A complete process to maximize customer Lifetime Value (LTV) through best in class lifecycle mangement
LTV analysis identifies who are currently your "best" customers to retain and expand, and who are your lowest value ones, potentially draining resources and profits. We will provide you with high impact marketing recommendations to maximize your customer's Lifetime value.
1to1 lifecycle Service Include:
Creation of Your Lifetime Value Equation
Identification of Your Customer Value Components and key drivers
Customer Asset Quadrant Analysis To Map Current Customers Based On Value, Needs and Potential
Identification of Most Valuable Customers
Identification of Highest Potential Customers that May Look Like Your Best Customers
Identification of low value or at-risk customers
Strategic Recommendations Based on Value Analysis
Primary channels and content development
Complete lifecycle management strategies
Immediate opportunities for growth
Program development and implementation
Our goal is to provide you with a clear tactical strategy to invest your limited resources for the highest possible return.
The first step is a quadrant analysis of your customer base:
A quadrant analysis of your customer base will provide you with a road map of where and how to establish 1to1 strategies:
Your customers are your company's primary assets. Our work centers on how to improve the value of this asset base by optimizing how and where your corporate resources are utilized. Your customers can be categorized into one of four quadrants. They are:
1. Core Customers
Your highest value customers giving you most of their spend for your category
You need to retain these customers and make them loyal
Knowing their needs and interests is expected by them
Cross selling and service expansion opportunities may represent immediate future growth opportunities
2. Core Prospects
These customer may look like your best customers but are not yet reaching their potential value
They represent your highest growth group
Increasing their "share of mind" by improving your 1to1 relationships will require that you provide them with information that they want, when and where they want it
Refocusing your marketing dollars here can provide you with an immediate return on investment
3. Mid Values
These are customers that are meeting their potential value but not part of your high value group
Opportunities exist to identify extended needs that may not yet be fulfilled
Creating an "opt-in" dialogue is critical
Retaining these customers will lead to future growth
4. Marginals
These customers may be unprofitable to cultivate and retain
An analytical understanding of this group will show you how to improve future profits
Cost reductions, changes in processes, and revenue improvements projects may be needed
1to1 Lifetime Value Case Studies
Financial Services Case Study
Manufacturing Firm Customer Value Analysis
Not-For-Profit Case Study
Fortune 50 Financial Service and Insurance Provider 70/30 Rule
Insurance
Many financial services and insurance providers target mid to high income consumers for their products and services. Although lifestyle, family as well as individual needs and perceptions play a role in customer potential value there is a group of high value customers in each market that can be analyzed for “look-a-like” high potential prospects.
After analyzing the value skew across businesses we realized that “70/30 rule” applied universally based on common pricing, risk and targeting techniques. Essentially, 70% of financial value within the overall customer base was coming from 30% of the total customers. These customers were identified as “most valuable” or top customers. There were many implications that came from these finding, including:
Further analyzing the top 30% of customers would provide insight into the characteristics of a top customer and therefore a top prospect
Retention or loss of one of these customers would be much impactful that for lower value customers
Using this knowledge led to new data driven customer marketing strategies, each creating new growth for the organization. Among these strategies we assisted in the identification and implementation of the following:
An understanding of the demographics and psychographic characteristics of high value customer for targeting. This included identifying key subsegments for specific products such as high potential retirement solutions for those nearing retirement age, wealthy, but insecure in exploring their actual retirement requirements
Identifying high potential new and existing customers based on high value customer “look-a-like” matching
Very successful Up-sell marketing programs targeting high potential new customers buying below the average for their demographic profile (age, income, family, occupation, etc.)
Measured cross sell initiatives for high potential customers designed for every outreach, communication and touch between these customers and the organization
Successful save programs based on the analysis of high potential customers that cancel and match cancellation prediction models
Increased communications and higher levels of customer service outreach to the high potential group
Identifying the unmet needs of high and low value customers for new products and services
The value of our work in defining high value customers continues to increase over time. After each program is implemented successive improvements are made over time. These become part of the every improving marketing plan. These have included new programs to improve the relationship with new customers, new more insightful needs based customer segmentation, identification of niche marketing opportunities and high potential subsegments, identification of trusted information sources for new marketing campaigns, identifying unmet needs, developing new referral programs and others.
Pitney Bowes Customer Value Analysis
Manufacturing
As a result of our work, we turned the $1-billion-plus mailing systems division of Pitney Bowes into a successful Customer Relationship Management organization.
Pitney Bowes enjoyed a U.S. market share of more than 80 percent. It was by far the dominant competitor in the postal meter and mailing systems category, but growth was flattening and profits were declining. Tom Shimko used 1to1 strategies to set up two customer portfolios, identifying the company's best and worst customers. Pitney Bowes differed from many companies in that it incurred a substantial expense in both acquiring and installation. Disconnecting a lost customer presented a relatively large negative financial impact, because it must install and remove equipment. A customer lost within one year of placement created a financial loss. Tom determined that the top 10 percent of Pitney Bowes customers accounted for two-thirds of customer value - yet at the same time, the largest retention and profitability problem lay within the bottom 25 percent.
Two customer-focused teams were established: a retention team to reduce disconnection expenses on the low end, and a loyalty team to improve Pitney Bowes' relationships with high-value customers. Within 12 months, we had reduced attrition in the low-end group by 20 percent and improved market share refocusing marketing efforts. At the high end, Pitney Bowes learned to collaborate with its most valuable customers to improve the selling process and build loyalty. "Super elite" customers - the 0.1 percent of the base that accounted for 12 percent of the business - were identified, and their views on products and services were solicited to create strategies that put Pitney Bowes ahead of the competition and increased customer loyalty.
Not for Profit
The American Cancer Society
Situation
The American Cancer Society is one of the nation's largest not-for-profit organizations, their focus is on the fight against cancer. They are primarily a fund raising institution chartered with generating donations to be used in cancer prevention, cancer research and patient care
Problem
Donations range from $1 to $1 million plus, and are generated in a variety of direct marketing and event driven ways. Much of these funds are created through direct contact with individual donors, direct mail, email and telemarketing. The balance of donations are built through promotional events and fundraisers.
Most donors fall into the $5 - $10 range. Those that fall into the highest income categories were pursued most vigorously, but total donations tended to move up or down with the economy
A new way of generating donor based income was needed
1to1 Action
ACS completed a qualitative assessment of donor needs. They formed a team interviewing and working with donors and front line employees.
We created a pilot direct mail program that would identify donor needs and provide different treatments based on responses. A random sample was selected for different treatments over a six month period, another random sample was selected as a control group and continued to receive their traditional marketing messages.
Findings:
Donors primary needs centered on one or more areas, including:
•Interest in prevention
•Interest in research work
•Interest in breakthroughs only
•No involvement or interest – a social responsibility
•A social interest, a way to get involved with the community and others. A way to meet people
An outbound direct mail effort asked test donors to identify “why they were interested in the fight against cancer”. Findings were used to change material that was sent to donors based on needs, e.g. Attached is article about new breakthroughs in cancer prevention
Impact
After six months, donations from the test group were compared with the control group. Donations from the test group were 225% higher than the control group. The test was expanded to all high value customers and rolled-out nationally.
In addition, a pilot to explore the needs and interests of high income individuals was conducted in a local market. Through this outreach around special interests, a donor led breast cancer fund raiser was created bringing over $325,000 for the event. It is now an annual fund raiser run by engaged donors, and the program was also expanded nationally.