ENBIS: European Network for Business and Industrial Statistics

An Application of Discriminant Analysis for Measuring Customer Lifetime Value

21 September 2009, 14:45 – 15:05

Abstract

Submitted by

Hamidreza Koosha

Authors

Hamidreza Koosha, Amir Albadvi

Affiliation

Industrial Engineering Division, Engineering Faculty, Tarbiat Modares University, Tehran, Iran.

Abstract

Customer Lifetime Value (CLV) is a core concept in relationship marketing. CLV measures the value a company may achieve from a customer or a prospect (potential customer) during their lifetime. CLV is a very useful metric which helps to identify and target profitable customers. Also, companies may adopt appropriate strategies based on CLV measurement to achieve their future objectives. In this research, a new model for measuring CLV in telecommunication industry is proposed. We use a discriminant analysis to find that if customers will purchase from company in future. We use real world data from telecommunication industry, to do discriminant analysis. Then, customer lifetime value (CLV) is calculated based on results of discriminant analysis. Finally, the proposed model is analyzed based on real world data and the results, recommendations, limitations and future directions are presented.

Return to programme