Contactstrategy
ContactStrategy:Whatisit?ContactstrategydealswithusinginformationaboutCustomerpurchasesPromotionpatternsInterests,andPreferencesInordertoRegulatethefrequencyandsequenceofcustomercontactCustomizetheoffer,creativethrust,andpositioningofcontacts
Whatisnewintoday’sContactStrategyAllthekeydecisioncriteriaarebasedatthecustomerorindividuallevelAcustomerisincludedinapromotionorcampaigndependingonwhetherthereisanyincrementalprofitfromcontactingthecustomer
Whatisnewintoday’sContactstrategyPreviouslyallcustomerswhodidnotownproductAweremailedpromotionsaboutproductA.Today,acustomerismailedpromotionsaboutproductAdependingonHowlongapersonhasbeenacustomer?Whatproductsthepersonhaspreviouslybought?Whatweretheperson’sresponsestopreviousmailings,orcontacts?Whatarethepurchasepatternsoftheperson?ThesefactorsarethencombinedtocomputetheReturnonInvestment(ROI)foraparticularcustomer
CustomerLifetimeValueLifetimevalueistheNPVoftheprofitthatyouwillrealizeonanewcustomerduringagivennumberofyearsFactorsincalculationofCLTV -Retentionrate -Spendingrate -Acquisitioncost -Discountrate -NPVcalculation -Referralrate
CustomerLifetimeValueRidgewayFashionsisinfashionretailingWantstotestideaofaBirthdayClubWomenprovidetheirfashionpreferencesandtheirhusband’sbusinessaddress.Ridgewaysendshusbandsareminderandhintsforgiftsbeforewife’sbirthdayWewilllookatRidgewaybeforeandaftertheBirthdayClubLookat20000customersovera3yearperiod
CustomerLifetimeValueRetentionrate -Thesinglemostimportantnumberinthelifetimevaluetable -Iscalculatedbyasimpleformula: RR=yearXcustomers/year1customers egRR=8000/20000=40% -YearXcustomersrepresentthoseYear1customerswhoarestillbuyinginthelateryear
CustomerLifetimeValueSpendingrate -Averageamounts
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