Kantar leverages a statistical analysis technique used to estimate the impact of various marketing activities on sales and other performance metrics. When applied to a portfolio of financial products, the marketing mix model helps understand each product's contribution to the total client value. This involves assessing the interplay between different products and how they collectively influence a client’s lifetime value (LTV).
TCV is a comprehensive metric that encompasses the revenue generated from a client across all products, adjusted for acquisition costs and retention.
To measure TCV using LIFT ROI you follow these steps:
- Data Collection: Gather detailed data on marketing spend, sales, and client behaviour for each product. This includes acquisition costs, cross-sell and up-sell rates, and retention rates.
- Model Specification: Define the MMM model for each product. Specify the variables that influence sales and client behaviour, including marketing activities, economic factors, and client demographics.
- Model creation: Use statistical techniques to estimate the impact of each variable on sales and client retention for each product. This will provide insights into how different factors drive performance.
- Portfolio Analysis: Integrate the individual product models to create a comprehensive view of your product portfolio. This involves analysing the interactions between products, such as how cross selling a credit card to a home loan client impacts their overall value.
- Optimisation: Identify the optimal marketing mix to maximise TCV. This involves reallocating marketing resources across products to enhance the overall portfolio's performance.
To determine which product contributes the most to lifetime value, consider the following:
- Analyse the revenue generated by each product per client over their lifetime. Home loans typically provide substantial revenue due to high loan amounts and interest rates.
- Assess the retention rates for each product. Savings accounts might have higher retention rates due to lower churn compared to credit cards.
- Evaluate the potential for cross-selling and up-selling. A client with a home loan might be more likely to take additional financial products, increasing their overall value.
- Consider the cost of acquiring clients for each product. Credit cards may have higher acquisition costs but can also drive significant cross-sell opportunities.
By integrating these factors into the LIFT ROI model, financial institutions can identify which product contributes most to LTV. For example, a home loan might generate substantial revenue, but if credit cards and savings accounts enhance client retention and cross-sell potential, they collectively contribute more to TCV.
Implementing LIFT ROI provides several strategic advantages where financial institutions can allocate marketing budgets more effectively. This includes:
- Focusing on products that drive the highest TCV.
- Gaining insights from the LIFT ROI model enabling personalized marketing strategies, targeting with the right product at the right time.
- Understanding the contribution of each product to TCV can guide product development and innovation, ensuring offerings meet client needs and drive value.
- Identifying key drivers of retention, institutions can implement strategies to enhance client loyalty and reduce churn.
In conclusion, LIFT ROI is a powerful tool for financial institutions aiming to maximise total client value across their product offerings. By understanding the individual and collective contributions of home loans, credit cards, and savings accounts, institutions can optimize their marketing strategies, enhance client relationships, and drive sustainable growth. In a competitive market, leveraging the insights can be the differentiator that propels financial institutions to new heights of success.
For more information about Kantar’s LIFT ROI portfolio and how it can help you unlock your investments and potential please contact Pamela.goodman@kantar.com
Measuring Total Client Value
TCV is a comprehensive metric that encompasses the revenue generated from a client across all products, adjusted for acquisition costs and retention. To measure TCV using LIFT ROI you follow these steps:
- Data Collection: Gather detailed data on marketing spend, sales, and client behaviour for each product. This includes acquisition costs, cross-sell and up-sell rates, and retention rates.
- Model Specification: Define the MMM model for each product. Specify the variables that influence sales and client behaviour, including marketing activities, economic factors, and client demographics.
- Model creation: Use statistical techniques to estimate the impact of each variable on sales and client retention for each product. This will provide insights into how different factors drive performance.
- Portfolio Analysis: Integrate the individual product models to create a comprehensive view of your product portfolio. This involves analysing the interactions between products, such as how cross selling a credit card to a home loan client impacts their overall value.
- Optimisation: Identify the optimal marketing mix to maximise TCV. This involves reallocating marketing resources across products to enhance the overall portfolio's performance.
To determine which product contributes the most to lifetime value, consider the following:
- Analyse the revenue generated by each product per client over their lifetime. Home loans typically provide substantial revenue due to high loan amounts and interest rates.
- Assess the retention rates for each product. Savings accounts might have higher retention rates due to lower churn compared to credit cards.
- Evaluate the potential for cross-selling and up-selling. A client with a home loan might be more likely to take additional financial products, increasing their overall value.
- Consider the cost of acquiring clients for each product. Credit cards may have higher acquisition costs but can also drive significant cross-sell opportunities.
By integrating these factors into the LIFT ROI model, financial institutions can identify which product contributes most to LTV. For example, a home loan might generate substantial revenue, but if credit cards and savings accounts enhance client retention and cross-sell potential, they collectively contribute more to TCV.
Implementing LIFT ROI provides several strategic advantages where financial institutions can allocate marketing budgets more effectively. This includes:
- Focusing on products that drive the highest TCV.
- Gaining insights from the LIFT ROI model enabling personalized marketing strategies, targeting with the right product at the right time.
- Understanding the contribution of each product to TCV can guide product development and innovation, ensuring offerings meet client needs and drive value.
- Identifying key drivers of retention, institutions can implement strategies to enhance client loyalty and reduce churn.
In conclusion, LIFT ROI is a powerful tool for financial institutions aiming to maximise total client value across their product offerings. By understanding the individual and collective contributions of home loans, credit cards, and savings accounts, institutions can optimize their marketing strategies, enhance client relationships, and drive sustainable growth. In a competitive market, leveraging the insights can be the differentiator that propels financial institutions to new heights of success.
For more information about Kantar’s LIFT ROI portfolio and how it can help you unlock your investments and potential please contact Pamela.goodman@kantar.com