Predicting future customer value

Julian Berry
Director
Berry Thompson
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Did you know that by the time you on-board a customer you will be able to accurately predict their future value?

From which it becomes clear that the decisions you make at the customer recruitment stage will determine that key metric of future customer value.

These are typically decisions about the recruitment channel and tactic you use, the types of customer you are targeting, and the nature of the proposition you are making to them.

Now you should also take into consideration the fact that a large number of customers that businesses recruit will yield negative value after the costs of recruitment have been deducted, whilst others will be strongly positive.

So, what as a marketer, should you do about this? First stop focusing on cost per acquisition; it’s the wrong metric to be guided by.

Next, we suggest that you should take a multivariate approach so that you consider all the factors together that define customer groups in order to focus on the ones that will bring you value.

We have recently been helping a substantial life insurance broker do this and the result has been transformational; for instance, they can now balance factors like the risk of attrition against the amount of monthly premium paid. They have found that a substantial number of their marketing tactics are yielding negative customer value and have had to be abandoned.

Read our case study about how we did it.

About Julian Berry

Julian Berry demonstrating UniFida

As a marketeer I have a passion for bringing science and statistics to the marketing process. The objective being to make every marketing penny count!
This has led to my developing innovative software tools for optimising marketing budget allocation, and customer contacts.
It has also taken me into geek territory with special interests in digital marketing attribution, and understanding the impact of customer contact density.
I started my direct marketing career reporting directly to the legendary Christian Brann, and 
I soon found myself working in ground breaking client direct marketing roles at NatWest and LTSB.
Subsequently I became a direct marketing consultant.The first company that I founded, Berry Consulting, was sold to Acxiom, and the second, The Customer Partnership, to greenstone data solutions.
Specialties: applying science and statistics to marketing

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