To develop a customer lifetime value metric that could support customer acquisition and retention marketing efforts.
Mather used historical customer transaction data to build an econometric model of retention. This model produced customer-level forecasts of expected retention over a three-year horizon. Monthly operating margins for each customer were combined with the forecasted monthly retention to estimate expected realized operating margins by customer.
Mather developed a Customer Lifetime Value (CLV) model for the client that measured the value of current customers and estimated return on marketing spend for loyalty programs based on their retention effectiveness. The lifetime value model also supplied churn risk scores for current customers that enabled the client to proactively contact those customers most at risk for deactivating their service. Our econometric model used operating and billing data from millions of current and former customers in addition to appended demographic information. Mather developed an econometric model of retention. The client incorporated the CLV model into their internal customer data warehouse so that it was updated weekly.