Questions tagged [customer-lifetime-value]

Customer Lifetime Value (LTV) is the projected, discounted revenue that a customer will generate during their lifetime. LTV is a key business metric for many types of businesses.

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Estimating variance of MLE estimate of Beta-Geometric/NBD without MCMC

I'm using Fader's BG/NBD model for customer LTV calculations. The log likelihood is the following: $$ \sum_{i=1}^{N} \ln L(r, \alpha, a, b|X_i=x_i, t_{x_i}, T_i) = \frac{B(a, b + x)}{B(a, b)}\frac{\...
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190 views

How to fit newer cohorts using Pareto/NBD or Beta/Geo for CLTV

I am trying to fit the popular Pareto/NBD or Beta/Geometric models for non-contractual, continuous customer data. On top of that I then fit the Gamma/Gamma model for monetary value (using the very ...
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170 views

Pareto/NBD and New/Existing Customers

I am looking at implementing a Pareto/NBD model to forecast customer lifetime value in a non-contractual business setting. One thing I haven't got my head around yet is whether such a model is equally ...
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17 views

Do Non-Contractual RFM Models deal well with Supermarket Data?

With supermarkets, it seems reasonable to assume that there will be some periodicity to the purchases, because customers do regularly go to them. So my guess is that it's improper to use it for these ...
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15 views

Why *exactly* do we use *repeat* transactions for Non-Contractual RFM Models?

In models like the Pareto/NBD and the BG/NBD for RFM modeling in Non-Contractual settings, it is conventional to use repeat purchases. The only answer I've found to it is (in the BTYD Vignettes) ...
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12 views

online news readers engagement index (inverse of churn model?)

I would like to get a second opinion of the problem of assigning engagement scores to online news readers. Currently, I build a churn model as required by the company, that mainly predicts the ...
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19 views

Calculating Lifetime Value with a “confidence” factor

I am working on calculating the lifetime value of a group of individuals who registered to a site. I am determining the lifetime value of signup and not necessarily a customer. I am calculating ...
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12 views

LTV formula calls for Avg Order Value * Purchase Frequency * Lifespan--what to do when Lifespan is less than 1 year and Purchase frequency is 1?

Let's say hypothetically that you have the following: Looking at 5 years worth of data, we have in one group: ...
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16 views

How much data is considered “sparse” for fitting a mixed (Beta Geometric) distribution with 4 shape parameters?

I'm using CamDavidsonPhillips Customer Lifetime Value library to calculate CLV, and it uses a distribution based on Peter Fader's work on the subject that fits a Gamma distribution to model customer ...
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In the context of predicting customer churn, what is “small effect size?” [closed]

One research paper says an example of "effect size" is the difference in the average age of churners vs. non-churners (31 vs 40). A different paper says "effect size" is the difference in the area ...