A customer base model consists of four sub models that provide insights into how each of a company’s customers will behave. They are:
Customer acquisition model, which forecasts the inflow of new customers Customer retention model, which forecasts how long customers will remain active Purchase model, which forecasts how frequently customers will transact with a company Basket-size model, which forecasts how much customers spend per purchase Together, these sub models produce much more precise estimates of future revenue streams. This, in turn, can yield better estimates of what a company is really worth.