Journal ArticleDOI
An ltv model and customer segmentation based on customer value: a case study on the wireless telecommunication industry
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An LTV model considering past profit contribution, potential benefit, and defection probability of a customer is suggested and a framework for analyzing customer value and segmenting customers based on their value is covered.Abstract:
Since the early 1980s, the concept of relationship management in marketing area has gained its importance. Acquiring and retaining the most profitable customers are serious concerns of a company to perform more targeted marketing campaigns. For effective customer relationship management, it is important to gather information on customer value. Many researches have been performed to calculate customer value based on Customer lifetime value (LTV). It, however, has some limitations. It is difficult to consider the defection of customers. Prediction models have focused mainly on expected future cash flow derived from customers' past profit contribution. In this paper we suggest an LTV model considering past profit contribution, potential benefit, and defection probability of a customer. We also cover a framework for analyzing customer value and segmenting customers based on their value. Customer value is classified into three categories: current value, potential value, and customer loyalty. Customers are segmented according to three types of customer value. A case study on calculating customer value and segmenting customers of a wireless communication company will be illustrated.read more
Citations
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Review: Application of data mining techniques in customer relationship management: A literature review and classification
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TL;DR: A framework for analyzing customer value and segmenting customers based on their value is proposed and strategies building according to customer segment will be illustrated through a case study on a wireless telecommunication company.
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References
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Journal Article
Manage Marketing by the Customer Equity Test
TL;DR: In this paper, the authors use decision calculus to help managers determine the optimal balance between spending on acquisition and spending on retention, and provide a series of guidelines and suggestions to help frame the issues that affect acquisition, retention and customer equity.
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Customer lifetime value: marketing models and applications
Paul D. Berger,Nada I. Nasr +1 more
TL;DR: In this article, the authors present a series of mathematical models for determining customer lifetime value, based on a systematic theoretical taxonomy and on assumptions grounded in customer behavior, and select managerial applications of these general models.
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Customer lifetime value research in marketing: A review and future directions
TL;DR: The notion of lifetime value of a customer has been well accepted by both researchers and business practitioners as discussed by the authors and it is normally be-lieved that long-lifetime customers are more profitable to a firm.
Journal ArticleDOI
Customer lifetime valuation to support marketing decision making
TL;DR: In this paper, a simple taxonomy of buyer-seller relationships is adapted to distinguish basic approaches for estimating customer lifetime value (LTV), which is an important construct in designing and budgeting for customer acquisition programs and a number of other decision areas.
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Customers as assets
Sunil Gupta,Donald R. Lehmann +1 more
TL;DR: In this paper, the authors show how one can use publicly available information and a simple formula to estimate the lifetime value of a customer for a publicly traded firm, and provide a link between customer and firm value.