Customer Lifetime Value Models: A literature Survey

Customer Lifetime Value (CLV) is known as an important concept in marketing and management of organizations to increase the captured profitability. Total value that a customer produces during his/her lifetime is named customer lifetime value. The generated value can be calculated through different methods. Each method considers different parameters. Due to the industry, firm, business or product, the parameters of CLV may vary. Companies use CLV to segment customers, analyze churn probability, allocate resources or formulate strategies related to each segment. In this article we review most presented models of calculating CLV. The aim of this survey is to gather CLV formulations of past 3 decades, which include Net Present Value (NPV), Markov chain model, probability model, RFM, survival analysis and so on.

Keywords:

Customer Lifetime Value , Markov chain , RFM method , Survival analysis