Criminology Commons^™

Profitable Retail Customer Identification Based On A Combined Prediction Strategy Of Customer Lifetime Value, Yinglu Sun, Dong Cheng, Subir Bandyopadhyay, Wei Xue

Midwest Social Sciences Journal

As a fundamental concept of customer relationship management, customer lifetime value (CLV) serves as a crucial metric to identify profitable retail customers. Various methods are available to predict CLV in different contexts. With the development of consumer big data, modern statistics and machine learning algorithms have been gradually adopted in CLV modeling. We introduce two machine learning algorithms—the gradient boosting decision tree (GBDT) and the random forest (RF)—in retail customer CLV modeling and compare their predictive performance with two classical models—the Pareto/NBD (HB) and the Pareto/GGG. To ensure CLV prediction and customer identification robustness, we combined the predictions of the …