We present a Bayesian framework for estimating the customer equity  and the customer lifetime value (CLV) based on the purchasing behaviour deducible from the market surveys. We analyse a consumer survey on mobile phones carried out in Finland in February 2013. The survey data contains consumer given information on the current and previous brand of the phone and the times of the last two purchases. In contrast to personal purchase histories stored in a customer registry of a company, the survey provides information also on the purchase behaviour of the customers of the competitors. The proposed framework systematically takes into account the prior information and the sampling variance of the survey data and by using Bayesian statistics quantifies the uncertainty of the customer equity and CLV estimates by posterior distributions. The introduced approach is directly applicable in the domains where a customer relationship can be thought to be monogamous.
We present a Bayesian framework for estimating the customer equity (CE) and the customer lifetime value (CLV) based on the purchasing behavior deducible from the market surveys. As an example on the use of the framework, we analyze a consumer survey on mobile phones carried out in Finland in February 2013. The survey data contains consumer given information on the current and previous brand of the phone and the times of the last two purchases. In contrast to personal purchase histories stored in a customer registry of a company, the survey provides information also on the purchase behavior of the customers of the competitors. The proposed framework systematically takes into account the prior information and the sampling variance of the survey data and by using Bayesian statistics quantifies the uncertainty of the CE and CLV estimates by posterior distributions. The introduced approach is directly applicable in the domains where a customer relationship can be thought to be monogamous.
A
(CE)
R
behaviour
behavior
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We analyse
As an example on the use of the framework, we analyze
R
behaviour
behavior
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customer equity
CE