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Predicting e-Customer behavior in B2C Relationships for CLV model

Author

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  • Kaveh Ahmadi

    (Islamic Azad University, Islamshahr Branch, Iran)

Abstract

E-Commerce sales have demonstrated an amazing growth in the last few years. And it is thus clear that the web is becoming an increasingly important channel and companies should strive for a successful web site. In this completion knowing e-customer and predicting his behavior is very important. In this paper we describe e-customer behavior in B2C relationships and then according to this behavior a new model for evaluating e-customer in B2C e-commerce relationships will be described. The most important thing in our e-CLV (Electronic Customer Lifetime Value) model is considering market\'s risks that are affecting customer cash flow in future. A lot of CLV models are based on simple NPV (simple net present value). However simple NPV can assess a good value for CLV, but simple NPV ignores two important aspects of B2C e-relationship which are market risks and big amount of customer data in e-commerce context. Therefore, simple NPV isn\'t enough for assessing e-CLV in high risk B2C markets. Instead of NPV, real option analyses could lead us to a better estimation for future cash flow of customers. With real option analyses, we predict all the future states with probability of each of them. And then calculate the more accurate of future customer cash flow. In this paper after a brief history of CLV, we explain customer behavior in B2C markets especially for e-retailers. Then with using real option analyses, we introduce our CLV model. Two extended examples explain our model and introduce the steps in finding CLV of customer in a B2C relationship.

Suggested Citation

  • Kaveh Ahmadi, 2011. "Predicting e-Customer behavior in B2C Relationships for CLV model," International Journal of Business Research and Management (IJBRM), Computer Science Journals (CSC Journals), vol. 2(3), pages 128-138, October.
    • Handle: RePEc:aml:intbrm:v:2:y:2011:i:3:p:128-138
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    References listed on IDEAS

    as
    1. David C. Schmittlein & Robert A. Peterson, 1994. "Customer Base Analysis: An Industrial Purchase Process Application," Marketing Science, INFORMS, vol. 13(1), pages 41-67.
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    Cited by:

    1. Matteo Cristofaro & Pier Luigi Giardino & Luna Leoni, 2021. "Back to the Future: A Review and Editorial Agenda of the International Journal of Business Research and Management," International Journal of Business Research and Management (IJBRM), Computer Science Journals (CSC Journals), vol. 12(1), pages 16-33, February.

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    More about this item

    Keywords

    Customer Lifetime Value (CLV); e-Commerce Relationships; Net Present Value (NPV); customer's behavior; Customer Segmentation;
    All these keywords.

    JEL classification:

    • M0 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - General

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