All is well just south of Miami
Eduardo Alvarez is the general manager of a direct marketing agency in Caracas, Venezuela.
Eduardo and I first met in 1988. When I was in Caracas doing a series of seminars. At that time he was involved with building a database for a local direct marketing agency headed by another good friend - Jack Hardy.
Jack is an American who had lived in various south American countries, Venezuela specifically for the last 35 years. He got hot on direct marketing ... and brought Eduardo in whose back ground was computers.
Clients were not jumping into direct marketing. They certainly weren't jumping into database marketing. It's tough in a new marketplace where the direct mail delivery service isn't good, where the telephone operation isn't outstanding, where the population is 20 million people and where almost as much television from Miami is viewed as is viewed locally.
That is, there was no structure. There was not very much interest. There was a lot of education that needed to be done.
Education before sales
A fter a couple of years of batting around with a fair amount of success Jack decided to head back to the States. And Eduardo hooked up with a local advertising agency who wanted him to run a local direct marketing agency.
Most of the earlier accounts were those that were already on board at the ad agency. Most of the early programs were small. One of the more interesting ones was a loyalty program developed for a packaged goods company.
They had a variety of products, cereals and other related grain products. Each bought at the grocery store level.
The idea was to build a loyalty program. To build a club concept. Coupon ads were placed in the newspapers. The offer was very weak ... but still they picked up 2000 people who wanted to become members.
Eduardo and the agency designed special stationery. They mailed the initial respondees a recipe book. With ideas on how to use the clients products. The direct mail package included a welcome card, a plastic identification card, and another response device/questionnaire which queried the types of products they bought and the frequency which they bought them. Out of the initial 2000 respondees, 36% responded again to this simple questionnaire.
By now they had the customers' name, sex, amd number of children; they knew such things as whether or not they had a microwave oven.
With this data they then mailed those who had a microwave oven information on microwave popcorn. They sent a sample of the popcorn along with another questionnaire. This one asked such questions as:
They asked the customer to return the questionnaire with proof of purchase and they would reward them with a surprise gift. The surprise was another bag of microwave popcorn, in a different flavor, sent absolutely free.
To this offer, they received another 12% response.
Obviously, out of all this simple back and forth with customers, they were beginning to build not only a database, but gathering some research about the type of people they really wanted to talk to.
The program continues today with new products being introduced constantly and new people being added to the clients database.
Another one of Eduardo's clients is Revlon. Revlon distributes through 70 points of sale all around Venezuela. Department stores, specialty perfume and cosmetic centers, drug stores and similar.
By digging into the industry a little bit it was soon learned that the sales people in the cosmetic sections of these stores kept a paper record of their customers. Each sales person kept a 3x5 card on their clients. Data on 2,500 names was turned into a database.
The objective is to get to about 20,000 working and active names on the list. The initial thrust was to double to 5000 or more.
So, a direct mail package was put together. By using the data from the 2,500 names already aboard, they knew the type of woman they were chasing. They developed a special Revlon identification card.
It is not a credit card ... but it looks like one. It is called the Golden Card, and there is a tracking number.
Through a series of contacts with the 2,500 names already on the list, and others like it, plus ads in special sections of newspapers and specialty magazines, they're able to reach a large prospective audience.
They gathered data as to the customer's name, age, telephone number, whether they worked outside the home, and other specific characteristics ... such as their birthday and wedding anniversary, their skin type and color preference and other details that can be important in the cosmetic trade.
One of the obvious things is that a young lady is going to use different products and use them in a different way than an older woman. All of these preferences will make it easier, with a database, to send the right message to the right person.
A frequent user type program was started in late November, 1991. For the following 6 months a thorough tracking was done of all the people on their database and the purchases they made.
A mailing was done each month to every person on the database. For every purchase they made of a Revlon product they got one point for each Bolivar spent.
1 Bolivar = 1 US cent
Since each customer had their own identification number it was easy to track the frequency of their purchases. The types of products they bought. The high end and the low end. Special skin care products or cosmetic products.
Combined with all of this was an award program that is very similar to the airlines frequent flyer program. There also was a sweepstakes, where the top winner gets an all expense paid trip to New York. Out of this program alone they generated over 3 million Bolivar worth of sales.
From the beginning 2,500 names the database now is approaching 6,000 names. Well on the way to the 20,000 goal of Revlon.
Size is deceiving
When I was talking with Eduardo about this I was surprised at what I felt was a small number ... 20,000 names. My reasoning was this:
If half the population of Venezuela is women (in that case about 10 million people) and only half of that group are only remotely prospects for Revlon product (now we are down to 5 million) I wonder why in the world they are going to be satisfied with 20,000.
