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Customer Lifetime Value

 

How much profit can the company make with a particular customer? The ability to estimate this amount represents an important advantage for a company.

Customer lifetime value is dependent on a number of elements :

  • How long will this customer remain loyal to the company?
  • Will the customer increase or decrease his/her consumption habits?
  • Will the customer be willing to pay for profitable services and products?

Predictive analytics techniques identify which factors best explain these elements and which variables are the best predictors: i.e. will yield the best forecasts.