Maximizing Profits by Predicting Customer Churn Using Lifetime Value
The article discusses how to predict when customers will stop buying from a company, known as churn. Instead of focusing on products, they look at customer loyalty using a new method called Customer Lifetime Value (CLV). Churners are customers whose CLV is decreasing. They also introduce a new way to measure the cost of misclassifying a customer. By comparing different prediction techniques, they find that focusing on profit is more important than just accuracy.