Eduardo gave this answer: He reports that Revlon has about 60% of their desired market. Those women who are able and willing and interested in buying and using Revlon products.The purpose of the database is to keep these ladies from moving to a competitive product. They want to concentrate on the peak users and keep them as ongoing customers.
What are they doing to accomplish this?
Well, they're mailing them at least once a month. And it does appear to be working. Within 18 months after the program started at least 10% of the people receiving a mailing on a monthly basis were going to the store and buying something.
The program for Revlon is continuing. They still have a little way to go to reach their own goal of 20,000 names. Maybe this time next year I'll bring you up to date on what's going on with Revlon in Venezuela.
Now to another client of Eduardo's: In addition to Revlon he is also working with 3M, a local paper company, a local building supply firm, and a division of a tobacco company. Plus, Honda automobiles. Let's talk about Honda.
The Honda Accord is a relatively expensive car in Venezuela. Honda built a database. Built by hand, picking what appeared to be the right people in the right companies at the right levels who would have the right amount of money to buy a Honda automobile. And then telephoning and confirming the name, the spelling, the title, the address and other details.
Since the list had been hand built and telephone confirmed, it was very accurate.
The idea was to get each of these people to take a test drive in a new Honda Accord. The sales people reported that if they got somebody in the car, they made a sale. So, here is what Eduardo did.
He did a three dimensional mailing. Because most of the addresses were at a business and most of the prospects were male executives, secretary/filter existed. "Regular" mail did not get through ... it was felt three dimensional mail would. Something in a box would get to the intended party. And, it did!
On the outside of the box, this is the teaser copy: "There are two ways to meet the latest in technology and comfort".
When you open the box the left side has a brochure, a letter and a little additional paperwork. On the right hand side you have a key chain, with a key. And an invitation to take a test drive.
You're asked to call a special phone number and tell Honda when you wish to be picked up. You will be picked up whenever and wherever you wish. A chauffeur and a Honda Accord will arrive at your doorstep at 6:00 in the morning at your home ... at 7:00 in the evening at your office ... in the middle of Saturday afternoon. Whenever and wherever Honda will send a chauffeur driven Honda Accord for you to test drive.
The program is in test as this article is being written.
Approximately 2,000 names are going to be reached. The boxes are being waved out so many every week. So that all those people who want a test drive can get one. And the sales people can follow-up and get the order.
If the recipient doesn't call within 7 to 10 days, Honda calls them. Asks about the box. Asks why they're not interested in taking a test drive at this time. They're getting some very nice results out of the follow-up. Some of the people felt an obligation. They weren't sure if they should keep the key or not.
After all, the stationery was water marked and fancy. It was from the president of Honda, sent peer to peer. It was high level to high level. It looked good and felt very five star ... very gold medal ... very blue ribbon. Because it was.
Some people were not interested in the car but they took time to write a "Thank You" note. Some people returned the key. Some people passed on the opportunity to a friend.
Another lesson from this is that three dimensional packaging works. Particularly for a high ticket item and a business-to-business item.
The box did not get stopped at the secretary/receptionist desk. It's getting through to the right person. It's too important and too obvious to be ignored.
So far Honda is enjoying a 12% response ... obviously all are not turning into sales. But in each case they certainly have somebody who is serious and somebody who they can talk to.
Let's end this story about Eduardo and his agency - DIRECT MARKETING SERVICES - with a report on the mail and telephone service in Venezuela. I started off mentioning it wasn't as great as it is in other parts of the world. Well, that is true.
There's also good news to report that it is greatly improving. The post office is being privatized. The telephone company is already privatized. 800 numbers are now active in Venezuela. Those wanting and needing phones are getting them in a reasonable time rather than taking years and years.
Eduardo and others report to me that the mail service is in the process of getting restructured, under the guidelines of a new president. Who expects things to work and has a plan to make them work. As of this moment nobody's quite sure how this is going to happen ... it is very obvious that it is happening.
All these are excellent signs for Venezuela. It is my personal opinion that Central and South America will be the growing direct marketing arena in this world over the next decade or two.
We've already had major spurts in North America - in Europe - in the South Pacific and in Asia. There are only a couple of places left ... the southern part of the Americas and Africa. Africa is a little further away. I think we all can look forward to enjoying the opportunities of direct marketing with our Central and South American neighbors.
by ROCKINGHAM*JUTKINS*marketing, all rights reserved.