Customer lifetime value in CRM

Machine Learning for Marketing Analytics in R

Verena Pflieger

Data Scientist at INWT Statistics

Machine Learning for Marketing Analytics in R

Customer lifetime value (CLV)

  • Predicted future net-profit
  • Identify promising customers
  • Prioritize customers according to future margins
  • No further customer segmentation
Machine Learning for Marketing Analytics in R

Predicting the Margin of Year 2

Predicting the future margin

Machine Learning for Marketing Analytics in R

Predicting the Future Margin

Machine Learning for Marketing Analytics in R
str(clvData1, give.attr = FALSE)

Classes 'tbl_df', 'tbl' and 'data.frame':    4191 obs. of  15 variables:
 $ customerID        : int  2 3 4 5 6 7 8 9 10 11 ...
 $ nOrders           : int  4 3 12 16 1 2 3 15 16 1 ...
 $ nItems            : int  7 4 25 29 2 8 4 20 18 2 ...
 $ daysSinceLastOrder: int  4 272 12 32 47 19 63 23 75 193 ...
 $ margin            : num  35.8 25.7 63.3 53.7 35.9 ...
 $ returnRatio       : num  0.25 0.44 0.15 0.03 0 0.18 0 0.01 0.02 1 ...
 $ shareOwnBrand     : num  0.67 0.33 0.86 0.96 1 0 0.33 0.53 0.27 0 ...
 $ shareVoucher      : num  0.17 0 0.38 0.17 0 0.86 0.33 0.12 0.6 0 ...
 $ shareSale         : num  0 0.67 0.29 0.33 1 0.14 0 0.12 0.2 1 ...
 $ gender            : chr  "female" "male" "male" "female" ...
 $ age               : int  56 37 32 43 48 31 27 30 50 50 ...
 $ marginPerOrder    : num  8.94 8.58 5.28 3.36 35.85 ...
 $ marginPerItem     : num  5.11 6.43 2.53 1.85 17.93 ...
 $ itemsPerOrder     : num  1.75 1.33 2.08 1.81 2 4 1.33 1.33 1.12 2 ...
 $ futureMargin      : num  57.6 29.7 56.3 58.8 29.3 ...
Machine Learning for Marketing Analytics in R

Correlations

library(corrplot)
clvData1 %>% 
    select(nOrders, nItems, margin, futureMargin) %>% 
    cor() %>% corrplot()

Machine Learning for Marketing Analytics in R

Let's practice!

Machine Learning for Marketing Analytics in R

Preparing Video For Download...