Customer Lifetime Value Analysis: Designing a Multi-Company Rewards Programme to Incentivise Beneficial Customer Behaviors

Abstract

This data challenge follows the early career experience of Billie, who is working as a graduate analyst at a fictional start-up rewards firm called Honeypot. Woven into the case are key concepts of lifetime value (LTV) and loyalty, with a deeper practical engagement with the metrics alignment of customer rewards systems. The initial student task is to create an incremental revenue and cost forecast using provided growth factors to evaluate, for each of the five company players, the commercial impact of joining the Honeypot rewards scheme. Qualitative interpretation is required to recommend a framework for earning and spending points that is aligned to the organisational goal(s), using a blend of the provided Excel data and the information from the body of the challenge. The second challenge invites students to use a profit-focused net present value (NPV) calculation over a 10-year time period to gain an appreciation for the time value of money and discount rates. All characters, companies, numbers, and scenarios are entirely fictional. This data challenge is designed for higher-level undergraduate and graduate students in marketing and strategy. As part of a business/management/marketing degree programme, students will have already covered a range of introductory marketing and numeracy modules before attempting this data challenge.

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