Designing Great Data Products by Zwemer Margit

Author:Zwemer, Margit...
Language: eng
Format: epub
Published: 2014-03-30T09:24:54.271000+00:00

Optimizing lifetime customer value

This same systematic approach can be used to optimize the entire marketing strategy. This encompasses all the interactions that a retailer has with its customers outside of the actual buy-sell transaction, whether making a product recommendation, encouraging the customer to check out a new feature of the online store, or sending sales promotions. Making the wrong choices comes at a cost to the retailer in the form of reduced margins (discounts that do not drive extra sales), opportunity costs for the scarce real-estate on their homepage (taking up space in the recommendation feed with products the customer doesn’t like or would have bought without a recommendation) or the customer tuning out (sending so many unhelpful email promotions that the customer filters all future communications as spam). We will show how to go about building an optimized marketing strategy that mitigates these effects.

As in each of the previous examples, we begin by asking: “What objective is the marketing strategy trying to achieve?” Simple: we want to optimize the lifetime value from each customer. Second question: “What levers do we have at our disposal to achieve this objective?” Quite a few. For example:

We can make product recommendations that surprise and delight (using the optimized recommendation outlined in the previous section).

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