The document discusses how several companies used lifecycle modeling to improve marketing results. Martha Stewart Living used a predictive model to increase payment rates for sweepstakes and direct mail, improve renewal behavior, and optimize insert efficiency. Publishers Clearing House used a model to screen mail prospect orders and qualify responders for offers to improve payment rates and manage payment risk. The models analyzed customer behaviors across touchpoints to find the most profitable segments.

1. 9/30/2011
Lifecycle
Modeling
To Increase Response, Payment and Retention
Jennifer Schulties Martha Stewart Living
Keith Bergendorff Publishers Clearing House
Mary-Jo Checco Alliant
A single
predictive
model
can improve
marketing results
at every customer
touchpoint
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2. 9/30/2011
acquisition
direct mail
alternate media
retention
reactivation
online store
email
upsell/cross-sell
The right segmentation tool identifies the behaviors
that drive profitability across the business
Martha Stewart Living Omnimedia
Jennifer Schulties
Senior Marketing Manager
Martha Stewart Living Omnimedia
Business
Challenges
• Poor payment on sweeps
• Deteriorating bottom-tier response on
direct mail
• Shifting renewal behavior
• Unfavorable insert card/onsert metrics
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3. 9/30/2011
Martha Stewart Living Omnimedia
Daily
Sweepstakes
Payment
Martha Stewart Living Omnimedia
Daily Sweepstakes Payment
Pros Cons
• Partner-driven • Less targeted
• Exposes brand to new • Low payment on
audiences sub offers
• Traffic-driver for site
• Promotes trial issue of
magazine/ generates
gross subs
Martha Stewart Living Omnimedia
Daily Sweepstakes Payment
Solution:
Use “Mega-Model”
to find “good” payers
What does a person who pays
for a magazine look like?
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4. 9/30/2011
Martha Stewart Living Omnimedia
Daily Sweepstakes Payment
Mega-Model Insight:
Have they paid for other products?
How recently?
What kinds of products?
Martha Stewart Living Omnimedia
Daily Sweepstakes Payment
Mega-Model Payment Rates per Billing Effort
Insight:
• 45% of sweeps
responders were
deemed “good
payers” from the
model
• “Good payers” pay
twice as well as the
“bad payers” overall 1 2 3 4 5 6 7
Good Payers Bad Payers
Martha Stewart Living Omnimedia
Direct Mail
Response
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5. 9/30/2011
Martha Stewart Living Omnimedia
Direct Mail Response
Pros Cons
• 32-pages of content is • Payment is delayed
compelling • Lowest tier not
• Free trial offer yields performing well
high gross orders enough, but mail
• Premium and combo volume needed
offer on payment
pushes high payment
Martha Stewart Living Omnimedia
Direct Mail Response
Solution
Use Mega-Model to find the worst responders
before they respond…
…and make them an offer they can’t refuse.
Martha Stewart Living Omnimedia
Direct Mail Response
We’re talking about magazine subscriptions, of course…
Use Mega-Model score groups to
strategically increase response by:
• Lowering prices
• Adding premiums
• Shortening terms
And if that doesn’t work…
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6. 9/30/2011
Martha Stewart Living Omnimedia
Direct Mail Response
Use score groups
to selectively cut costs
• No premium
• Shorter bill series
• Less expensive direct mail package
Martha Stewart Living Omnimedia
Direct Mail Response
• Removed premium (cost cutting) and took $1 off
subscription price (incentive) on modeled names
• Test of bottom tier saw impressive gross response
• Payment suffered with lack of premium
Martha Stewart Living Omnimedia
Direct Mail Response
Additional Applications
for Mega-Model
• Cut bottom tier from mail altogether
• Mine marginal compiled lists or other
large universes for best names
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7. 9/30/2011
Martha Stewart Living Omnimedia
Renewal
Behavior
Martha Stewart Living Omnimedia
Renewal Behavior
Challenges
• Everyday Food offered as a “combo”
subscription with Martha Stewart Living
• Everyday Food shares in the revenue,
but is perceived as FREE
• Even though acquisition offer is a combo,
the titles are renewed individually
• Renewals of EF are good, but at a
discounted price
Martha Stewart Living Omnimedia
Renewal Behavior
Solution
Use Mega-Model to:
• Segment out best prospective renewers
• Offer a slightly higher price to help bridge
the gap in revenue
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8. 9/30/2011
Martha Stewart Living Omnimedia
Renewal Behavior
Mega-Model Test Results
• Tested a 60% increase in price to best
prospects (from $5 to $8)
• Higher price increased revenue by 11% vs.
