. But the warehouse cannot contain that information. Mass marketing on TV showing people eating delicious lobster dinners at a low price can work wonderfully. The image sticks in people’s minds and will be recalled the next time they are hungry. You don’t need a warehouse to design and place such ads. Mass marketing works very well and is a lot cheaper in terms of sales per dollar spent.

Of course, there are situations in which a timely and relevant offer can make the difference in a sale. Banks know a lot about people’s demographics and behavior. They can predict the probability of a particular customer’s buying a particular product and the lifetime value that the customer would produce for the bank if it were to offer the product and the customer were to accept the offer. This also applies to automobile companies that have customers on 3-year leases, and to scores of other situations. But for most of these situations, good old database marketing will work just fine. We can pick out all the people who have lived in their homes for 5 years or more and do not have a home equity loan, and send them an offer. It works. We are marketing to segments. We don’t need a warehouse or one-to-one marketing to be successful.