Alan Weber

A continuous threat to the health of any company is the loss of customers. That makes prospecting efforts all the more important, because newly acquired customers are worth more in the future. Profits rise because repeat sales rise, and most profits come from repeat sales. Your catalog’s attrition can be mapped using many variables. Recency, or how long ago customers made purchases, is the most common. Total spending, average amount spent, method and type of purchase are common variables used to estimate attrition by customer segments. Demographics and psychographics also may be helpful predictors. A common strategy for marketers is to re-contact all

Two things are common to many database marketers. First, they can measure acquisition cost well (what it takes to turn a prospect into a customer), but they don’t employ a sound method of judging lifetime value (LTV). Second, they emphasize prospecting rather than retention/cross-selling/upselling. The combination of these two traits, measuring acquisition but not LTV and concentrating on prospecting rather than retention, often leads to profitability problems when testing new media. For a “traditional” cataloger, who sells only through direct mail and prospects only with rented lists, there can be a major difference in the long-term profitability of buyers from different sources. For