Abstract
The general aim of this study is to provide a guide to the future marketing decisions of a firm, using a model to predict customer lifetime values. The proposed framework aims to eliminate the limitations and drawbacks of the majority of models encountered in the literature through a simple and industry-specific model with easily measurable and objective indicators. In addition, this model predicts the potential value of the current customers rather than measuring the current value, which has generally been used in the majority of previous studies. This study contributes to the literature by helping to make future marketing decisions via Markov decision processes for a company that offers several types of products. Another contribution is that the states for Markov decision processes are also generated using the predicted customer lifetime values where the prediction is realized by a regression-based model. Finally, a real world application of the proposed model is provided in the banking sector to show the empirical validity of the model. Therefore, we believe that the proposed framework and the developed model can guide both practitioners and researchers.
Original language | English |
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Pages (from-to) | 278-288 |
Number of pages | 11 |
Journal | European Journal of Operational Research |
Volume | 237 |
Issue number | 1 |
DOIs | |
Publication status | Published - 16 Aug 2014 |
Funding
This paper is a part of the PhD thesis of Yeliz Ekinci which was held at Istanbul Technical University (ITU) and she was awarded by The Scientific and Technological Research Council of Turkey 2211 scholarship. This research was also supported by Republic of Turkey, Ministry of Industry and Trade (Project No: 00432.STZ.2009-2) and ITU, Institute of Science and Technology (Project No: 34228). The interpretation and conclusions revealed in this study do not represent the official perspectives of the institutes stated above. The authors would like to express their deep gratitude to the anonymous referees for their invaluable comments and to the anonymous financial services company that supplied the data.
Funders | Funder number |
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International Technological University | |
Türkiye Bilimsel ve Teknolojik Araştirma Kurumu | |
Ministerstvo Průmyslu a Obchodu | 00432.STZ.2009-2 |
Institute of Nano Science and Technology | 34228 |
Keywords
- Customer lifetime value
- Forecast models
- Markov decision process