Predicting Customer Lifetime Value Early Boosts Firm Success and Profits
Predicting customer behavior early on can help firms manage relationships better. A model was developed to predict customer lifetime value using data like communication, channel choices, and transaction behavior. The model tested on a European airline showed it can forecast future behavior accurately. Updating estimates regularly improves predictions. Customers with overestimated lifetime value do less business and are less satisfied. This model can help firms focus on customers worth investing in.