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Analysis of customer lifetime value model: Literature review
[Analýza modelu hodnoty životního cyklu zákazníků: přehled literatury]

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  • Petr Čermák

Abstract

The financial performance of a company is evaluated by two models in the marketing and sale phase of business cycle: tactically oriented customer profitability analysis model (CPA) and strategically oriented customer lifetime value model (CLTV). The article surveys the current literature which deals with both marketing and sales models with the emphasis on the strategic customer lifetime value model. Furthermore the article studies strengths and limitations of different models used to determine the customer lifetime value with the respect on their application on real data. The paper concludes that there is a significant amount of limitations of the fundamental model CLTV leading to a bias CLTV determination of a customer. Their neglect may lead to poor strategic management decisions about the resource allocation within the customer portfolio.

Suggested Citation

  • Petr Čermák, 2013. "Analysis of customer lifetime value model: Literature review [Analýza modelu hodnoty životního cyklu zákazníků: přehled literatury]," Český finanční a účetní časopis, Prague University of Economics and Business, vol. 2013(4), pages 84-95.
    • Handle: RePEc:prg:jnlcfu:v:2013:y:2013:i:4:id:355:p:84-95
    DOI: 10.18267/j.cfuc.355
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    References listed on IDEAS

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    1. V. Kumar & Rajkumar Venkatesan & Tim Bohling & Denise Beckmann, 2008. "—The Power of CLV: Managing Customer Lifetime Value at IBM," Marketing Science, INFORMS, vol. 27(4), pages 585-599, 07-08.
    2. Bas Donkers & Peter Verhoef & Martijn Jong, 2007. "Modeling CLV: A test of competing models in the insurance industry," Quantitative Marketing and Economics (QME), Springer, vol. 5(2), pages 163-190, June.
    3. Eric Korpi & Timo Ala-Risku, 2008. "Life cycle costing: a review of published case studies," Managerial Auditing Journal, Emerald Group Publishing, vol. 23(3), pages 240-261, March.
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    More about this item

    Keywords

    Customer profitability analysis (CPA); Customer lifetime value (CLTV); Model ziskovosti zákazníků (CPA); Model životního cyklu (CLTV);
    All these keywords.

    JEL classification:

    • M30 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - General

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