ABSTRACT
Dynamic customer optimization is the development of decision rules that specify what marketing to target to which customers at what times in order to maximize the lifetime value of the customer (CLV). The managerial relevance and methodological challenge of dynamic customer optimization has generated a burgeoning literature over the last decade. The theme of these efforts is that CLV is something to be managed, not only measured. Traditional applications treat CLV as a marketing metric – for valuing customers, deciding which customers to acquire and invest in, and for valuing the firm (Gupta, et al., 2004). CLV was seen as a static customer characteristic. In contrast, the dynamic customer optimization movement asks “what actions can we take to increase, that is, optimize, CLV?”
