E-Mail : What's That Contact Worth?
Using e-mail to build lifetime customer valueNovember 2008 By Loren McDonald
Today, smart marketers are beginning to tie their marketing activities to the lifetime customer value of various segments of their databases.
E-mail is a key ingredient in this approach and can be used to target marketing dollars more effectively by sending more relevant messages and offers.
Instead of blasting out a single message to an entire database, a marketer can tailor messages to customer segments based on their lifetime values, both to solidify the relationship with those customers and to try to build the value of lower-performing segments.
Targeting messages this way has other rewards, too: More relevant messaging means recipients are more likely to open and act on your e-mail and less likely to unsubscribe, go inactive or simply report your e-mail as spam.
First Step: Define and Calculate LCV
The basic definition of LCV is the amount of money a customer represents to your company, minus acquisition and retention costs, for the life of his relationship with you.