Customer Lifetime Value: Empirical Generalizations and Some Conceptual Questions

Abstract

From the extant literature on Customer Lifetime Value (CLV), we identify four empirical generalizations (well-defined, consistent effects found by at least three different sets of authors): customer satisfaction, marketing efforts, cross-buying and multichannel purchasing all have positive relationships with CLV. The frequency and monetary value of previous purchases generally have a positive effect on CLV, although there are some contradictory findings in this regard. We identify additional issues that have received limited attention in the literature, but require further empirical study: the effects of pricing, earned rewards and promotions on CLV, managing a sequence of contacts to maximize response rates and CLV, and whether CLV can be forecasted sufficiently accurately. We also discuss additional conceptual issues that merit further research.