Genalytics is trying to take the junk out of junk mail.
Using patented software capable of analyzing more than 500 variables per household, the Andover, Mass. company predicts for its clients which homes are more or less likely to order a pizza, hire a maid, or purchase furniture.
Genalytics Inc. clients use the information to target their direct-mail advertising to those customers likely to be receptive to their message — and bypass those who are likely to throw it in the trash. The company says the system isn't foolproof, but it cuts mailing costs significantly, while boosting customer response rates 7 to 15 %.
"There's a big difference between someone who buys a pizza and someone who buys a variable annuity, but they both can be predicted," said Ray Kingman, chief executive of Genalytics.
For years, larger companies have used predictive modelling to tailor their marketing. But Genalytics has automated much of the process with patented genetic algorithms, making it possible for smaller companies and nonprofits to perform the analysis in a fraction of the time and at a fraction of the cost, roughly 5 cents per name. Direct-mail advertising expenditures of all types hit $166.5 billion last year, according to the Direct Marketing Association. It said a $1 expenditure had an average revenue yield of $11.65.
The key to increasing direct mail's bang for the buck is reaching the right audience. Genalytics, through its patented algorithms, tries to eliminate waste by figuring out who is likely to be receptive to the sales pitch. Typically, the company develops a model of a business's typical customer and then finds matches among the general public.