Recently, I came across a very useful Marketing Science article on customer lifetime value calculations. “Customer Base Analysis in a Discrete-Time Non-contractual setting,” presents an excellent and accessible way of answering the difficult question of customer lifetime value when no ongoing contractual relationship exists.
The paper itself was enlightening. Unfortunately, as is often the case with academic papers, the key business insights are hidden from plain sight behind a rather dense, high order, statistics heavy paper. I am sure their findings are as clear as glass to the authors. However, for me, I needed some time to unpack the content, understand it, and work out how to apply it for my customers. [Read more…]