Evaluating customer lifetime value for customer recommendation

It is crucial for a company to identify which are its most valuable and least profitable customers so that appropriate customer-specific marketing strategies can be developed and put in place. This paper develops a comprehensive customer lifetime value (CLV) measure model. The model not only combines the up-selling, cross-selling, and network influence opportunity, but also considers the churn risk. By regarding the market as a social network, the social influence role of a customer is explicitly modeled into the CLV evaluation. The result from the CLV model is used as a metric for customer selection. The model is empirically validated by the application to a company in the health care industry.