A Rational Argument - Lifetime Customer Value

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To figure out which customers to go after marketers determine their customer lifetime value or LTV. Using statistic models is one way to go about it. From Peppers and Rogers' The One to One Future:

The lifetime value of a customer can be calculated using different formulas. The objective, however, is to get as close as possible to an evaluation of the net present value of all future profits from a particular customer.
One formula for an individual customer's lifetime value (LTV) would be:

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