Comments for Mad Marketing Blog http://www.madmarketing.co.za Internet Marketing & Small Business Blog Tue, 15 Dec 2009 20:47:43 +0200 http://wordpress.org/?v=2.9.1 hourly 1 Comment on Part 1e : Lifetime Customer Value by admin http://www.madmarketing.co.za/41/part-1e-lifetime-customer-value/comment-page-1/#comment-13 admin Tue, 15 Dec 2009 20:47:43 +0000 http://www.madmarketing.co.za/?p=41#comment-13 David, thanks for the detailed comments! I can see this definitely deserves a more thorough investigation on my part. I will look into this in more detail and hopefully be able to put together a more rounded post soon on this topic. Thanks again. David, thanks for the detailed comments! I can see this definitely deserves a more thorough investigation on my part. I will look into this in more detail and hopefully be able to put together a more rounded post soon on this topic. Thanks again.

]]> Comment on Part 1e : Lifetime Customer Value by David http://www.madmarketing.co.za/41/part-1e-lifetime-customer-value/comment-page-1/#comment-11 David Tue, 15 Dec 2009 02:20:09 +0000 http://www.madmarketing.co.za/?p=41#comment-11 Okay that worked - I will try more. Customer value is almost always a good RELATIVE measure, not an ABSOLUTE measure. The numbers are almost never good enough to use as spending guidelines - though they often are used for just that by marketers who really just want budget justification. What I see time and time again is really crude metrics used to business case campaigns and measure marketing ROI when at best they are good enough only for identifying which customers are top 20% and bottem 20%. LTV adds more noise than value to the situation since it necessarily involves predicting future events and most companies accuracy is very low when it comes to acquisition, retention and cross-sales scoring - which are core foundations of such a model. Best business advice is to measure current value and potential then manage to close the gap. That at least is relatively solid and directionally correct. LTV is mostly a myth that certain consultants (P&R)came up with to extend the life of their franchise with the "new" idea of "customer equity" which is really just discounted cash flows which accountants and investment bankers have been doing for decades. I wrote for the Canadian Marketing Association's Database Analytics and Marketing Technology council's national convention on Customer Profitability. You can read the articles here: http://www.objectivebusiness.com PS Good for you to write this ! I do not mean to be negaitive....it is nice to see others thinking and sharing thoughts on this important topic. David McNab, CA Okay that worked – I will try more. Customer value is almost always a good RELATIVE measure, not an ABSOLUTE measure. The numbers are almost never good enough to use as spending guidelines – though they often are used for just that by marketers who really just want budget justification. What I see time and time again is really crude metrics used to business case campaigns and measure marketing ROI when at best they are good enough only for identifying which customers are top 20% and bottem 20%.

LTV adds more noise than value to the situation since it necessarily involves predicting future events and most companies accuracy is very low when it comes to acquisition, retention and cross-sales scoring – which are core foundations of such a model.

Best business advice is to measure current value and potential then manage to close the gap. That at least is relatively solid and directionally correct.

LTV is mostly a myth that certain consultants (P&R)came up with to extend the life of their franchise with the “new” idea of “customer equity” which is really just discounted cash flows which accountants and investment bankers have been doing for decades.

I wrote for the Canadian Marketing Association’s Database Analytics and Marketing Technology council’s national convention on Customer Profitability. You can read the articles here: http://www.objectivebusiness.com

PS Good for you to write this ! I do not mean to be negaitive….it is nice to see others thinking and sharing thoughts on this important topic.

David McNab, CA

]]> Comment on Part 1e : Lifetime Customer Value by David http://www.madmarketing.co.za/41/part-1e-lifetime-customer-value/comment-page-1/#comment-10 David Tue, 15 Dec 2009 02:11:27 +0000 http://www.madmarketing.co.za/?p=41#comment-10 NO no no. LTV is largely impractical. It takes tremendous sophistication to make it meaningful and rarely does the data support it well enough to be bothered. Customer ranking will almost always be unchanged by using LTV instead of current value. See articles at http://www.objectivebusiness.com Sorry this was so short but I am frustrated - two posts I made got killed by the submission process already. NO no no. LTV is largely impractical. It takes tremendous sophistication to make it meaningful and rarely does the data support it well enough to be bothered. Customer ranking will almost always be unchanged by using LTV instead of current value.

See articles at http://www.objectivebusiness.com

Sorry this was so short but I am frustrated – two posts I made got killed by the submission process already.

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