Estimating the True Value of a Marketing Contact

The true value of a marketing contact is the sum of any resulting short-term profit, the change in long-term customer value due to change in customer status and the strategic value of having more information about the customer. The first two components of the value of a contact have been studied extensively in the literature; we explore the third component in this paper. We operationalize the value of information as the increase in discounted future customer value due to policy improvement from additional customer information. We demonstrate how a marketing strategist, using Bayesian dynamic programming techniques, can improve performance by taking the value of information into account while making marketing contact decisions.