Tuesday, November 11, 2014

Article Number: 9959

Call and Tell

The zip code tells the U.S. Postal Service where to deliver the mail.

It also tells direct marketers what to deliver. Combining the zip

code with census and other data provides marketers with a rich vein of

demographic information concerning your income, buying habits and

socio-economic preference for squash instead of handball.

If all this is not enough, the past decade has given direct marketers

another wedge into the collective psyche of American consumers: your

telephone number. Combining the resources of massive computer data

bases with the ability of an emerging "smart" telephone network to

identify callers, the direct-marketing industry is using the telephone

number to track down a person's name, address--and life-style. If

your household is deemed "desirable" to a marketer--perhaps one of the

"Pools & Patios" crowd, as one telemarketer puts it--an 800 or 900

line service representative may know it before the call is answered.

Target direct marketing is not new. A company that subscribes to an

800 or 900 service can receive a monthly listing of the numbers of

callers, which can then be matched with names and addresses using a

reverse telephone directory. Correlating that information with

demographic data produces valuable mailing or phone lists. (An 800

call is toll free, whereas the caller pays for dialing a 900 number.

A caller interested enough to pay a fee is more likely to buy a

product, marketers reason.)

To the consumer, all this means that products can be more closely

matched to personal tastes, with the result that the junk mail might

just contain something worth buying. What's new is that

information-age marketers have begun to acquire the technology to

carry out this screening process instantly and without the caller's


Beginning this year, Telesphere Communications, Inc., and Oakbrook

Terrace, Ill., company with $550 million in annual sales, will offer a

service to 900 subscribers that can peg the location of an incoming

call using an are code and the number's three-digit prefix. Knowing

where the call originates allows a salesperson to prepare a pitch.

Later a reverse directory can be used to identify the caller, and a

data base can determine which of 40 demographic "clusters" fits that

person. In the near future, these services may be provided while the

caller is still on the lines.

Telesphere gets in demographic information from PRIZM, a data base

owned by Claritas Corporation in Alexandria, Va. PRIZM can pinpoint a

neighborhood for virtually everyone in the U.S. using census and other

public demographic information. "It works on the theory that birds of

a feather flock together," says Harvey B. Uelk, a Telesphere sales


So if you are lucky, the pitchman will know if you fall in the fifth

cluster in the data base: "Furs & Station Wagons." This group is

described as "'new money' living in expensive new neighborhoods....

They are winners--big producer, and big spenders." A not so fortunate

caller might be lumped into the "Emergent Minorities" cluster. These

people, says a promotional report, are "almost 80 percent black, the

remainder largely composed of Hispanics and other foreign-born

minorities.... Emergent Minorities shows...below-average levels of

education and [below-average] white-collar employment. The stuggle

for emergence from poverty is still evident in these neighborhoods."

The risk that a household, through clustering, might become the

telemarketing equivalent of a bad credit risk has not escaped the

notice of the American Civil Liberties Union and other public interest

groups who fear that minorities might be excluded from mortgage and

credit opportunities or a gay neighborhood may be blacklisted by an

insurance advertising campaign. A telemarketer might display

different sales pitches on a service representative's computer screen,

depending on whether the incoming caller hails from the "Money &

Brains" or the "Coalburg & Corntown" cluster.

Marc Rotenberg of Computer Professionals for Social Responsibility

likens calling an 800 or 900 number to walking into a store. "A

person should have a right to enter a store without disclosing

creditworthiness, residence or annual income," Rotenberg asserts.

Lobbying by privacy groups has focused so far on supporting national

legislation that would, in effect, allow a caller to keep his wallet

in his back pocket until he decides to make a purchase.

The law would give the caller the option of blocking a number from

being displayed immediately bya receiving party. This would be done

by pressing "*-6-7," or a similar combination of numbers, before

making a call. (Marketers could still get callers' 800 or 900 numbers

with their statements each month, however.) Although the law failed

to pass Congress last year, it is scheduled to be reintroduced this


Individual states are not necessarily waiting for Congress. A

Pennsylvania court has banned "Caller ID" service--a decision that is

on appeal--and a number of state public utility commisions have

ordered that blocking be offered free of charge. For the moment,

states' actions may not affect most telemarketers, whose 800 and 900

calls are usually routed over the long-distance phone network and

displayed to a clerk using a service called automatic number


Support for blocking has come not just from privacy advocates but from

the White House's Office of Consumer Affairs, four of the seven

regional Bell companies and the Direct Marketing Association in New

York City. As with junk mail, the direct-marketing industry

acknowledges that the consumer should have the right to choose not to

receive unsolicited information.

On the opposite end of the line, a number of telephone companies

contend that caller identification services are a clear boon to

subscribers. Bell Atlantic, an ardent opponent of call blocking, has

compiled a list of subscribers who have used the Caller ID service to

stop obscene phone calls or fake pizza orders and to track down


For their part, some direct marketers assert that fears of

misappropriatio of personal information are greatly exaggerated: they

are interested in patterns of group behavior, not the personal

preferences of the individual. "We try to identify market segments

that are most likely to respond to a particular marketer's products or

services," explains Philip H. Bonello, director of corporate planning

for Metromail, a Lombard, Ill., firm that owns a data base of 86

million households that supplies the direct-marketing industry.

But the public is clearly concerned about electronic privacy. In

January Lotus Development Corporation, a Cambridge, Mass., software

company, and Equifax, Inc., an Atlanta-based credit bureau, withdrew

plans to market Lotus Marketplace on compact discs after some 30,000

people asked that their names be removed from the files. This data

base contains demographic information on about 120 million


The public debate over privacy could grow still more heated if

telephone companies try to market their internal data bases of

information about residential customers. Limited attempts to do so

have sometimes met with resistance. Recently New England Telephone

and New York Telephone dropped a service offering residential and

business directory listings when hundreds of thousands of customers

asked that their names be taken off the lists.

Legislation may help stem abuses. A public outcry may force companies

to lay low. But the irresistible lure of knowing name, phone number

and lifestyle means that computerized telemarketing is here to stay.

Caveat salutator: let the caller beware.

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