Use of Database Marketing

With all these new developments, you would think that catalogers would be in the forefront of database marketing today. You would be wrong. While every cataloger creates a house file of customers so that it can mail them catalogs and exchange their names with other catalogers, few catalogers have a marketing database system. Recent studies show that catalogers with sales of more than $100 million per year spend an average of $18,000 on database marketing. That does not pay the salary of even a half a person to do database marketing. Those with sales of less than $100 million spend almost nothing in this field. Why not?

To explain this, let’s define what we mean by database marketing. In modern DBM, a company keeps track of customer purchases and crafts special customer communications that are designed to build retention, referrals, loyalty, and cross sales. Why aren’t catalogers doing this?

The explanation lies in the nature of modern catalog operations. Catalogers have developed a universally successful method of operating. In theory, catalogs could be personalized, with Arthur Hughes getting a catalog containing things that the sender assumes he would be interested in, and Helena Hughes getting a catalog from the same company with a different selection of products. Several catalogers have tried this. It is technically possible. However, the increase in sales was disappointing. Personalization of catalogs is expensive, and so few catalogers do it because the increased sales from personalization are not sufficient to cover the cost of personalization. Catalogers print 500,000 or more identical copies, trying to get the per-piece cost as low as possible. They mail these catalogs to their house file plus hundreds of thousands of rented names. This method keeps the marketing costs to a minimum.