Customer Lifetime Value Prediction – Treasure Boxes

Predicting and analyzing Customer Lifetime Value (CLTV).

Predicting Customer Lifetime Value (CLTV) allows you to efficiently identify high-value customers and understand their behavior. Eventually, you can effectively optimize your day-to-day marketing activities without missing important highly-engaged customers.

For online retailers, the Treasure Boxes for CLTV Prediction shows how to create a CLTV prediction model based on customer's order histories.

Input: Order histories

This Treasure Box guides helps you prepare the following transactional data based on a public dataset:

InvoiceNo `string`	InvoiceDate `string`	CustomerID `long`	Country `string`	StockCode `string`	Description `string`	UnitPrice `double`	Quantity `long`
536365	2010/12/01 8:26	17850	United Kingdom	85123A	WHITE HANGING HEART T-LIGHT HOLDER	2.55	6
536365	2010/12/01 8:26	17850	United Kingdom	71053	WHITE METAL LANTERN	3.39	6
536365	2010/12/01 8:26	17850	United Kingdom	84406B	CREAM CUPID HEARTS COAT HANGER	2.75	8
...	...	...	...	...	...	...	...
C536391	2010/12/01 10:24	17548	United Kingdom	22556	PLASTERS IN TIN CIRCUS PARADE	1.65	-12
...	...	...	...	...	...	...	...

Calculating CLTV and Derived Attributes

In the middle of the workflow, the data is aggregated, CLTV is calculated for each CustomerID, and attributes are enriched with basic statistics:

customerid `long`	cltv `double`	country `string`	recency `long`	avg_basket_value `double`	avg_basket_size `long`	cnt_returns `long`	has_returned `boolean`
14001	2030.33	United Kingdom	327	681.0266666666666	320.6666666666667	1	1
14911	132572.6200000001	EIRE	372	715.5475621890546	400.5721393034826	47	1
18144	2888.7499999999995	United Kingdom	365	240.72916666666666	111.91666666666667	0	0
...	...	...	...	...	...	...	...

Output: Predicted CLTV

The output of this Treasure Box is a table that contains the predicted CLTV for a subset of customers:

customerid `long`	predicted_cltv `double`
12355	68.84149528775471
12356	172.29478943269208
12357	151.84542283221555
...	...

Use-Cases

Sales
Marketing
Customer Success
Customer Support