Understanding Net Present Value vs. Lifetime Value

Reading a LinkedIn article I came across the term Net Present Value (NPV). Wikipedia describes NPV as “the present value of money today compared to the present value of money in future, taking inflation and returns into account.” It’s However, I found the writer, Sallie Krawcheck’s, personal explanation more thought provoking: “the willingness to forgo earnings today, to invest smartly for more earnings tomorrow.”

Instead of applying to finances, economics and accounting, I started to think how NPV can be applied to marketing and customer relationship building. As marketers, we’ve been programmed to calculate something similar called a Customer’s Lifetime Value (LTV), the predicted net profit for the entire future relationship of the customer…but what about a prospect’s Net Present Value? Are they even worth acquiring? In the years to come, will they be worth more or less than they are right now?

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Understanding Net Present Value vs. Lifetime Value

Net Present Value

Reading a LinkedIn article I came across the term Net Present Value (NPV).  Wikipedia describes NPV as “the present value of money today compared to the present value of money in future, taking inflation and returns into account.” It’s However, I found the writer, Sallie Krawcheck’s, personal explanation more thought provoking: “the willingness to forgo earnings today, to invest smartly for more earnings tomorrow.”

Read more


Think Before You Leap: Making Social Media Marketing Work For Your Business

Many marketers say, “We know we need to do social media marketing” without actually taking a good, hard, analytical look at how. So we’ve provided a list of considerations to determine how social media can be an effective marketing strategy for your business.

  1. Know Your Goals: What do you want to accomplish, and why? Do you want to increase awareness? Build customer loyalty? Acquire new customers? Mine your audience for new demographic and psychographic insights? When you have concrete goals, you’ll have a better idea of how to use social media more effectively.
  2. Make Sure You Can Measure: Anyone can count likes, shares, follows, re-Tweets and video views. But think about measuring specific actions beyond social media engagement that can have more of a direct impact on your business. Can you move the audience from your Facebook page to a landing page where you can capture their email address? Or consider a specific call to action at the end of a YouTube video that encourages the viewer to visit your website to download a coupon. Think about what kind of user activity you can measure beyond your social media pages.
  3. Post With Purpose: Whether addressing Facebook fans, Twitter followers or YouTube subscribers, make them a compelling offer that can only be acquired through social media. That takes mere customer engagement up to another level and strengthens loyalty and retention. Social media shouldn’t be thought of as just a web portal—make it an interactive ecommerce solution.

At The Weinstein Organization we consider social media to be an effective direct response marketing channel with many opportunities. Contact us to find out how we can help you turn “likes” into trackable, measureable responses.


Social Media As A Living Focus Group

There's an old saying that loosely goes "bad press is better than no press". It's better to be known for something, good or bad, than to be unknown. Or so the theory goes. And due to social media marketing that theory is being put to the test all the time now.

Take for example the latest campaign for Dr. Pepper Ten, a new diet drink that boasts only 10 calories. Their campaign theme is aimed directly at men, and their Facebook page is branded in kind with the "Dr. Pepper 10 Man'Ments"--a code of how to live life like a real man. The all-man-all-the-time approach is familiar--many brands have gone down this road before with varying degrees of success--and even goes so far as to offer the tagline "It's Not For Women". Ok we get it. It's a man's drink with only 10 calories. But that is not what Dr. Pepper is now known for.

Spend a few minutes on their Facebook page and you'll find that Dr. Pepper Ten is now the big instigator in the most recent battle of the sexes. 10.6 million people have liked their page as of this writing--this is enough to make any CMO smile--but an unofficial analysis of their wall comments tells a different story. Alternating in almost a perfect back-and-forth debate, comments range from the defensive ("I'm a woman and I'll never drink this misogynistic soda") to the offensive ("if you don't like it, get back in the kitchen and make my dinner"), from the analytic ("this campaign will kill your sales") to the humorous ("as a lesbian, am I manly enough to drink this?"). This is enough to make any CMO cringe. Or maybe not. Maybe they intended to cause a controversy to rally people around their drink.

In one sense, marketing's job is to create brand awareness and increase sales. This campaign certainly raised awareness (10.6 million people are definitely aware of the campaign), and likely prodded their target audience (men) to buy the product. It definitely alienated some women, but there were plenty of comments from women who shrugged off the controversy and declared their affinity for the brand ("laughing at this *fake* controversy--it's a joke people! Going to chug a Dr. Pepper 10 right now!"). Even some men were offended, but they remained engaged ("going to check back tomorrow to see how Dr. Pepper has ruined women's lives").

The bottom line will be the sales figures, but the line just above the bottom line simply cannot be ignored: more than 10.6 million people know about the new drink. For better or for worse, this very public airing of instant reactions to a marketing campaign mark the rise in power of the consumer. Now when you launch a campaign you get an immediate reaction that is quantifiable and qualifiable. There is no silent majority in social media marketing because the message now gets shaped after the launch by the audience, just as much as the agency creatives and planners who developed it. Dr. Pepper launched a men-only campaign, but women have taken over the message surrounding the campaign to a large degree. The campaign is now a controversy, and garnering plenty of earned media coverage on top of it. The continuing dialog surrounding this campaign will ultimately determine how long it lives or how soon it dies because it is being tested in-market. And the results are coming in every second.

The influence an audience has over what a brand does goes beyond a marketing campaign. Recently there was so much social media backlash against Netflix and their plans to launch a brand for their DVD-only subscriptions called Qwikster, that they scrapped the whole idea before it even launched. What this tells us is that brands are listening to their customers more than ever before. Not because they're suddenly more interested, but because now they have this real-time ability to track and measure audience reaction and response.

Social media is the world's most dynamic focus group.


Ode to Server and a Happy Thanksgiving

We have much to be thankful for. Our staff, clients, vendors, friends and family, and extra long weekends on national holidays.

On this Thanksgiving Day we give thanks to the one who never stops working.

The one who can launch a 1.2 million-email campaign, update a Facebook status, and tweet about it all at the same time.

While directing phone calls and internet communications data over miles of circuitry.

The one who makes it possible for us to go home and sleep at night (well, maybe not the folks in IT).

Doing the heroic work of many, in total anonymity.

Sitting in a cramped, cold, windowless office. Usually with the lights off.

So while we digest our well-earned Thanksgiving harvest, let us think of

the one who keeps on at it, even while the office is "closed for the holiday".

Who even has the tortured indignity to aid and abet the publishing of this very blog entry.

We thank you, we raise our glasses to you in honor.

To the Server of The Weinstein Organization: we wish you a Happy Thanksgiving!

Thanks indeed.