E-commerce customers lifetime value analysis

This project involves evaluating the long-term value that each customer brings to the company. It considers various factors such as customer behavior, sales history and engagement patterns to determine the potential revenue a customer is likely to generate over their entire relationship with the business.

The primary goal of conducting this CLV analysis is to understand and quantify the value of each customer to the e-commerce retail business. By calculating CLV, the company can identify their most valuable customers, develop targeted marketing strategies, optimize customer acquisition costs, and improve customer retention efforts. This analysis is to enable the organization make informed decisions about resource allocation and prioritize initiatives that maximize customer lifetime value.

Business Needs:

Which customer segments are most valuable and how do we drive sustainable revenue growth?

Which customers are the least valuable?

Methodology:

This CLV analysis involves several steps, including data collection, segmentation and calculation of customer value metrics. It started with gathering relevant customer data, such as purchase history, transactional data, customer demographics, and behavioral data. Segmentation techniques were then are then applied to group customers based on similar characteristics or behaviors. CLV was calculated using historic CLV and predictive CLV.

By implementing this CLV analysis, the e-commerce retail businesses gained a comprehensive understanding of customer value, optimized marketing efforts, enhanced customer experiences, and drive long-term profitability. This helped the management in taking strategic decision-making and cultivate customer-centric approaches that result in sustained business growth.