Customer lifetime profitability is one of the holy grails of analytics, and companies are often surprised when they see data that goes against what they assumed was gospel for their business. Like when a bank discovers that its high-income customers aren’t the most profitable. Or the insurance company that extends discount rates to hang on to marginal customers that end up defecting to a low-cost Internet provider anyway.
The question is, how do you know when a customer costs more to keep than to simply let go? There's conventional wisdom, or a sacrosanct rule of business, that the name of the game is expanding and acquiring as many new customers as possible. Analytics is seen as the way forward to cracking open new markets, but analytic tools can also show you where you may be better off closing markets.
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