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Customer Lifetime Value

Pfeifer, Phillip E. ; Farris, Paul W. ; Bendle, Neil

Reference: DARDEN-M-0800-E
Number of pages: 9
Publication Date: Apr 20, 2011
Fecha de edición: Jun 19, 2014
Source: Darden University of Virginia (USA)
Type of Document: Technical Note
Industry Setting: Multiple

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Description

This technical note introduces important metrics firms use to monitor customer relationships. An important summary of customer activity is the profit the firm receives from each customer. Customer profit (CP) is the metric that summarizes the past financial performance of a customer relationship and is covered in a companion note, "Customer Profit" (UVA-M-0799). The central difference between CP and customer lifetime value (CLV) is that CP measures the past and CLV looks forward. This note addresses the forward-looking metric that attempts to put a dollar value on a customer relationship. This technical note is an excerpt of the more comprehensive treatment of customer metrics found in "Customer Profitability" (UVA-M-0718).

Keywords

CLV cohort and incubate customer lifetime value infinite horizon prospect lifetime value retention