Inquiry Response: Including Customer Lifetime Value

Inquiry:

We have models to show propensity to buy, and now would like to include customer lifetime value. Do you have any suggestions on how to make this happen?

Response:

THE BIG IDEAS:

  • Customer acquisition vs. customer retention
  • Base customer lifetime value
  • Binomial matrix

CUSTOMER ACQUISITION VERSUS CUSTOMER RETENTION

When it comes to customer lifetime value (CLV), it’s critical to know whether you’re looking at customer acquisition or customer retention, which will lead to different values.

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