WHY USE CUSTOMER PROFILING AND MODELING?
Obviously, profiling and modeling add to the initial costs of preparing a mailing. Why not stick with a tried-and-true technique like recency- frequency-monetary analysis (RFM), which was the original way of predicting customer behavior? RFM is a good way to tune your approach to a customer by using data you’ve collected about the customer’s purchasing habits, but there’s a catch. For RFM to be employed, you need to have a rough idea of an individual’s purchase history. Thus it works only for existing customers and is of no use for prospects. What makes profiling and modeling cost-efficient? The answer may be found by looking at three trends: Rising mailing costs. In the past, direct marketers might zero in on repeat customers through successive mailings and analyze the results to determine likely buying scenarios. That could mean mailing to 400,000 to find a strong market of 40,000. The dramatic increase in paper and postage costs has made this practice prohibitively expensive. Powerf
