FINGERHUT FOREVER: THE ADVANTAGES OF
MODELING LIFETIME VALUE
By Martha Rogers, Ph.D.
Fingerhut Corp. ( fingerhut.com ), the $2 billion
database marketing giant, is on the leading edge of lifetime
value measurement. It accomplishes this by closely
examining the elements of a customer relationship --
whether it is purchasing behavior, preferences, or financial
and credit issues. The company collects more than 3,000
data elements per customer and will soon have a database
exceeding 7 terabytes in size. Using intricate
mathematical algorithms, Fingerhut has developed some
of the business world's most sophisticated models of
lifetime value, carefully projecting expected customer
revenues and costs on an individual basis.
Such efforts help Fingerhut invest its catalogue and Web
marketing resources more effectively. For its most
promising customers, the company focuses on
personalization. If you order a product via mail, you'll
receive a phone call from a customer service
representative confirming the order and letting you know
when it will arrive. The rep will use the opportunity to
inquire whether you are interested in future contact
regarding products that match your interests, enabling you
to "opt-in" to receive special offers. Moreover, the company
offers personalized services such as its "birthday club," a
program that invites you to provide birthdays, dates and
interests associated with spouses, friends, children and
grandchildren. Fingerhut reminds birthday club members
as these dates approach and makes customized offers
reflecting the information they've provided. It's not a bad
way to win customer loyalty.
One interesting Web site managed by Fingerhut is Andy's
Garage ( andysgarage.com ), which sells
remnants and overage products at bargain-basement
prices. Powered by a BroadVision
( broadvision.com ) One-to-One Web app, the site
is flexible enough to allow Fingerhut's marketing managers
to run "specials" that last hours or even minutes.
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