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Title: Study of behavior and determination of customer lifetime value(CLV) using Markov chain model

Customer Lifetime Value or CLV is a restriction on interactive marketing to help a company in arranging financial for the marketing of new customer acquisition and customer retention. Additionally CLV can be able to segment customers for financial arrangements. Stochastic models for the fairly new CLV used a Markov chain. In this model customer retention probability and new customer acquisition probability play an important role. This model is originally introduced by Pfeifer and Carraway in 2000 [1]. They introduced several CLV models, one of them only involves customer and former customer. In this paper we expand the model by adding the assumption of the transition from former customer to customer. In the proposed model, the CLV value is higher than the CLV value obtained by Pfeifer and Caraway model. But our model still requires a longer convergence time.
Authors:
 [1] ; ;  [2]
  1. Statistics Research Division, Faculty of Mathematics and Natural Science, Bandung Institute of Technology, Indonesia and Statistics Study Program, Faculty of Mathematics and Natural Sciences, Padang State University (Indonesia)
  2. Statistics Research Division, Faculty of Mathematics and Natural Science, Bandung Institute of Technology (Indonesia)
Publication Date:
OSTI Identifier:
22265988
Resource Type:
Journal Article
Resource Relation:
Journal Name: AIP Conference Proceedings; Journal Volume: 1589; Journal Issue: 1; Conference: ICMNS 2012: 4. international conference on mathematics and natural sciences: Science for health, food and sustainable energy, Bandung (Indonesia), 8-9 Nov 2012; Other Information: (c) 2014 AIP Publishing LLC; Country of input: International Atomic Energy Agency (IAEA)
Country of Publication:
United States
Language:
English
Subject:
29 ENERGY PLANNING, POLICY AND ECONOMY; ECONOMICS; LIFETIME; MARKETING; MARKOV PROCESS; PROBABILITY; SOCIO-ECONOMIC FACTORS