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You recognize that no profit customers are a serious liability. So , in addition to offering rewards and discounts to high CLV members, you impose
You recognize that no profit customers are a serious liability. So in addition to offering rewards and discounts to high CLV members, you impose cancellation fees, hike late payment assessments, and take other steps to discourage behaviors that cost you more than they are worth. The strategy is an unqualified success. The most profitable members are trading up to your priciest offerings and regularly recruiting new customers. Those at the bottom of the CLV scale are taking their business to your competitors reducing costs and management headaches. While some of the penalized individuals complained to Susan, she appreciates the effectiveness of your approach and realizes that friends do not necessarily make the best customers. You're still uneasy about the future given that the spa's youngest members are over but for now, the business is more profitable than ever. And the CEO has rewarded you with a company car. By developing a CLV strategy based on purchase data, you succeeded in maximizing profits from top spenders while minimizing the costs of unprofitable members. Demographic challenges still lie ahead as you chose to focus on an aging boomer customer base but your efforts have put the business on a firm financial footing.
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