Abstract
Various customer selection metrics are available for managing loyalty programs, but the traditional ones don’t consider (1) the probability of customers being active in the future, (2) the future marketing costs, and (3) the future contribution margin. Customer lifetime value (CLV) incorporates all these aspects in the calculation. Firms can harness three key strategies to maximize CLV: optimal allocation of resources, pitching the right product to the right customer at the right time, and acquiring and retaining profitable customers.