Abstract
Customer lifetime value (LTV) is one of the cornerstones of database marketing. It is the metric by which we quantify the customer's long-term value to the firm. This chapter focuses on the fundamental methods for calculating lifetime value, centering on “simple retention models” and “migration models.” We present a general approach to calculating LTV using these models, and illustrate with specific examples. We also discuss the particular case of calculating LTV when customer attrition is unobserved.
This is a preview of subscription content, log in via an institution.
Buying options
Tax calculation will be finalised at checkout
Purchases are for personal use only
Learn about institutional subscriptionsPreview
Unable to display preview. Download preview PDF.
Author information
Authors and Affiliations
Rights and permissions
Copyright information
© 2008 Springer Science+Business Media, LLC
About this chapter
Cite this chapter
Blattberg, R.C., Kim, BD., Neslin, S.A. (2008). Customer Lifetime Value: Fundamentals. In: Database Marketing. International Series in Quantitative Marketing, vol 18. Springer, New York, NY. https://doi.org/10.1007/978-0-387-72579-6_5
Download citation
DOI: https://doi.org/10.1007/978-0-387-72579-6_5
Publisher Name: Springer, New York, NY
Print ISBN: 978-0-387-72578-9
Online ISBN: 978-0-387-72579-6
eBook Packages: Business and EconomicsBusiness and Management (R0)