By measuring how customers move from one segment to another segment over time, this Enginius module helps predict the lifetime value of a customer based on which segment he or she belongs to today, as well as future sales, or the current value of the entire customer database as a whole.
The lifetime value model can be calibrated with several options, such as the speed at which customers will churn (e.g., immediately -transactional- or at the end of contract period -contractual-). Discount rate can also be applied immediately or after one period.
Customers churn over time, but they are also acquired and replaced. Enginius allows you to run multiple customer acquisition scenarios to simulate the impact of various acquisition strategies on the long-term value of a customer database.
In this case, Syphone is a cell phone company trying to understand the value of their existing customer base. Using customer lifetime value, Syphone must determine the value of existing customer segments and determine how much a new prospective
Northern Aero is determining the value of their customer as well as their airline loyalty program. Using customer lifetime value, Northern Aero must determine the value of each customer segment and the return on investment of its loyalty program.