Managing Your Company’s Housefile
The Importance of RFM
Not all names on your house file are equal. Therefore, you should manage your file based on the relative importance, or value, of your customers. Today, there are several successful house file modeling techniques and programs, but in my opinion, recency, frequency and monetary value (RFM) segmentation is still the most effective circulation management tool. The RFM classification system “flags” each customer with a three-place identifier that is based on the recency, frequency and total monetary value of former purchases. The data is based on customer information within a current master file. (Inactive customers’ names will normally be purged after three to five years of no activity depending on the cataloger, of course.) Recency is the most important determinant of future purchases.
- Companies:
- Lett Direct Inc.
Steve Lett graduated from Indiana University in 1970 and immediately began his 50-year career in Direct Marketing; mainly catalogs.
Steve spent the first 25 years of his career in executive level positions at both consumer and business-to-business companies. The next 25 years have been with Lett Direct, Inc., the company Steve founded in early 1995. Lett Direct, Inc., is a catalog and internet consulting firm specializing in circulation planning, plan execution, analysis and digital marketing (Google Premier Partner).
Steve has served on the Ethics Committee of the Direct Marketing Association (DMA) and on a number of company boards, both public and private. He served on the Board of the ACMA. He has been the subject of two Harvard Business School case studies. He is the author of a book, Strategic Catalog Marketing. Steve is a past Chairman of both the Catalog Council and Business Mail Council of the DMA. He spent a few years teaching Direct Marketing at Indiana University in Bloomington, Indiana.
You can contact Steve at stevelett@lettdirect.com.
