In this highly complex and ever-evolving industry, the days of simply analyzing day-to-day sales in one channel—be it store, catalog, or the Web—are long gone. To increase your company’s growth in the quickest, most cost-effective manner you need to integrate the analytics and map out a detailed, actionable plan. Your first step is to assess the lifetime value of your customers. This will determine the long-term value of each of your customers by source, which is often different from what initial sales might seem to indicate. Then you can look at the cost of acquisition by source and calculate the subsequent purchase activity by customer.
Looking at lifetime value allows you to
- identify the most profitable sources of new customers over the long-term
- provide the basis for developing individual strategies to build and harvest long-term value from each acquisition source
- guide strategic marketing decisions regarding prospecting and customer contact strategies, programs, and expenditures
You should also analyze your house file. Go back one, two, or three years to see how it has performed over time and to evaluate acquisition performance. The further back you go, the bigger and more accurate the picture.
Carefully look at critical areas such as
- RFM, product and source segmentation and contribution
- list selection criteria and results down to the source-code level
- online and offline performance by segment and original source
- house file and acquisition strategies for effectiveness and consistency
Once you have developed a historical view of your company, you will be able to calculate your growth potential and identify opportunities to grow online marketing, circulation, and revenue through each acquisition source and channel strategy.
To optimize your results it is essential that you streamline and maintain your business practices to the highest level and institute key metrics to assess change. Realizing your company’s full potential will enable you to improve performance, identify most-profitable new customer sources, create targeted contact management strategies by source, and determine reasonable expectations by source and channel.
This will enable you to stay ahead of the competition and grow your business faster and more profitably.
Steve Tamke is senior vice president at Hackensack, NJ-based list services firm Mokrynskidirect.