Don’t Risk Lifetime Value Over Contact Frequency

Carefully thought-out direct mail and e-mail tactics can help you reach potential and existing customers with a contact frequency timed both to their need for information about your products and your own marketing calendar.

The plans you developed with cool thought shouldn’t quickly be abandoned in fear of the economy or an overabundance of inventory. How do you know the difference between being attentive or obtrusive? And, what do your actions cost you if you reach the point of over contacting customers?

Some e-mail marketers have announced their need to sell more merchandise by increasing their customer contact frequency. One commented that as long as he could increase his sales he would try to balance the increase in mailings with the increase in unsubscribe requests that would follow.

However, other marketers have realized that when a prospect or customer unsubscribes they most likely have unsubscribed forever. A situation can develop in which the population of potential users is growing so rapidly that a company can ignore unsubscribe rates and depend only on new acquisitions. But situations such as the introduction of a fabulous new phone or fad item never last long.

Lifetime value should be your guide to determine whether a sound contact frequency plan should be violated in favor of short-term gains. Remember, your customer’s lifetime value is the total dollars to be received either in the past or present or future from all purchases. If you have long-term contact and sales history data of a core group of customers you can calculate their lifetime value. You can then use that calculation to project the lifetime value of a group of prospects with similar characteristics.

Test a small random sample of customers using a campaign of higher frequency contacts and measure the change in unsubscribe requests. When you add that factor to your lifetime value projection you will be able to estimate the potential current and future loss of customers and revenue due to a change in contact frequency.

It is easy to overlook lifetime value when trying to pump up sales for a quarter or in an overstock situation. If you stick to your contact strategies based on lifetime value rather than short-term gains you are likely to see two good results. First, your plan will increase lifetime value. It will do this by spacing out your offers so prospects and customers are more likely to get them and respond with regularity. Second, such a measured approach is also more likely to keep unsubscribe and do-not-mail requests to a minimum. A balanced contact strategy will allow both acquisition and retention plans to be exercised at the same time.

Don’t let a sound contact management strategy be discarded in the short term. Respect your contacts’ attention and your reluctance to clutter their in-boxes will reward you with long-term relationships of frequent purchases and high lifetime value.

Bill Singleton is a manager of analytics and consulting services with the Allant Group in Naperville, IL .