Predicting Customer Lifetime Value: When Is It Sensible To Give Perks To Customers?

If you have been a great customer, catalog companies may send you more mailings, airlines may give you priority for upgrades, credit card companies may waive late fees, and hotels may leave a bottle of cabernet in your suite. These are discretionary marketing investments, bestowed upon unsuspecting customers and intended to cultivate continued, profitable business among the best customers. At the heart of this practice lies the belief that a good customer yesterday will be a good customer tomorrow.