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08/21/2001 Archived Entry: "21-August-2001 -- The Lifetime Value of a Customer"

The Lifetime Value of a Customer -- "Every marketing initiative you undertake (such as setting up a customer service operation with a toll free 800 telephone line) has certain costs. It also may have certain benefits in improved customer relationships, increased sales, and increased retention. How can you be sure that your new customer service is the right move for you? If it has the effect of increasing your customer lifetime value. For your particular business, a toll free customer hot line may actually cost more than it is worth, and you should not invest in it. On the other hand, it may be quite profitable. Lifetime value computations can help you determine that before you invest the money. That is why lifetime value is such a useful concept."

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