Customer Lifetime Value Models for Decision Support

Authors:
Saharon Rosset;Einat Neumann;Uri Eick;Nurit Vatnik
Affiliations:
Amdocs Ltd. 8 Hapnina St., Ra'anana, 43000 Israel. saharonr@amdocs.com;Amdocs Ltd. 8 Hapnina St., Ra'anana, 43000 Israel. einatn@amdocs.com;Amdocs Ltd. 8 Hapnina St., Ra'anana, 43000 Israel. urieick@amdocs.com;Amdocs Ltd. 8 Hapnina St., Ra'anana, 43000 Israel. nuritv@amdocs.com
Venue:
Data Mining and Knowledge Discovery
Year:
2003

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Abstract

We present and discuss the important business problem of estimating the effect of marketing activities on the Lifetime Value of a customer in the Telecommunications industry. We discuss the components of this problem, in particular customer value and length of service (or tenure) modeling, and present a novel segment-based approach, motivated by the segment-level view marketing analysts usually employ. We describe in detail how we build on this approach to estimate the effects of retention campaigns on Lifetime Value, and also discuss its application in other situations. Our solution has been successfully implemented by the Business Insight (BI) Professional Services.