LIFEVALUE AND LIMITED RESOURCES
Since almost every company or nonprofit organization has limited resources to invest in developing revenue, the LifeValue focus is to use a five-way strategic planning process for every marketing or fundraising initiative. The goal is simple: to invest in the highest yielding marketing and fundraising activities.
NetValue Methodology seeks to select the marketing programs and events that produce the highest net income with customers/constituents who have the highest predicted LifeValue. This balances short-term and long-term income strategies and selects those who are predictably high in both term measures. This approach focuses on spendable net income as a cash stream that continues over time.
A number of elements must be quantified to determine which marketing initiatives rank high enough to be included in a LifeValue Strategic Plan and where they are to be placed in that plan. Discovering how changing the element mix affects performance is essential to optimum results.
Five of the most essential elements of LifeValue Methodology are:
TARGET:
The LifeValue Methodology selects individuals with the highest predictive value from a defined marketing universe. This may result in the selection of or one or more cohort groups, subgroups or clusters.
RELATIONSHIP CONTEXT:
If it is an initial contact the question becomes: What will be necessary to connect the communication to any brand awareness or equity in the target's mind? If it is not an initial contact the question is, Where is this initiative in the context of the individual's relationship or sequence of marketing contacts over time? Every developing cohort group needs a plan which determines the sequence of initiatives and milestones on the path to the highest LifeValue.
OFFER:
The offer takes into consideration the motivation, call to action and benefit associated with each communication effort. The match between offer, channel and audience can be optimized by additional predictive analysis.
CHANNEL:
The channel or channel mix to be used for each targeted individual should be consistent with channel preferences or channel behavior of each individual.
PAYMENT:
What are the primary and secondary (if any) payment methodologies to utilized? The payment preferences and behavior of each targeted individual (check, credit card, EFT) and the channel used for the preferred payment method are relevant in most marketing initiatives.
In this type of analysis the Value Prediction can be calculated with one or more elements, i.e. with the target audience limited to one group of people at a specific point in their relationship. It focuses on identifying and applying the best marketing event, and leaves offer, channel and payment variables open. In other cases as many as four elements can be fixed for example to determine who should be selected for a marketing or fundraising event. On the other hand, all elements can be defined to determine which channel or channel mix should be selected for which subset of the population.
