Prospecting: Improve Customer Lifetime Value
“Although less than 40 percent of catalog companies conduct a lifetime-value analysis of their customers, it can be a powerful tool in new customer acquisition efforts,” said Steve Trollinger, senior vice president of client marketing for catalog consultancy J. Schmid& Associates at his session “Seven Ways to Increase Customer Value Today and Tomorrow” at the Annual Catalog Conference held last month in Orlando, Fla. In that session, Trollinger offered the following tips:
¥ Don’t just focus on initial acquisition costs. It’s tempting to try to make your money back on prospects as quickly as you can, but it’s also possible that a higher acquisition cost may result in better customer retention, said Trollinger.
¥ Maintain a complete history for each select on each list you use, said Trollinger. “Use what you learn through these histories to estimate which selects on future lists will result in the best lifetime value,” he said.
¥ Learn your best lists’ usages, and apply what you find. “How do your best lists compare with selects on potential new lists?” asked Trollinger. You may find untapped pockets in lists you might not consider otherwise, he said.
¥ Look at 13- to 24-month segments on well-performing lists. “Just because these customers haven’t ordered from that book in 13 to 24 months, doesn’t mean they won’t buy from you,” said Trollinger.