Customer Relationship Marketing

The sum of discounted cash flows from a customer over the lifetime of the relationship with that customer

Simple LTV, LTV with Retention Rate, and Forecasted Lifetime Value

An alternative method for valuing customers that is based on evaluating the expected revenue stream from each customer over future time periods

Time-value of money ( future revenue is worth less today than current revenue)

Cumulative retention rate over time

Only considered the revenue and costs

Takes into consideration the market characteristics, individual differences ,and purchase settings

-if expected npv of future contribution margins is less than the contact cost, if discount rate is assumed to be fixed, and decision rule incorporates the cost of mailings and an average flat contribution margin before mailings

Attempts to determine the relative importance consumers attach to attributes and the value they attach to the levels of attributes

1. formulate the problem 2. construct the stimuli 3. decide the form of input data 4. select a conjoint analysis procedure 5. interpret the results 6. assess reliability and validity

Two factor evaluation- the respondents evaluate two attributes at a time until all the possible pairs of attributes have been evaluated

Multiple-factor evaluations- full or complete profiles of brands are constructed for all the attributes

Cyclical designs- pairwise approachfractional factorial designs- full profile approach

Easier for subjects to make a tradeoff between two attribute levels, particularly useful when there are a large number of attributes to be tested

Stimuli may be unrealistic since two products may differ on more than two attributes