Database marketing is very well suited to this type of customer relationship, because an ongoing association is expected and there are lots of opportunities for collecting information. In fact, database marketing and lifetime value analysis are mainstays of profitability in subscription industries.
Lifetime value is a critical computation in database marketing.
Retention analysis is critical to understanding lifetime value. A typical time horizon for a lifetime value study is 15 years. Of course, analysts make projections of lifetime value using various assumptions that allow us to make estimates without waiting 15 years. But to get complete information on the lifetime value of a customer, you will have to wait 15 years to validate it. A lot can happen in 15 years, and it's risky to assume that customers' motivations and buying habits would not have changed in that period of time.