What about Business Contact Manager for Outlook? I have only installed it on a friend's laptop, never used it, but it might be worth checking out. Beware that it installs SQL Basic (or something like that, at least the 2007 version did) which will slow down your computer when it's running. You might see what the free alternative to Outlook, Thunderbird, has as well.
I imagine you can use Word's Mail Merge to access the customer database and send them letters.
Idealy, you would keep it simple and simply have one customer record for each address, with "John & Jane" in the first name field.
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