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Customer lifetime value (ClV) modeling in retail banking
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Orientador(es)
Resumo(s)
Based on regression models, simple customer’s attributes (age, income, assets and debt) - which
banks usually use to identify who their most valuable customers are - were found not to be very
effective at explaining and predicting customer’s Gross Income. Thus, banks are recommended
to consider alternative methods. A CLV estimation model based on Markov Chains is presented
and tested as a potential alternative, even though our application is still rather conceptual, with
limitations which would have to be addressed in future research. Also, another methodology
based on retention cohort analysis is presented, aimed at estimating CLV for individual
products.
Descrição
Palavras-chave
Customer lifetime value Retail banking Markov chains Retention cohort analysis