Counting your customers: who are they and what will they do next?
Management Science
Marketing Metrics: 50+ Metrics Every Executive Should Master
Marketing Metrics: 50+ Metrics Every Executive Should Master
Managing customers as investments the strategic value of customers in the long run
Managing customers as investments the strategic value of customers in the long run
Portfolio Dynamics for Customers of a Multiservice Provider
Management Science
Modeling Customer Lifetimes with Multiple Causes of Churn
Marketing Science
A Joint Model of Usage and Churn in Contractual Settings
Marketing Science
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The past few years have seen increasing interest in taking the notion of customer lifetime value (CLV) and extending it to value a customer base (with subsequent links to corporate valuation). The application of standard textbook discussions of CLV leads to calculations based on a single retention rate. However, at the cohort level, retention rates typically increase over time. It has been suggested that these observed dynamics are due, in large part, to a sorting effect in a heterogeneous population. We show that failing to recognize these dynamics yields a downward-biased estimate of the residual value of the customer base (compared to an aggregate analysis that ignores these dynamics). We also explore the implications of failing to account for retention dynamics when computing retention elasticities and find that the frequently reported values underestimate the true effect of increases in underlying retention rates in a heterogeneous world.