Customer Lifetime Value

In this chapter, we are going to focus on the second use case of predictive analytics in marketing, the customer lifetime value that we discussed in the previous chapter. In marketing, it is always a challenge to budget for marketing campaigns. We do not want to spend too much and result in a negative ROI. However, we also do not want to spend too little and have no visible impact or outcome. When determining the budget for a marketing strategy, it is essential to know what the expected return will be from running a given marketing campaign. Understanding what the customer lifetime value (CLV) is for individual customers can help marketers justify their marketing budget, as well as target potential high-value customers. In this chapter, we are going to discuss in more detail the concept and the advantage of calculating the CLV, as well as how to build a...