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Modeling and Application of Customer Lifetime Value in Online Retail

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Department of Information Technologies, Faculty of Informatics and Statistics, University of Economics, Prague, W. Churchill Sq. 1938/4, 130 67 Prague, Czech Republic
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Department of Statistics and Probability, Faculty of Informatics and Statistics, University of Economics, Prague, W. Churchill Sq. 1938/4, 130 67 Prague, Czech Republic
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Department of Systems Analysis, Faculty of Informatics and Statistics, University of Economics, Prague, W. Churchill Sq. 1938/4, 130 67 Prague, Czech Republic
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Department of Software Engineering, Faculty of Nuclear Sciences and Physical Engineering, Czech Technical University in Prague, Brehova 7, 115 19 Prague 1, Czech Republic
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Author to whom correspondence should be addressed.
Informatics 2018, 5(1), 2; https://doi.org/10.3390/informatics5010002
Received: 11 December 2017 / Revised: 31 December 2017 / Accepted: 3 January 2018 / Published: 6 January 2018
This article provides an empirical statistical analysis and discussion of the predictive abilities of selected customer lifetime value (CLV) models that could be used in online shopping within e-commerce business settings. The comparison of CLV predictive abilities, using selected evaluation metrics, is made on selected CLV models: Extended Pareto/NBD model (EP/NBD), Markov chain model and Status Quo model. The article uses six online store datasets with annual revenues in the order of tens of millions of euros for the comparison. The EP/NBD model has outperformed other selected models in a majority of evaluation metrics and can be considered good and stable for non-contractual relations in online shopping. The implications for the deployment of selected CLV models in practice, as well as suggestions for future research, are also discussed. View Full-Text
Keywords: applied computing; customer lifetime value; extended pareto negative binomial distribution model; Markov chain model; marketing management; e-commerce; e-shop applied computing; customer lifetime value; extended pareto negative binomial distribution model; Markov chain model; marketing management; e-commerce; e-shop
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Jasek, P.; Vrana, L.; Sperkova, L.; Smutny, Z.; Kobulsky, M. Modeling and Application of Customer Lifetime Value in Online Retail. Informatics 2018, 5, 2.

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