Customer Active Probability and Customer Lifetime Value Analysis in Internet

Authors

Ying-Chan Tang, Institute of Business and Management, College of Management, National Chiao Tung University, Taipei, Taiwan
Min-Hua Wu, Institute of Business and Management, College of Management, National Chiao Tung University, Taipei, TaiwanFollow
Jzu-Hsuan Lin, Institute of Business and Management, College of Management, National Chiao Tung University, Taipei, Taiwan

Document Type

Article

Abstract

As the age of digital information, marketers are in information overload. A mass of customers’ data is available but may be useless only if it can be turned into business intelligence and implement appropriate database marketing. This research aims to assist managers in discriminating and learning from their right customers that helps to serve high value customers and create successful marketing programs targeted at the prospected ones. Transaction data on the purchasing of VCD at an online retailer was used as empirical analysis; Pareto/NBD model and customer lifetime value model were applied to capture customer active probability and construct profitable customer profile. The results demonstrated four priority ranks of online customers for managers to choose the prospects that best match the profitable customer profile by observing their purchase behaviors.

Recommended Citation

Tang, Ying-Chan; Wu, Min-Hua; and Lin, Jzu-Hsuan, "Customer Active Probability and Customer Lifetime Value Analysis in Internet" (2010). ICEB 2010 Proceedings (Shanghai, China). 13.
https://aisel.aisnet.org/iceb2010/13