Marketing database Essay Example | Topics and Well Written Essays - 250 words

Marketing database - Essay Example This is because profitability levels of different client differs, and thus being able to detect the most rewarding customers is essential. Based on the number of consumers under investigation, LTV can be carried out on the whole customer base or through segmentation (Hughes, 2014). Although the latter is more demanding, its more effective in analyzing clients. For royalty program, acquisition cost is considered as ‘sunk cost’, and thus not used in the calculation, as the customers are part of the current customer base. To effectively analyze the customers, analysis need to be executed at a group level using the test versus control situation approach. In this case, the tests are used to realize the loyalty program, an aspect not addressed by control. In this regard, for success to be realized, the lifetime value should be higher than the investment costs. Therefore, LPV is an efficient tool in evaluating the worthiness of a future royalty program (Rodgers & Peppers,