Being an analytics consultant, I always preach the value of taking a comprehensive view of the customer to my clients. It makes a lot of sense to weed out risky customers during acquisition or to put in greater effort to retain customers who are likely to spend more in the future. This is the basic premise of CLTV. Further, for this measure to be really actionable it should be tied to the CRM, so that tactical and strategic decisions can be influenced by the CLTV score.
Recently I was very thrilled to see a real life illustration of this by none other than amazon.com. The winter being what it was in New Jersey, we had a somewhat unwanted guest in our house seeking refuge from the harsh outdoors-- a mighty mouse! Once I discovered the guest, I was determined to get it out, but being soft at heart, I researched the Internet for "humane traps". Found quite a few on amazon.com, from where I buy almost everything that I need that does not grow on trees or has feet. Leaving nothing to chance, ordered about 6 of them to be delivered express. Well for some reason the package never arrived. After a few days, I sent a complaint email to amazon. I expected to have to duke it out with the retailer, supplier and the delivery service to get my money back--- especially because the product status was showing delivered. Imagine my surprise, when within 10 minutes I get an email stating that 5 new "humane traps" were being shipped, and the money was being refunded for the sixth variety as it was out of stock. The shipment arrived the next day.
If amazon was to do this for all customers, without even asking any follow up question to verify the facts, it will very soon be inundated with frivolous claims. However, the strategy makes very good sense for customers who do a lot of business with amazon. And speed to action is everything here, because instead of complaining about a bad experience, I am actually praising them for the way they remedied the situation. And to do this at the speed they did, the score has to be tied to their CRM.
For those curious, the mouse was caught and released in a nearby reservation area.
-- Datamining_guy
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