Using Customer Valuation to determine your contact strategy

For a large business-to-business marketer—say $500 million in sales—a field sales visit costs about five times more than a telemarketing call and 100 times more than a direct mail piece. But while catalogs, e-mail, and telemarketing are cheaper ways of gaining sales, they’re not always as effective as sales reps. Salespeople can build relationships with prospects and customers who wouldn’t respond to less-personal communications. For b-to-b marketers, then, the challenge is determining when the expense of sales calls is warranted.

For most marketers, the potential value of a customer determines how they’ll be contacted. “The companies spending the greatest amount of money represent the greatest opportunity,” says Stevan Roberts, president/CEO of Pearl River, NY-based list firm Edith Roman Associates. But size shouldn’t be the only determining factor. Says Roberts, “You don’t want to have your field salespeople tied up making calls to companies that may or may not pan out.”

To assess which prospects should receive a catalog rather than a visit from a sales rep, many mailers model prospect names against their best customers. New England Business Service (NEBS), for instance, maintains an inhouse prospecting database using information from Dun & Bradstreet, InfoUSA, and other compilers. NEBS puts the prospects through a predictive model, which “tells us these X amount of names fit our profile and who is most likely to buy checks from us,” says Bob Saarimaki, group director for marketing services for the Groton, MA-based business forms supplier. The company also puts prospects through another database, which predicts lifetime value based on variables such as the sales and rate of growth.

Catalog Age April 1 2004