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Customer Lifetime Value Incorporating Negative Behavior: Measurement and Comparison

In: Liss 2014

Author

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  • Jiana-Fu Wang

    (National Chung Hsing University)

Abstract

Some customers might have negative behavior that harms a company’s benefit. In this study, we emphasize on incorporating negative behavior incurred by these customers into the calculation of customer lifetime value (CLV) when doing business with them. Data from a railway e-booking system was adopted for a case study. The invisible cost of cancellation was incorporated along with the revenue of ticket selling into the calculation of CLV. From the results, we conclude that our model has a good estimation about the customers’ real values and can cherry-pick out customers with higher values than the traditional CLV models. By cherry-picking customers, lower cancellation rate and higher customer satisfaction are expected.

Suggested Citation

  • Jiana-Fu Wang, 2015. "Customer Lifetime Value Incorporating Negative Behavior: Measurement and Comparison," Springer Books, in: Zhenji Zhang & Zuojun Max Shen & Juliang Zhang & Runtong Zhang (ed.), Liss 2014, edition 127, pages 897-901, Springer.
    • Handle: RePEc:spr:sprchp:978-3-662-43871-8_129
    DOI: 10.1007/978-3-662-43871-8_129
    as

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