On the Profitability of Long-Life Customers in a Non-Contractual Setting: An Empirical Investigation and Implications…

Popular wisdom holds that it’s the long lifetime customers bringing in the most profits. Or is it? In this working paper, Professors Reinartz and Kumar move beyond the traditional recency, frequency and monetary value (RFM) framework, apply a new model to the profitability-lifetime problem in a non-contractual context, and examine the implications for marketing. Their results may surprise you.

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