Interface 2003

Customer Lifetime Value Modeling and Its Use for Retention Planning
Saharon Rosset, (Stanford University and Amdocs Ltd.),,
Einat Neumann, (Amdocs (Israel) Ltd.),,
Uri Eick, (Amdocs (Israel) Ltd.),, and
Nurit Vatnik, (Amdocs (Israel) Ltd.),


We present and discuss the important business problem of estimating the effect of retention efforts on the Lifetime Value of a customer in the Telecommunications industry. We discuss the components of this problem, in particular customer value and length of service (or tenure) modeling, and present a novel segment-based approach, motivated by the segment-level view marketing analysts usually employ. We then describe how we build on this approach to estimate the effects of retention on Lifetime Value. Our solution has been successfully implemented in Amdocs’ Business Insight (BI) platform, and we illustrate its usefulness in real-world scenarios.

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