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Category Coupons to Maximize CLV and Minimize Cost

Journal of Retailing akzeptiert Artikel von Dr. Bernhard von Mutius und Prof. Dr. Arnd Huchzermeier

Das Journal of Retailing (ERIM P: Impact Factor: 5.873) hat den Artikel von Dr. Bernhard von Mutius und Prof. Dr. Arnd Huchzermeier über Customized Targeting Strategies for Category Coupons to Maximize CLV and Minimize Cost angenommen. Der Artikel wird in der Sonderausgabe zu Metrics and Analytics in Retailing erscheinen. Die Autoren bedanken sich für die Diskussionsrunden und die zur Verfügung gestellten Daten bei Herrn Marcel Uphues, ehemaliger Finanzdirektor, und Herrn Stefan Länge, Hauptabteilungsleiter Customer Information Management, vom Einzelhändler Real.

Title: Customized Targeting Strategies for Category Coupons to Maximize CLV and Minimize Cost

Abstract: It is standard procedure to use short-term measures for designing customized marketing campaigns and evaluating their success. We consider the integration of customer lifetime value (CLV) thinking into the category selection problem for targeted coupons. This problem involves two primary considerations: should the coupon be a category-specific one? – and, if so, should short-term or rather long-term objectives govern the choice of category? Our paper is the first to address these questions by analyzing the effects of different customized targeting strategies for category coupons on short-term marketing costs and long-term CLV using an analytical model. We develop these targeting strategies with the help of a data-driven customer segmentation framework based on the dimensions of churn, frequency, and loyalty. Using data from a German hypermarket chain, we identify four refined targeting strategies that enable multi-category retailers to exploit the full potential of customized marketing by optimizing the trade-off between marketing cost and CLV considerations. Our analysis reveals that the targeting strategy most likely to be employed by retail practice –as compared with the one most commonly used – can yield a substantially higher CLV even as it reduces wasteful marketing costs.

Key words: customized coupons, targeted marketing, category selection, targeting strategies