Re: LOOSE CANNON: EYEBALLS WIDE SHUT, MARGINS WIDE OPEN (DIRECT Newsline, Feb. 13)
Lifetime Value
You’re right on target with this observation! We’re a boutique firm specializing in database construction, data mining and direct marketing consulting. Lifetime value analysis, which relies on the margin components touched upon in your discussion, should be a critical component of both databases and data mining. Often, however, it is not.
Once, for example, while analyzing the merge/purge output of one of the largest magazine titles, I discovered that overly stringent record-matching logic was allowing several million duplicates a year to enter the mail stream. The circulation manager responded by doing nothing. There would be an internal witch hunt if she failed to make rate-base, and she didn’t want anyone questioning why she’d lowered circulation quantities!
Integrating margin into databases and associated lifetime value analysis is a straightforward matter, but one that is often overlooked. SKU-level integration can be problematic because of definitional volatility.
Generally, however, gross margin information can be reliably tracked and incorporated into lifetime analysis, by creating a database table at a modestly aggregated level. The other components of margin, such as discounts, returns and promotion history, can also be easily included at a granular level. However, as you indicated, it often isn’t!
Jim Wheaton
Principal
Wheaton Consulting Group
Chapel Hill, NC
Don’t Forget the ‘P’ Word
In the meetings I’ve had with marketers, the “P” word (profit) never came up at all, and I’m not sure this is a good thing.
Remember these are usually the same people who are charged with making very expensive CRM decisions and go out and buy seven-figure software packages. I think many marketing departments need someone around who knows how to spell ROI!
Jeff Fowler
President and founder
Decision Software Inc.
Lanham, MD
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