Hello Sir/Madam,

We all agree that customer retention is a good idea but it can all look a bit daunting and expensive. So if you could easily classify your prospects and assign your marketing dollars accordingly that would make sense.

But how…?

Here is a formula that is used by numerous sales firms around the world based on 3 simple criteria.

How recently, how often and how much?

Recency
Assign a value based on the last 24 months, e.g. 1 month ago = 25 points, 24 months ago = 1 point.

Frequency
Assign 1 point for each sale in the last 24 months

Monetary
Assign a point system for the value of the sales in the last 24 months say 3 for high 2 for medium and 1 for low (based on your average sales volume).

Also note here that this is “dynamic” in that your list ages every month which accurately reflects the real life value of your prospect list.

Customer Profile

Excellent customer profile.

Last purchase 3 months ago = 23 points.
8 purchases in the last 2 years = 8 points.
Sales Volume = High = 3 points.

Customer value: 23 x 8 x 3 = 552

Low value customer profile.

Last purchase 18 months ago = 6 points
2 purchases in the last 24 months = 2 points
Sales Volume low = 1 point

Customer value: 6 x 2 x 1 = 12

Separate your list into Gold, Silver and Bronze and allocate your marketing and service budget; 50% Gold, 30% Silver and 20% Bronze.

You can of course adjust your profile system to better suit your industry but the above would be a good start.

For the full data on this subject check out www.dbmanagement.com.

Prospect Marketing News

Get you Fax Broadcasts setup to go, this is the time of the year when you need an effective way to market your products. Use our extensive fax database to help you promote you products, for more details on our faxing service please visit www.prospects.com.au.

Good Selling.

Brendan Warren
Sales Manager