control, but reduced response by 30%
• Testing continues as we determine what our
end-goals are (revenue vs. orders)
Martha Stewart Living Omnimedia
Insert
Efficiency
Challenges
• Declining response in subscription cards
• Rising paper costs
• Still a large enough source of
subscriptions, so don’t want to cut
completely
Martha Stewart Living Omnimedia
Insert Efficiency
Group Net Index
1 120
2 115
3 114
4 109
5 106
6 115
Mega Model 7 94 Take inserts OUT
Application 8 106 of the issue
9 105
10 105 copies going to
11 94 LEAST responsive
12 96
13 95 names
14 97
15 93
16 91
17 91
18 96
19 79
20 51
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9. 9/30/2011
Martha Stewart Living Omnimedia
One Model,
Many Solutions,
Higher ROI
• Daily Sweepstakes Payment
• Direct Mail Response
• Renewal Behavior
• Insert Efficiency
Publishers Clearing House
Keith Bergendorff
Assistant Vice President of Analytical Services
Publishers Clearing House
Business
Challenges
• Convert prospects into long-term customers
• Order response and payment rates for prospect
mailings in decline
• Attaining profit goals requires shifting consumers
to high-margin merchandise offers
• Extend PCH business across media channels
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10. 9/30/2011
Publishers Clearing House
Mail Prospect
Order Screening
Publishers Clearing House
Mail Prospect Order Screening
Challenges
• All PCH mail offers are Bill-Me so managing
payment risk is essential
• PCH needs included:
– Ability to qualify responders for Bill-Me offers
– Improvement in pay rates on “sub-standard” lists
• Tests of scoring lists prior to mailing ineffective
Publishers Clearing House
Mail Prospect Order Screening
Solution
• Required a tool to improve fulfillment decisioning
• Tested and rolled out with custom Alliant
profitability model applied at order stage
• Combined profitability score with re-developed
PCH internal payment model to create a
“Behavioral Profitability Score”
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11. 9/30/2011
Publishers Clearing House
Mail Prospect Order Screening
Publishers Clearing House
Mail Prospect Order Screening
RESULTS:
“Mail Prospect” Behavioral Profitability Score
• Substantial increase in prospect mail volume
– Back-end score allows expansion into mail lists and
segments not previously viable due to low pay
• Substantial increase in new paid buyer generation
• No significant deterioration in pay-up rate!
• Combined score generates significantly higher
margin dollars than single internal scoring solution
Publishers Clearing House
“One-Timer”
Segmentation
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12. 9/30/2011
Publishers Clearing House
“One-Timer” Segmentation
Challenge
• Speed is a key factor in successfully
re-promoting new mail buyers
– Response declines rapidly with time
elapsed before first customer mailing
• Was not viable to re-mail new buyers until first
payment received (6-12 weeks after order)
• Internal payment model anemic due to lack of
predictive data for new buyers
Publishers Clearing House
“One-Timer” Segmentation
Solution
• Reapply Alliant profitability scores already
appended to all responders
• New internal model uses Alliant scores to create
a new One-Timer Behavioral Profitability Score
• One-Timer score allows for payment
segmentation
• Huge improvement vs. previous internal model
using only transactional data and demographics
Publishers Clearing House
“One-Timer” Segmentation
RESULTS:
“One-Timer” Behavioral Profitability Score
• Enables mailing the highest scoring half of new
One-Timers without waiting for payment
– Reduced interval between first order and first customer
package from 6-12 weeks to 3 weeks
• Significant increase in overall order response and
conversion to Repeat Buyers
• Lift in order response and future value more than
compensates for decrease in overall payment rate
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13. 9/30/2011
Publishers Clearing House
Online Prospect
Scoring
Publishers Clearing House
Online Prospect Scoring
Challenges
• Payment rates for online orders abysmal
• Publishers unhappy with paid subscription rates
• Can’t offer merchandise and make a profit
• Insufficient internal data to identify who is
appropriate for Bill-Me offers
• Order screening improved pay rates, but
it’s not good marketing to solicit orders
and then reject them!
Publishers Clearing House
Online Prospect Scoring
Solution
• Apply scores from same Alliant profitability model
in Real Time at sweeps registration
• Combine profitability scores with internal Real Time
model to create “Ensemble Model”
• Use Ensemble Model score to segment offers
– “Prime” names get merchandise offers
– “Restricted” names get magazine offers
– “Lows” receive partner offers only
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14. 9/30/2011
Publishers Clearing House
Online Prospect Scoring
RESULTS:
“Ensemble” Behavioral Profitability Score
• Targeted offers in online path and email deliver:
– Much improved profitability for merchandise sales
– Much improved pay rates for subscription sales
– Minimal rejection of orders on back end
– “Lows” routed immediately to partner email programs,
improving partner revenue
• Quality of new acquisition sources can quickly be
evaluated via average profitability score
Publishers Clearing House
Profitability Scores +
House Data =
Increased ROI
• Mail Prospect Order Screening
• ‘One-Timer’ Segmentation
• Online Prospect Scoring
Lifecycle Modeling to Increase Response, Payment and Retention
Questions & Answers
Mary-Jo Jennifer Keith
Checco Schulties Bergendorff
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15. 9/30/2011
Lifecycle Modeling to Increase Response, Payment and Retention
Thank You!
Mary-Jo Jennifer Keith
Checco Schulties Bergendorff
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