Customers who pose the most value to the brand are shown in the database and this helps to give insight to the brand on how well they are retaining customers and also how to keep them loyal to the brand in the future. In the “The Customer Lifetime Value Equation” case study, customers were differentiated at Amazon based on their previous purchases. Customers who frequently made purchases with the brand over long periods of time helped the company to offset the costs of marketing to that customer. For instance, Amazon Prime membership encourages members to make frequent purchases through Amazon because of the benefits they receive from their paid subscription. Amazon Prime members receive free shipping on all prime orders, and they receive special promotions through Amazon Prime and Amazon Kindle. Subscription services help to differentiate customers as seen with Amazon Prime. Customers are more inclined to become Amazon Prime members because of the incentives rewarded by Amazon. Thus, Amazon is able to increase their most valued customers (Prime members) who contribute to the brand not only through frequent purchases but also through a monthly or annual subscription fee. Amazon Prime members would be the most valued Amazon customers because of how engaged they are with the brand. Prime customers share their personal information with the company so Amazon …show more content…
Business may not see profit upfront when building their customer base, as seen with businesses like Amazon, Sprint, and Verizon in the “Customer Lifetime Value” case study; however, customer lifetime value makes the initial cost and effort worth it in the long run. For example, Amazon was not profitable initially when it introduced Amazon e-reader products and service, nonetheless, those same products became very profitable over time because the people that bought the items tended to purchase more content from Amazon for those devices. The initial investment resulted in increased sales in the long run even though it was not profitable in the beginning. The Customer Value Equation has proven to be effective over the years in accessing how successful a business would be based on the customer relationships they could potentially build. By focusing on building strong, mutually beneficial relationships through CRM tools, businesses are capable of retaining valued customers and turning a profit over