As often as the customer lifetime value metric is used to make decisions, set pricing, and bundle offers, very few institutions can claim they have this figured out.
It’s starting to become clear that much analytic technology, including enterprise-wide decision management systems, rely on a solid and defensible customer lifetime value metric to create truly optimal decisions. Without it, banks run the risk of underestimating or overestimating the customer’s reaction to those decisions. That error could easily result in incurring unforeseen costs or giving away unnecessary profit.
More important than the end result of customer lifetime value is establishing a process to get there. There are three important dimensions to customer lifetime value: the length of the relationship, the breadth of the relationship, and the depth of the information about the customer. In this report, we cover all three dimensions and discuss how a financial services institution can make progress towards the goal of an overall lifetime value calculation.
To learn more, Retail Banking and Cards members can access Seeing the Forest and the Trees: Calculating Customer Lifetime Value.