Customer Lifetime Value with PyMC Marketing
Customer Lifetime Value (CLV) is a forward-looking approach that allows analysts to estimate the value and profitability of customers. CLV equals the net present value of the future cash flows from a customer. It is used to estimate the value of a customer over the entire relationship with a company. It is used for customer profitability, segmentation, targeting and retention strategies, customer divestment, promotions, advertising, and pricing campaigns.
In this chapter, we will cover the following topics:
- The fundamentals of CLV and why analysts use them
- What’s wrong with the CLV formula
- Beyond the CLV formula
- Implementing the BTYD model with PyMC Marketing
By the end of this chapter, you will be able to use PyMC Marketing’s CLV classes to predict the lifetime value and purchase frequency of the users in your business, as well as what the pitfalls of a naïve approach are.
