Customer Value Modelling: Model synthesis and extension proposals

• INTRODUCTION
• Relationship Marketing and Direct Marketing
• Profitability of the customer relationship
• Need for customer value calculations
• Dichotomies of the customer's relationship behaviours
• Research objective
• Research Framework
• Retention, migration and mathematical approaches of customer value
• Some works on customer value
• Algebraic approaches
• Matrix approaches
• Comparison of works
• The nature and mechanics of the customer's individual response
• Dichotomies of the customer relationship behaviour
• Particularities of the retention model
• Particularities of the migration model
• Distinction between transaction- and financial flows
• Probability to generate transactions and transaction potential
• The Retention Model
• Introduction to the Retention model
• The general case (variable retention probability with time)
• Numeric example
• Formalisation of calculations
• The case where retention probabilities remain constant
• Particularities of models with constant retention rate
• Numeric Example
• Formalisation of calculations
• "Long-term" customer value
• Use of the long-term analysis
• Transactional Potential and long-term customer value
• Customer's Long-term and Lifetime values
• Optimisation of the long-term present customer value
• Retention probability: as a function of customer oriented expenses
• Finding the budget that maximizes the customer's present value  
• Numeric Example
• Finding the balance between customer acquisition and retention
• Acquisition and Retention Probabilities as functions of prospect/customer oriented expenses
• Numeric Example
• Numeric Example
• Desynchronisation of the financial flows in the retention model
• Synchronized flows
• Desynchronisation of flows and commercial cycle amplitudes
• Formalisation and numeric example
• The Migration Model
• Mechanics of retention/reactivation - a series of artefacts
• Purchase profile (pattern) and the decision tree
• The migration tree and the recurrence of the transition process
• Formulas for a migration process censored in relation to the recency
• Numeric Example
• Comments
• Formula for a left censored migration process (the starting recency)
• Numeric example
• Financial flows and customer value calculations
• Customer Value - limits of some formulations
• Limited use of calculations adapted from the retention model
• Calculations adapted to the standard migration model
• The customer value formula for the standard migration model
• Modelling the customer elimination process
• Matrix approach
• Introduction
• Transition probabilities Matrix and its derivatives
• Transactional flow
• The customer value
• The long-term customer value
• Matrix approach : Customer value Optimisation
• Introduction
• Numeric example
• Optimisation Procedure
• Optimisation using Markov decision processes
• Optimising mailing policy without budgetary constraints
• Conclusions
• Systematisation of calculations
• Progressive modelling
• New algebraic formulas
• A matrix optimisation procedure
• Application conditions
• REFERENCES
• REFERENCES
• Appendix 2: Matrix calculations for customer long term value optimisation
• Appendix 2: Matrix calculations for customer long term value optimisation