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For many DM executives who sell luxury goods, there's nothing especially luxurious about their marketing strategies. They have to deal with tight budgets, database limitations, and the painful gap between the kind of marketing they're doing and what they know they really should be doing.

According to research by Echelon Marketing Group, 85% of these DMers want to do customized one-to-one customer and prospect communications, yet only 40% are.

Luxury goods marketers understand what's at stake. They know the trend is toward tailored, personal communications. They know building share of wallet with their best customers is essential and that doing this is impossible if they can't get relevant messages across.

But relevance is easy when operating just a single small boutique, when a merchant knows customers by name and, for example, remembers their birthdays. It gets harder when a client database reaches 50,000 or 500,000 names. How does one understand those customers, know what's important to them, and determine how marketing resources should be allocated?

Also — crucially — how does one know where to find more customers like them?

Echelon asked those who deal in luxury goods why they aren't conducting the marketing they'd like to do. Two answers came back over and over: “Our database isn't where it needs to be” and “We just don't have the budget.”

All databases aren't the same. And as any fine diamond merchant will tell you, bigger isn't always better. A database of 100,000 records can be an extraordinarily valuable marketing tool if it supports the depth of customer understanding that one-to-one contact requires. At that point a database doesn't cost money, it produces money.

Still need to think about it? Take the fifth. Walk along New York's Fifth Avenue, that is. Many of the people walking with you can't afford Henri Bendel, Ferragamo or Saks. But if you could view the crowd closely, from the way people were dressed and the look in their eyes you could get a pretty good impression of who was there to window shop…and who was there to shop.

The very same separation between “who admires” and “who can afford” that makes a brand exclusive also exemplifies the marketing challenge. Where are the prospects with both the love and the lucre?

Understanding who has wealth is key, and it's a much different measure than income or ZIP code. There are three elements — capacity, affinity and propensity — my firm uses to score files and achieve a three-dimensional view of customers and prospects.

Our headquarters is located near Washington. When people name the top luxury goods markets in the country, that city doesn't always make the top five. Or 10. But a recent article in Washingtonian magazine revealed what many of us always suspected. All the Benjamins aren't in Philadelphia, or even in New York.

The magazine's editors quantified six segments of “big money” Washington, from “everyday millionaires” to “Forbes rich.” Add them all together and there are more than 200,000 affluent consumers.

According to their description of how an “A-list” Washingtonian spends his or her money, city denizens allocate $20,000 for “basic clothing” expenses; $3,000 for a “college consultant”; almost $40,000 for restaurants; $30,000 for vacations; and more than $8,000 for spa treatments. Name your category, and chances are these consumers are spending big on it.

That's just Washington. What would the numbers be in San Francisco…or Los Angeles…or New York?

Now consider a marketer that knows where these people are, whether they love the brand, and that understands their needs and desires. Suddenly the value of one-to-one marketing communications jumps higher than Trump Tower.

Big luxury goods marketers like Neiman Marcus are already figuring out ways to reach them. But where does that leave the midsize market?

That's the complicated part. Sending a mailing to 200,000 prospects isn't achieving relevance. After all, it's one thing to know the customers are out there, and quite another to reach them where they live.

Real relevance means understanding what customers want, when they want it, and how much they can afford. A marketer with this kind of insight can provide targeted messages that have the most impact, and ROI would improve exponentially.

Relevance, after all, is like that boutique experience. It's being greeted by name, at the right time, and getting an offer that matches one's budget and interests. For DMers who don't generally use this level of information, this may seem “sophisticated.”

But isn't that what being a luxury brand is all about?

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DON NEAL is president of Echelon Marketing Group, a marketing solutions provider in McLean, VA.