Direct Mailing Decisions for a Dutch Fundraiser

Abstract

Direct marketing firms want to transfer their message as efficientlyas possible in order to obtain a profitable long-term relationshipwith individual customers. Much attention has been paid to addressselection of existing customers and on identifying new profitableprospects. Less attention has been paid to the optimal frequency ofthe contacts with customers. We provide a decision support system thathelps the direct mailer to determine mailing frequency for activecustomers. The system observes the mailing pattern of these customersin terms of the well known R(ecency), F(requency) and M(onetary)variables. The underlying model is based on an optimization model forthe frequency of direct mailings. The system provides the directmailer with tools to define preferred response behavior and advisesthe direct mailer on the mailing strategy that will steer thecustomers towards this preferred response behavior.decision support system;direct marketing;Markov decision process