presentation on customer lifetime value
TRANSCRIPT
CUSTOMER LIFETIME VALUE
Team 3
Segmentation – Bhoir, Sapna; Singhi, Mohit; Siyoum, Admas
Modeling – Chowdavarapu, Indra; D Vivek; Musuku, Prashanth Reddy
Presentation – Bhargava, Juhi; Kawitkar, Nachiket; Varadarajan, Kisorkumar
If we don’t sell it, you won’t need itWebsite http://customer-ltv.weebly.com
BUSINESS OBJECTIVES
Increase revenue by identification of target customer segments
Segment based marketing strategies based on Customer Future Value (CFV)
Identify schemes to migrate customers from low/medium CFV to high CFV
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APPROACH - SEGMENTATION
Churn datasetSegmentation
Demog dataset
RFM Analysis
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RESULTS – SEGMENTATION USING BASE VARIABLES
Legend Variable with baseline value > 100 Variable with baseline value < 100 3
RESULTS – PROFILING USING DESCRIPTOR VARIABLES
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INSIGHTS FROM SEGMENTATION
Happy segments
Segments 1 and 5 have the lowest churn rate
Other variables like home value income, purchase, purchase count, RFM are above baseline
Unhappy segments
Segments 2 and 7 have the highest churn rate
Other variables like home value income, purchase amount & count, RFM are below baseline
Availability of email address in segment 2 high with low average number of marketing emails
High Call in count with low Call out count
Important findings
Segments 3 and 9 have a very high churn rate
Other variables like home value income, purchase, purchase count, RFM are above baseline
Relook at strategy adopted with these segments due to which churn rate is high
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INSIGHTS FROM SEGMENTATION
6Legend 102 < Value < 120 Value >= 120
…INSIGHTS FROM SEGMENTATION RESULTS
Segment 2 has disproportionately larger share of customers with Bronze Tier
Segments 1, 3 and 5 have disproportionately larger share of customers with Gold, Platinum and
Diamond Tiers
Segment 5 also has disproportionately larger share of customers with Silver Tier
Customers with Bronze Tier represent over 64 percent of the total number of customers Appendix-
table analysis
Customers with Silver Tier represent over 20 percent of the total number of customers
☼Focusing marketing resources to migrate bronze and silver tier customers to the next
tiers can improve the bottom line7
APPROACH - MODELING
Churn dataset
Margin dataset
ModelingScore on
Holdout dataset
Customer Future Value
Profiling
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Demog dataset
Data prep onHoldout dataset
Customer
Future
Value
RESULTS - MODELING
High
HighLow Margin $
Rete
nti
on
Lik
eli
ho
od
Q3 - Med CFV
• CFV - $ (1,174) to $ 478
• No. of Accounts – 9,112
Q4 - High CFV
• CFV - $ 416 to $ 8,290
• No. of Accounts – 18,609
Q1 - Low CFV
• CFV - $ (981) to $ 403
• No. of Accounts – 18,455
Q2 - Med CFV
• CFV - $ 5 to $ 6,977
• No. of Accounts – 9,258
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Future Margin Value Split Point $195
Probability of Retention Split 0.91
CFV DISTRIBUTION ANALYSIS
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Total Negative CFV $ (237,599)
Total Positive CFV $ 37,884,709
Net CFV $ 37,647,109
INSIGHTS & FINDINGS-MODELING
CFV Value State wise Top 5 CFV
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INSIGHTS & FINDINGS-MODELING
Average CFV Value State wise Top 5 Avg. CFV
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INSIGHTS & FINDINGS
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RECOMMENDATIONS
Quadrant 1
Low Response count(response to mailers)
Low Length of Residence, Home value
Low RFM score
Low Call out compared to high Call in
Quadrant 1 Recommendations
Identify & focus on customers with high Length of residence
Better handling of Call in from customers
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RECOMMENDATIONS
Quadrant 2
Low Length of residence
