Customer Value - What & How?

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Customer Value - What & How?

I've heard that "Customer Value" analysis is the hottest thing in advanced analytics these days.

Can anyone tell me:

What are the different aspects of customer value and which decisions do they support?

What are the best practices in the creation of customer value assessments?

What components are required to build understanding of customer value?

Do you have any war-stories to share from your experience with Customer Value?

Re: Customer Value - What & How?


Myabe an obvious one, but the nature of your business and *who* your customers are plays a big part in what a feasible 'customer value' might be.

I work for a Telco, and conduct a lot of churn/attrition analysis. Also cross-sell models. As part of our data mining for we use customer spend over the prior three months as an indication of customer value. We also look at the number of minutes and number of calls in conjunction with customer spend get an idea of profitability of that customer.

One thing I was pondering for future projects is the use of clustering or segmentation to compute average value for specific groups of customers. Identifying customers those customer value might be lower than average compared to other customers of similar nature (it might be easier to get these customers to increase spend or profitability).



Re: Customer Value - What & How?

Another value of looking at a customers is not only by the revenue he gets you
but rather what is his actual cost v/s his billing
it is a sort of profit margin anlysis on each customers.
The same can be carried out across different revenue buckets to find low contribution customers and target them for specific schemes & offers