Lifetime value is widely recognized as important, but more than a few managers will admit in private that they don't really know what to do with it. This naturally makes them reluctant to invest the considerable resources required to come up with a meaningful lifetime value model.

It is possible to argue that what you do with lifetime value doesn't matter; assembling the data for the calculation will by itself bring enough new insight to justify the effort. Regardless of whether or not this is true, this rationalization isn't necessary. Lifetime value has many practical applications that fall into several broad categories. In rough order of increasing complexity, they are:

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