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Loyalty Technologies develops customer lifetime value score (LTV) to target most valuable customers for marketing spend


Loyalty Technologies' client needed tools to determine which of their customers were the most profitable in order to focus marketing spend. With best-in-class churn numbers, the client had mastered the art of making their customers happy. However, there were still pockets of valuable customers that were slipping away via targeted marketing campaigns on behalf of their competitors.

Project Goal

Establish Lifetime Value (LTV) Score to enable targeted marketing programs on the most valuable customers.


  • Segment customers based on past, present and potential future value.
  • Create profiles of different customer segments.
  • Identify drivers of value, and determine marketing strategies and tactics to improve and protect customer value.

Loyalty Technologies Solution

Loyalty Technologies had already established a successful customer loyalty program for its client. However, to combat the potential increase in customer turnover due to the impending LNP rule, it was important to build additional incentives into the existing program in an effort to retain the client's most valuable customers.

To strengthen the existing program, Loyalty Technologies added an incremental vesting feature that would quickly engage its client’s best customers, while supplying an avenue for one-to-one marketing as the new LNP rule approached and took effect.

With the new program, participants were now rewarded for the length of time they had vested in the loyalty program. Each month of participation would bring more valuable customer rewards, monthly sweepstakes prizes and an increased opportunity to win a grand prize sweepstakes held at the end of the loyalty program promotion period.

By rewarding the length of participation, customers are now more likely to stick with the loyalty program and less likely to switch mobile carriers.

Key Discoveries

Customer Profiles
  • High Value Customers were more than twice as valuable as the rest of the base:
    • High Value Customers contribute disproporionately to overall value
  • A significant percentage of the customer base actually cost money to service and support:
  • Highlighted area shows bottom two deciles with an average _negative_ value.
Drivers of Value
  • The anaysis revealed significant differences in what drove value and risk. Some behaviors customers engaged in were desructive to value. In other cases, excessive promotions offered reduced risk but decreased profitablity.
    • Analysis revealed different sized customer groups with differeing value/risk characteristics.
Score Utililty
  • Scores were used to prove ROI on multiple marketing initiatives
    • Contract Renewal Offers: In concert with a robust churn model, customers who were at the highest risk of churn and who were in the highest value groups were targeted for contract renewal.
    • Handset Upgrade Program: Subsidies were set based on customer value, saving the most subsidy dollars for the highest value customers.
    • Self-care Initiatives: Low value customers were channeled to less expensive customer care touchpoints (web, IVR), reducing cost of care.