Determining the optimal direct mailing frequency

This paper studies the mailing frequency problem that addresses the issue of how often to send a mailing to an individual customer in order to establish a profitable long-term relation rather than targeting profitable groups of customers at every new mailing instance. The mailing frequency is optimized using long-term objectives but restricts the decisions to the number of mailings to send to the individual over consecutive finite planning periods. A stochastic dynamic programming model is formulated for this problem that can easily be applied to various direct marketing frameworks such as catalog sales or charity organizations. The model is calibrated for a large Dutch non-profit organization and shows that substantial improvements can be achieved by approaching the mailing strategy with the mailing frequency problem, both in the number of mailings to send and in the profits resulting from the responses.