Abstract:This paper studies strategies to access customer lifetime value (CLV). Traditionally, heuristics based on recency, frequency and monetary value variables (RFM) are used to determine the best customers. Here, some forms of directly exploring these parameters to predict CLV are compared to an approach based on fitting a stochastic model. The model employed is a composition of a model for the number of transactions along the residual lifetime and a model for the value spent. New evidence is raised on the effect o… Show more
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