Margin per period 500000 M - R

Retention Rate 85% r

Discount Rate 10% d
Number of periods 10

Year 1 2 3 4 5 6
Discounted Margin 500000.00 454545.45 413223.14 375657.40 341506.73 310460.66
Retention rate 100.000% 85.000% 72.250% 61.413% 52.201% 44.371%
Value 500000 386363.636364 298553.719 230700.601 178268.646 137753.045
 7 8 9 10
282236.97 256579.06 233253.69 212048.81
37.715% 32.058% 27.249% 23.162%
106445.535 82253.3677 63559.4205 49114.0976 2033012.07
 CLV
MBA
Case study

CLV M-R R = retention cost

d
r retention rate

(M-R)(1+d)/(1+d -r)

MBA
A 200
B 500
AandB 150
Total transactions 10000
support of A 0.02 p(A)
support of B 0.05 p(B)
support of AandB 0.015 p(AintB)
confidence A 0.3 p(A|B) p(AintB)/p(B)
Lift 15 confidenceA/supportA
train
test = validation

test

10000
7000 5000 2000
3000