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Strategic Database Marketing by Arthur Hughes

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3Lifetime Value: The Way to Measure Marketing Programs

 

That loyal customers are a good thing is self-evident to every business person. Yet the vast majority of companies don’t know the cash value of customer loyalty, and most don’t know they don’t know. They look at their sales figures or at average customer tenure, and they draw a series of inappropriate or inaccurate conclusions.… In most businesses, accountants treat investment in customer acquisition as one more current expense, instead of assigning it to specific customer accounts and amortizing it over the life of the customer relationship.

FREDERICK REICHHELDThe Loyalty Effect, Bain and Company 1996

In this chapter you will learn how to calculate the lifetime value of your customers ...

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