Customer lifetime value determination and strategic implications for a cruise-ship company
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Paul D. Berger is a professor of marketing at the School of Management, Boston University. He is co-author of a number of books and has published a variety of journal articles. He has extensive consulting experience in the areas of direct marketing, marketing research and experimental design.
Bruce Weinberg serves as an associate professor of marketing and e-commerce at Bentley College’s McCallum Graduate School of Business. His expertise is in online consumer behaviour, particularly online shopping and customer service, internet auctions and online banking and bill payment. He has received awards for both teaching and research and his publications have appeared in a range of marketing journals.
Richard C. Hanna is an assistant professor of marketing at the Carroll School of Management at Boston College. His research interests include database marketing, internet marketing, marketing research techniques, pricing strategy and promotions. He is an active member of the American Marketing Association and the Academy of Marketing Science.
Abstract Customer lifetime value (CLV) has been a mainstay concept in direct response/database marketing for many years. It has more recently become a major focus in ‘mainstream’ marketing. In spite, however, of all the mathematical models that have been developed to indicate formulas for calculating CLV, there is little, if any, detailed discussion in the literature of the actual applied calculations of CLV. This paper reports on a real-world application of the use of CLV calculations to aid marketing strategy for a cruise-ship company. It covers the real-world issue of database cleaning and merging of the data into a ‘usable’ format, and developing customer migration models utilising these real data, as opposed to using mathematical models that ‘approximate’ repeat/retention patterns. Customer migration analyses are performed and CLV determined for each of three years (eg the ‘cohort of 1993,’ those taking their first voyage with the cruise-ship company in 1993), for several different destinations and for different age segments. The implications and aftermaths of the analyses are discussed.
Paul D. Berger Boston University, School of Management, Marketing Department, 595 Commonwealth Avenue, Boston MA 02215, USA. Tel: ⫹1 617 353 2655; e-mail: [email protected]
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INTRODUCTION Customer lifetime value (CLV) has been a mainstay concept in direct response/ database marketing for many years, as noted by Dwyer,1 and discussed by Keane and Wang2 in the publishing
Database Marketing & Customer Strategy Management
industry. It has since become a major focus in ‘mainstream’ marketing. In spite, however, of all the mathematical models that have been developed to indicate formulas for calculating CLV, there is little, if any detailed discussion in the
Vol. 11, 1, 40–52
䉷 Henry Stewart Publications 1741–2447 (2003)
Customer lifetime value determination and strategic implications for a cruise-ship company
literature of the actual applied calculations of CLV. Berger and Nasr3 were the fi
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