Modelling customer lifetime value in contractual settings

Heitz, Christoph; Dettling, Marcel; Ruckstuhl, Andreas

doi:10.21256/zhaw-1899

Please use this identifier to cite or link to this item: https://doi.org/10.21256/zhaw-1899

Publication type:	Article in scientific journal
Type of review:	Peer review (publication)
Title:	Modelling customer lifetime value in contractual settings
Authors:	Heitz, Christoph Dettling, Marcel Ruckstuhl, Andreas
DOI:	10.21256/zhaw-1899 10.1504/IJSTM.2011.042595
Published in:	International Journal of Services Technology and Management
Volume(Issue):	16
Issue:	2
Page(s):	172
Pages to:	190
Issue Date:	2011
Publisher / Ed. Institution:	Inderscience
ISSN:	1460-6720
Language:	English
Subjects:	Markov chain model; Direct marketing; Newspaper subscription; Customer dynamics
Subject (DDC):	658.8: Marketing management
Abstract:	Service provision is often governed by a contract (e.g., newspaper subscriptions, phone contracts, and credit agreements). Typically, such a contract includes rules that influence the dynamics of the customer in the marketplace. Typical examples are minimum contract durations, or fixed time instants for contract termination. The goal of these rules is to increase the future total profit gained from the customer, which is usually denoted with the term customer lifetime value (CLV). We analyse the problem of calculating the CLV under general contract structures. We show that classical Markov models for describing the customer dynamics are not appropriate and may lead to huge errors in the CLV. We propose a semi-Markov formulation which leads to substantially better results. We apply the framework to data of newspaper subscription.
URI:	https://digitalcollection.zhaw.ch/handle/11475/4429
Fulltext version:	Published version
License (according to publishing contract):	Licence according to publishing contract
Departement:	School of Engineering
Organisational Unit:	Institute of Data Analysis and Process Design (IDP)
Appears in collections:	Publikationen School of Engineering

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Heitz, C., Dettling, M., & Ruckstuhl, A. (2011). Modelling customer lifetime value in contractual settings. International Journal of Services Technology and Management, 16(2), 172–190. https://doi.org/10.21256/zhaw-1899

Heitz, C., Dettling, M. and Ruckstuhl, A. (2011) ‘Modelling customer lifetime value in contractual settings’, International Journal of Services Technology and Management, 16(2), pp. 172–190. Available at: https://doi.org/10.21256/zhaw-1899.

C. Heitz, M. Dettling, and A. Ruckstuhl, “Modelling customer lifetime value in contractual settings,” International Journal of Services Technology and Management, vol. 16, no. 2, pp. 172–190, 2011, doi: 10.21256/zhaw-1899.

HEITZ, Christoph, Marcel DETTLING und Andreas RUCKSTUHL, 2011. Modelling customer lifetime value in contractual settings. International Journal of Services Technology and Management. 2011. Bd. 16, Nr. 2, S. 172–190. DOI 10.21256/zhaw-1899

Heitz, Christoph, Marcel Dettling, and Andreas Ruckstuhl. 2011. “Modelling Customer Lifetime Value in Contractual Settings.” International Journal of Services Technology and Management 16 (2): 172–90. https://doi.org/10.21256/zhaw-1899.

Heitz, Christoph, et al. “Modelling Customer Lifetime Value in Contractual Settings.” International Journal of Services Technology and Management, vol. 16, no. 2, 2011, pp. 172–90, https://doi.org/10.21256/zhaw-1899.