Lifetime Customer Value and Repeat Behavior

From: John Gaskill <gm_at_info-central-usa.com>
Date: Tue 05 Dec 2000 16:17:25 -0500

JIM NOVO <jimnovo_at_sprintmail.com> WROTE:
> Here's a very simple example. Say I run the same ad in
> two different newsletters and get response from both.
> When I look at these responders, maybe a week later for
> a content visit or 30 days later for a purchase, I find
> a high percentage of repeat visitors or buyers from one
> newsletter, and a low percentage from the other.
>
> Repeat behavior indicates higher lifetime value, and
> predicts future repeat behavior, regardless of what the
> actual value is. I switch money out of the low repeat
> newsletter into the high repeat newsletter. I know I
> get higher ROI without having to measure anything but
> repeat behavior.

Research has shown that better overall response and
purchase rates are produced when an advertising message
is broadcast along wider channels.

As a result, you would be better off taking your ad
investment out of the lower response newsletter and
putting it into a completely different newsletter than
your high producing one (sticking to your target
demographic, of course). Your budgeted amount should
continue to include the high producer as it is your
benchmark for the specific ad you are running.

> The problem with most dotcoms was this: since they
> didn't include lifetime value in their biz plans, they
> didn't know what they had to track, and didn't track
> it. If they had, they would have much more quickly
> realized they were wasting a ton of advertising money,
> and might still be in business today.

Whether or not they used lifetime values in their biz
plans ignores the reality that many are buying too many
exposures and repetitions in their TV campaigns and
this literally drains their bank accounts.

As long as dot.coms keep trying to get big quick they
will continue committing killing themselves off at a
high rate.

Regards all,

John Gaskill
gm_at_info-central-usa.com





Received on Tue Dec 05 2000 - 15:17:25 CST