CUSTOMER VALUE SCORING

PROCESS

Prepared by

Barbara Brown

April 22, 2008

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– James Barrett

– Charles Noland

– Eleanor Hong

– Barbara Brown

– Gina Grossman

– Charles de Gruchy

Following our analytics planning meeting we began implementation of the value scoring model (RFM).

The purpose of this presentation is to confirm why we kicked off the change from the current segmentation and timing.

OVERVIEW

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The proposed RFM segmentation will be tested against the current demographic segmentation.

The forecast for the proposed RFM segmentation is to deliver an incremental $11M to the business. The test will confirm the forecast across all business segments ( ref: 04/09 business plan)

TESTING

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Customer value scoring is a simple and highly effective tool to determine the overall health of your business and to drive:

1. efficient allocation of marketing expense to customer marketing based on customer type and value to business

2. identification of strategic customer segments for:• Targeted communications• Customized messaging• lifecycle management,

1. identification of predicted "best" customer segments for identification of high potential prospects

PURPOSE

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1. SIMPLE – The approach creates a "snapshot" of the overall health of the business through a behavioral view of customer's value to business.

2. CLEAR -- Key customer segments are easily identifiable and actionable for marketing

3. FLEXIBLE -- The "snapshot" can be updated on a regular schedule and establishes clear trend lines by customer value segment

4. ECONOMICAL -- The approach is cost and time efficient relative to other options available and can be automated and/or integrated with legacy tools

5. STRATEGIC -- The segmentation results relate directly to strategic customer management issues of acquisition, activation, retention/loyalty, grooming and re activation.

BENEFITS

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THE PROCESS

STEP 1 – DATA COLLECTION & AUDIT – Identify data sources, complete interviews to understand any data issues (i.g. table linkage) and provide data request documentSTEP 2 – STANDARDIZE DATA -- cleanse data and run RFM rankingsSTEP 3 – RANKINGS – Recency, Frequency, Monetary rankings and ranges determinedSTEP 4 – REPORT DESIGN – Build value scoring reportSTEP 5 – TRENDLINES – identify key trend lines by segment and marketing implicationsSTEP 6 – OVERLAYS – overlay 3rd party data sources e.g. lifestyle and demographicsSTEP 7 – BEST CUSTOMER – Insights and analysis of results with an emphasis on best customer segments identifying key business opportunities.

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NEXT STEPS

1. Restart the RFM methodology development Completion May 152. Present RFM mockups/templates to Harte Hanks May 253. Deliver requirements to Harte Hanks May 284. Verify model and list selections June/July5. Mail drop Fall 20086. Final results and rollout Mar/Apr 09

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