High Average purchases count compared to Q4
Home value and Household income (course & fine) higher than
the values in Q4
Assets value are nearly equal to home value in Q4
Quadrant 2 Recommendations
Cross-sell to increase retention and thereby revenues
Customers characteristics similar to Q4, appropriate schemes will
retain customers
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RECOMMENDATIONS
Quadrant 3
Low - High Call in count with low Call out count
Assets, Home value, Household Income (course & fine) similar to
Q1
Customers response rate is high
Quadrant 3 Recommendations
Leverage Call in from customers
Upsell to increase margins
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RECOMMENDATIONS
Quadrant 4
Significantly higher Mail count with high Response count
Low order count compared to Q3
Purchase amount high with a slightly lower avg purchase count
Quadrant 4 Recommendations
Target customers with high Length of Residence and high Purchase
amount life
Retain loyal customers with sustained quality customer service
Marketing scheme to increase revenues and incurring less cost
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RECOMMENDATIONS
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Target customers with high Length of Residence and high Purchase amount life
Cross-sell to customers in Quadrant 2 to increase retention and thereby revenues
Upsell to customers in Quadrant 3 to increase margins
Retain loyal customers with sustained high quality customer service
Marketing scheme to increase revenues and incurring less cost
Leverage Call in from customers
FUTURE APPROACH - MODELING
Churn dataset
Margin dataset
ModelingScore onHoldout dataset
Customer Future Value
Segmentation
Demog dataset
RFM Analysis
Churn dataset
Predict the segment to which each customer
belong to
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Thank You
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APPENDIX-FREQUENCY OF STATES
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APPENDIX-SEGMENT PROFILING
Segment Profiling
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APPENDIX-TABLE ANALYSIS
1-Bronze 2-Silver 3-Gold 4-Platinum 5-Diamond
Segment Id
Frequency
Percent 5.64 2.57 1.76 0.42 0.48 10.88
Row Pct 51.86 23.59 16.21 3.9 4.43
Col Pct 8.78 12.71 15.69 18.73 24.17
Frequency 28520 6007 2590 460 285 37862
Percent 11.87 2.5 1.08 0.19 0.12 15.75
Row Pct 75.33 15.87 6.84 1.21 0.75
Col Pct 18.45 12.37 9.58 8.44 5.94
Frequency 8999 2799 2023 507 685 15013
Percent 3.74 1.16 0.84 0.21 0.28 6.25
Row Pct 59.94 18.64 13.47 3.38 4.56
Col Pct 5.82 5.76 7.49 9.3 14.29
Frequency 23970 7045 3330 664 354 35363
Percent 9.97 2.93 1.39 0.28 0.15 14.71
Row Pct 67.78 19.92 9.42 1.88 1
Col Pct 15.51 14.51 12.32 12.18 7.38
Frequency 16349 7425 4664 966 836 30240
Percent 6.8 3.09 1.94 0.4 0.35 12.58
Row Pct 54.06 24.55 15.42 3.19 2.76
Col Pct 10.58 15.29 17.26 17.72 17.43
Frequency 12407 4428 2123 375 245 19578
Percent 5.16 1.84 0.88 0.16 0.1 8.15
Row Pct 63.37 22.62 10.84 1.92 1.25
Col Pct 8.03 9.12 7.86 6.88 5.11
Frequency 18712 4163 2147 379 284 25685
Percent 7.78 1.73 0.89 0.16 0.12 10.69
Row Pct 72.85 16.21 8.36 1.48 1.11
Col Pct 12.11 8.57 7.95 6.95 5.92
Frequency 18702 6730 3483 605 402 29922
Percent 7.78 2.8 1.45 0.25 0.17 12.45
Row Pct 62.5 22.49 11.64 2.02 1.34
Col Pct 12.1 13.86 12.89 11.1 8.38
Frequency 13320 3787 2424 475 545 20551
Percent 5.54 1.58 1.01 0.2 0.23 8.55
Row Pct 64.81 18.43 11.8 2.31 2.65
Col Pct 8.62 7.8 8.97 8.71 11.37
Frequency
Percent 64.29 20.2 11.24 2.27 1.99 100
48555 27023 5452 4795 240368Total
5
6
7
8
9
154543
1
2
3
4
tier
Total
13564 6171 4239 1021 1159 26154
Table of Segment Id by tier
Table Analysis - The Frequency Procedure
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Back
APPENDIX-CHURN MODELING OUTPUT
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APPENDIX-MARGIN MODELING OUTPUT
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